Document:

Service Agreement

 EXHIBIT 10.14 
  
 SERVICE AGREEMENT 
  
 THIS AGREEMENT (the “Agreement”) is made and entered into this          day of April 2004, by and
between ELITE FINANCIAL COMMUNICATIONS GROUP, LLC, located at 605 Crescent Executive Court, Suite 124, Lake Mary, Florida 32746, (hereinafter referred to as “ELITE”) and DAYSTAR TECHNOLOGIES, INC., located at 900 Golden Gate
Terrace, Suite A, Grass Valley, California 95945, (hereinafter referred to as the “Company”). 
  
 WITNESSETH: 
  
 For and consideration of
the mutual promises and covenants contained herein, the parties hereto agree as follows: 
  

	1)	EMPLOYMENT 

  
 Company hereby hires and employs ELITE as an independent contractor, and ELITE does hereby accept its position as an independent contractor to the Company upon the terms and conditions hereinafter set forth.

  

	2)	TERM 

  
 The term of this Agreement shall be for twelve (12) months. However the Company shall retain the right to terminate this Agreement at any time after 90 days from the execution of this agreement with 30 days written
notice. 
  

	3)	DUTIES AND OBLIGATIONS OF ELITE 

  

	 	a)	ELITE will review and analyze various aspects of the Company’s goals and make recommendations on feasibility and achievement of desired goals. 

	 	b)	ELITE will provide all services as defined in the Comprehensive Strategic Financial Communications Plan for DayStar Technologies, Inc. (Exhibit 1) 

	 	c)	ALL ELITE-PREPARED DOCUMENTATION CONCERNING THE COMPANY, INCLUDING, BUT NOT LIMITED TO, INFORMATIONAL WRITE-UPS, NEWS ANNOUNCEMENTS, SHAREHOLDER LETTERS, ET AL, SHALL BE PREPARED BY
ELITE USING MATERIALS SUPPLIED TO IT BY THE COMPANY AND SHALL BE APPROVED BY THE COMPANY PRIOR TO DISSEMINATION BY ELITE. 

  

	4)	ELITE’S COMPENSATION 

  

	 	a)	$10,000 cash, payable per month with the first payment of $10,000 due immediately following execution of this Agreement and subsequent monthly payments due every 30 days thereafter
for the term of the Agreement. The Company agrees to make all monthly payments on the applicable due date and in no event beyond five (5) days past the due date. For every five (5) days past the applicable payment due date, the Company shall be
assessed a late fee equal to $100 until the payment is received by ELITE. 

	 	b)	ELITE would also be entitled to receive an option or warrant to purchase up to 100,000 common shares of the Company’s common stock, exercisable as follows:

  

	 	i)	25,000 shares exercisable at $4.12 per share, which shall vest immediately. 

	 	ii)	25,000 shares exercisable at $5.50 per share, which shall vest on the 91st day following execution of this Agreement; 

  
 Initial Company /s/ JRT        Initial ELITE /s/ DBH 
  

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	 	iii)	25,000 shares exercisable at $6.87 per share, which shall vest on the 181st day following execution of this Agreement; and 

	 	iv)	25,000 shares exercisable at $8.25 per share, which shall vest on the 271st day following execution of this Agreement. 

  

	 	c)	The Company shall agree to issue ELITE piggyback registration rights for the common shares underlying the warrant listed above, whereby these shares will be registered for resale by
ELITE on the first applicable Registration Statement filed by the Company with the U.S. Securities & Exchange Commission, excluding the filing of the Registration Statement which is expected to occur in May, 2004; said underlying shares common
shares shall be held by the Company until such time as ELITE elects to exercise its warrant to purchase the common shares. The term of the warrant shall expire 24 months from the date the Registration Statement registering the shares underlying the
warrant is deemed effective while the agreement is effective. Upon early termination of the agreement, then the warrants shall expire 12 months from the date the Registration Statement registering the shares underlying the warrants is deemed
effective. 

	 	d)	In the event that the Company elects early termination, any warrants that have not vested will be deemed null and void. 

  

	5)	ELITE’S EXPENSES AND COSTS 

  
 Company shall pay all reasonable costs and expenses incurred by ELITE, its directors, officers, employees and agents, in carrying out its duties and obligations pursuant
to the provisions of this Agreement, excluding ELITE’s general and administrative expenses and costs, but including and not limited to the following costs and expenses; provided all costs and expense items in excess of $1.00 (One Dollar)
must be approved by the Company in writing prior to ELITE’s incurrence of the same: 
  

	 	a)	Travel expenses, including but not limited to transportation, lodging and food expenses, when such travel is conducted on behalf of the Company. 

	 	b)	Seminars, expositions, money and investment shows. 

	 	c)	Radio and television time and print media advertising costs, when applicable. 

	 	d)	Subcontract fees and costs incurred in preparation of research reports, when applicable. 

	 	e)	Cost of on-site due diligence meetings, if applicable. 

	 	f)	Printing and publication costs of brochures and marketing materials, which are not supplied by the Company. 

	 	g)	Corporate web site development costs. 

	 	h)	Printing and publication costs of Company annual reports, quarterly reports, and/or other shareholder communication collateral material, which is not supplied by the Company.

  

	6)	FUNDING ADVISORY SERVICES 

  
 Upon request by the Company’s management team, Elite will make strategic introductions to funding groups, investment banking firms, and/or other sources interested
in furthering the business of the Company. Elite will submit in writing a list of such sources first introduced to the Company by Elite on a monthly basis. In the event that a private/public financing transaction is arranged and successfully
implemented using a source first introduced to the Company by Elite, then Elite shall be entitled to receive a cash finder’s fee at closing equal to 3% of the gross proceeds received by the Company. No finder’s fee shall be paid for any
closing that occurs twelve months after termination or expiration of this Agreement. 
  

	7)	COMPANY’S DUTIES AND OBLIGATIONS 

  
 Company shall have the following duties and obligations under this Agreement: 
  

	 	a)	Cooperate fully and timely with ELITE so as to enable ELITE to perform its obligations under this Agreement. 

  
 Initial Company /s/
JRT        Initial ELITE /s/ DBH 
  

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	 	b)	Within ten (10) days of the date of execution of this Agreement to deliver to ELITE a complete due diligence package on the Company, including all the Company’s filings with
the U.S. Securities and Exchange Commission within the last twelve months; the last six (6) months of press announcements on the Company; and all other relevant materials with respect to such filings, including but not limited to, corporate reports,
brochures, and the like, and a list of analysts and or fund managers, who have been following the Company. 

	 	c)	The Company will act diligently and promptly in reviewing materials submitted to it from time to time by ELITE and inform ELITE of any inaccuracies contained therein prior to the
dissemination of such materials. 

	 	d)	Promptly give written notice to ELITE of any change in the Company’s financial condition or in the nature of its business or operations which had or might have an adverse
material effect on its operations, assets, properties or prospects of its business. 

	 	e)	Promptly pay all Company pre-approved costs and expenses incurred by ELITE under the provisions of this Agreement when presented with invoices for the same by ELITE.

	 	f)	Give full disclosure of all material facts concerning the Company to ELITE and update such information on a timely basis. 

	 	g)	Promptly pay the compensation due ELITE under the provisions of this Agreement, and as defined in Section 4 and Section 6 (if and when applicable) herein. 

 

	8)	COMPANY’S DEFAULT 

  
 In the event of any default in the payment of ELITE’s compensation to be paid to it pursuant to this Agreement, or any other charges or expenses on the
Company’s part to be paid or met, or any part or installment thereof, at the time and in the manner herein prescribed for the payment thereof and as when the same becomes due and payable, and such default shall continue for five (5) days after
ELITE’s written notice thereof is received by Company; in the event of any default in the performance of any of the other covenants, conditions, restrictions, agreements, or other provisions herein contained on the part of the Company to be
performed, kept, complied with or abided by, and such default shall continue for five (5) days after ELITE has given Company written notice thereof, or if a petition in bankruptcy is filed by the Company, or if the Company is adjudicated bankrupt,
or if the Company shall compromise all its debts or assign over all its assets for the payment thereof, of if a receiver shall be appointed for the Company’s property, then upon the happening of any of such events, ELITE shall have the right,
at its option, forthwith or thereafter to accelerate all compensation, costs and expenses due or coming due hereunder and to recover the same from the Company by suit or otherwise and further, to terminate this Agreement. The Company covenants and
agrees to pay all reasonable attorney fees, paralegal fees, costs and expenses due of ELITE, including court costs, (including such attorney fees, paralegal fees, costs and expenses incurred on appeal) if ELITE employs an attorney to collect the
aforesaid amounts or to enforce other rights of ELITE provided for in this Agreement in the event of any default as set forth above and ELITE prevails in such litigation. 
  

	9)	COMPANY’S REPRESENTATIONS AND WARRANTIES 

  
 The Company represents and warrants to ELITE for the purpose of inducing ELITE to enter into and consummate this Agreement as follows: 
  

	 	a)	The Company has the power and authority to execute, deliver and perform under this Agreement. 

	 	b)	The execution and delivery by the Company of this Agreement have been duly and validly authorized by all requisite action by the Company. No license, consent or approval of any form
is required for the Company’s execution and delivery of this Agreement. 

  
 Initial Company /s/ JRT        Initial ELITE /s/ DBH 
  

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	10)	LIMITATION OF ELITE LIABILITY 

  
 If ELITE fails to perform its services hereunder, its entire liability to the Company shall not exceed the lessor of (a) the amount of cash compensation ELITE has
received from the Company under Section 4 of this Agreement or (b) the actual damage to the Company as a result of such non-performance. IN NO EVENT WILL ELITE BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES NOR FOR ANY CLAIM AGAINST
THE COMPANY BY ANY PERSON OR ENTITY ARISING FROM OR IN ANY WAY RELATED TO THIS AGREEMENT, UNLESS SUCH DAMAGES RESULT FROM THE USE, BY ELITE, OF INFORMATION NOT AUTHORIZED BY THE COMPANY. 
  

	11)	MISCELLANEOUS 

  

	 	a)	Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when delivered personally or
sent by registered or certified mail, return receipt requested, postage prepaid to the parties hereto at their addresses first above written. Either party may change his or its address for the purpose of this paragraph by written notice similarly
given. 

	 	b)	Entire Agreement. This Agreement represents the entire agreement between the Parties in relation to its subject matter and supercedes and voids all prior agreements between such
Parties relating to such subject matter. 

	 	c)	Amendment of Agreement. This Agreement may be altered or amended, in whole or in part, only in a writing signed by both Parties. 

	 	d)	Waiver. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other subsequent breach or condition, whether of a like or different nature,
unless such shall be signed by the person making such waiver and/or which so provides by its terms. 

	 	e)	Captions. The captions appearing in this Agreement are inserted as a matter of convenience and for reference and in no way affect this Agreement, define, limit or describe its scope
or any of its provisions. 

	 	f)	Situs. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. Venue shall be located in Seminole County, Florida when and if Elite
elects to pursue legal remedy to any alleged breach by the Company. Venue shall be located in              when and if the Company elects to pursue legal remedy to any alleged breach
by Elite. 

	 	g)	Benefits. This Agreement shall inure to the benefit of and be binding upon the Parties hereto, their heirs, personal representatives, successors and assigns.

	 	h)	Severability. If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not
in any way render invalid or unenforceable any other provisions of this Agreement, and this Agreement shall be carried out as if such invalid or unenforceable provision were not contained herein. 

	 	i)	Arbitration. Any controversy, dispute or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration. Arbitration proceedings shall be
conducted in accordance with the rules then prevailing of the American Arbitration Association or any successor. The award of the Arbitration shall be binding on the Parties. Judgment may be entered upon an arbitration award or in a court of
competent jurisdiction and confirmed by such court. Venue for arbitration proceedings shall be in the county and state of the party pursuing legal remedy of any alleged breach of this Agreement. The costs of arbitration, reasonable attorney’s
fees of the Parties, together with all other expenses, shall be paid as provided in the Arbitration award. 

	 	j)	Currency. In all instances, references to monies used in this Agreement shall be deemed to be United States dollars. 

  
 Initial Company /s/
JRT        Initial ELITE /s/ DBH 
  

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	 	k)	Multiple Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of such counterparts shall constitute one (1)
instrument. 

  
 IN WITNESS WHEREOF, the Parties have executed this
Agreement on the day and year as follows: 
  
 CONFIRMED AND AGREED ON THIS
20th DAY OF APRIL, 2004. 
  
 ELITE FINANCIAL COMMUNICATIONS GROUP, LLC 
  

									
					
	By:	 	 /s/    Dodi B. Handy
	 	 	 	 	 	 
	 	 	
	 	 	 	 	 	

	 	 	 ELITE Officer
	 	 	 	 	 	 Witness

  

									
					
	 	 	 Dodi B. Handy
	 	 	 	 	 	 
	 	 	
	 	 	 	 	 	

	 	 	 Print Name
	 	 	 	 	 	 Print Name

  
 CONFIRMED AND AGREED ON THIS 20th DAY OF APRIL, 2004. 
  
 DAYSTAR TECHNOLOGIES, INC. 
  

									
					
	By:	 	 /s/    John R. Tuttle
	 	 	 	 	 	 /s/    Stephen A. Aanderud

	 	 	
	 	 	 	 	 	

	 	 	 Duly Authorized
	 	 	 	 	 	 Witness

  

									
	 	 	 	 	 
					
	 	 	 John R. Tuttle
	 	 	 	 	 	 Stephen A. Aanderud

	 	 	
	 	 	 	 	 	

	 	 	 Print Name
	 	 	 	 	 	 Print Name

  
 Initial Company /s/ JRT        Initial ELITE /s/ DBH 
  

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 ELITE 
 FINANCIAL COMMUNICATIONS GROUP 
  
 Exhibit 1 
  
 COMPREHENSIVE
STRATEGIC 
 FINANCIAL COMMUNICATIONS PLAN FOR 
 DAYSTAR TECHNOLOGIES, INC. 
  

			
	 PRIMARY ACCOUNT MANAGEMENT TEAM:

	 Account Manager:
	  	 Dodi B. Handy, President/CEO

	 Shareholder Relations:
	  	 Stephanie Noiseux, Vice President – Client Relations

	 Operations/Production:
	  	 Steve Handy, COO

	 Media Relations:
	  	 Andrea Strittmatter – Director of Media Outreach

	 Market Relations:
	  	 Dan Conway, Director of Market Relations

	 	  	 Colin Prest, Director of Market Relations

  
 12-Month Primary
Campaign Objectives 
  

	•	Develop investor relations messages that will most pro-actively leverage senior management’s strategic vision, operational and financial performance and ongoing business
expertise to deliver the optimum P/E multiple and lower the Company’s cost of capital. 

  

	•	Provide strategic counsel, policy guidance and program execution leading to sound investor relations’ performance and consistent, credible communications programs.

  

	•	Develop customized, high-quality, high impact and fully integrated financial communications programs and platforms. 

  

	•	Increase general market awareness of DSTI and promote understanding and appreciation for the Company’s strategic direction among the retail, wholesale, institutional and
individual investing communities. 

  

	•	Launch aggressive investor outreach program via successive email broadcasts targeting up to three million individual investors. 

  

	•	Promote enhanced daily trading activity in DSTI’s common stock through pervasive education of our retail broker and institutional network. 

  

	•	Promote positive awareness of DSTI among securities and industry analysts. Research and track analysts’ perceptions and attitudes towards DSTI and benchmark these measurables
against realization of program objectives. 

  

	•	Coordinate all media activity to promote mass awareness of DSTI and material events via traditional and new media outlets – both industry-specific as well as general financial.

  

	•	Assist management with the development of high-impact strategic approaches to the equity and debt markets that will deliver enhanced shareholder value and lower DSTI’s cost of
capital. 

  
 ELITE
FINANCIAL COMMUNICATIONS GROUP, LLC 
 605 CRESCENT EXECUTIVE
COURT 
 LAKE MARY, FLORIDA 32746 
 PHONE: 407-585-1080/FAX: 407-585-1081 
 WW.EFCG.NET 

	I.	FOLLOWING CONTRACT EXECUTION, SUBMIT MATERIAL REQUEST TO DSTI FOR FULFILLMENT 

	 	a.	Elite Financial Forum Questionnaire. 

	 	b.	News Release Posting Approval Form. 

	 	c.	Disclaimer – for approval. 

	 	d.	Media Profile. 

	 	e.	Weekly DTC Sheets. 

	 	f.	100 Complete Due Diligence Packages. 

	 	g.	Company Logo (camera ready art; high resolution file in 300bDPI in Tiffs or eps form). 

	 	h.	Coordinate Strategic Planning Session with DSTI executive(s) to establish all campaign protocols; to clarify campaign objectives and to define campaign initiatives and priorities.

  

	II.	REVIEW ALL AVAILABLE DUE DILIGENCE MATERIAL REFERENCING DSTI 

	 	a.	Draft for DSTI’s review and approval refined branding statements and tag lines reflecting the Company’s strategic corporate direction. 

	 	b.	Review DSTI’s corporate web site and make applicable recommendations for enhancement from an investor relations and Regulation FD perspective. 

	 	c.	Review and update all online financial information portals, including marketguide.com, hoovers.com, smallcapcenter.com, and yahoo/finance.com. 

	 	d.	Review current investor due diligence package; make applicable recommendations for enhancement. 

  

	III.	PREPARE ELITE FINANCIAL FORUM FACT SHEET 

	 	a.	Upon approval by DSTI, post EFFFS to www.efcg.net. 

	 	b.	Mass email EFFFS to Elite’s Opt-In Subscribers of approximately 65,000 investors. 

	 	c.	Mass email EFFFS to Elite’s retail broker network – approximately 6,300 addresses. 

	 	d.	Prepare introduction letter for first class mailing to select institutional groups and money managers; attach EFFFS. (Estimate quantity – 1000). 

	 	e.	Insert copies of the EFFFS into all outgoing investor due diligence kits. 

	 	f.	Update hard copy quarterly. Electronic copy enjoys streaming data that immediately provides for the latest news announcements, stock quote and daily trading data.

  

	IV.	CREATE AND MANAGE ALL FAX AND EMAIL DATABASES OF DSTI INQUIRERS 

	 	a.	Immediately following release of news announcements, special corporate communiqués, et al, Elite will forward the applicable document(s) to those names captured in the
databases. 

	 	b.	Elite will manage all shareholder relations for DSTI, to include phone queries; outreach updates via telephone, fax and email (as preferenced); media alerts; et al.

  

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	V.	NEWS ANNOUNCEMENT PROTOCOL 

	 	a.	Elite will serve as an additional “editor” on draft releases or manage the initial drafting, if desired. Upon release to the wire service and Nasdaq MarketWatch, Elite
will post the release to the online EFFFS, email to the Elite subscriber base, and email/fax to pre-selected media database. 

	 	b.	Elite’s Market Relations Group will personally email and fax (as applicable) each announcement to those retail brokers, institutions and analysts who have been introduced to
DSTI by Elite over the course of the campaign term. 

	 	c.	Each announcement will also be immediately emailed to any individual who has requested to receive ongoing information regarding DSTI (by way of www.efcg.net).

  

	VI.	TELE-MARKET RELATIONS ACTIVITY 

	 	a.	On a daily basis, Elite’s Market Relations Group (MRG) executives will systematically contact all retail brokers who populate Elite’s broker network (composed of
approximately 10,000 U.S. stockbrokers) and introduce them to DSTI. 

	 	b.	Particular emphasis will be placed on contacting every U.S. securities and industry analyst who is currently monitoring and/or reporting on sectors identifiable with DSTI.

	 	c.	The MRG will also coordinate the Institutional Outreach Program, which entails the first class mailing of a personal letter of introduction from the President of Elite and encloses
a copy of DSTI’s EFFFS. The AE/AM team will follow-up with a phone call to each of the institutional contacts sent this information to quantify interest in DSTI and/or a desire to meet with management. 

	 	d.	In association with DSTI’s management team, Elite will coordinate a nationwide meeting schedule (road show) providing for one-on-one meetings with appropriate institutional
investors with an objective of achieving a notable increase in overall institutional holdings in the Company’s common stock. 

  

	VII.	MEDIA RELATIONS 

	 	a.	Elite will strive to obtain coverage in both national financial and industry publications, in financial newsletters, on financial radio and television programming, and via
traditional and new press mediums. 

	 	b.	Elite will track published articles and report all activity to DSTI via “Elite Access” on a monthly basis. 

	 	c.	Elite will facilitate an ongoing Media Outreach Program to an intelligently targeted universe of media professionals stemming from our list of nearly 380,000 media contacts.

	 	d.	For high profile coverage, Elite will evaluate how best to leverage the media coverage to promote broader awareness and appreciation of Elite in its Market Relations Group
activities – via news announcements or special bulletin, and distributed by way of fax, email and telemarketing. 

  

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	VIII.	STRATEGIC RESOURCING 

	 	a.	Elite will tap its network of strategic resources to assist Elite in the identification of individuals capable of furthering its business objectives, i.e. board building (if
required), strategic business relationships, sales and marketing opportunities, or whatever is desired by management. 

  

	IX.	GOING THE EXTRA MILE 

	 	a.	As a valued client of Elite, DSTI can expect: 

	 	•	Each member of the account management team will listen to you, decipher your needs and respond accordingly. 

	 	•	We will practice perfection in everything we produce for you. 

	 	•	We will give you a little extra each day and always more than you expect. 

  

	X.	ANCILLARY CREATIVE/MARKETING/PRODUCTION SUPPORT 

 At
DSTI’s request, Elite will assist in the creation, design and production of all desired marketing material, to include marketing brochures, due diligence folders, annual reports — in print or electronic medium, et al. In addition, Elite
will serve as DSTI’s liaison in negotiation with third party vendors, such as proxy solicitation service providers and the like, to ensure maximum possible cost and quality efficiencies. Fees for these types of services will be submitted via
proposal to DSTI for review, approval and payment prior to any ancillary services being performed. Any ancillary services subject to any expense exceeding $1.00 must be submitted and pre-approved by DSTI’s management team prior to
incurrence.  
  

	XI.	FUNDING ADVISORY SERVICES 

 Upon request by DSTI’s
management team, Elite will make strategic introductions to funding groups, investment banking firms, and/or other sources interested in furthering the business of DSTI. In the event that a private/public financing transaction is arranged and
successfully implemented using a source first introduced to the Company by Elite, then Elite shall be entitled to receive a finder’s fee at closing equal to 3% of the gross proceeds received by the Company. 
  

 Page 4 of 4Employment Agreement

 EXHIBIT 10.42 
  
 EMPLOYMENT AGREEMENT 
  

THIS EMPLOYMENT AGREEMENT (the “Agreement”), effective as of the 2nd day of April, 2004 (the “Effective Date”), by and
between PharmaNetics, Inc., a North Carolina corporation (the “Company”), and John P. Funkhouser (the “Employee”), an individual residing in Wake County, North Carolina. 
  
 WITNESSETH: 
  
 WHEREAS, the Company is presently engaged in the business of developing and
providing diagnostic technologies for the testing of various therapeutics by monitoring and assessing the coagulation or clotting of blood (the “Business”); and 
  
 WHEREAS, the Company wishes to continue employing Employee, and Employee desires to continue his employment with the
Company, all upon the terms and conditions enumerated below; and 
  
 NOW, THEREFORE, in consideration of the foregoing, the mutual promises herein contained, and other good and valuable consideration, including the employment of Employee by the Company and the compensation received by Employee from the
Company from time to time, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 
  
 1. DUTIES. Employee shall serve as the Chief Executive Officer (“CEO”) of the Company upon the terms and
conditions hereinafter set forth. Employee shall faithfully discharge his responsibilities and perform all duties typically assigned to an employee acting in the capacity of a CEO as are set forth in the Bylaws of the Company related to the CEO
position held by Employee; and as prescribed from time to time by the Company’s Board of Directors (the “Board”), the Chairman of the Board, or other appropriate parties within the Company. 
  
 2. SERVICE. Employee agrees to perform his duties to the best of his
ability; provided, however, Employee may devote some of his time and attention to the performance of duties and responsibilities in furtherance of non-Company interests, so long as such efforts do not interfere in any material respect with his
Company duties. Employee agrees to comply with all policies, standards and regulations of the Company now existing or hereafter promulgated. Employee’s duties include attendance at scheduled meetings of the Board and all other normal duties
associated with a director’s responsibilities. Employee agrees that he does not currently serve and will not serve on the board of directors of any company that engages in any business that competes with or represents a conflict with the
business of the Company as determined in the sole discretion of the Board. 
  
 3. COMPENSATION. During the term of this Agreement, Employee’s compensation shall be determined and paid as follows: 
  
 (a) BASE SALARY. Employee shall receive as compensation a base salary at the rate of no less than One
Hundred Seventy Thousand Dollars ($170,000.00) per year (the “Base Salary”), paid on the Company’s regularly scheduled paydays in accordance with the Company’s payroll practices, less any federal, state and local payroll taxes
and other withholdings legally required or properly requested by Employee. Employee’s Base Salary is subject to annual review by the Board. 

 (b) BENEFITS. Employee shall continue receiving such other benefits as he has
received during his employment with the Company and as are provided from time to time to other executive employees of the Company. The Company expressly agrees to continue payment for or reimbursement of Employee’s expenses related to his car,
insurance, and mobile telephone. All such benefits are subject to change by the Company without the consent of Employee. 
  
 (c) VACATION. Employee shall be entitled to take paid vacation in accordance with the Company’s vacation policy. Unused
vacation shall be forfeited at the end of each fiscal year and upon termination of employment, whether by Employee or the Company, regardless of the cause or reason for such termination. 
  
 (d) BUSINESS EXPENSES. The Company will pay all reasonable expenses incurred by Employee directly
related to conduct of the business of the Company, provided Employee complies with the policies for reimbursement or advance of business expenses established by the Company. 
  
 4. TERM; TERMINATION. 
  
 (a) TERM. Unless earlier terminated in accordance with this Section 4, the Company agrees to employ Employee for one (1) year from the Effective
Date hereof (the “Initial Term”). This Agreement shall be automatically renewed for additional one (1) year terms (the “Renewal Term”) so long as the Company has shares of common stock registered under Section 12 of the 1933
Securities Act. 
  
 (b) TERMINATION FOR CAUSE. This
Agreement may be terminated immediately and without prior notice at the election of the Company, “for cause,” as hereinafter defined, immediately upon written notice to Employee. “Cause” shall be decided by a majority vote of the
Directors of the Company other than Employee and shall mean: (i) any criminal act or omission of Employee (including, without limitation, fraud or embezzlement); or (ii) any material adverse act or omission of Employee which would preclude the
Company or any entity affiliated with the Company from selling securities under any federal or state law. 
  
 (c) DEATH OR DISABILITY. Employee’s employment shall be terminated automatically, effective immediately, upon his death or Permanent
Disability. “Permanent Disability” means Employee’s inability, with or without reasonable accommodations, to substantially perform the services necessary to complete the duties set forth herein for a period of more than twenty-six
(26) weeks while employed by the Company. 
  
 5. PAYMENTS ON
TERMINATION. 
  
 (a) ACCRUED COMPENSATION. Regardless
of the cause or manner of termination, on or before the next regular payday following termination, the Company shall pay Employee for any accrued, unpaid Base Salary and unreimbursed expenses (provided that Employee complies with the Company’s
expense reimbursement policies) through the date of termination. 

 (b) CONTINUED EMPLOYMENT. During the Initial or Renewal Term of this Agreement, unless (a) the
Company terminates Employee’s employment for Cause or due to Employee’s death or Permanent Disability or (b) Employee terminates his employment with the Company, the Company shall not terminate Employee and shall continue the employment of
Employee and pay Employee his then-current regular Base Salary for the remainder of the Initial or Renewal Term, as then applicable (the “Employment Continuation Payment”). 
  
 (c) CONDITIONS. Employee agrees that his right to receive the Severance Payment described in Section 5(b) is
conditioned upon his execution of a release of claims in favor of the Company, in a form reasonably acceptable to the Company. Employee further agrees and acknowledges that except as set forth in this Section 5, he will not be entitled to any other
or further payments from the Company following the termination of his employment. 
  
 6. CONFIDENTIALITY; NON-DISCLOSURE. Employee hereby acknowledges that he will hold positions of trust and confidence with the Company, and that during the course of his employment he will be exposed to and work
with customers, collaborators, and others in the employ of the Company sharing customer information, sales information, confidential product information, trade secrets, sensitive financial information, advertising, research and development
information, and other material which is proprietary in nature, confidential to the Company and not generally available to the public or its competitors and which, if divulged, would be potentially damaging to the Company’s ability to compete
in the marketplace (hereinafter referred to as the “Confidential Information”). Employee agrees not to disclose any Confidential Information to belonging to the Company to any person or entity, except in the course of performing duties
assigned by the Company, as authorized by the Company, or as may be required by court order, statute, law or regulation. Confidential Information does not include any of the following: (i) information that at the time of disclosure is generally
known to the public or becomes known to the public through no violation of this Agreement; or (ii) information that is disclosed to Employee by a third party that is not under an obligation to maintain the confidentiality of the information.

  
 7. COVENANT NOT TO COMPETE. Employee, through his
position as CEO of the Company, will acquire a considerable amount of Confidential Information along with knowledge and goodwill with respect to the Company’s Business, which knowledge and goodwill are valuable to the Company, and which would
be extremely detrimental to the Company if used by Employee to compete with the Company. Because of the nature of the business of the Company, it is necessary to afford fair protection to the Company from such competition by Employee. Consequently,
as material inducement for and condition of the continued employment of Employee under the terms of this Agreement, Employee covenants and agrees to the following: 
  
 (a) that at any time while an employee of the Company and for a period of one (1) year following the termination of his
employment for any reason whatsoever, he will not, directly or indirectly, with or through any family member or former director, officer or employee of the Company, or acting alone or as a director, employee, agent, consultant, member of a
partnership, firm, Company or 

 other entity or as a holder of or investor in more than 2% of any security of any class of any Company or other business
entity: 
  
 (1) serve as an executive officer,
manage, operate, control or supervise, or participate in the management, operation, control or supervision of, any entity that is engaged in the Business of the Company, or 
  
 (2) solicit for the purpose of providing diagnostic technologies that monitor or assess the coagulation or
clotting of blood any current or prospective customers of or collaborators with the Company with whom Employee had access or contact on behalf of the Company while employed by the Company; and 
  
 (3) solicit any employees of the Company (i) to resign their
employment with the Company; (ii) to violate any duties owed to the Company; or (iii) breach any agreements with the Company. 
  
 (b) The parties hereto agree that in the event that the length of time, the geographic area or prohibited activities set forth in this Section 7 shall be
deemed too restrictive in any court proceeding, that the court shall eliminate or reduce such restrictions to those which it deems reasonable and enforceable under the circumstances. 
  
 8. ASSIGNMENT OF DEVELOPMENTS. 
  
 (a) If at any time or times during Employee’s employment, Employee shall (either alone or with others) make, conceive,
discover or reduce to practice any invention, modification, discovery, design, development, improvement, process, software program, work of authorship, documentation, formulae, data, technique, know-how, secret or intellectual property right
whatsoever or any interest therein (whether or not patentable or registrable under copyright or similar statutes or subject to analogous protection) (herein called “Developments”) that relate to the Company’s Business or any of the
products or services being developed, manufactured or sold by the Company or that may be used in relation therewith, such Developments and the benefits thereof shall immediately become the sole and absolute property of the Company and its assigns,
and Employee shall promptly disclose to the Company each such Development. Employee hereby assigns any rights Employee may have or acquire in the Developments and benefits and/or rights resulting there from to the Company and its assigns without
further compensation and shall communicate, without cost or delay, and without publishing the same, all available information relating thereto to the Company. Employee further agrees to execute any instruments and to do all other things reasonably
requested by the Company (both during and after Employee’s employment with the Company) in order to more fully vest in the Company all ownership rights in those items hereby or thereby transferred by Employee to the Company. In the event the
Company is unable for any reason, after reasonable effort, to secure Employee’s signature on any document needed in connection with the actions specified in this Section, Employee hereby irrevocably designates and appoints the Company and its
duly authorized officers and agents as Employee’s agent and attorney in fact, which appointment is coupled with an interest, to act for and in Employee’s behalf to execute, verify and file any such documents and to perform all other
lawfully permitted acts to further the purposes of such section with the same legal force and effect as if executed by Employee. Employee hereby waives and quitclaims to the Company any and all claims, of any nature whatsoever, which Employee now or
may hereafter have for infringement of any Development assigned hereunder to the Company. 

 (b) Notwithstanding anything in this Agreement to the contrary, the obligation of Employee to assign or
offer to assign his rights in an invention to the Company shall not extend or apply to an invention that Employee developed entirely on his own time without using the Company’s equipment, supplies, facility or trade secret information,
unless such invention (i) relates to the Company’s business or actual or demonstrably anticipated research or development, or (ii) results from any work performed by Employee for the Company. Employee shall bear the burden of proof in
establishing that his invention qualifies for exclusion under this Section 8(b). With respect to this Section 8, it is agreed and acknowledged that during Employee’s employment, the Company may enter other lines of business that are related or
unrelated to its current lines of business, in which case this Agreement would be expanded to cover such new lines of business. 
  
 9. REASONABLENESS OF COVENANTS. Employee has carefully read and considered the provisions of Sections 6 through 8 hereof and, having done so,
agrees that the restrictions set forth therein are fair and reasonable and are reasonably required for the protection of the interests of the Company, its officers, directors, stockholders and employees. Accordingly, Employee agrees that the length
of time, geographic area and any other restrictions contained in this Agreement are reasonable to protect the legitimate interests of the Company and do not unfairly restrict or penalize Employee. Notwithstanding the foregoing, in the event that any
part of the covenants set forth in Sections 6 through 8 hereof shall be held to be invalid and unenforceable, the court so deciding may, and is hereby directed to, reduce or limit the terms of such provision to allow such provision to be enforced.

  
 10. INJUNCTIVE RELIEF. Employee understands and agrees
that the Company will suffer irreparable harm in the event that Employee breaches any of his obligations under Sections 6 through 8 hereof and that monetary damages will be inadequate to compensate the Company for such breach. Accordingly, Employee
agrees that, in the event of a breach or threatened breach by Employee of any of such provisions of this Agreement, the Company, in addition to and not in limitation of any other rights, remedies or damages available to the Company at law or in
equity, shall be entitled to injunctive relief in order to prevent or to restrain any such breach by Employee, or by Employee’s partners, agents, representatives, servants, employers, employees and/or any and all persons directly or indirectly
acting for or with him. 
  
 11. COMPANY PROPERTY. All
notes, data, tapes, reference materials, sketches, drawings, memoranda, models and records in any way relating to any of the information referred to in Sections 6 through 8 hereof (including without limitation, any Confidential Information) or to
the Company’s Business shall belong exclusively to the Company and Employee agrees to turn over to the Company all such materials and all copies and reproduction capabilities concerning such materials or compilations of information therefrom in
his possession or then under his control at the request of the Company or, in the absence of such request, upon the termination of Employee’s employment with the Company. 
  
 12. WAIVER. No waiver of any provision of this Agreement shall be valid unless the same is in writing and signed by
the party against whom such waiver is sought to be enforced. Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such terms, covenants or conditions, nor shall any waiver or
relinquishment of any right or power granted hereunder at any particular time be deemed a waiver or relinquishment of such rights or power at any other time or times. 

 13. SEVERABILITY. The provisions of this Agreement shall be deemed severable, and the invalidity
or unenforceability of any provision (or part thereof) of this Agreement shall in no way affect the validity or enforceability of any other provision (or remaining part thereof) or the enforceability thereof under different circumstances.

  
 14. GOVERNING LAW; VENUE. This Agreement shall be
governed by and construed according to the laws of the State of North Carolina, without reference to the choice of law or conflict of law provisions of such laws. The parties further agree that the state or federal courts sitting in Wake County,
North Carolina shall have sole and exclusive jurisdiction to adjudicate any disputes in connections with or arising out of the Agreement. 
  
 15. NOTICES. Any notice required to be given hereunder shall be sufficient if in writing and sent by certified or registered mail, return receipt
requested, first-class postage prepaid, in the case of Employee, to his address shown on the Company’s records, and in the case of the Company, to its principal office in the State of North Carolina. 
  
 16. BENEFIT. This Agreement shall be binding upon and shall inure to
the benefit of each of the parties hereto, and to their respective heirs, representatives, successors and permitted assigns. Employee expressly agrees that the Company may assign its rights and obligations under this Agreement to any successor in
interest (whether due to a merger or purchase of substantially all of the assets of the Company). Employee may not assign any of his rights or delegate any of his duties under this Agreement. 
  
 17. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understandings by and between the Company and Employee with respect to the matters covered herein, and no representations, promises, agreements or understandings, written or oral related to the matters covered herein, but not contained in this
Agreement, shall be of any force or effect. No change or modification hereof shall be valid or binding unless the same is in writing and signed by the parties hereto. Nothing contained in this Agreement shall alter, change, modify or in any way
terminate the obligation of the Company to fund and pay Employee under Employee’s SERP agreement. 
  
 18. CAPTIONS. The captions in this Agreement are for convenience only and in no way define, bind or describe the scope or intent of this Agreement.

  
 19. SURVIVAL OF COVENANTS. The provisions set forth in
Sections 6 through 8 hereof shall survive the termination of this Agreement and any period of applicability stated therein shall be extended to the extent of any period of time during which the Employee is in violation thereof. 

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

			
	PHARMANETICS, INC.
		
	By:	 	 /s/ Paul T. Storey

	Title:	 	Chief Financial Officer
	
	EXECUTIVE
	
	 /s/ John P. Funkhouser

	John P. Funkhouser

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