Document:

Exhibit 10.29

	
 

	
 

	
1210 Northbrook Drive, Suite 470

 Trevose, PA 19053-8406 USA

 Tel 215 355 2900

 http://www.technitrol.com

	

November 21, 2008

	
 

	
 

	
 

	
Personal & Confidential

	
 

	
 

	
 

	
To:

	
 

	
Edward J.
 Prajzner

	
 

	
 

	
[address]

	
 

	
 

	
 

	
Re:

	
 

	
Separation and Release Agreement

Dear Ed:

The purpose of
this letter (“Letter Agreement”) is to confirm our understanding with regard to
your resignation from Technitrol, Inc. (the “Company”) effective November 21,
2008 (“Termination Date”). In consideration of the mutual promises contained in
this Letter Agreement, we agree as follows:

         1.
Transition Work

Prior to your
Termination Date, you provided me with an up-to-date status report of
significant projects you were managing, or otherwise involved with, including a
description of each project, the project due date, and other information
relevant to the project.

After your
Termination Date, you agree to be available for 90 days (by phone or email) to
discuss the above referenced projects. Such assistance shall not unreasonably
interfere with your duties as a full time employee elsewhere.

         2.
Indemnification Agreement

	
 

	
 

	
 

	
(i)     The
 Company agrees that Paragraph 6 of the Indemnification Agreement dated April
 26, 2006 between you and the Company should be and hereby is amended in its
 entirety as follows:

	
 

	
 

	
 

	
 

	
 

	
“6. The indemnification, advancement of expenses and limitation of
 liability provided in this Agreement shall continue after the Indemnitee has
 ceased to be a director or officer of the corporation and shall inure to the
 benefit of the heirs, executors and administrators of the Indemnitee.”

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(ii)      In addition, any
 indemnification obligations of the Company to which you are entitled as a
 director, officer and employee of the Company, whether by contract or
 pursuant to the Company’s charter or by-laws, relating to the period prior to
 termination, shall survive such termination and shall thereafter be paid to
 you as and when due in accordance with applicable law and the constituent
 documents of the Company.

	
 

	
 

	
 

	
3. RSP Vesting;
 Vacation Pay

	
 

	
 

	
 

	
(i)       On your Termination Date, the
 8,650 unvested shares of Technitrol, Inc. restricted stock currently held in
 your name under Technitrol Inc.’s Restricted Stock Plan II will be vested
 100%. Share certificates will be issued in your name within thirty (30) days
 of your Termination Date and if applicable will contain a legend indicating
 that any sale of shares must comply with Rule 144 of the Securities Act of
 1933. Any disposition of shares must also comply with other applicable
 securities laws, including without limitation the rules on insider trading.
 You agree that the number of shares set forth above is accurate.

	
 

	
 

	
 

	
(ii)      Within thirty (30) days of
 your Termination Date, the Company will pay you a lump sum in the amount of
 $14,634.07 (net of your normal deductions) for your earned and accrued, but
 unused, vacation. You agree that the amount of vacation pay set forth above
 is accurate.

	
 

	
 

	
 

	
(iii)     For purposes of clarification,
 this Letter Agreement shall not terminate any ordinary course benefits which
 accrued to you during your employment with the Company such as retirement
 plan benefits.

	
 

	
 

	
 

	
4. Confidentiality
 – Business and Operational Issues

You will not
directly or indirectly disclose or use, for your own or anyone else’s benefit,
any confidential or proprietary information of the Company and/or any of its
affiliates, including but not limited to, information regarding employees,
mergers, acquisitions, due diligence, customers, quotes, prices/pricing, costs,
products, processes, technical data, operating priorities or business plans, or
any other confidential or proprietary information that you learned or observed
during your employment (collectively, “Confidential Information”). Confidential
Information shall not be deemed to include information that (i) is or becomes
generally available to the public through no act or omission by you; (ii) is
subsequently disclosed to you without restriction by a third party having
rightful possession of such information and the legal right to disclose it to
you without restriction; or (iii) is required to be disclosed by law but only
to the extent necessary and only after you have given the Company written
notice and reasonable opportunity to respond prior to such required disclosure.

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5. Confidentiality of this Agreement

	
 

	
 

	
In addition
 to your obligations in paragraph 4 above, you will not disclose any
 information concerning this Letter Agreement to any person, except as
 specifically permitted below in this paragraph. The terms and conditions of
 this Letter Agreement may be disclosed by you as follows: (i) to your
 attorneys, accountants and tax advisors, who have a reasonable need to know,
 (ii) to your immediate family; and (iii) as required by law according to a
 legal opinion you have received from an attorney; provided that any
 individual to whom you disclose the terms and conditions of this Letter
 Agreement assure you that he or she will keep all such information
 confidential.

	
 

	
 

	
 

	
6. Return of Property; Subsidiary Resignations

	
 

	
 

	
 

	
(i)     On
 or before your Termination Date, you shall return to the Company any property
 or information that belongs to the Company and/or any of its affiliates,
 including but not limited to, all company credit cards, access keys,
 computers, BlackBerry devices, equipment, cell phones and Confidential
 Information.

	
 

	
 

	
 

	
(ii)     On
 or before your Termination Date, you will execute and deliver to the Company
 a subsidiary resignation letter in the form of Exhibit A attached hereto.

	
 

	
 

	
 

	
7. Release of Technitrol and Others

	
 

	
 

	
 

	
(i)     In
 consideration for the above benefits and all of the terms of this Letter
 Agreement, you, Edward J. Prajzner, for yourself, your agents,
 representatives, heirs, executors, and all other persons or entities which might
 claim on your behalf (all of whom are hereinafter collectively referred to as
 “Releasors”), do hereby release, remise and forever discharge the Company,
 its direct and indirect subsidiaries, parent companies, affiliates,
 investors, insurers, successors, assigns, and each of their agents, servants,
 shareholders, employees, officers, directors, trustees, representatives and
 attorneys (all of whom are hereinafter individually and collectively referred
 to in this paragraph as “Releasees”) of and from any and all claims, demands,
 causes of action, actions, rights, damages, judgments, costs, compensation,
 suits, debts, dues, accounts, bonds, covenants, agreements, expenses,
 attorneys’ fees, damages, penalties, punitive damages and liability of any
 nature whatsoever, in law or in equity or otherwise, which Releasors have
 had, now have, shall or may have in the future, against or in any way related
 to Releasees, whether known or unknown, foreseen or unforeseen, suspected or
 unsuspected, by reason of any cause, matter or thing whatsoever, including
 those relating to your employment with the Company and the termination of
 that employment.

	
 

	
 

	
 

	
(ii)     This
 paragraph 7 and its sub-paragraphs are intended to comply with Section 201 of
 the Older Workers’ Benefits Act of 1990.

	
 

	
 

	
 

	
 

	
 

	
(a)          By
 the release set forth in this paragraph 7, you acknowledge that you are
 giving up all claims related to your employment with the Company and the 

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termination
 of that employment, including but not limited to, claims for breach of
 contract or implied contract, wrongful, retaliatory or constructive
 discharge, negligence, misrepresentation, fraud, detrimental reliance,
 promissory estoppel, defamation, invasion of privacy, impairment of economic
 opportunity, intentional or negligent inflection of emotional distress, any
 and all other torts, and claims for attorney’s fees, as well as the following
 statutory claims described below in sub-paragraph (b).

	
 

	
 

	
 

	
 

	
 

	
(b)          You
 further acknowledge that various state and federal laws prohibit
 discrimination based on age, gender, race, color, national origin, religion,
 handicap or veterans status. These include Title VII of the Civil Rights Act
 of 1964, 42 U.S.C. §2000 et seq. and the Civil Rights Act of 1991 (relating
 to gender, national origin, and certain other kinds of job discrimination);
 the Age Discrimination in Employment Act, 29 U.S.C. §626 et seq., (relating
 to age discrimination in employment), the Older Workers Benefit Protection
 Act, 29 U.S.C. §626, the Rehabilitation Act of 1973, the Civil Rights Act of
 1866 and 1871, the Americans with Disabilities Act and the Pennsylvania Human
 Relations Act. You also understand and acknowledge that there are various
 federal and state laws governing wage and hour issues, including but not
 limited to the Fair Labor Standards Act, Pennsylvania wage and hour laws and
 the Equal Pay Act of 1963 (relating to all the above forms of job
 discrimination). You acknowledge that you are giving up any claims you may
 have under any of these statutes and under any other federal, state or
 municipal statute, ordinance, executive order or regulation relating to
 discrimination in employment, wage and hour issues, or in any way pertaining
 to your employment relationship with the Company. You understand and
 acknowledge that this release applies to all such employment-related claims,
 which you have had, now have or shall or may have in the future.

	
 

	
 

	
 

	
 

	
 

	
(c)          You
 hereby acknowledge that the Company has advised you that you have at least
 twenty one (21) days (I) to consider and review this Letter Agreement and its
 consequences with an attorney of your choosing, and (II) if you accept the
 terms of this Letter Agreement, to forward an executed copy to the Company in
 accordance with paragraph 8 of this Letter Agreement. The offer contained in
 this letter may only be executed in whole and not in part; if you do not
 execute and deliver this Letter Agreement to the Company within twenty one
 (21) days from the date hereof, then the offer set forth in the body of this
 letter is automatically and without further notice to you revoked (including
 the provisions of paragraph 3 above) and it will be of no further force or
 effect whatsoever.

	
 

	
 

	
 

	
 

	
 

	
(d)          You
 also acknowledge that you have seven (7) days from the date you execute this
 Letter Agreement to advise the Company that you are revoking this Letter
 Agreement, and understand that if you have not revoked this Letter Agreement
 by the end of the seven (7) day period, this Letter Agreement will be
 effective and in full force. You understand that any revocation you make
 shall be in writing, sent by facsimile, hand delivery or overnight mail, to
 the Company in accordance with the below paragraph 8 of this Letter
 Agreement.

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8. Acknowledgement

	
 

	
 

	
 

	
You acknowledge
 that you have been given a reasonable opportunity to discuss this Letter
 Agreement with an attorney or advisor of your choice; that you have carefully
 read and fully understand all of the provisions of this Letter Agreement; and
 that you are entering into this Letter Agreement knowingly, voluntarily and
 of your own free will, and intending to be legally bound.

	
 

	
 

	
 

	
If you
 choose to accept the offer under the terms and conditions set out in this
 letter, please sign and date this Letter Agreement where indicated below, and
 return it to me. Your signature below indicates your acceptance of this
 Letter Agreement in full and shall cause this Letter Agreement to be binding
 upon you, your heirs, representatives and assigns. If you do not return it to
 the Company signed within twenty one (21) days from the date hereof, we shall
 assume that you have elected not to accept the terms and conditions of this
 Letter Agreement, this offer is revoked (including the provisions of the
 above paragraph 3(i) of this Letter Agreement).

	
 

	
 

	
 

	
 

	
9. Non-Compete with Technitrol and Affiliates

	
 

	
 

	
 

	
 

	
(i)     You
 acknowledge that: (a) your relationship with the Company and its affiliates
 has brought you in close contact with customers, suppliers and/or many
 confidential affairs not readily available to the public, (b) the business of
 the Company is international in scope, (c) the products and services of the
 Company are currently marketed throughout the world, (d) the provisions of
 this paragraph 9 are reasonable, with respect to duration, geographical area
 and scope, and necessary to protect and preserve the business of the Company,
 (e) the Company would be irreparably damaged if you were to breach the
 covenants set forth in this paragraph 9, and (f) you have carefully read and
 understand the provisions of this Letter Agreement and have had an
 opportunity to consult with an independent legal counsel of your choosing.

	
 

	
 

	
 

	
 

	
(ii)    As
 a material inducement for the Company to enter into this Letter Agreement,
 you agree that for twelve (12) months after your Termination Date, you will
 not directly or indirectly, without the Company’s prior written consent:

	
 

	
 

	
 

	
 

	
 

	
(a)          render
 services to, be engaged in, become employed by, own, manage, or have a
 financial or other interest in (either as an individual, partner, joint
 venturer, owner, manager, stockholder, employee, consultant, partner,
 officer, director, independent contractor, agent or other such role) any
 business which is engaged, directly or indirectly, in the manufacture, design
 and/or sale of products substantially similar in function to those
 manufactured, designed and or sold by the Company; except that nothing herein
 shall prohibit you from owning less than 1% of the outstanding shares of a
 publicly traded corporation, provided you do not actively participate in the
 management or decision-making processes of such other entity;

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(b)          contact,
 solicit, contract with, or accept business from any customer or supplier of
 the Company or it affiliates; or

	
 

	
 

	
 

	
 

	
 

	
(c)          solicit,
 hire or engage the services of, or contact with a view to the engagement or
 employment, any person or entity of any person who is an employee of the
 Company or its affiliates, or induce, solicit, or cause any employee, agent
 or representative of the Company or its affiliates to terminate his or her
 employment or business affiliation with the Company or its affiliates.

	
 

	
 

	
 

	
 

	
(iii)    The
 provisions of this Letter Agreement are separate and distinct from and in
 addition to the restrictive covenant and invention provisions contained in
 any confidentiality agreement or Company policy or other agreement to which
 you are a party or by which you are bound.

	
 

	
 

	
 

	
 

	
(iv)    You
 acknowledge that the covenants contained in this Letter Agreement are fair
 and reasonable in light of the consideration paid under this Letter
 Agreement, and that damages alone shall not be an adequate remedy for any
 breach by you of such covenants, and accordingly expressly agree that, in
 addition to any other remedies which the Company may have, the Company shall
 be entitled to injunctive relief in any court of competent jurisdiction for
 any breach of any such covenants by you. Nothing contained in this Letter
 Agreement shall prevent or delay the Company from seeking, in any court of
 competent jurisdiction, specific performance or other equitable remedies in
 the event of any breach by you of any of your obligations under this Letter
 Agreement.

	
 

	
 

	
 

	
 

	
Monetary
 claims against you under the above paragraph 9(ii) of this Letter Agreement
 will in no event exceed the amount actually paid to you under the above
 paragraph 3(i) of this Letter Agreement. Any other claim shall not be
 limited.

	
 

	
 

	
 

	
 

	
(v)     You
 shall not be required to mitigate damages or the amount of any payment
 provided for under this Letter Agreement by seeking other employment or
 otherwise, and compensation earned from such employment or otherwise shall
 not reduce the amounts otherwise payable under this Letter Agreement. No
 amounts payable under this Letter Agreement shall be subject to reduction or
 offset in respect of any claims which the Company (or any other person or
 entity) may have against you.

	
 

	
 

	
 

	
 

	
10. Miscellaneous

	
 

	
 

	
 

	
This Letter
 Agreement supersedes all prior agreements, arrangements and understandings
 and constitutes the complete and full agreement and understanding between the
 Company and you relating to the subject matter covered herein except as
 specifically set forth in the above paragraph 3(iii). Any modifications or
 amendments to this Letter Agreement must be made in writing and signed by
 both you and the Company.

	
 

	
 

	
 

	
This Letter
 Agreement shall be governed by the laws of the Commonwealth of Pennsylvania,
 without regard to conflicts of law principles.

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I will be your
primary contact after your Termination Date, providing assistance for all
matters related to this Letter Agreement. I have sent you two originals signed
and dated. Please return one original of this Letter Agreement to me signed and
dated as confirmation of your acceptance of this offer.

	
 

	
 

	
 

	
Sincerely,

	
 

	
 

	
 

	
/s/ Drew A.
Moyer

	
 

	

	
 

	
Drew A.
 Moyer

	
 

	
Sr. Vice
 President and

	
 

	
Chief
 Financial Officer

Accepted and
agreed to on

November 21, 2008, and intending

to be legally bound.

	
 

	
/s/ Edward
J. Prajzner 

	

	
Edward J.
 Prajzner

7CONSULTING AGREEMENT

Exhibit 10.1

CONSULTING AGREEMENT

This Consulting Agreement (the "Agreement") is entered into as of the 19th day of February, 2009, by and between NovaRay Medical, Inc. ("the Company") and Jack Price (the "Consultant").

WHEREAS, Consultant is employed by the Company as its Chief Executive Officer and President;

WHEREAS, Consultant desires to resign as Chief Executive Officer and President of the Company but remain on the Company's Board of Directors and the Company desires to accept such resignation by Consultant and desires that Consultant remain on its Board of Directors;

WHEREAS, Company and Consultant desire to obtain a release from all claims, counterclaims and defenses that could be brought against the other party including without limitation pertaining to, in connection with or arising out of (i) Consultant's employment with Company, (ii) Consultant's resignation as Chief Executive Officer and President of the Company, (iii) the termination of Consultant's employment with Company and (iv) the Executive Employment Agreement (as defined below);

WHEREAS, Consultant desires to receive and the Company desires to pay the amounts set forth herein;

WHEREAS, Company desires to engage Consultant for certain services as set forth herein and Consultant desires to provide such services to the Company and its Board of Directors;

WHEREAS, Consultant desires and the Company desires to continue vesting of the Consultant's Stock (as defined below) pursuant to the Restricted Stock Purchase Agreement dated as of October 23, 2006 (the "Restricted Stock Purchase Agreement").

NOW, THEREFORE, in consideration of the above premises and intending to be legally bound hereby, the parties agree as follows:

	Resignation. Consultant hereby resigns as Chief Executive Officer and President of the Company as of February 28, 2009 pursuant to Section 7.3 of that certain Executive Employment Agreement dated as of December 19, 2007 (the "Executive Employment Agreement") and Company accepts such resignation.  Consultant's employment with Company shall be terminated as of February 28, 2009.  In consideration of signing this Agreement, Consultant shall receive payments of (i) $28,333, less regular withholdings, no later than the eighth day after Consultant has executed this Agreement, provided that Company has received the executed Agreement and Consultant has not revoked the Agreement, (ii) reimbursement of business expenses properly incurred prior to March 1, 2009 and submitted in accordance with the Company's policies and (iii) $5,000 or pro rata amount for each calendar quarter beginning on April 1, 2009 until the end of the term of this Agreement as set forth in Section 13 hereof, payable at the end of each calendar quarter with the first payment commencing June 30, 2009.  Consultant shall not be entitled to any other compensation, benefits or payments from the Company.

	Mutual Release. Consultant and Company hereby release and forever discharge the other party, its officers, Board of Directors, affiliated, related, parent or subsidiary corporations, employees, successors and agents from any and all claims, demands, obligations, causes of action of any nature whatsoever, whether based on tort, including but not limited to wrongful termination, public policy, constructive discharge, negligent or intentional tort; contract (implied, oral or written), or breach thereof; fraud; or statute, including the Age Discrimination in Employment Act, the Older Workers' Benefits Protection Act, the California Fair Employment & Housing Act; or any other theory of recovery or claim either in equity or in law, whether or not now known, suspected or unsuspected, or claimed, which Consultant or Company ever had or now has or claims to have, including without limitation in any way pertaining to, in connection with or arising out of (i) Consultant's employment with Company,(ii) Consultant's resignation as Chief Executive Officer and President of the Company, (iii) the termination of Consultant's employment with Company and (iv) the Executive Employment Agreement.  Consultant and Company promise that such party will never file, at any time subsequent to the execution of this Agreement, in any state or federal court or before any local, state, or federal administrative agency, any claim or action of any kind, nature, or character whatever, known or unknown, which each may now have, or ever have had, against the other party with respect to any matter including without limitation pertaining to, in connection with or arising out of (i) Consultant's employment with Company, (ii) Consultant's resignation as Chief Executive Officer and President of the Company, (iii) the termination of Consultant's employment with Company and (iv) the Executive Employment Agreement.  In addition, Consultant and Company hereby waive any and all rights or benefits which such party may have under the terms of section 1542 of the California Civil Code, which is set forth below as follows:

Section 1542.  A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected in his settlement with the debtor.

	Continued Vesting. Consultant's Stock (as defined in the Restricted Stock Purchase Agreement) shall continue to vest (as defined in the Restricted Stock Purchase Agreement) pursuant to Section 3 thereof until the later of (i) the end of the term of this Agreement as set forth in Section 13 below or (ii) the date on which Consultant ceases to be a member of the Company's Board of Directors.  At such time, the Restricted Stock (as defined in the Restricted Stock Purchase Agreement) shall be subject to the Repurchase Option (as defined in the Restricted Stock Purchase Agreement) for a period of ninety (90) days from the later of (i) the end of the term of this Agreement as set forth in Section 13 below or (ii) the date on which Consultant ceases to be a member of the Company's Board of Directors.  For purposes of the Restricted Stock Purchase Agreement, Consultant's termination of employment with the Company shall not be deemed a termination of Consultant's employment by the Company, a termination of employment by Consultant for Good Reason (as defined in the Restricted Stock Purchase Agreement) or a termination of employment by Consultant for Good Reason without consent.  Subject to the foregoing, the Restricted Stock Purchase Agreement shall remain in full force and effect.  

	Independent Contractor. This Agreement shall not render the Consultant an employee, partner, agent of, or joint venturer with the Company for any purpose except as set forth in Section 16 of the Restricted Stock Purchase Agreement.  Consultant is and will remain an independent contractor in the relationship with the Company. The Company shall not be responsible for withholding, social security, retirement, unemployment, worker's compensation, disability or similar taxes or insurance with respect to the compensation of the Consultant hereunder after February 28, 2009. The Consultant waives and shall have no claim against the Company hereunder or otherwise for vacation pay, sick leave, retirement benefits, social security, worker's compensation, health or disability benefits, unemployment insurance benefits, or employee benefits of any kind.  Consultant agrees to indemnify the Company and hold it harmless from any and all claims on the Company to pay any withholding, social security, retirement, unemployment, worker's compensation, disability, vacation, sick leave, health or employee benefit obligations.      

	Duties. Subject to the terms and conditions of this Agreement, the Company hereby engages the Consultant as an independent contractor to  consult in the strategic and market development activities for the Company's Board of Directors and the Consultant hereby accepts such engagement.  

	Expenses. During the term of this Agreement, the Consultant shall bill and the Company shall reimburse Consultant only for such out-of-pocket expenses for such amounts previously approved by the Company in writing.

	Inventions.

	Any and all ideas, processes, technology, computer programs, software, original works of authorship, designs, formulas, patents, copyrights, trademarks, service marks, inventions, discoveries, developments, innovations and all improvements, rights and claims related to the foregoing that are conceived, developed or reduced to practice by the Consultant (alone or with others) pursuant to this Agreement ("Invention Ideas") shall be the exclusive property (whether or not patentable) of the Company; and the Consultant hereby assigns, without further consideration, all right, title, and interest (throughout the United States and in all foreign countries) in the Invention Ideas to the Company free and clear of all liens and encumbrances. 
	The Consultant agrees to maintain adequate and current written records on development of all Invention Ideas for the Company and to promptly disclose to the Company all Invention Ideas and relevant records, which records shall remain the sole property of the Company.  Consultant further agrees that all information and records pertaining to any idea, process, technology, computer program, software, original work of authorship, design, formula, patent, copyright, trademark, service mark, invention, discovery, development, innovation and all improvements, rights and claims related to the foregoing that Consultant believes is not or may not be an Invention Idea, but is conceived, developed or reduced to practice by the Consultant (alone or with others) during the term of this Agreement shall be promptly disclosed to the Company.  The Company shall determine if in fact the idea, process, technology, computer program, software, original work of authorship, design, formula, patent, copyright, trademark, service mark, invention, discovery, development, innovation and all improvements, rights and claims related to the foregoing is an Invention Idea subject to this Agreement. 
	The Consultant agrees to cooperate with the Company, to assist the Company, to testify on behalf of the Company and to execute all proper documents, to enable the Company to apply for, prosecute, obtain or enforce letters patent, applicable registrations and all other intellectual property protection in the United States and foreign countries in the inventions and the copyrightable material. Should the Company be unable to secure signature of Consultant on any document necessary to apply for, prosecute, obtain, or enforce any patent, copyright, or other right or protection relating to any Invention Idea, whether due to mental or physical incapacity or any other cause, Consultant hereby irrevocably designates and appoints the Company and each of its duly authorized officers and agents, as the agents and attorneys-in-fact of Consultant to act for and on behalf and instead of the Consultant, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by the Consultant. A reasonable attempt will be made to inform the Consultant of such actions taken on behalf of Consultant.

	Confidentiality. The Consultant acknowledges that during the engagement Consultant will have access to and become acquainted with various trade secrets, inventions, innovations, processes, information, records, and specifications owned or licensed by the Company or its clients and/or used by the Company in connection with the operation of its business including, without limitation, business and product processes, methods, customer lists, accounts, and procedures. The Consultant agrees that Consultant will not disclose any of the aforesaid, directly or indirectly, or use any of them in any manner, either during the term of this Agreement or at any time thereafter, except to the extent required to perform the services in the course of this engagement with the Company. All files, records, documents, blueprints, specifications, information, letters, notes, media lists, original artwork/creative, notebooks, products, prototypes and similar items relating to the business of the Company, whether prepared by the Consultant or otherwise coming into Consultant's possession, shall remain the exclusive property of the Company. The Consultant shall not retain any copies of the foregoing without the Company's prior written permission. Upon the expiration or earlier termination of this Agreement, or whenever requested by the Company, the Consultant shall immediately deliver to the Company all such files, records, documents, specifications, information, and other items in the possession of the Consultant or under control of the Consultant. The Consultant further agrees not to disclose the terms of this Agreement to any person without the prior written consent of the Company.

	Representations and Warranties. The Consultant represents and warrants that the performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by the Consultant in confidence or in trust prior to the execution of this Agreement. The Consultant further represents and warrants that any and all inventions that the Consultant has created or will create under this Agreement will be original and shall not infringe the rights of any third party to the extent of Consultant's knowledge.  

	Conflicts of Interest; Non-hire Provision. The Consultant represents that Consultant is free to enter into this Agreement and that this engagement does not violate the terms of any agreement between the Consultant and any third party. There is no existing contract in conflict with this Agreement or any other contract to assign or license Invention Ideas or other ideas, processes, technology, computer programs, software, original works of authorship, designs, formulas, patents, copyrights, trademarks, service marks, inventions, discoveries, developments, innovations pursuant to this Agreement. Further, the Consultant, in rendering the services hereunder shall not utilize any invention, discovery, development, improvement, innovation, or trade secret in which Consultant does not have a proprietary interest. For a period of twelve (12) months following any expiration or termination of this Agreement, the Consultant shall not, directly or indirectly hire, solicit, induce, recruit or encourage any employee, consultant, or contractor to leave the Company using or involving trade secrets or confidential information of the Company.

	Right to Injunction. The parties hereto acknowledge that the services to be rendered by the Consultant under this Agreement and the rights and privileges granted to the Company under the Agreement are of a special, unique, unusual, and extraordinary character which gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated by damages in any action at law, and the breach by the Consultant of any of the provisions of this Agreement will cause the Company irreparable and immediate injury and damage which is extremely difficult to estimate, making any remedy at law or in damages inadequate. The Consultant expressly agrees that the Company shall be entitled to injunctive and other equitable relief in the event of, or to prevent, a breach of any provision of this Agreement by the Consultant. Resort to such equitable relief, however, shall not be construed to be a waiver of any other rights or remedies that the Company may have for damages or otherwise. The various rights and remedies of the Company under this Agreement or otherwise shall be construed to be cumulative, and no one of them shall be exclusive of any other or of any right or remedy allowed by law.

	Limitations of Liability. IN NO EVENT SHALL COMPANY BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY NATURE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO LOSS OF PROFITS OR OTHER ECONOMIC LOSS ARISING OUT OF THIS AGREEMENT OR THE SERVICES RENDERED HEREUNDER.  CONSULTANT AGREES THAT COMPANY'S LIABILITY TO THE CONSULTANT UNDER ANY PROVISION OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY SHALL NOT EXCEED $10,000.  THE PARTIES ACKNOWLEDGE AND AGREE THAT THE FOREGOING LIMITATIONS OF LIABILITY ARE AN ESSENTIAL ELEMENT OF THE AGREEMENT BETWEEN THE PARTIES AND THAT IN THEIR ABSENCE THE ECONOMIC TERMS OF THIS AGREEMENT WOULD BE SUBSTANTIALLY DIFFERENT.
	Term. This Agreement shall commence on the date set forth above and shall remain in full force and effect until either (i) the earlier of March 31, 2010 or the date on which Consultant ceases to be a member of the Company's Board of Directors or (ii) such other date agreed to in writing by Consultant and the Company and signed by the Consultant and the Chief Executive Officer or Chief Financial Officer of the Company.

	Survival. Sections 1-4, 7-19 of this Agreement shall survive and continue in effect after any expiration or termination of this Agreement.

	Successors and Assigns. All of the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, if any, successors, and assigns.

	Choice of Law, Jurisdiction. The laws of the state of California as applied to agreements between California residents to be performed entirely within California without reference to its conflict of laws principles shall govern the interpretation of this Agreement including without limitation, the validity of this Agreement, the construction of its terms, and the interpretation of the rights and duties of the parties hereto.  Except as set forth in Section 11 hereof, the parties agree that any dispute arising from the terms and conditions of this Agreement that cannot be settled by mutual agreement of the parties shall be resolved through binding arbitration in Alameda County, California.  If the parties cannot agree on a single arbitrator, each party shall select one arbitrator and those two arbitrators so selected shall select a third and thereafter, all three arbitrators shall hear the matter.  The award may be enforced in a court of competent jurisdiction in Alameda County, California.

	Headings. Section headings are not to be considered a part of this Agreement and are not intended to be a full and accurate description of the contents hereof.

	Waiver. Waiver by one party hereto of breach of any provision of this Agreement or rights hereunder by the other shall not operate or be construed as a continuing waiver or waiver of any subsequent breach.

	Notices. Any and all notices, demands, or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if personally served, or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice or demand is served personally, notice shall be deemed constructively made at the time of such personal service. If such notice, demand, or other communication is given by mail, such notice shall be conclusively deemed given five (5) days after deposit thereof in the United States mail addressed to the party to whom such notice, demand, or other communication is to be given as follows:

If to the Consultant:Jack Price

________________

________________

If to the Company:NovaRay Medical, Inc.

39655 Eureka Drive

Newark, California 94560

Attention: Chief Financial Officer

Any party hereto may change its address for purposes of this paragraph by written notice given in the manner provided above.

	Modification or Amendment. No amendment, change, or modification of this Agreement shall be valid unless in writing specifically referring to this Agreement and signed by the Chief Executive Officer or Chief Financial Officer of Company.

	Entire Understanding, Interpretation. This document and the Restricted Stock Purchase Agreement constitute the entire understanding and agreement of the parties, and any and all prior or contemporaneous agreements, understandings, and representations including without limitation, any prior contractor agreements are hereby superseded in their entirety and are of no further force and effect.  In the event of a conflict between any provision of this Agreement and the Restricted Stock Purchase Agreement, the provisions of this Agreement shall prevail.  The Agreement is to be construed as drafted by both parties jointly.  The Agreement shall be interpreted and construed neutrally in accordance with its plain meaning and shall not be presumptively construed against either party.  Each party to the Agreement represents and acknowledges that it is represented by counsel or decides not to seek such representation and the Agreement shall be deemed to have been drafted jointly by both parties. Consultant is hereby advised to consult with an attorney prior to executing this Agreement and is further advised that Consultant has twenty-one (21) days to consider this Agreement.  Consultant acknowledges that if Consultant executes this Agreement prior to the expiration of 21 days, or if Consultant chooses to forego the advice of an attorney, Consultant does so freely and knowingly, and waives any and all future claims that such action or actions would affect the validity of this Agreement.  Consultant may revoke this Agreement within seven (7) calendar days after signing it.  If Consultant revokes this Agreement, the Company will be immediately released from any further obligation under this Agreement, the Company may recover any payments already made under this Agreement, and this Agreement will not be effective or enforceable and will be subject to the terms and conditions of California Evidence Code sections 1152 and 1154.

	Unenforceability of Provisions. If any provision of this Agreement, or any portion thereof, is held to be invalid and unenforceable, then the remainder of this Agreement shall nevertheless remain in full force and effect.

In witness whereof the undersigned have executed this Agreement as of the day and year first written above. The parties hereto agree that facsimile signatures shall be as effective as if originals and that the Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument.

	
NovaRay Medical, Inc.

By:       _/s/ William Frederick_____________

Name: William Frederick

Title:   Chief Financial Officer
	
Jack Price

By:       _/s/ Jack Price_______________________

Name: Jack Price

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