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EXHIBIT 10.4
September 04, 2007
Jonathan R. T. Lakey, Ph.D., M.S.M.
6370 Nancy Ridge Drive, Suite 112
San Diego, CA 92121
Re: Employment Agreement (this "AGREEMENT")
Dear Dr. Lakey:
MicroIslet Inc., a Nevada corporation (the "COMPANY"), is
pleased to
offer you employment as President and Chief Scientific Officer
of the Company on
the following terms:
1. POSITION; EFFECTIVE DATE. As President and Chief Scientific
Officer,
you will report to the Chief Executive Officer and the Company's
Board of
Directors (the "BOARD"), and will perform the duties customarily
associated with
this position and such other duties assigned by the Board. The
Company
acknowledges that you currently live in Edmonton, Alberta
Canada, and you and
the Company agree that you will work from the Company's
facilities in San Diego,
California or travel on Company business at least sixty per cent
(60%) of the
business days of each month during the term of this Agreement.
So long as you
serve as President and Chief Scientific Officer, the Company
will recommend to
the Board's Nominating and Governance Committee, and to the
Board, that you be
included on management's slate of directors at each meeting of
the stockholders
of the Company at which directors are elected. Subject to the
"Approved
Commitments" set forth in paragraph 3.1 below, you agree to
devote substantially
all of your business time and attention to the business of the
Company. This
Agreement shall be effective as of September 04, 2007 (the
"START DATE").
2. COMPENSATION.
2.1 BASE SALARY AND ADJUSTMENTS. Your base salary will be at
a
rate of $250,000 per year (the "BASE SALARY"), less payroll
deductions and
required withholdings, paid according to the Company's regular
payroll schedule
and procedures.
2.2 EMPLOYEE BENEFITS. You shall be entitled to all
benefits,
including vacation, health and disability benefits, for which
you are eligible
under the terms and conditions of the standard Company benefit
plans, which may
be in effect from time to time and are provided by the Company
to its senior
executive level employees generally.
2.3 EXPENSES. The Company shall reimburse you for reasonable
travel and other out-of-pocket expenses (including telephone,
lodging and meals)
upon submission of receipts, including by way of example your
airline travel
between San Diego and Edmonton. The Company will also pay you
$2,900, according
to the Company's regular payroll schedule and procedures, per
calendar month (1)
for maintaining a residence in San Diego away from your
permanent residence in
Edmonton, and (2) to reimburse your automobile expenses for a
vehicle in San
Diego. The Company shall deduct any required withholdings
associated with such
benefits from your regular payroll amounts in accordance with
the applicable
regulations of the Internal Revenue Service.
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2.4 STOCK OPTION. You have been granted an option to
purchase
400,000 shares of Common Stock of the Company (the "OPTION")
under the Company's
2005 Equity Incentive Plan (the "EQUITY PLAN") pursuant to a
Stock Option
Agreement of even date herewith.
3. NON-COMPETITION AND NON-SOLICITATION.
3.1 NON-COMPETITION. Except as permitted by the last
sentence
of this Paragraph 3, during the term of your employment by the
Company and for a
period of one year thereafter, you will not directly or
indirectly, whether as
an officer, director, stockholder, employee, advisor, manager,
partner,
proprietor, associate, representative, consultant, or in any
capacity whatsoever
engage in, become financially interested in, be employed by or
have any business
connection with any other person, corporation, firm, partnership
or other entity
whatsoever that is engaged anywhere in the world, in any line of
business
engaged in (or planned to be engaged in) by the Company without
the prior
consent of the Board; provided, however, that anything above to
the contrary
notwithstanding, you may own, as a passive investor, securities
of any
publicly-traded entity, so long as your holdings in any one such
entity do not
in the aggregate constitute more than one percent (1%) of the
voting stock of
such entity and securities of any non-publicly traded entity, so
long as your
holdings in any one such entity do not in the aggregate
constitute more than
five percent (5%) of the voting stock of such entity; and
further provided, that
the restrictions in this Paragraph 3 shall apply after your term
of employment
only to the extent the restricted actions would involve the use
of the Company's
trade secrets. For such purpose, the term "trade secrets"
includes "Confidential
Information" as that term is defined in your Confidentiality and
Intellectual
Property Agreement. If any restriction set forth in this
paragraph is held to be
unreasonable, then you agree, and hereby submit, to the
reduction and limitation
of such prohibition to such area or period as shall be deemed
reasonable under
the law. Notwithstanding the above, the Company through the
Board hereby gives
its consent to allow you to remain on the Scientific Advisory
Board for Normedex
and Clinical Islet Transplant Group (CITG) (collectively, the
"Approved
Commitments"), in all cases subject to your continued fiduciary
obligations to
the Company and its stockholders. The Approved Commitments shall
also include
other civic or not-for-profit activities you many engage in so
long as such
activities do not interfere with the performance of your job
duties.
3.2 NON-SOLICITATION. You will not, at any time during the
term of this Agreement, or during the 24 months following
termination of this
Agreement, in any manner, directly or indirectly, alone or
jointly, with or as
an agent for, or as an employee of, any person, firm or
corporation, employ,
solicit or induce to leave any employee or independent
consultant of the
Company, or any former employee or independent consultant who
was employed or
retained by the Company within 24 months preceding such attempt
to employ or
solicit; provided, however, that this non-solicitation provision
shall not
prevent you from hiring any employee or independent consultant
of the Company
that you can demonstrate either (i) approached you independently
without any
prior direct or indirect solicitation or encouragement by you or
on your part,
or (ii) replied to a solicitation made to the general public
without any direct
or indirect solicitation or encouragement by you or on your
part.
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4. COMPANY POLICIES; CONFIDENTIALITY AND INTELLECTUAL
PROPERTY
AGREEMENT; STOCKHOLDERS AGREEMENT. You agree to execute the
Company's
Confidentiality and Intellectual Property Agreement (the
"CONFIDENTIALITY
AGREEMENT") and to abide by the Company's rules, policies and
procedures.
5. TERM AND TERMINATION OF EMPLOYMENT.
5.1 AT-WILL EMPLOYMENT RELATIONSHIP. You and the Company
each
acknowledge that your employment with the Company is "at-will,"
as defined under
applicable law, and that either party may terminate your
employment with the
Company at any time for any reason, and with or without Cause
(as defined below)
or notice. If your employment terminates for any reason, you
will not be
entitled to any payments, benefits, damages, award or
compensation other than as
expressly provided in this Agreement.
5.2 ACCEPTANCE AND TERMS OF EMPLOYMENT. The Company agrees
to
employ you and you agree to serve the Company on the terms and
conditions set
forth herein. Your employment with the Company will not be for
any specific term
and may be terminated by you or by the Company at any time, with
or without
cause and with not later than ninety (90) days prior you or the
Company provides
to the other notice in writing of an intention not to continue
this Agreement.
Upon notice your employment hereunder shall terminate on the
close of business
on the last day of the ninety (90) day notice.
5.3 TERMINATION. The term of your employment shall terminate
earlier than as provided in Section 5.2 hereof upon the earliest
to occur of:
(i) your voluntary resignation; (ii) termination by reason of
your disability or
death, or (iii) a termination by the Company with or without
Cause.
5.4 VOLUNTARY TERMINATION. If you terminate your employment
at
any time you shall not be entitled to severance pay, pay in lieu
of notice or
any other such compensation other than payment of accrued salary
and vacation
through the date of termination and such other benefits as
expressly required in
such event by applicable law or the terms of applicable benefit
plans. The
continued vesting of the Option shall cease on the termination
date, and your
right to exercise any vested portion of the Option shall be
governed by the
terms of the Equity Plan and the corresponding stock option
agreement.
5.5 TERMINATION FOR CAUSE, DEATH OR DISABILITY. If the
Company
terminates your employment at any time for Cause (as defined
below) or if your
employment is terminated by reason of your death or disability
(defined as the
inability, in the opinion of a qualified physician acceptable to
the Company, to
perform the requirements of your position with the Company
because of any
disease or condition for a continuous period of more than 90
days) your salary
shall cease on the date of termination and you shall not be
entitled to
severance pay, pay in lieu of notice or any other such
compensation other than
payment of accrued salary and vacation through the date of
termination and such
other benefits as expressly required in such event by applicable
law or the
terms of applicable benefit plans. In the event of your death,
payment of
accrued salary and vacation, if any exists at time of
termination, will be paid
to your estate. The continued vesting of the Option shall cease
on the
termination date, and your right to exercise any vested portion
of Option shall
be governed by the terms of the Equity Plan and the
corresponding stock option
agreement.
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5.6 SEVERANCE BENEFITS FOR TERMINATION WITHOUT CAUSE. If the
Company terminates your employment without Cause (as defined
below) before the
termination of this Agreement pursuant to Section 5.2 of this
Agreement, you
will receive a lump sum severance payment (the "SEVERANCE
PAYMENT") equal your
Base Salary in effect as of such termination date multiplied by
ninety (90)
calendar days. The Severance Payment shall be paid within sixty
(60) calendar
days following any such termination; provided, however, that the
Company's
obligation to make the Severance Payment is expressly
conditioned upon your
execution and timely delivery, without revocation, of a full
general release of
claims (excluding claims for amounts payable under this
Agreement), in form and
substance reasonably satisfactory to the Company, against the
Company and its
officers, directors, employees and agents. Delivery of such
general release
shall not be considered timely, and the Severance Payment shall
be extinguished,
if not made by the later of (A) thirty (30) calendar days after
your
termination, or (B) twenty-one (21) days after your receipt of a
form such
general release to be executed.
5.7 TERMINATION FOR CAUSE. Notwithstanding any other
provision
contained in this Agreement, the Company may terminate this
Agreement
immediately, at any time, for Cause. For purposes of this
Agreement, "CAUSE"
shall mean:
(i) any willful breach or habitual neglect of your
material duties (other than due to a disability or death) that
you are
required to perform under the terms of this Agreement or the
Confidentiality Agreement;
(ii) your conviction for committing (A) a felony, (B)
a fraud or act of dishonesty that results in material harm to
the
Company, (C) financial impropriety, or (D) an act of moral
turpitude;
(iii) your knowing or deliberate violation of any
requirement of the Sarbanes-Oxley Act of 2002 or other
material
provisions of the federal securities laws; or
(iv) your failure to obey the lawful and reasonable
direction of the Board, or breach of any fiduciary duty owed by
you to
the Company or its shareholders, in such a way that has had or
will
have a direct, substantial and adverse effect on the business,
finances
or reputation of the Company.
Notwithstanding the foregoing, if th
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