Exhibit 10.2

SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE

This Settlement Agreement and Mutual General Release (hereinafter, this
“Agreement”) is made and entered into as of the 13th day of February 2007, by
and between Isonics Corporation (“Isonics”) and James E. Alexander (“Mr.
Alexander”).  Isonics and Mr. Alexander are referred to jointly herein as “the
Parties.”

RECITALS

A.                                   Mr. Alexander had been an officer,
director, and employee of Isonics for more than the past ten years.

B.                                     By this agreement, Isonics and Mr.
Alexander have determined that it is in their best interests to resolve all
disagreements and issues between them and to provide for the resolution of all
issues relating to Mr. Alexander’s employment with Isonics, service as an
officer and director thereof, and the termination of his employment and
resignation as an officer and director (collectively the “Issues”) in exchange
for the consideration set forth herein.

AGREEMENT

NOW THEREFORE, in consideration of the following covenants and promises and for
other valuable consideration as described below, and without admitting any fault
or liability on the part of any of the Parties, their officers, directors, or
affiliates, the Parties hereby terminate the employment agreement between Mr.
Alexander and Isonics dated September 22, 1997, and further enter into this
Agreement.

1.                                       Mr. Alexander’s Acknowledgements,
Representations, and Agreement.

a.                                       Mr. Alexander hereby submits his
resignation as an officer and director of Isonics and acknowledges that he has
no authority to act or to make representations on behalf of Isonics or any
affiliate or subsidiary thereof.

b.                                      Mr. Alexander represents that he has
returned all of the property of and information pertaining to Isonics, its
subsidiaries and its affiliates, in his possession and control.  Mr. Alexander
further represents to Isonics that he does not have any complete or partial
copies of any of this property, either written or on tape, disk, diskette or
other storage media.  Mr. Alexander acknowledges that if he later learns that he
has any property that belongs to Isonics, he is obliged to notify Isonics and to
make arrangements to return all such property.  Notwithstanding the foregoing,
the parties have agreed that Mr. Alexander will take ownership of the twelve
year old custom made furniture in his office at Isonics and also of the two
laptops in his possession, after they have been cleaned of all Isonics related
information.

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c.                                       Mr. Alexander agrees that he will not
disparage Isonics or any of its officers, directors, employees, affiliates, or
agents.  Mr. Alexander further acknowledges that (to the extent he has received
confidential or non-public information regarding Isonics) he will comply with
his legal obligations with respect thereto.  Failure to comply with the
provisions of this paragraph may, in addition to any other remedies available
under applicable law and at Isonics’ option, result in a termination of any
payments and benefits which have not been made as of the first day of the month
following such failure.

d.                                      Mr. Alexander agrees that during the
period of his continuing employment with Isonics and thereafter, he will assist
Isonics’ executive chairman, chief executive officer and chief financial officer
with transition matters and the litigation against Grant Thornton LLP.

e.                                       Mr. Alexander hereby grants the
enclosed proxy by which the named proxy holder can vote all shares of Isonics
common stock held in his name, in the name of the James and Carol Alexander
Foundation, in the name of Carol Alexander, and any other beneficial ownership
controlled by him for approval of Isonics’ 2007 Restructuring Equity Plan and
any amendment to the Isonics 2005 Stock Option Plan that may be proposed at the
next meeting of shareholders of Isonics.

f.                                         Mr. Alexander agrees that, at all
times from the date of this Agreement and for a period of one  year thereafter,
he will not either directly or indirectly solicit, induce, recruit or encourage
(or attempt to solicit, induce, recruit or encourage) any of Isonics’ employees
to leave their employment.  Failure to comply with the provisions of this
paragraph may, in addition to any other remedies available under applicable law
and at Isonics’ option, result in a termination of any payments and benefits
which have not been made as of the first day of the month following such
failure.

2.                                       Settlement Consideration.

a.                                       Isonics will pay Mr. Alexander
compensation for continuing employment of $206,244, in the form of three
payments of $22,916 each payment, commencing February 28, 2007 (for the period
from February 16 through March 15, 2007) and on or before the last day of the
two months thereafter, and then twelve payments of $11,458.  Isonics will make
this payment directly into Mr. Alexander’s account and will deduct all normal
withholdings from that payment in accordance with its normal payroll practices,
and such payments made be made semi-monthly in accordance with Isonics’ normal
payroll practices.

b.                                      Mr. Alexander hereby surrenders all
options issued to him under the 2005 Stock Option Plan and the 1996 Executive’s
Plan for cancellation.

c.                                       Mr. Alexander will continue to be an
employee of Isonics during the period ending on the last day of the month that
payments are being made to him pursuant to Section 2(a) hereof (the “Employment
Period”), and will be entitled to participate in

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Isonics normal employee benefits except the accrual of personal time off (“PTO”)
which ceases on the date hereof.  Mr. Alexander will respond to reasonable
requests, spending such time as he deems necessary, for information and
assistance during the Employment Period.  Isonics will use its best efforts to
avoid exposing Mr. Alexander to any material non-public information without
advising Mr. Alexander in advance that the information it is providing with
respect to a project is material non-public information. Further, Isonics
understands that Mr. Alexander will pursue significant outside interests during
the Employment Period and understands that any requests for information and
assistance will be subordinate to his outside interests.  Isonics does not
expect Mr. Alexander to report to Isonics’ offices or deal with Isonics
personnel except upon written or oral request of the chairman of the audit
committee, the executive chairman of Isonics, or the chief executive officer of
Isonics.

d.                                      Isonics will issue to Mr. Alexander
250,000 shares of common stock from Isonics’ 2005 Stock Option Plan (such number
of shares being calculated after the effectiveness of the reverse stock split
scheduled to be completed on February 13, 2007), such issuance being subject to:
(i) Mr. Alexander executing and returning an acceptable subscription agreement
for those shares; and (ii) either Mr. Alexander providing evidence to Isonics
that he owes no income tax liability on that amount, or that he has made
adequate provision for such liability.  If the parties are unable to achieve a
method of satisfying the requirements of the Internal Revenue Service and state
taxing authorities for the payment of any withholding necessary with respect to
the issuance of the shares, the parties will negotiate in good faith an issuance
of shares or other compensation to Mr. Alexander with an equal economic benefit
to Mr. Alexander but which will not materially adversely impact Isonics’ cash
position or other financial obligations.  In connection with the issuance of the
shares of common stock referenced in this Section 2(d), Mr. Alexander represents
and warrants to Isonics:

·              He is an accredited investors as that term is defined in
§2(a)(15) of the Securities Act of 1933 (the “1933 Act”);

·              He has received such information about Isonics as is, in his
opinion, reasonably necessary for him to make his decision whether to accept
such shares;

·              He has discussed the acceptance of such shares with his legal,
financial, tax, investment and other advisors to the extent that he has
determined such consultation to be appropriate or necessary;

·              He understands the risks associated with receiving and holding
shares of Isonics common stock.

e.                                       Reports.  The Parties agree to make all
necessary and usual reports to the Internal Revenue Service, state taxing
authorities and any similar agencies and to perform all withholdings normally
applicable to the types and amounts of payments and other consideration Mr.
Alexander is to receive as a result of this Agreement.

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f.                                         No Other Payment or Employee
Benefit.  Isonics will make only the payments expressly stated in this Agreement
and will provide no other payments or benefits to Mr. Alexander. 
Notwithstanding the foregoing, Isonics will, pay full amounts accrued by Mr.
Alexander in each qualified retirement plan maintained by Isonics in which he
participates.

3.                                       General Release by Isonics.  In
consideration for Mr. Alexander’s releases and agreements contained in this
Agreement and upon its receipt of a fully executed and notarized copy of this
Agreement, Isonics and each of Isonics’ officers, directors, employees, and
agents, and for anyone who has or obtains rights or claims from Isonics, forever
releases and discharges Mr. Alexander and each of Mr. Alexander’s heirs,
beneficiaries, successors, assigns, agents, employees, executors,
administrators, and representatives from any and all claims and causes of action
arising before the effective date of this Agreement, whether known or unknown
and including, but not limited to, all claims arising out of Mr. Alexander’s
employment with Isonics or arising out of any act or omission of Mr. Alexander
made in good faith as Isonics’ employee; provided, however, Isonics’ release
does not include a release for any liability or obligation arising under this
Agreement, or arising from any fraud or willful misconduct by Mr. Alexander or a
breach of this Agreement.

4.                                       General Release by Mr. Alexander.

a.                                       In consideration for Isonics’ releases
and agreements contained in this Agreement, the payment of the settlement
consideration described herein and upon his receipt of a fully executed and
notarized copy of this Agreement, Mr. Alexander, for himself, for his heirs,
beneficiaries, successors, assigns, agents, employees, executors,
administrators, and representatives, and for anyone who has or obtains rights or
claims from him, forever releases and discharges Isonics, and each of Isonics’
affiliates, directors, officers,  successors, assigns, agents, employees, and
representatives from any and all claims and causes of action arising before the
effective date of this Agreement, whether known or unknown and including, but
not limited to, all claims arising out of Mr. Alexander’s employment with
Isonics or arising out of any act or omission of Isonics or any of its officers
and directors and any PTO accrued through the date hereof; provided, however,
Mr. Alexander’s release does not include a release for any liability or
obligation arising under this Agreement, or arising from any fraud or willful
misconduct by Isonics, or any of its officers and directors, and further does
not apply to any rights that Mr. Alexander might have as a shareholder of
Isonics or as a holder of options or warrants issued by Isonics.

b.                                      To the extent permitted by law, Mr.
Alexander specifically releases Isonics from all claims arising under or in
connection with the following federal and state laws, as amended, and all
related regulations, the: Age Discrimination in Employment Act of 1967;
Americans with Disabilities Act of 1990; Title VII of the Civil Rights Act of
1964; Civil Rights Act of 1991; Civil Rights Acts of 1866 and 1871; Equal Pay
Act of 1963; Family and Medical Leave Act of 1993; National Labor Relations Act;
Occupation Safety and Health Act of 1970; Older Workers Benefit Protection Act
of 1990;

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Pregnancy Disability Act of 1978; the Rehabilitation Act of 1973; Executive
Order 11246; Colorado Anti-Discrimination Act of 1957; Colorado’s Minimum Wages
of Workers Act; Colorado Wage Equality Regardless of Sex Act; Colorado Labor
Peace Act; and the common law of the State of Colorado for compensation,
damages, tort, breach of express or implied employment contract, discrimination,
harassment, sexual harassment, wrongful discharge, infliction of emotional
distress, defamation and for any other damages or injuries incurred on the job,
in relation to Mr. Alexander’s employment or incurred as a result of loss of
employment.

5.                                       Reference.  Isonics and its officers,
directors, employees, agents and assigns, agree to advise persons who may ask
for a reference no more than the following: that Mr. Alexander was employed by
Isonics, the capacities in which he was employed, and the dates that Mr.
Alexander was employed, and that such employment was satisfactory.

6.                                       Entire Agreement; Amendment;
Enforceability; Interpretation.  This Agreement expresses our entire
understanding about its subject matter and is the only agreement, promise or
understanding on which we are relying in performing the duties this Agreement
describes.  The only way this Agreement may be amended, changed or waived will
be through a written document we both sign.  This Agreement is enforceable by
and against each Party and anyone else who has or who obtains rights under this
Agreement from either Party.  This Agreement will be interpreted and enforced
under Colorado law.  No part of this Agreement should be construed against
either Party on the basis of authorship.  Any unenforceable provision of this
Agreement will be modified to the extent necessary to make it enforceable or, if
that is not possible, will be severed from this Agreement, and the remainder of
this Agreement will be enforced to the fullest extent possible.  Any claims
arising under this Agreement shall be subject to binding arbitration pursuant to
the rules of the Uniform Arbitration Act as enacted in the State of Colorado,
with one arbitrator to be selected from the Judicial Arbiter Group, as agreed
upon by both parties.  Or in the absence of an agreement by JAG.  The site of
arbitration shall be Denver, Colorado.  Further, should any party be forced to
bring an action to enforce any provision of this Agreement, the prevailing
party, in addition to all other applicable remedies, shall be awarded all
reasonable cost and attorneys’ fees.

7.                                       Notices; Process.  Any notice this
Agreement required must be in writing and will be effective only if
hand-delivered or sent by certified U.S. mail, return receipt requested, to the
Party entitled to receive the notice at the Party’s address stated below, or at
such other address as that Party may later provide to the other Party.  We each
agree to waive service of process in any action or arbitration brought to
enforce or to interpret this Agreement, and we agree that service of this
complaint and any other pleading, discovery, order or service of the complaint
and any other pleading, discovery, order or documents in any such action that
would otherwise have to be served by personal service will be deemed served
three days after being sent to the other Party and that Party’s attorney as
provided below:

to Mr. Alexander at:                                      31146 Tanoa Road

Evergreen, Colorado 80439

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with a copy to:                                                                
Law Offices of Peggy J. Hoyt-Hoch

P.O. Box 2783

Evergreen, Colorado 80437

 

to Isonics
at:                                                                          
Isonics Corporation

5906 McIntyre Street

Golden, Colorado  80403

with a copy to:                                                                
Herrick K. Lidstone, Jr., Esq.

Burns Figa & Will, P.C.

Suite 1000

6400 South Fiddler’s Green Circle

Greenwood Village, Colorado  80111

8.                                       Signatory’s Authority; All Necessary
Consents.  Each Party expressly represents that such Party does not require any
third party’s consent to enter into this Agreement, including the consent of any
spouse, insurer, assignee, licensee, secured lender, or regulatory agency.  Each
Party has read and considered this Agreement carefully, believes that Party
understands each provision, and has conferred or has had the opportunity to
confer with the Party’s own attorney before executing this Agreement.

9.                                       SPECIFIC ACKNOWLEDGEMENTS.  MR.
ALEXANDER ACKNOWLDEGES THAT HE HAS READ THIS AGREEMENT, THAT HE HAS BEEN ADVISED
THAT HE SHOULD CONSULT WITH AN ATTORNEY BEFORE HE EXECUTES THIS AGREEMENT, AND
THAT HE UNDERSTANDS ALL OF ITS TERMS AND EXECUTES IT VOLUNTARILY WITH FULL
KNOWLEDGE OF ITS SIGNIFICANCE AND THE CONSEQUENCES THEREOF.

10.                                 No Admission.  This Agreement, and
compliance with this Agreement, shall not be construed as an admission of
liability on the part of the Parties, such liability being hereby expressly
denied.  The Parties’ intent in this Agreement is to provide the other Party
with a complete, total, irrevocable and binding release of all matters arising
before the date of this Agreement (except those matters reserved herein), which
might result in a dispute and avoid any further differences or conflicts. The
Parties hereby represent that they have neither filed nor caused to be filed any
pending charges, suits, claims, grievances or other action (hereinafter referred
to as “Claims”) which in any way arise from or relate to the Issues.  Each Party
further represents to each other that such Party has not directly or indirectly
assigned any claim related to the Issues or released hereby to any other person.

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11.                                 No Knowledge of Securities or Disclosure
Violations.  Each of Isonics and Mr. Alexander affirmatively states and
represents to the other that it has no knowledge that the other has violated the
requirements of the Securities Act of 1933, the Securities Exchange Act of 1934
(the “1934 Act”), the reporting requirements of the 1934 Act, the requirements
for disclosure controls and financial controls imposed by the 1934 Act, or other
provisions of the federal or applicable state securities laws.

12.                                 Full and Complete Defense.  This Agreement
and the releases contained herein, may be pleaded as a full and complete
defense, counterclaim or cross-claim to, and may be used as a basis for an
injunction against, any action, suit, or other proceeding which may be
instituted, prosecuted or attempted in breach of this Agreement or the releases
contained herein.  In the event of any action by any Party hereto to enforce
this Agreement, the releases contained herein, or any other agreement delivered
pursuant hereto, the prevailing party shall be entitled to recover reasonable
attorneys’ fees and costs.

13.                                 Attorneys’ Fees.  Each of the Parties shall
be responsible to pay his or its respective attorneys’ fees incurred in
connection with the negotiation and drafting of this Agreement.  Each Party
shall release and forever hold the other harmless from any liability to the
attorneys for payment of such fees pursuant to any agreement or understanding
between each Party and his or its attorneys.

14.                                 No Reliance.  The Parties warrant to each
other that in agreeing to the terms of this Agreement, they have not relied in
any way upon any representations or statements of the other party regarding the
subject matter hereof for the basis or effect of this Agreement other than those
representations or statements contained herein.  In entering into this
Agreement,   each Party represents that in entering into this Agreement and
completing the transactions hereunder, he or it has done so after completing
such investigation as he or it has determined to be necessary or appropriate in
the circumstances, and after having consulted with and taken advice from such
Party’s legal, financial, tax, investment, and other advisors to the extent such
Party has determined such consultation to be necessary or appropriate in the
circumstances.

15.                                 No Mistake; Final Settlement.  In connection
with this Agreement, the Parties hereby acknowledge that they are aware that
they may hereafter discover facts in addition to or different from those which
they now know or believe to be true with respect to this Agreement, but that it
is their intention hereby to settle, fully, finally and forever, and to release
all matters, Issues and differences, known or unknown, suspected or unsuspected,
which now exist, which may exist, or which heretofore have existed against any
and all Parties under this Agreement.

16.                                 Severability.  If any part of this Agreement
shall be determined to be illegal, invalid or unenforceable, the remaining part
shall not be affected thereby, and the illegal, unenforceable or invalid parts
shall be deemed not to be a part of this Agreement, although this Agreement will
be rewritten by the court or person making such finding to reflect the intention
of the Parties to the maximum extent permitted by law. Each Party represents and
warrants that he or it has full capacity and authority to settle, compromise,
and release his or its claims and to enter into this Agreement and that no other
person or entity has acquired, or will in the future

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acquire or have any right to assert, against any person or entity released by
this Agreement any portion of that Party’s claims released herein.

17.                                 Counterparts.  This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

18.                                 Notices. All written notices required by
this Agreement or any document delivered pursuant hereto or as contemplated
herein, must be delivered to the addresses set forth in the first paragraph
above (or to such other address as may be specified by a Party) by a means
evidenced by a delivery receipt and will be effective upon receipt.

19.                                 Survival.  The Parties agree that the
obligations, representations and warranties contained herein shall indefinitely
survive the execution of this Agreement, the delivery of all documents
hereunder.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the date first mentioned above.

THE UNDERSIGNED HAVE CAREFULLY READ THE FOREGOING SETTLEMENT AGREEMENT AND
GENERAL RELEASE OF ALL CLAIMS, KNOW THE CONTENTS THEREOF, FULLY UNDERSTAND IT,
AND SIGN THE SAME AS HIS OR ITS OWN FREE ACT.

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CAUTION! READ BEFORE SIGNING

 

 

 

 

 

James E. Alexander

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STATE OF

 

 

)

 

 

 

 

 

) ss.

 

 

COUNTY OF

 

 

)

 

 

 

 

 

 

 

Subscribed, sworn to, and acknowledged before me by James E. Alexander on this
          day of February 2007.

 

 

 

 

Witness my hand and official seal.

 

 

 

 

 

 

 

 

 

My commission expires:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notary Public

 

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·

CAUTION! READ BEFORE SIGNING

 

 

 

 

 

 

 

Isonics Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

John Sakys, Chief Financial Officer

 

 

 

 

 

 

 

 

 

STATE OF COLORADO

 

)

 

 

 

 

) ss.

 

 

COUNTY OF JEFFERSON

 

)

 

 

 

 

 

 

 

Subscribed, sworn to, and acknowledged before me by John Sakys, on this
           day of February 2007.

 

 

 

 

 

 

Witness my hand and official seal.

 

 

 

 

 

 

 

 

 

My commission expires:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notary Public

 

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