Exhibit 10.1


CLASS A COMMON STOCK PURCHASE AGREEMENT


This Class A Common Stock Purchase
Agreement (this “Agreement”), dated as of October 26, 2006, is by
and between, SenseIt Corp., a
Delaware corporation (the “Company”), and Isonics
Corporation, a California corporation (the “Purchaser”).  Capitalized terms used in this Agreement and
not otherwise defined shall have the meanings ascribed to such terms in Article
V of this Agreement.


W I T N E S S E T H:


WHEREAS, prior to the Initial Closing Date, the Board
of Directors of the Company (the “Board of Directors”) will create a class of
securities to be known as Class A Common Stock, with a par value of $0.001 per
share (the “Class A Common Stock”), the preferences, limitations and relative
rights of which are set forth in the form of the Certificate of Amendment to
the Certificate of Incorporation of the Corporation attached as Exhibit 4.2(a)
to this Agreement (the “Amended Certificate of Incorporation”);


WHEREAS, subject to the conditions and terms set forth
in this Agreement, on the Initial Closing Date (at such term is defined in
Section 1.6 of this Agreement), the Company will issue and sell to Purchaser
and Purchaser will purchase from the Company 400,000 shares of Class A Common
Stock (each, an “Initial Share”), valued at $10.00 per Initial Share (the “Initial
Shares Purchase Price”), by assigning to the Company all of Purchaser’s rights,
title and interest under the Development and Licensing Agreement, dated as of
September 28, 2005 (the “Original Lucent Agreement”), as amended by an
Amendment effective July 31, 2006 (the “Amendment”) and three additional
amendments effective September 1, September 29, and October 16, 2006 (the “Additional
Amendments”) and, collectively with the Original Lucent Agreement and
Amendment, the “Lucent Agreement”), each between Purchaser and Lucent
Technologies Inc. (“Lucent”), including all expenditures and commitments paid
or incurred by Purchaser on or prior to the Initial Closing Date in connection
with the execution and delivery of, and performance by Purchaser under, the
Lucent Agreement;


WHEREAS, subject to the conditions and terms set
forth in this Agreement, on the Initial Closing Date, the Company also will
issue and sell to Purchaser and Purchaser will purchase from the Company an
additional 25,000 shares of Class A Common Stock (each, an “Additional Initial
Share”), at a purchase price of $10.00 per Additional Initial Share (the “Additional
Initial Shares Purchase Price”), for the aggregate consideration of $250,000, payable
in immediately available funds;


WHEREAS, the Company has agreed that, to the extent
that Lucent agrees to credit amounts greater than $1,000,000 of the $1,333,000
payment contemplated by the first sentence of paragraph 3 of the Amendment
towards amounts due Lucent under the Lucent Agreement, whether credited prior
to or after the Initial Closing Date, it shall issue to Purchaser one
additional share (each, a “Credit Share”) of Class A Common Stock for every
$10.00 in excess of $1,000,000 so credited by Lucent (such amount in excess of
$1,000,000 being the “Credit Amount”);









 



 


WHEREAS, subject to the conditions and terms set
forth in this Agreement, on the Second Installment Closing Date, the Company
will issue and sell to Purchaser and Purchaser will purchase from the Company,
25,000 additional shares of Class A Common Stock (each a “Second Installment
Share”), at a purchase price of $10.00 per Second Installment Share (the “Second
Installment Shares Purchase Price”), for the aggregate consideration of $250,000,
payable in immediately available funds.


WHEREAS, subject to the conditions and terms set
forth in this Agreement, on the Lucent Payment Closing Date, the Company will
issue and sell to Purchaser and Purchaser will purchase from the Company an additional
aggregate 100,000 shares of Class A Common Stock (each a “Lucent Payment Share”),
at a purchase price of $10.00 per Lucent Payment Share (the “Lucent Payment
Shares Purchase Price”), for the aggregate consideration of $1,000,000, payable
in immediately available funds; and


WHEREAS, subject to the conditions and terms set
forth in this Agreement, on the Final Installment Closing Date, the Company
will issue and sell to Purchaser and Purchaser will purchase from the Company,
no later than March 14, 2007, additional shares of Class A Common Stock (each a
“Final Installment Share”) in an amount equal to (a) 50,000 minus (b) the
number of Credit Shares issued prior to the Final Installment Closing Date, at
a purchase price of $10.00 per Final Installment Share (the “Final Installment
Shares Purchase Price”), for the consideration equal to (X) $500,000 minus
(4) the Credit Amount, payable in immediately available funds.


NOW, THEREFORE, in consideration of the premises and
agreements contained in this Agreement, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, THE PARTIES HEREBY AGREE AS FOLLOWS:


ARTICLE I

PURCHASE AND SALE OF THE CLASS A SECURITIES


Section 1.1.           Authorization
of Issuance of Class A Common Stock.  Subject to the terms and
conditions of this Agreement, on or prior to the Initial Closing Date, the
Company shall have authorized the issuance and sale to Purchaser of the Class A
Securities.


Section 1.2.           Purchase
and Sale of the Initial Shares.  Subject to the terms and
conditions of this Agreement, Purchaser agrees to purchase, and the Company
agrees to issue and sell to Purchaser, at a closing (the “Initial Closing”)
held in accordance with Section 1.6, the 400,000 Initial Shares in exchange for
the assignment to the Company by Purchaser of all of Purchaser’s rights, title
and interest under the Lucent Agreement, including all expenditures and
commitments paid or incurred by Purchaser on or prior to the Initial Closing
Date in connection with the execution and delivery of, and performance by
Purchaser under, the Lucent Agreement, such assignment to be evidence by an
Assignment, substantially in the form attached as Exhibit 1.2 to this Agreement
(the “Assignment”).  The consummation of
the purchase and sale of the Class A Initial 



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Shares
as contemplated by this Section 1.2 are conditioned upon the simultaneous
consummation of the purchase and sale of the Additional Initial Shares as
contemplated by Section 1.3 of this Agreement.


Section 1.3.           Purchase
and Sale of the Additional Initial Shares. 
Subject to the terms and conditions of this Agreement, the Purchaser
agrees to purchase at the Initial Closing, and the Company agrees to issue and
sell to Purchaser at the Initial Closing the 25,000 Additional Initial Shares
at a purchase price per Additional Initial Share equal to the Class A
Additional Initial Shares Purchase Price, for an aggregate purchase price of
$250,000, payable in immediately available funds.  The consummation of the purchase and sale of
the Additional Initial Shares as contemplated by this Section 1.3 are
conditioned upon the simultaneous consummation of the purchase and sale of the
Initial Shares as contemplated by Section 1.2 of this Agreement.


Section 1.4.           Purchase
and Sale of the Second Installment Shares. 
Subject to the terms and conditions of this Agreement, Purchaser agrees
to purchase, and the Company agrees to issue and sell to Purchaser, at a
closing (the “Second Installment Closing”) to be held (a) on the earlier of :
(i) the third business day following the date on which Purchaser shall have
received a minimum of $250,000 in gross proceeds from the sale of Purchaser’s
securities pursuant to that certain Securities Purchase Agreement, dated as of
May 30, 2006, between Purchaser and Cornell Capital Partners, L.P., and (ii)
December 31, 2006 (in either case, the “Second Installment Closing Date”) and
(b) in accordance with Section 1.8, 25,000 Second Installment Shares at a
purchase price per Second Installment Share equal to the Second Installment
Shares Purchase Price, or for an aggregate purchase price of $250,000, payable
in immediately available funds. 
Purchaser’s right to purchase from the Company, and the Company’s
obligation to sell and issue to Purchaser, such Second Installment Shares shall
be subject to Purchaser having duly purchased (x) the Initial Shares pursuant
to Section 1.2 and (y) the Additional Initial Shares pursuant to Section 1.3.


Section 1.5.           Purchase
and Sale of the Lucent Payment Shares.  Subject to the terms and
conditions of this Agreement, Purchaser agrees to purchase, and the Company
agrees to issue and sell to Purchaser, at a closing (the “Lucent Payment
Closing”), to be held in accordance with Section 1.9, 100,000 of Lucent Payment
Shares at a purchase price per Lucent Payment Share equal to the Lucent Payment
Shares Purchase Price, or for an aggregate purchase price of $1,000,000 payable
in immediately available funds. 
Purchaser’s right to purchase from the Company, and the Company’s
obligation to sell and issue to Purchaser, such Lucent Payment Shares shall be
subject to Purchaser having duly purchased (x) the Initial Shares pursuant to
Section 1.2, (y) the Additional Initial Shares pursuant to Section 1.3 (z) the
Second Installment Shares pursuant to Section 1.4.


Section 1.6.           Purchase
and Sale of the Final Installment Shares. 
Subject to the terms and conditions of this Agreement, Purchaser agrees
to purchase, and the Company agrees to issue and sell to Purchaser, at a
closing (the “Final Installment Closing”) to be held (a) on March 14, 2007 (the
“Final Installment Closing Date”) and (b) in accordance with Section 1.10,
50,000 Final Installment Shares at a purchase price per Final Installment Share
equal to the Class A Final Installment Shares Purchase Price, or for an
aggregate purchase price of $500,000, payable in immediately available
funds.  Purchaser’s right to 



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purchase
from the Company, and the Company’s obligation to sell and issue to Purchaser,
such Final Installment Shares shall be subject to Purchaser having duly
purchased (w) the Initial Shares pursuant to Section 1.2, (x) the Additional
Initial Shares pursuant to Section 1.3, (y) the Second Intallment Shares
pursuant to Section 1.4  and (z) the Lucent
Payment Shares pursuant to Section 1.5.


Section 1.7.           Initial
Closing.  The Initial Closing of the purchase and sale
of the Initial Shares and Additional Initial Shares shall take place at 10:00
a.m. (local time) at the offices of Davidoff, Malito & Hutcher LLP, located
at 200 Garden City Plaza - Suite 315, Garden City, New York 11530, promptly
upon the satisfaction or waiver of the closing conditions set forth in Sections
4.1, 4.2 and 4.3, or on such other date and at such other time as the Company
and Purchaser mutually agree upon in writing. 
The date on which the Initial Closing shall occur is referred to herein
as the “Initial Closing Date.” At the Initial Closing, the Company shall
deliver to Purchaser certificates for the 400,000 Initial Shares and 25,000
Additional Initial Shares against payment of the (a) Initial Shares Purchase
Price (by delivery of (i) a duly executed Assignment to the Company and (ii) a
consent to the Assignment duly executed by Lucent, which consent shall include
specific consent by Lucent to the assignment of all indemnification rights
granted to Isonics under the Lucent Agreement and be in a form reasonably
satisfactory to the Company and Company’s counsel) and (b) aggregate Additional
Initial Shares Purchase Price, by wire transfer of immediately available funds
to such account as the Company designates. The Initial Closing shall not occur,
and the Company shall have no obligation to make such deliveries, unless
Purchaser purchases and pays for all of the 400,000 Initial Shares and 25,000
Additional Initial Shares.  Purchaser
shall pay any documentary stamp or similar issue or transfer taxes due as a
result of the issuance and sale of the Initial Shares and Additional Initial
Shares.


Section 1.8.           Second
Installment Shares Closing.  Subject to Section 1.4 and satisfaction
of the conditions set forth in Section 4.1 and paragraph 4.3, the Second
Installment Closing of the purchase and sale of the Second Installment Shares
shall take place at 10:00 a.m. (local time) at the offices of Davidoff, Malito
& Hutcher LLP, located at 200 Garden City Plaza - Suite 315, Garden City,
New York 11530, on the Second Installment Closing Date.  At the Second Installment Closing, the
Company shall deliver to Purchaser a certificate for the 25,000 Second
Installment Shares to be sold at the Second Installment Closing against payment
of the aggregate Second Installment Purchase Price, by wire transfer of
immediately available funds to such account as the Company designates.  The Second Installment Closing shall not
occur, and the Company shall have no obligation to make such delivery, unless
Purchaser purchases and pays for all of the 25,000 Second Installment
Shares.  Purchaser shall pay any
documentary stamp or similar issue or transfer taxes due as a result of the
issuance and sale of the Second Installment Shares.


Section 1.9.           Lucent
Payment Shares Closings.  Subject to Section 1.5 and satisfaction of
the conditions set forth in Section 4.1 and paragraph 4.3, the Lucent Payment
Shares Closing of the purchase and sale of the Lucent Payment Shares shall take
place at 10:00 a.m. (local time) at the offices of Davidoff, Malito &
Hutcher LLP, located at 200 Garden City Plaza - Suite 315, Garden City, New
York 11530, on January 11, 2007 (the “Lucent Payment Shares Closing Date”).  At the Lucent Payment Shares 



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Closing,
the Company shall deliver to Purchaser a certificate for the 100,000 Lucent
Payment Shares being purchased at the Lucent Payment Shares Closing against
payment of the aggregate Lucent Payment Shares Purchase Price, by wire transfer
of immediately available funds to such account as the Company designates.  The Lucent Payment Shares Closing shall not
occur, and the Company shall have no obligation to make such delivery, unless
Purchaser purchases and pays for all of the 100,000 Lucent Payment Shares.  Purchaser shall pay any documentary stamp or
similar issue or transfer taxes due as a result of any issuance and sale of
Lucent Payment Shares.


Section 1.10.        Final
Installment Shares Closing.  Subject to Section 1.6 and
satisfaction of the conditions set forth in Section 4.1 and paragraph 4.3, the
Final Installment Closing of the purchase and sale of the Final Installment
Shares shall take place at 10:00 a.m. (local time) at the offices of Davidoff,
Malito & Hutcher LLP, located at 200 Garden City Plaza - Suite 315, Garden
City, New York 11530, on the Final Installment Closing Date.  At the Final Installment Closing, the Company
shall deliver to Purchaser a certificate for the 50,000 Final Installment
Shares to be sold at the Final Installment Closing against payment of the
aggregate Final Installment Purchase Price, by wire transfer of immediately
available funds to such account as the Company designates.  The Final Installment Closing shall not occur,
and the Company shall have no obligation to make such delivery, unless
Purchaser purchases and pays for all of the 50,000 Final Installment
Shares.  Purchaser shall pay any
documentary stamp or similar issue or transfer taxes due as a result of the issuance
and sale of the Final Installment Shares.


Section
1.11         Issuance of the Credit Shares.  Upon
adequate evidence being presented to the Company that Lucent has credited
against amounts due Lucent under the Lucent Agreement such funds as to create a
Credit Amount, the Company shall immediately issue to Purchaser such number of
Credit Shares as shall equal the quotient resulting from dividing (a) such
Credit Amount by (b) $10.00, and cause to be delivered to Purchaser as soon as
reasonably possible a certificate evidencing such Credit Shares.  The Credit Shares so issued shall be deemed
issued as of the date on which Lucent shall have credited the funds so as to
create such Credit Amount, regardless of the date of delivery of the evidence
of such credit.


ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY


The
Company hereby represents and warrants to Purchaser the following, except as
set forth on the Disclosure Schedule, which Disclosure Schedule shall be deemed
to be part of the representations and warranties as if made under this Article
II:


Section 2.1.           Organization
and Qualification.  The Company is duly organized, validly
existing and in good standing under the laws of Delaware and has the requisite
power and authority to own, lease and operate its assets, properties and
business and to carry on its business as it is now being conducted or proposed
to be conducted.  The Company is duly
qualified as a foreign corporation to transact business, and is in good
standing, in each jurisdiction where it owns or leases real property or
maintains 



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employees
or where the nature of its activities make such qualification necessary, except
where such failure to qualify would not have a Material Adverse Effect.


Section 2.2.           Certificate
of Incorporation and Bylaws.  The Company has delivered to
the Purchasers true, correct, and complete copies of the Company’s certificate
of incorporation as in effect on the date hereof (the “Existing Certificate”)
and the Company’s bylaws as in effect on the date hereof (the “Existing Bylaws”).


Section 2.3.           Corporate
Power and Authority.  The Company has all requisite corporate power
and authority to execute and deliver this Agreement, issue and sell the 300,000
Initial Shares, 25,000 Additional Initial Shares, 25,000 Second Installment
Shares, 200,000 Lucent Payment Shares and 50,000 Final Installment Shares
(collectively, the “Class A Securities”) to Purchaser pursuant to this
Agreement (assuming the filing of the Amended Certificate of Incorporation),
and carry out and perform its obligations under the terms of this Agreement.


Section 2.4.           Capitalization.


(a)           Immediately prior to
the date of this Agreement, the authorized capital stock of the Company
consists of 100 shares all of which are designated as common stock, par value
$.001 per share, of which 100 shares are issued and outstanding and owned of
record by Christopher Toffales (“Toffales”).


(b)           Upon the filing of
the Amended Certificate of Incorporation, the authorized capital stock of the
Company shall consist of 50,000,000 shares, each of a par value of $.001 per
share, of which (i) 29,000,000 shares shall be designated as Common Stock, (ii)
20,000,000 shares shall be designated as Class A Common Stock, (iii) 100 shares
shall be designated as Class B Common Stock and (iv) 999,900 shares shall be
designated as Preferred Stock, of which only 100 shares of Common Stock shall
be issued and outstanding and which shall be, at the Initial Closing, exchanged
for Class B Common Stock pursuant to the terms of the Stock Exchange Agreement,
dated of even date with this Agreement (the “Stock Exchange Agreement”),
between Toffales and the Company, substantially in the form attached as Exhibit
4.2(b)(iii) to this Agreement.  As of the
date of this Agreement, all issued and outstanding shares of the Company’s
capital stock are duly authorized and validly issued, are fully paid and
non-assessable and are owned of record by Toffales.  There are no options, warrants, conversion
privileges, or preemptive or other rights or agreements presently outstanding
to purchase or otherwise acquire from the Company any shares of the capital
stock or other securities of the Company, except pursuant to the Stock Exchange
Agreement and this Agreement.  The
Company is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise to acquire or retire any shares of its capital stock,
except as provided in the Stock Exchange Agreement.  The Company has never declared or paid any
dividend or made any other distribution of cash, stock or other property to its
stockholders.  The Company has no
subsidiaries.  No stock plan, stock
purchase, stock option or other agreement or understanding between the Company
and any holder of any equity securities or rights to purchase equity securities
provides for acceleration or other changes in the vesting provisions or other
terms of such agreement or understanding 



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(including
any reduction in the exercise price of any option, warrant or similar security)
as the result of any merger, consolidation or sale of stock.


Section 2.5.           Authorization.  The
execution, delivery and performance by the Company of this Agreement, and the
sale, issuance and delivery of the Class A Securities and the performance of
all of the obligations of the Company under this Agreement have been duly
authorized by the Board of Directors, and, other than (a) shareholder approval
required with respect to the Amended Certificate of Incorporation and (b) the
filing of the Amended Certificate of Incorporation with the Secretary of State
of the State of Delaware (the “Delaware Secretary of State”), no other
corporate action on the part of the Company and no other corporate or other
approval or authorization is required on the part of the Company or otherwise
in order to make this Agreement and the sale and issuance of the Securities the
valid, binding and enforceable obligations (subject to (i) laws of general
application relating to bankruptcy, insolvency, and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief, or other
equitable remedies) of the Company.


Section 2.6.           Title
to Properties and Assets.  The Company does not currently
own any real property and has never owned any real property.  The Company has good and marketable title to
or has, or will have, concurrently with the execution of this Agreement, a
valid leasehold interest in, or license to use, all of the property or assets
used by it or located on its premises and necessary for the conduct of business
as presently conducted, free and clear of all liens, other than as set forth on
Section 2.6 of the Disclosure Schedule (the “Permitted Liens”), which together
do not have a Material Adverse Effect.


Section 2.7.           Permits;
Compliance with Applicable Law.  The Company has all material
franchises, permits, licenses, authorizations, approvals, registrations and any
similar authority (“Permits”) necessary for the conduct of its business as now
being conducted by it and believes it can obtain any similar authority for the
conduct of its business as currently planned by the Company to be conducted.  The Company is not in violation in any
material respect of, or default in any material respect under, any such
Permits.  All such Permits are in full
force and effect, and to the Company’s knowledge, no violations in any material
respect have been recorded in respect of any such Permits; no proceeding is
pending or, to the Company’s knowledge, threatened to revoke or limit any such
Permit; and no such Permit will be suspended, cancelled or adversely modified
as a result of the execution and delivery of this Agreement and the Class A
Securities.  The Company is in compliance
in all respects with all applicable laws, except where the failure to so comply
would not have a Material Adverse Effect.


Section 2.8.           Absence
of Conflicts.  The Company is not in violation of or default
under any provision of its Existing Certificate or Existing Bylaws.  Except as set forth in Section 2.8 of the
Disclosure Schedule, the execution, delivery, and performance of, and
compliance with this Agreement and the consummation of the transactions
contemplated by this Agreement, have not and will not:


(a)           violate, conflict
with or result in a breach of any provision of or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a 



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default)
under, or result in the termination of, or accelerate the performance required
by, or result in the creation of any Lien (other than a Permitted Lien) upon
any of the assets, properties or business of the Company under, any of the
terms, conditions or provisions of the Existing Certificate, as amended by the
Amended Certificate of Incorporation, or the Existing Bylaws or any agreement
to which the Company is a party, or


(b)           violate any
judgment, ruling, order, writ, injunction, award, decree, or any Law or regulation
of any court or federal, state, county or local government or any other
governmental, regulatory or administrative agency or authority which is
applicable to the Company or any of its assets, properties or businesses, which
violation would have a Material Adverse Effect.


Section 2.9            Litigation.  There
is no action, claim, litigation, tax or compliance audit, suit or proceeding,
regulatory or administrative enforcement action or governmental inquiry or
investigation (including, without limitation, a defective pricing investigation
or claim or other proceeding in connection with the Company’s contracts),
pending, or, to the Company’s knowledge, any threat thereof, against the
Company or any of its officers or directors or the assets of the Company.  To the Company’s Knowledge, there is no
reason to believe that any of the foregoing may occur which, in the aggregate,
would have a Material Adverse Effect. 
The Company is not subject to any outstanding judgment, order or decree
directed against the Company or any officer or director of the Company.  There is no action, suit, proceeding or
investigation into the possibility thereof by the Company currently pending or
that the Company presently intends to initiate against a third party.


Section 2.10.        Consents.  No
consent, approval, waiver or authorization, or designation, declaration,
notification, or filing with any person or entity (governmental or private), on
the part of the Company is required in connection with the valid execution,
delivery and performance of this Agreement, the offer, sale or issuance of the
Class A Securities or the consummation of any other transaction contemplated by
this Agreement (other than such notifications or filings required under
applicable federal or state securities laws, if any), except for such consents,
approvals, waivers, authorizations, designations, declarations, notifications,
or filings that will be received prior to or as of the Initial Closing Date.


Section 2.11.        Brokers
or Finders.  The Company has not incurred, or will not
incur, directly or indirectly, as a result of any action taken by the Company,
any liability for brokerage or finders’ fees or agents’ commissions or any
similar charges in connection with this Agreement or the issuance of the Class
A Securities or any of the transactions contemplated by this Agreement.  The Company agrees to indemnify and hold
harmless Purchaser from any liability for any commission or compensation in the
nature of a finder’s fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.


Section 2.12.        Offering
Exemption.  Assuming the truth and accuracy of the
representations and warranties contained in Article III, the offer and sale of
the Class A Securities as contemplated by this Agreement and the issuance and
delivery to the


 



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Purchasers
of the Class A Securities, are exempt from registration under the Securities
Act.


Section 2.13.        Offering
of the Class A Securities.  No form of general solicitation
or general advertising was used by the Company or any of its agents or representatives
in connection with the offer and sale of the Class A Securities.  Neither the Company nor, to the Company’s
knowledge, any agent acting on the Company’s behalf has, directly or
indirectly, offered the Class A Securities for sale to or solicited any offers
to buy the Class A Securities from, or otherwise approached or negotiated with
respect thereto with any other potential purchaser.


Section 2.14.        Existing
Registration Rights.  The Company has not granted or agreed to
grant rights, including piggyback rights, to require the registration of the
Company’s equity securities under the Securities Act to any person or entity.


ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER


Purchaser hereby represents
and warrants to the Company the following, except as set forth on the
Disclosure Schedule, which Disclosure Schedule shall be deemed to be part of
the representations and warranties as if made under this Article III:


Section 3.1.           Organization
and Qualification.  Purchaser is duly organized, validly existing
and in good standing under the laws of the State of California and has the
requisite power and authority to own, lease and operate its assets, properties
and business and to carry on its business as it is now being conducted or
proposed to be conducted.


Section 3.2.           Power
and Authority.  Purchaser has all requisite corporate power
and authority to execute and deliver this Agreement, purchase the Class A
Securities from the Corporation pursuant to this Agreement (assuming the filing
of the Amended Certificate of Incorporation), and carry out and perform its
obligations under the terms of this Agreement (including the assignment of the
Lucent Agreement upon the consent of Lucent).


Section 3.3.           Authorization.  The
execution, delivery and performance by Purchaser of this Agreement, and the
purchase of the Class A Securities and the performance of all of the
obligations of Purchaser under this Agreement, including the assignment of the
Lucent Agreement, have been duly authorized by the Board of Directors of
Purchaser, and no other corporate or other approval or authorization is
required on the part of Purchaser or otherwise in order to make this Agreement
and the purchase of the Class A Securities the valid, binding and enforceable
obligations (subject to (a) laws of general application relating to bankruptcy,
insolvency, and the relief of debtors, and (b) rules of law governing specific
performance, injunctive relief, or other equitable remedies) of Purchaser.


Section 3.4.           Purchase
Entirely for Own Account.  The Class A Securities will be
acquired for investment for Purchaser’s own account, not as a nominee or agent,
and not 



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with
a view to the resale or distribution of any part thereof.  Purchaser’s principal office is located in
the State of Colorado for purposes of state securities laws.  Purchaser is aware that the Company is
issuing the Class A Securities pursuant to Section 4(2) of the Securities Act
and Regulation D promulgated under the Securities Act, without complying with
the registration provisions of the Securities Act or other applicable federal
or state securities laws.  Purchaser also
is aware that the Company is relying upon, among other things, the
representations and warranties of Purchaser contained in this Agreement for
purposes of complying with Regulation D and state securities laws.


Section 3.5.           Disclosure
of Information.  Purchaser has received and carefully reviewed
all the information it considers necessary or appropriate for deciding whether
to purchase the Class A Securities.  Purchaser
further represents that the Company has made available to Purchaser, at a
reasonable time prior to the date of this Agreement, an opportunity to (a) ask
questions of, and receive answers from, the Company regarding the terms and
conditions of the offering of the Class A Securities and the business,
properties and financial condition of the Company, all of which questions (if
any) have been answered to the reasonable satisfaction of Purchaser, and (b)
obtain additional information, all of which was furnished by the Company to the
reasonable satisfaction of Purchaser.


Section 3.6.           Investment
Experience.  Purchaser acknowledges that it is able to
fend for itself, can bear the economic risk of its investment, and has, through
its officers and directors, such knowledge and experience in investing in
companies similar to the Company and in financial or business matters such that
it is capable of evaluating the merits and risks of the investment in the Class
A Securities.  Purchaser has made the
determination to enter into this Agreement and the other agreements
contemplated by this Agreement and to acquire the Class A Securities based upon
its own independent evaluation and assessment of the value of the Company and
its present and prospective business prospects.


Section 3.7.           Accredited
Investor.  Purchaser is an “accredited investor” within
the meaning of SEC Rule 501 of Regulation D, as presently in effect.


Section 3.8.           Restricted
Securities; Legends.  Purchaser recognizes that the Class A
Securities will not be registered under the Securities Act or other applicable
federal or state securities laws. Purchaser understands that the Class A
Securities are characterized as “restricted securities” under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering. 
In addition to transfer restrictions contained in other agreements to
which Purchaser is a party, Purchaser acknowledges that it may not sell or
transfer any of the Class A Securities unless such Class A Securities are
registered under the Securities Act and under any other applicable securities
laws and that certificates evidencing the Class A Securities will bear the
following legend or similar legend:


“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY BE OFFERED AND SOLD
ONLY IF SO REGISTERED OR IF 



 10
 






 



 


AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH EXEMPTION IS AVAILABLE.”


Section 3.9.           No
General Solicitation.  Purchaser acknowledges that the Class A
Securities were not offered to Purchaser by means of: (a) any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar medium, or broadcast over television or radio, or (b) any other form of
general solicitation or advertising.


Section 3.10.        Absence
of Conflicts.  Purchaser’s execution, delivery, and
performance of, and compliance with, this Agreement and the consummation of the
transactions contemplated by this Agreement have not and will not:


(a)                                  violate, conflict with or result in a breach
of any provision of or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any lien upon any of the assets, properties or business of
Purchaser under, any of the terms, conditions or provisions of (i) its
certificate of incorporation or (ii) any material contract to which it is a
party, except to the extent that Purchaser’s obligations under the Lucent
Agreement require Lucent’s consent as a condition to the effectiveness of any
assignment, which consent has not been obtained as of the date of this
Agreement; or


(b)                                 violate any judgment, ruling, order, writ,
injunction, award, decree, or any law or regulation of any court or federal,
state, county or local government or any other governmental, regulatory or
administrative agency or authority which is applicable to Purchaser or any of
its assets, properties or businesses, which violation would have a material
adverse effect on Purchaser.


Section 3.11.        Brokers
or Finders.  Purchaser has not incurred, nor will it
incur, directly or indirectly, as a result of any action taken by Purchaser,
any liability for brokerage or finders’ fees or agents’ commissions or any
similar charges in connection with this Agreement or the issuance of the Class
A Securities or any of the transactions contemplated by this Agreement.  Purchaser agrees to indemnify and hold
harmless the Company from any liability for any commission or compensation in
the nature of a finders’ fee (and the costs and expenses of defending against
such liability or asserted liability) for which Purchaser, or any of its
respective officers, employees or representatives is responsible.


Section 3.12.        Rights
in the Lucent Agreement.


(a)                                  Except to the extent that Purchaser’s
obligations under the Lucent Agreement require Lucent’s consent as a condition
to the effectiveness of any assignment, which consent has not been obtained as
of the date of this Agreement:


(i)            the
Lucent Agreement is valid, binding and enforceable in accordance with its
terms;



 11
 






 



 


(ii)                                  Purchaser has fulfilled, or taken all action
necessary to enable it to fulfill when due, all of its obligations under the
Lucent Agreement;


(iii)                               all parties to the Lucent Agreement have
complied in all material respects with the provisions of the Lucent Agreement;


(iv)                              no party is in default, or has received
notice of default, under the Lucent Agreement;


(v)                                 no event has occurred that, but for the
passage of time or the giving of notice or both, would constitute a default
under the Lucent Agreement;


(vi)                              Purchaser has neither given nor received any
notice of cancellation or termination under the Lucent Agreement;


(vii)                           to Purchaser’s knowledge, there are no
provisions of, or developments materially affecting, the Lucent Agreement that
are likely to prevent the Company from realizing the benefits of the Lucent
Agreement following its Assignment to the Company by Purchaser; and


(viii)                        Purchaser has made payments to Lucent
aggregating to $4,333,000 pursuant to the Lucent Agreement, including timely
payment of the $1,333,000 fee contemplated by the first sentence of paragraph 3
of the Amendment.


(b)                                 Purchaser has not granted to any third party
any rights, title or interest in or to the Lucent Agreement, except pursuant to
this Agreement and the other agreements being entered into between Purchaser
and the Company as contemplated by this Agreement.


ARTICLE IV

CONDITIONS OF THE PARTIES


Section 4.1.           Conditions
of Purchaser’s Obligations at any Closing.  The
obligations of Purchaser under Article I of this Agreement are subject to the
satisfaction by the Company on or before any closing (each, a “Closing”) of a
sale and purchase of any of the Class A Securities of each of the following
conditions:


(a)                                  Representations and Warranties.  The
representations and warranties of the Company contained in Article II shall be
true and correct on and as of the date of such Closing with the same force and
effect as though such representations and warranties had been made on and as of
the date of such Closing, except as a result of events and changes thereto that
do not result in a Material Adverse Effect; provided, however,
that, where such representation is made as of a specific date, it shall be true
and correct as of such date.


(b)                                 Performance.  The Company shall have
performed and complied with all conditions contained in this Agreement that are
required to be performed or complied with by it on or before such Closing.


(c)                                  No Material Adverse Effect; Compliance
Certificate.  No Material Adverse Effect shall have
occurred between the date of this Agreement and the Closing Date for such
Closing, and the President of the Company shall deliver to Purchaser at each 



 12
 






 



 


Closing a certificate
stating that the conditions specified in paragraphs 4.1(a) and (b) have been
fulfilled.


(d)                                 Consents and Approvals.  All
authorizations, approvals, permits, or consents, if any, of any governmental
authority or regulatory body of the United States or of any state or any
creditor of the Company or any other Person that are required in connection
with the lawful issuance and sale of the Class A Securities pursuant to this
Agreement shall be duly obtained and effective as of each such Closing and the
purchase and payment of the Class A Securities to be purchased by Purchaser at
such Closing on the terms and conditions as provided in this Agreement shall
not violate any applicable Law.


(e)                                  Certificates.  The
Company shall deliver to Purchaser one or more certificates representing the
Class A Shares that are being issued and sold to Purchaser on such Closing
Date.


(f)                                    Good Standing; Qualification to do Business.  The
Company shall have delivered to Purchaser a certificate of good standing from
the Delaware Secretary of State and from the appropriate governmental authority
of each jurisdiction in which the Company is qualified to do business, each
dated as of a date no earlier than five business days prior to such Closing
Date.


(g)                                 Cross-Receipts of Purchaser.  The
Company and Purchaser shall have executed and delivered a cross-receipt
acknowledging the Company’s delivery to Purchaser of the certificates
representing the Class A Securities issued and sold to Purchaser at such
Closing and Purchaser’s payment for such Class A Securities.


(h)                                 Disclosure Schedule.  The
Company shall have delivered to Purchaser a revised Disclosure Schedule
accurately reflecting any additional information required to be provided to
Purchaser pursuant to this Agreement between the date of this Agreement and
such Closing Date.


Section 4.2.           Conditions
of Purchaser’s Obligations at the Initial Closing.  In
addition to the conditions set forth in Section 4.1, the obligations of
Purchaser under Section 1.2 of this Agreement are subject to the satisfaction
by the Company on the Initial Closing Date of each of the following conditions:


(a)                                  Filing of the Amended Certificate of
Incorporation.  The Company shall have filed with the
Delaware Secretary of State, and the Delaware Secretary of State shall have
accepted for filing, the Amended Certificate of Incorporation substantially in
the form attached as Exhibit 4.2(a) to this Agreement.


(b)                                 Stockholders’ Agreement, Amended and Restated
Employment Agreement and Stock Exchange Agreement.  The
Company and all other parties other than Purchaser shall have executed (i) a
Stockholders’ Agreement, substantially in the form attached as Exhibit
4.2(b)(i) to this Agreement (the “Stockholders’ Agreement”), (ii) an Amended
and Restated Employment Agreement, substantially in the form attached as
Exhibit 4.2(b)(ii) to this Agreement (the 



 13
 






 



 


“Employment Agreement”) and
(iii) the Stock Exchange Agreement, substantially in the form attached as
Exhibit 4.2(b)(iii) to this Agreement.


(c)                                  Election of Directors.  The
Company shall have taken all necessary corporate action to effect the election
of Purchaser’s designee as the Class A Director (as provided in the
Stockholders’ Agreement), to take office immediately following the Initial
Closing, at which time there will be no more than two members of the Board of
Directors.


(d)                                 Lucent Execution of New Statement of Work. 
Lucent shall have agreed to, and shall have executed and delivered to
Purchaser, a new statement of work as contemplated by the Amendment, the form
and terms of which shall be acceptable to each of Purchaser and the Company,
each in its respective sole discretion.


Section 4.3.           Conditions
of Company’s Obligations at any Closing.  The
obligations of the Company to consummate the transactions contemplated by this
Agreement are subject to the satisfaction by Purchaser on or before any such
Closing of each of the following conditions:


(a)                                  Representations and Warranties.  The
representations and warranties of Purchaser contained in Article III shall be
true and correct in all material respects on and as of the date of such Closing
with the same force and effect as though such representations and warranties
had been made on and as of the date of such Closing; provided, however,
that representations and warranties that contain a materiality qualification
shall be true and correct in all respects.


(b)                                 Performance.  Purchaser shall have performed
and complied with all conditions contained in this Agreement that are required
to be performed or complied with by it on or before such Closing.


(c)                                  Consents and Approvals.  All
authorizations, approvals, or permits, if any, of any governmental authority or
regulatory body of the United States or of any state or any other Person that
are required in connection with the lawful issuance and sale of the Class A
Securities pursuant to this Agreement shall be duly obtained and effective as
of such Closing and the purchase and payment of the Class A Securities to be
purchased by the Purchasers at such Closing on the terms and conditions as
provided in this Agreement shall not violate any applicable Law.


(d)                                 Cross-Receipts of the Purchasers.  The
Company and Purchaser shall have executed and delivered a cross-receipt
acknowledging the Company’s delivery to Purchaser of the certificates
representing the Class A Securities issued and sold to Purchaser at such
Closing and Purchaser’s payment for such Class A Securities.


(e)                                  Purchase Price. 
Purchaser shall have delivered to the Company the applicable Class A
Purchased Share Purchase Price for the Class A Securities being purchased on
such Closing Date as provided in Sections 1.6, 1.7 or 1.8, as applicable,
including, with respect to the Initial Closing only, (i) the delivery to the
Company of the duly executed Assignment and consent to the Assignment 



 14
 






 



 


duly executed by Lucent as
contemplated by Section 1.6 and (ii) evidence that Purchaser has paid to Lucent
the $1,333,000 fee contemplated by the first sentence of paragraph 3 of the
Agreement.


(f)                                    Lucent Agreement in Full Force and Effect.  The
Lucent Agreement shall be in full force and effect.


(g)                                 Compliance Certificate.   
The President of Purchaser shall deliver to the Company at each Closing
a certificate stating that the conditions specified in paragraphs 4.3(a) and
4.3(b) have been fulfilled.


ARTICLE V

CERTAIN DEFINITIONS


For the purposes of this
Agreement the following terms will have the following meanings:


“Affiliate” shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and executive officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation for the purposes of this definition if such Person possesses,
directly or indirectly, the power (i) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such corporation
or (ii) to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.


“Agreement” shall have the meaning ascribed to it in the preliminary
paragraph.


“Amended Certificate of Incorporation” shall have the meaning ascribed
to it in the recitals and shall be substantially in the form attached as
Exhibit 4.2(a).


“Amendment” shall have the meaning ascribed to it in the recitals.


“Business Day” shall mean any day other than a Saturday, Sunday, public
holiday under the laws of the State of New York or any other day on which
banking institutions are authorized to close in New York City.


“Additional Initial Shares” shall have the meaning ascribed to it in
the recitals.


“Additional Initial Shares Purchase Price” shall have the meaning
ascribed to it in the recitals.


“Class A Common Stock” shall have the meaning ascribed to it in the
recitals.


“Class A Purchased Shares Purchase Price” shall mean the Class A
Initial Shares Purchase Price, Class A Additional Initial Shares Purchase
Price, Class A Lucent 



 15
 






 



 


Payment
Shares Purchase Price and/or Class A Final Installment Purchase Price, as
applicable.


“Class A Securities” shall have the meaning ascribed to it in Section
2.3.


“Closing” shall mean each of the Initial Closing and any Subsequent
Closing.


“Closing Date” shall mean each of the Initial Closing Date and any
Subsequent Closing Date.


“Company” shall have the meaning ascribed to it in the preliminary
paragraph.


“Common Stock” shall have the meaning ascribed to it in the recitals.


“Credit Amount” shall have the meaning ascribed to it in the recitals.


“Credit Share” shall have the meaning ascribed to it in the recitals.


“Employment Agreement” shall have the meaning ascribed to it in Section
4.2(b)(ii) and shall be substantially in the form attached as Exhibit
4.2(b)(ii).


“Final Installment Closing Date” shall have the meaning ascribed to it
in Section 1.8.


“Final Installment Purchase Price” shall have the meaning ascribed to
it in the recitals.


“Final Installment Shares” shall have the meaning ascribed to it in the
recitals.


“Government” shall mean the government of the United States of America,
its agencies and instrumentalities.


“Governmental Approval” shall mean any approval, order, consent,
waiver, authorization, certificate, license, permit or validation of, or
exemption or other action by, or filing, recording or registration with, or
notice to, any Governmental Authority.


“Governmental Authority” shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.


“Hereof,” “hereto,” “hereunder” and similar terms shall refer to this
Agreement as a whole and not to any particular paragraph or provision of this
Agreement.


“Initial Closing” shall have the meaning ascribed to it in Section 1.6.


“Initial Closing Date” shall have the meaning ascribed to it in Section
1.6.


 



 16














 


 


“Initial Shares” shall have the meaning ascribed to it in the recitals.


“Initial Shares Purchase Price” shall have the meaning ascribed to it
in the recitals.


“Knowledge” shall mean with respect to the Company, the knowledge,
without investigation, of the directors, officers and senior management of the
Company and of the person or persons in such entity with responsibility for the
matter with respect to which the knowledge is applicable.


“Law” shall mean the Company’s certificate of incorporation, as amended,
the By-laws and any foreign, federal, state or local law, statute, rule,
regulation, ordinance, code, directive, writ, injunction, decree, judgment or
order applicable to the Company.


“Lien” shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, including any conditional sale or title retention arrangement, and
any assignment, deposit arrangement or lease intended as, or having the effect
of, security.


“Lucent Agreement” shall have the meaning ascribed to it in the
recitals.


“Lucent Payment Shares” shall have the meaning ascribed to it in the
recitals.


“Lucent Payment Shares Purchase Price” shall have the meaning ascribed
to it in the recitals.


“Material Adverse Effect” shall mean an effect which is materially
adverse to the business, assets, properties, operations, results of operations
or condition (financial or otherwise) of the Company taken as a whole
(excluding general economic conditions or acts of war or terrorism).


“Original Lucent Agreement” shall have the meaning ascribed to it in
the recitals.


“Permits” shall have the meaning ascribed to it in Section 2.7.


“Permitted Liens” shall have the meaning ascribed to it in Section 2.6.


“Person” shall mean an individual, corporation, limited liability
company, partnership, trust, incorporated or unincorporated organization, joint
venture, joint stock company, or a government or any agency or political
subdivision thereof or other entity of any kind.


“Proprietary Rights” shall have the meaning ascribed to it in Section
2.9.


“Purchaser” shall have the meaning ascribed to it in the preliminary
paragraph.


“Second Installment Closing” shall have the
meaning ascribed to it in Section 1.4.



 17
 






 



 


“Second Installment Closing Date” shall have the
meaning ascribed to it in Section 1.4.


“Second Installment Shares” shall have the
meaning ascribed to it in the recitals.


“Second Installment Shares Purchase Price” shall
have the meaning ascribed to it in the recitals.


“Securities Act” shall have the meaning ascribed to it in Section 2.10.


“Stock Exchange Agreement” shall have the meaning ascribed to it in
Section 4.2(b)(iii) and shall be substantially in the form attached as Exhibit
4.2(b)(iii).


“Stockholders’ Agreement” shall have the meaning ascribed to it in
Section 4.2(b)(i) and shall be substantially in the form attached as Exhibit
4.2(b)(i).


“Subsequent Closing” shall mean each Initial Closing, Lucent Payment
Shares Closing, and Final Installment Closing.


“Subsequent Closing Date” shall mean each Initial Closing Date, Lucent
Payment Shares Closing Date and/or Final Installment Closing Date.


“Securities Act” shall have the meaning ascribed to it in Section 2.13.


ARTICLE VI

INDEMNIFICATION


Section
6.1            Indemnification by
Purchaser, Generally.  Purchaser shall indemnify the Company and
each director, officer, employee, agent or permitted assign of the Company
(collectively with the Company, the “Company Indemnities”) against and agree to
hold the Company Indemnities harmless from any and all damage, loss, liability
and expense (including reasonable attorneys’ fees and expenses of investigation
in connection with any action, suit or proceeding), incurred or suffered by the
Company Indemnities, arising out of or resulting from:


(a)           any breach of any
representation or warranty, or any breach, non-fulfillment or default in the
performance of any covenant or agreement, made by Purchaser in this Agreement;
and


(b)           the enforcement of
the Company’s rights under this Article VI.


Section
6.2            Indemnification by the
Company.  The Company shall indemnify Purchaser and
each director, officer, employee, agent or permitted assign of Purchaser
(collectively with Purchaser, the “Purchaser Indemnities”) against and agree to
hold Purchaser Indemnities harmless from any and all damage, loss, liability
and expense (including reasonable attorneys’ fees and expenses of investigation
in connection with 



 18
 






 



 


any
action, suit or proceeding), incurred or suffered by Purchaser Indemnities,
arising out of or resulting from:


(a)           any breach of any
representation or warranty, or any breach, non-fulfillment or default in the
performance of any covenant or agreement, made by the Company in this
Agreement; and


(b)           the enforcement of
Purchaser’s rights under this Article VI.


Section 6.3            Infringement
and Other Third Party Claims.


(a)           In
addition to the indemnification provided in Section 6.1, Purchaser shall, at
Purchaser’s expense, defend or settle, at Purchaser’s option, any claim or suit
(each, an “Infringement Claim or Suit”) brought by any third party against the
Company alleging that a Licensee Licensed Product (as such term is defined in
the Lucent Agreement) infringes any valid United States patent, and pay all
damages and costs (including, but not limited to, reasonable attorney’s fees
and expenses) that by final judgment may be assessed against the Company due to
such infringement, as well as all costs relating to defending against and/or
settling the Infringement Claim or Suit. 
During the pendency of any such Infringement Claim or Suit, Purchaser
shall keep the Company reasonably informed of the status of such Infringement
Claim or Suit.


(b)           Purchaser’s
obligation under this Section 6.3 with respect to any Infringement Claim or
Suit, is expressly conditioned upon:


(i)            Purchaser being
promptly notified of the Infringement Claim or Suit;


(ii)           Purchaser (together
with Lucent) having sole control of the defense or settlement of the
Infringement Claim or Suit, provided that such defense or settlement creates or
results in no additional material liabilities or obligations on the part of the
Company; provided, however, that the Company shall have the right
to participate, at the Company’s own expense, with respect to the Infringement
Claim or Suit;


(iii)          the Company
cooperating with Purchaser (and Lucent, if required under the Lucent Agreement)
as may be reasonably requested by Purchaser, to facilitate the settlement or
defense of the Infringement Claim or Suit; and


(iv)          that the
Infringement Claim or Suit does not arise from a Company-directed modification
of a Licensee Licensed Product, any use of a Licensed Product (as such term is
defined in the Lucent Agreement) not contemplated by the Lucent Agreement or
from combinations of a Licensee Licensed Product with other products provided
by the Company or by third parties other than Isonics.


Notwithstanding
the provisions of clause (i) of this paragraph 6.3(b), no failure or delay in
giving Notice of an Infringement Claim or Suit shall affect the obligation of
Purchaser under this Article VI unless such failure materially and adversely
prejudices Purchaser.


(c)           In the event that
Purchaser fails to accept the defense of any Infringement Claim or Suit as
provided in this Section 6.3, the Company shall have the full right to defend
against the Infringement Claim or Suit, and shall be entitled to settle or
agree to pay in full the Infringement Claim or Suit, in the Company’s sole
discretion, and all costs 



 19
 






 



 


and
expenses relating thereto (including, but not limited to, legal fees and expenses)
shall be borne by Purchaser. 
Notwithstanding the immediately preceding sentence, no Infringement
Claim or Suit shall be settled without the prior written consent of Purchaser
(and Lucent, if required under the Lucent Agreement), which consent may not be
unreasonably withheld, and the Company, in the defense of any Infringement
Claim or Suit, shall not, except with the consent of Purchaser, consent to the
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Infringement Claim or Suit a release from all liability with respect to such
Infringement Claim or Suit.


(d)           Notwithstanding
anything to the contrary contained in this Section 6.3, if a firm, written
offer is made to settle in full any Infringement Claim or Suit and Purchaser
proposes to accept such settlement and the Company refuses to consent to such
settlement (which consent shall not be unreasonably withheld), then: (i)
Purchaser shall pay such amount to the Company, (ii) Purchaser shall be excused
from, and the Company shall be solely responsible for, all further defense of
such Infringement Claim or Suit and (iii) the maximum liability of Purchaser
relating to such Infringement Claim or Suit shall be the amount of the proposed
settlement and Purchaser’s costs and expenses incurred in connection with such
Infringement Claim or Suit through the date of settlement; and, as a result,
the Company shall reimburse Purchaser for any additional costs of defense which
Purchaser subsequently incurs with respect to such Infringement Claim or Suit
and all additional costs of settlement or judgment.


ARTICLE VII

LUCENT AGREEMENT CONFIDENTIAL TERMS


The Company acknowledges that certain terms and provisions of the
Lucent Agreement have not been publicly disclosed and that Purchaser, in
complying with its disclosure and reporting obligations under the Securities
Exchange Act of 1934, as amended, requested of, and was granted by, the
Securities and Exchange Commission (the “SEC”) confidential treatment with
respect to such terms and provisions (collectively, the “Confidential Terms”)
when filing the Lucent Agreement as Exhibit 10.1 to the Current Report on Form
8-K (Date of Report: December 5, 2005) of Isonics, filed with the SEC on March
31, 2006, and that Purchaser covenanted to the SEC not to disclose the
Confidential Terms.  Accordingly, upon
the assignment of the Lucent Agreement from Purchaser to the Company as
contemplated by this Agreement and at all times thereafter, the Company shall
not divulge or communicate to any person or entity nor shall the Company direct
any officer, director, employee, representative, consultant or agent of the
Company to divulge or communicate to any person or entity, any of the Confidential
Terms, except (a) to officers, directors, employees, representatives,
consultants or agents of the Company (including the Company’s accountants,
attorneys and financial advisers) with a need to be advised of the Confidential
Terms in order to reasonably perform their duties and services on behalf of the
Company and (b) in compliance with applicable law.  In addition, upon the assignment of the
Lucent Agreement from Purchaser to the Company as contemplated by this
Agreement and at all times thereafter, the Company shall (x) label the Lucent
Agreement “Confidential” and (y) restrict access to the Confidential Terms to
only those officers, directors, employees, 



 20
 






 



 


representatives,
consultants or agents of the Company (including the Company’s accountants,
attorneys and financial advisers) with a need to be advised of the Confidential
Terms in order to reasonably perform their duties and services on behalf of the
Company.


ARTICLE
VIII

MISCELLANEOUS


Section 8.1.          
Survival of Representations and Warranties.  The
representations and warranties of the Company and Purchaser contained in or
made pursuant to this Agreement shall survive the execution and delivery of
this Agreement (a) in connection with the Initial Closing, until the date that
is three months following the end of the fiscal year of the Company next ending
after the Initial Closing Date and (b) in connection with any Subsequent
Closing, until eighteen months after any such Subsequent Closing Date, but in
no event earlier than the time period set forth in clause (a) above.


Section 8.2.           Successors
and Assigns.  Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.


Section 8.3            Governing
Law.  The construction, validity and interpretation
of this Agreement will be governed by and construed in accordance with the laws
of the State of Delaware, without regard to principles of conflicts of law.


Section 8.4.           Counterparts;
Facsimile Signatures.  This Agreement may
be executed in separate counterparts each of which will be an original and all
of which taken together will constitute one and the same agreement.  Any signature page delivered by a fax machine
shall be binding to the same extent as an original signature page, with regard
to any agreement subject to the terms hereof or any amendment thereto.


Section 8.5.           Titles
and Subtitles. The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.


Section 8.6.           Notices.  All
notices and other communications required or permitted hereunder shall be in
writing.  Notices shall be delivered
personally, against written receipt therefor, via a recognized overnight
courier (such as Federal Express, DHL, Airborne Express or U.S.P.S. Express
Mail) or via certified or registered mail. 
Notices may be delivered via facsimile or e-mail, provided that by no
later than two days thereafter such notice is confirmed in writing and sent via
one of the methods described in the previous sentence.  Notices shall be addressed as follows:


	
  

  	
  If to Purchaser, to:

  	
  James E. Alexander, President

  
	
   

  	
   

  	
  Isonics Corporation

  
	
   

  	
   

  	
  5906 McIntyre
  Street

  
	
   

  	
   

  	
  Golden, Colorado
  80403

  
	
   

  	
   

  	
  Facsimile: (303)
  279-7300

  
	
   

  	
   

  	
  E-Mail:
  jealexander@isonics.com

  



 



 21
 






 



 


	
  

  	
  with a copy to:

  	
  Herrick K. Lidstone, Jr., Esq.

  
	
   

  	
   

  	
  Burns, Figa
  & Will, P.C.

  
	
   

  	
   

  	
  6400 South
  Fiddlers Green Circle - Suite 1000

  
	
   

  	
   

  	
  Greenwood
  Village, Colorado 80111

  
	
   

  	
   

  	
  Facsimile: (303)
  796-2626

  
	
   

  	
   

  	
  E-Mail:
  hklidstone@bfw-law.com

  
	
   

  	
   

  	
   

  
	
   

  	
  If to the
  Company, to:

  	
  Christopher Toffales, President

  
	
   

  	
   

  	
  SenseIt Corp.

  
	
   

  	
   

  	
  21 Motts Hollow
  Road

  
	
   

  	
   

  	
  Port Jefferson,
  New York 11777

  
	
   

  	
   

  	
  Facsimile: (631)
  331-3371

  
	
   

  	
   

  	
  E-Mail:
  Toffales21@aol.com

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
  Neil M. Kaufman, Esq.

  
	
   

  	
   

  	
  Davidoff Malito
  & Hutcher LLP

  
	
   

  	
   

  	
  200 Garden City
  Plaza, Suite 315

  
	
   

  	
   

  	
  Garden City, New
  York 11530

  
	
   

  	
   

  	
  Facsimile: (516)
  248-6422

  
	
   

  	
   

  	
  E-Mail:
  nmk@dmlegal.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and, if (x) Isonics and/or Isonics Homeland Security
  and Defense Corporation (“IHSDC”) owns of record at least 25% of the then
  outstanding shares of Class A Common Stock or (y) following the occurrence of
  a Threshold Event (as such term is defined in the Amended Certificate of
  Incorporation), Isonics and/or IHSDC owns of record at least 25% of the then
  outstanding shares of Common Stock, to Isonics in the manner as set forth in
  this Section 8.6

  



 


or,
in the case of any of the parties hereto, at such other address as such party
shall have furnished to each of the other parties hereto in accordance with
this Section 8.6.  Each such notice,
demand, request or other communication shall be deemed given (i) on the date of
such delivery by hand, (ii) on the first business day following the date of
such delivery to the overnight delivery service or facsimile transmission, or
(iii) three business days following such mailing.


Section 8.7.           Amendment
and Waiver.  No modification,
amendment or waiver of any provision of this Agreement will be effective
against a party to this Agreement unless such modification, amendment or waiver
is approved in writing by such party.  No
delay or omission to exercise any right, power or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under this
Agreement, shall 



 22
 






 



 


impair any such right, power or remedy of such
non-breaching or non-defaulting party nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring.


Section 8.8.           Severability.         Whenever
possible, each provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable Law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in such
jurisdiction to the greatest extent possible to carry out the intentions of the
parties hereto.


Section 8.9            Entire
Agreement; No Third Party Beneficiaries. 
Each party to this Agreement hereby acknowledges that no other party or
any other person or entity has made any promises, warranties, understandings or
representations whatsoever, express or implied, not contained in this Agreement
and acknowledges that it has not executed this Agreement in reliance upon any
such promises, representations, understandings or warranties not contained
herein and that this Agreement supersedes all prior agreements and
understandings between the parties with respect thereto.  There are no promises, covenants or
undertakings other than those expressly set forth or provided for in this Agreement.  This Agreement is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.


Section 8.10.        Delays
or Omissions.  No delay or omission to exercise any right,
power or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power or remedy of such nonbreaching or nondefaulting party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring.


Section 8.11.        Other
Remedies.  In addition to those remedies specifically
set forth in this Agreement, each party may proceed to protect and enforce its
rights under this Agreement either by suit in equity and/or by action at law,
including, but not limited to, an action for damages as a result of any such
breach and/or an action for specific performance of any such covenant or
agreement contained in this Agreement. 
No right or remedy conferred upon or reserved to any party under this
Agreement is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right and
remedy given under this Agreement or now and hereafter existing under
applicable Law.


Section 8.12.        Further
Assurances.  At any time or from time to time after any
Closing, the Company, on the one hand, and Purchaser, on the other hand, agree
to cooperate with each other, and at the request of the other party, to execute
and deliver any further instruments or documents and to take all such further
action as the other party may reasonably request in order to evidence or
effectuate the consummation of the 



 23
 






 



 


transactions
contemplated hereby relating to the purchase contemplated herein and to
otherwise carry out the intent of the parties hereunder.


Section
8.13         Reimbursement of Legal
Expenses.  Upon the Company receiving the aggregate
Final Installment Shares Purchase Price of $500,000 pursuant to this Agreement,
the Company shall reimburse Purchaser for all Purchaser’s legal fees and
expenses incurred in connection with the formation of the Company, this Agreement
and related transactions, as well as other expenses incurred for the benefit of
the Company and not previously reimbursed by the Company.


IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.


	
  

  	
  The
  Company:

  
	
   

  	
   

  	
   

  
	
   

  	
  SenseIt
  Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Christopher
  Toffales, President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Purchaser:

  
	
   

  	
   

  	
   

  
	
   

  	
  Isonics
  Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  James E.
  Alexander, President

  



 



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Exhibit 1.2

Form of Assignment of the Lucent Agreement


[To be inserted]









 



 


Exhibit 4.2(a)

Form of Amended Certificate of Incorporation


[To be inserted]









 



 


Exhibit 4.2(b)(i)

Form of Stockholders’ Agreement


[To be inserted]









 



 


Exhibit 4.2(b)(ii)

Form of Employment Agreement


[To be inserted]









 



 


Exhibit 4.2(b)(iii)

Form of Stock Exchange Agreement


[To be inserted]