Document:

Exhibit 10.1

 

Executive
Officer Compensation

 

The annual base salaries
for our executive officers for 2008 (effective April 1, 2008) are as
follows:

 

	
  Name

  	
   

  	
  Title

  	
   

  	
  Annual

  Base Salary

  
	
  Randall
  A. Lipps

  	
   

  	
  Chairman,
  President and Chief Executive Officer

  	
   

  	
  $

  	
   440,000

  
	
  Robin
  G. Seim

  	
   

  	
  Vice
  President, Finance and Chief Financial Officer

  	
   

  	
  $

  	
   252,000

  
	
  J.
  Christopher Drew

  	
   

  	
  Senior
  Vice President, Operations

  	
   

  	
  $

  	
   294,000

  
	
  Dan
  S. Johnston

  	
   

  	
  Vice
  President and General Counsel

  	
   

  	
  $

  	
   239,000

  
	
  Renee
  A. Luhr

  	
   

  	
  Vice
  President, Sales

  	
   

  	
  $

  	
   238,000

  
	
  John
  G. Choma

  	
   

  	
  Vice
  President, Human Resources, Employee Learning and Performance

  	
   

  	
  $

  	
   189,000Exhibit 10.2

 

 OMNICELL QUARTERLY EXECUTIVE BONUS PLAN

 

(FY 2008 — Effective
beginning Q1 2008)

 

OBJECTIVES:

1) Drive earnings predictability and revenue growth

 

2) Drive execution of operating plan and strategic
objectives

 

3) Motivate and inspire employees to contribute at
peak performance

 

ELIGIBILITY : Certain employees at the Director level
and above (including Section 16 executive officers) who are employed
full-time by Omnicell during an eligibility period (fiscal quarter) are
eligible for the Executive Bonus Plan. If an individual is hired after the
fifteenth day of the second month of the relevant quarter, or is no longer
employed by Omnicell as of the last day of the relevant quarter, the employee
is not eligible to participate in the Executive Bonus Plan for that quarter.

 

INCENTIVE THRESHOLD: Before any Incentive Targets are paid,
the Corporate Target must be achieved; however, achieving the Corporate Target
itself does not have any bonus value associated with it.

 

INCENTIVE TARGET : The Incentive Target is stated as a
percentage of quarterly base salary. 
100% of the total Incentive Target is based on achievement of the
quarterly Individual Targets.  It is
anticipated that the Incentive Target levels will range from 25% to 80% of
quarterly salary depending on the position of the participant.

 

PAYMENT SCHEDULE : The Incentive Target is paid on a
quarterly basis typically in the first payroll period after the compensation
committee of the Board of Directors (the “Committee”) has determined that the Corporate
Target for a particular quarter was reached.

 

BONUS
COMPONENTS

 

Corporate Target: The Corporate Target is driven by the
achievement of corporate profitability, revenue growth goals and, at the
discretion and determination of the Committee, other threshold targets.  Achievement of the Corporate Target requires
100% achievement of each of the following EPS Targets, Revenue Growth Targets,
and if applicable, Other Threshold Targets.

 

·                  EPS Target — the profitability portion of the
Corporate Target is achieved if the company meets the quarterly profitability
threshold target set by the Committee. There is an upside payment potential of
an additional 10% of each individual’s total bonus amount for achievement of
each incremental profitability metric above the threshold target as set by the
Committee.

 

·                  Revenue Growth Target — the revenue growth portion of
the Corporate Target is achieved by meeting the revenue threshold target set by
the Committee.

 

·                  Other Threshold Targets — The Committee, at its
discretion, may set other Threshold Targets, applied to each participant or any
subset thereof.

 

Individual Target: The Individual Target is based on
achievement of goals tied to the corporate operating plan and strategic
objectives.  This target is achieved by
meeting the quarterly individual objectives (MBOs) set by the individual’s
manager.

 

DIRECTION
AND ADMINISTRATION

 

·
Omnicell’s Chief Executive Officer may
adjust the percentage weightings within the plan to redirect behavior based on
changes in the economy, immediate needs of the company, changes in long-term
strategies and individual career growth and development throughout the fiscal
year.

 

· Participation in the Plan is at the discretion of
Company management. The Company reserves the right to make changes to the Plan
at any time. The Committee may alter the incentive payout based on achievement
of publicly announced targets, product milestones, strategic goals, cross
functional teamwork and collaboration, and unforeseen changes in the economy
and/or geopolitical climate.Exhibit 10.1

 

ISONICS CORPORATION

EXECUTIVE EMPLOYMENT
AGREEMENT

 

                                THIS
EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”), effective February 6, 2008 (“Effective
Date”), is made between Isonics Corporation, a California corporation (“Employer”),
and Christopher Toffales (“Executive”). 
Collectively Employer and Executive are referred to as the “parties.”

 

RECITALS

 

                                WHEREAS,
the Board of Directors of Employer desires to provide for the continued
employment of Executive.  Executive is
willing to commit himself to continue to serve Employer, on the terms and
conditions herein provided, although this Agreement may be amended at any time
by written agreement among the parties; and

 

                                WHEREAS,
the Executive understands that the Employer’s financial condition is such that
it has only limited working capital available and, as a result, Employer may
not be able to perform all of its obligations hereunder timely or completely;
and

 

                                WHEREAS,
in order to effect the foregoing, Employer and Executive wish to enter into
this Agreement on the terms and conditions set forth below.

 

AGREEMENT

 

                                NOW,
THEREFORE, in
consideration of the mutual covenants herein contained, and other good and
valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties agree as follows:

 

                                1.             Employment.

 

                                (a)           Employer hereby employs Executive,
and Executive agrees to be employed as Chief Executive Officer and Chairman of
the Board.   Executive will report to the
Board of Directors.  Executive will
devote substantially full time and attention to achieving the purposes and
discharging the responsibilities of his positions.

 

                                (b)           Executive will comply with all rules,
policies and procedures of Employer as modified from time to time, including
without limitation, rules and procedures set forth in the Employer’s
employee manuals and handbooks, supervisor’s manuals and operating
manuals.  Executive will perform all of Executive’s responsibilities in
compliance with all applicable laws and will ensure that the operations that Executive
manages are in compliance with all applicable laws.

 

                                (c)           Notwithstanding anything to the
contrary contained in this Agreement, during the Term of employment, Executive
may: (i) engage, directly or indirectly, in other businesses and ventures,
including providing services and otherwise being affiliated with (A) 

 

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SenseIt Corp., a Delaware corporation in which Employer is a
stockholder (“SenseIt”),  (B) CTC
Aero, LLC, a New York limited liability company in which Executive (in his
individual capacity and not in his capacity as an officer, director and/or
employee of Employer) is the sole member (“CTC Aero”), and (C) other
persons or entities (and their respective affiliates) with whom Executive or CTC
Aero, has any equity interest or any other business or financial relationship
or arrangement as of the date of the commencement of the Employment Period; (ii) become
a director of, or provide consulting or other services for, any other person or
entity that is not directly competitive with Employer so long as such
activities do not interfere with Executive’s duties and responsibilities under
this Agreement; and (iii) devote time, attention and energies to
reasonable community activities and public affairs, provided such community
activities and public affairs efforts shall not conflict with the amount of
time required to be devoted to Employer under this Agreement (the foregoing
activities are collectively referred to as “Outside Activities”).  Neither Employer nor any of Employer’s
officers, directors, employees and stockholders shall have any right, title or
interest, by virtue of this Agreement or otherwise, to share in any of the
businesses, ventures, equity interests, business or financial relationships or
arrangements, investments or activities to which Executive may engage or
participate in pursuant to the Outside Activities or in any income or revenues
derived from any of such businesses, ventures, equity interests, business or
financial relationships or arrangements, investments or activities relating to
Outside Activities.

 

                                2.             Prior Agreements.  The Executive and Employer agree that all
prior employment agreements and understandings between the Executive and
Employer related to Executive’s employment be and hereby are cancelled and are
of no further force or effect.  Without
limitation of the foregoing, subject to Section 4.4 below, that certain
employment agreement dated February 16, 2007 (the “February 2007
Employment Agreement) and any and all other understandings between the
Executive and Employer related to Executive’s employment be and hereby are
cancelled and are of no further force or effect.

 

                                3.             Term of Employment.  The term of employment (“Term”) shall be for
one year from the Effective Date unless terminated earlier in accordance with
the terms and conditions of this Agreement. 
The Term will automatically renew for successive one-year terms unless
and until the Employer or the Executive provides notice at least 60 days in
advance of the expiration of the current Term that the Employer or the
Executive will not accept a renewal term.

 

                                4.             Compensation.  For the duration of Executive’s employment
hereunder, the Executive will be entitled to compensation that will be computed
and paid pursuant to the following subsections.

 

                                4.1          Base Salary.  Employer will pay to Executive a base salary
(“Base Salary”) at an annual rate of Two Hundred Fifty Thousand Dollars
($250,000), subject to withholdings, ratably in accordance with Employer’s
policies, so long as Executive remains employed.  Executive’s Base Salary will be reviewed
annually during the term of Executive’s employment by the Compensation
Committee or the Board of Directors of Employer and may be increased based on
such review.

 

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                                4.2          Discretionary Cash Bonus.  Executive shall be eligible for a discretionary cash
bonus (“Cash Bonus”) equal to an amount as determined by the Compensation
Committee, which shall be based on the condition of Employer’s business and
results of operations, the Compensation Committee’s evaluation of Executive’s
individual performance for the relevant period, and the satisfaction of goals
that may be established by the Compensation Committee of the Employer.  Any Cash Bonus shall be paid in the
Compensation Committee’s discretion.

 

                                4.3          Equity-based Compensation.  Executive shall be entitled
to participate in all equity-based compensation plans offered by Employer to
its employees and as determined by the Compensation Committee.

 

                                4.4          Performance
Standards.  The Executive and
the Employer agree that the Executive’s discretionary cash bonus and
equity-based compensation will be based on the Executive’s and the Employer’s
achievement of performance goals that may be established by the Compensation
Committee after discussion with the Executive and his supervisors (if
any).  Until the Employer and the
Compensation Committee establish performance goals, the Executive’s
discretionary cash bonus and equity based compensation will be wholly
discretionary.

 

                                4.5          Discretionary Bonus.  In recognition of the Executive’s
continuing efforts on the Employer’s behalf, the substantial risk that the
Executive is taking by remaining with the Employer notwithstanding the Employer’s
financial condition, the significant operational improvements accomplished by
the Executive with other executives of the Employer since February 2007,
the Executive’s willingness to enter into this Agreement, and other factors,
the Employer agrees to pay Executive the sum of Seventy Thousand Dollars
($70,000) as a discretionary bonus, such payment to be made at the earlier of:

 

                                (a)           The Employer having sufficient
working capital that is not committed for operations to allow the Employer to
pay all (or a portion) of this bonus to the Executive with such approval and
direction from the Compensation
Committee.  If the Employer pays any portion of this bonus to the
Executive, the Employer will pay the same proportionate amount of the bonus to
other Executives who have entered into agreements similar to this Agreement, or

 

                                (b)           Termination of this Agreement
pursuant to Sections 6.2(a), 6.2(b), 6.2(c), 6.2(d) or Article 7,
below, in which case the discretionary bonus payable pursuant to this Section 4.5
will be payable on the same terms and over the same period as the severance pay
is determined in Section 6.4 or (in the case of a termination under Article 7)
Section 7.2.

 

The amount payable pursuant to this Section 4.5 will be reduced to
zero in the event the Executive terminates this Agreement pursuant to Section 6.2(e) or
if the Employer terminates this Agreement for Cause pursuant to Section 6.1.

 

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                                5.             Other
Benefits.

 

                                5.1          Certain
Benefits.  Executive will be
eligible to participate in all employee benefit programs established by
Employer that are applicable to management personnel on a basis commensurate
with Executive’s position and in accordance with Employer’s policies from time
to time, including, but not limited to, life insurance, disability insurance,
retirement plans, profit-sharing plans, savings plans, stock option plans and
other employee benefit plans and policies, but nothing herein shall require the
adoption or maintenance of any such plan. 
Notwithstanding the foregoing, Employer shall provide full medical and
dental insurance coverage for Executive as currently provided by Administaff
(or its successor) on the same terms as are then generally available to the
Company’s senior executive officers, at no cost to Executive.

 

                                5.2          Paid Time Off (“PTO”) and Expenses. 
For the duration of Executive’s employment hereunder, Executive will be
provided such PTO (which includes vacations and sick leave) as Employer makes
available to its management level employees generally as described in, and
subject to the provisions of, Employer’s employee manual. Employer will
reimburse Executive in accordance with company policies and procedures for
reasonable expenses necessarily incurred in the performance of duties hereunder
against appropriate receipts and vouchers indicating the specific business
purpose for each such expenditure.

 

                                5.3          Directors and
Officers Insurance.  During
the term of this Agreement and for a three year period thereafter, and subject
to the availability of adequate financing, Employer shall use its best efforts
to have in effect at all times, at its expense and no cost to Executive, one or
more directors and officers liability indemnification insurance policies (the “D&O
Policies”) covering liabilities which may have accrued or that will be incurred
by the performance of Executive’s services on behalf of Employer in the minimum
benefit amount to be determined in good faith by the Board of Directors, and
provided that all officers and directors are treated alike.

 

                                6.             Termination Or Discharge.

 

                                6.1          For Cause.  Employer will have the right to immediately terminate
Executive’s services and this Agreement for “Cause.”  For the purposes of this Agreement, the term “for
cause” shall mean:

 

                                (a)           any act of fraud or embezzlement
materially adversely affecting the financial, market, reputation or other
interests of Employer,

 

                                (b)           in the event of a conviction of
Executive of, or a plea of nolo contendere to, (A) any violent felony or
misdemeanor resulting in a jail sentence, (B) any felony involving moral
turpitude or (C) a criminal violation of federal or state securities laws,

 

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                                (c)           any material failure to perform
Executive’s duties as set forth in this Agreement which results in material
harm to Employer, after reasonable notice and the opportunity to cure,

 

                                (d)           gross negligence, incompetence or willful misconduct in the
performance by the Executive of his duties,

 

                                (e)           refusal by the Executive, without
proper reason, to perform his duties,

 

                                (f)            the Executive willfully engaging in
conduct that is materially injurious to Employer or its subsidiaries
(monetarily or otherwise),

 

                                (g)           unauthorized disclosure by the
Executive of Confidential Information, as such term is defined in Section 10
of this Agreement, or the unauthorized disclosure of proprietary material
information of Employer or an affiliate), or

 

                                (h)           Employer’s reasonable belief supported by a legal
opinion that Executive has engaged in a violation of any statute, rule or
regulation, any of which in the judgment of Employer is harmful to Employer’s
business or to Employer’s reputation.

 

                                Upon
termination of Executive’s employment hereunder for Cause, Executive will have
no rights to any unvested benefits or any other compensation or payments after
the termination date.

 

                                6.2          Termination Other
Than For Cause.  The Executive’s
employment hereunder may be terminated without any breach of this Agreement
under the following circumstances:

 

                                (a)           By Executive.  Upon the occurrence of any of the following
events, this Agreement may be terminated by the Executive upon not less than
three business days’ written notice to Employer specifying such reason:

 

                                                1.     if Employer makes a general assignment for
the benefit of creditors, files a voluntary bankruptcy petition, files a
petition or answer seeking a reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any law, or
there shall have been filed any petition or application for the involuntary
bankruptcy of Employer, or other similar proceeding, in which an order for
relief is entered or which remains undismissed for a period of thirty days or
more, or Employer seeks, consents to, or acquiesces in the appointment of a
trustee, receiver, or liquidator of Employer or any material part of its
assets;

 

                                                2.     the sale by Employer of substantially all
of its assets;

 

                                                3.     a decision by Employer to terminate its
business and liquidate its assets;

 

5

 

                                                4.     the holder of any convertible debenture
issued by Employer prior to the date of this Agreement declares a default or
accelerates any obligations under any of the terms of such debentures; or

 

                                                5.     a material breach of this Agreement by Employer
except to the extent that the material breach results directly or indirectly
from Employer’s lack of funding to cure any element of such material breach.

 

                                (b)           By Employer Without Cause.  The Employer may terminate this Agreement
without Cause at any time upon not less than 60 days’ written notice to the
Executive.

 

                                (c)           Death.  This Agreement shall terminate upon the death
of Executive.

 

                                (d)           Disability.  The Employer may terminate this Agreement
upon the permanent disability of the Executive. 
Executive shall be considered disabled (whether permanent or temporary)
if:  (i) he is disabled as defined
in a disability insurance policy purchased by or for the benefit of the
Executive; or (ii) if no such policy is in effect, he is incapacitated to
such an extent that he is unable to perform substantially all of his duties for
Employer that he performed prior to such incapacitation.

 

                                (e)           Material Breach as a Result of
Lack of Funding.  If the Employer
breaches this Agreement but such breach results directly or indirectly from
Employer’s lack of funding to cure any element of such material breach (and
therefore such material breach is not a basis for termination by Executive
under Section 6.2(a)(5), Executive may terminate this Agreement upon not
less than 30 days’ prior written notice specifying such breach.

 

                                6.3          Notice of Termination. 
Any termination of the Executive’s employment by the Employer or by the
Executive (other than termination pursuant to Section 6.2(b) above)
shall be communicated by written Notice of Termination to the other party.

 

                                6.4          Compensation Upon Termination.

 

                                (a)           Upon a termination of this Agreement
pursuant to Section 6.2(a), Employer shall pay to Executive a cash
severance payment in an amount equal to the sum of (i) one year of
Executive’s annual salary payable in a lump sum payment within three months of
the Executive’s termination pursuant to Section 6.2(a), and (ii) the
pro-rated portion (based on the number of days in the calendar year ending
prior to the effective date of such termination of Executive by Employer) of
any Cash Bonus for the year in which the termination occurred that has been
earned but has not been paid to Executive, which shall not be less than any
bonus with respect to the previous calendar year, in each case.

 

                                (b)           Upon a termination of this Agreement
pursuant to Section 6.2(b), Employer 

 

6

 

shall pay to Executive: (i) twelve
months of his annual salary then in effect, and (ii) the pro-rated portion
(based on the number of days in the calendar year ending prior to the effective
date of such termination of Executive by Employer) of any Cash Bonus for the
year in which the termination occurred that has been earned, but has not been
paid to Executive, in both cases payable upon such termination.

 

(c)     Following
the termination of this Agreement pursuant to Section 6.2(c), Employer
shall pay to Executive’s estate the compensation which would otherwise be
payable to Executive to the end of the month in which his death occurs,
including the pro-rated portion (based on the number of days in the calendar
year ending prior to the effective date of such termination of Executive by
Employer) of any Cash Bonus for the year in which the termination occurred that
has been earned but has not been paid to Executive.

 

(d)     If
Employer elects to terminate this Agreement in the event of permanent
disability of the Executive as described in Section 6.2(d), if the
Employer terminates this Agreement for Cause as set forth in Section 6.1,
or if the Executive elects to terminate this Agreement pursuant to 6.2(e),
Employer shall pay to Executive (i) compensation and benefits through the
Date of Termination; any such payment, however, shall (in the case of a
termination pursuant to Section 6.2(d)) be reduced by disability insurance
benefits, if any, paid to Executive under policies (other than group policies)
for which Employer pays all premiums and Executive is the beneficiary, and (ii) the
pro-rated portion (based on the number of days in the calendar year ending
prior to the effective date of such termination of Executive by Employer) of
any Cash Bonus for the year in which the termination occurred that has been
earned but has not been paid to Executive.

 

                                7.             Termination
by Executive due to Change of Control.  Upon
the occurrence of any Change of Control, the Executive may terminate this
Agreement upon not less than thirty days’ written notice to Employer.

 

                                7.1.         Change of Control —
Definition.  For purposes of
this Agreement, a “Change of Control” shall mean the happening of any of the
following:

 

                                (a)           A majority of the persons who were
members of the Board of Directors before any cash tender offer, merger or other
business combination, sale of assets, sale or transfer of Employer’s stock or
other equity securities, or contested election or combination of the foregoing,
shall cease to constitute a majority of the directors after the completion of
such event; or

 

                                (b)           The closing of: (i) a merger,
consolidation or reorganization of Employer with or into another corporation in
which the holders of Employer’s common stock immediately before such merger,
consolidation or reorganization do not, immediately following such merger,
consolidation or reorganization, hold as a group on a fully diluted basis both
the ability to elect at least a majority of the directors of the surviving
corporation (or its parent), and at least a majority in value of the surviving
corporation’s (or its parent’s) outstanding equity securities, or (ii) a
sale 

 

7

 

or other disposition of all or substantially all of the assets of
Employer, unless Employer owns 50% or more of the outstanding voting securities
or other equity interests of the transferee at the time of the transfer.

 

                7.2.         Compensation Upon Termination by
Executive Upon a Change of Control. 
Upon a termination upon a Change of Control Employer shall pay Executive
a cash severance payment in an amount equal to the sum of (a) one year of
Executive’s annual salary payable in a lump sum payment within three months the
Executive’s termination pursuant to Section 7, and (b) the pro-rated portion (based on the
number of days in the calendar year ending prior to the effective date of such
termination of Executive by Employer) of any Cash Bonus for the year in which
the termination occurred that has been earned but has not been paid to
Executive, which shall not be less than any bonus with respect to the previous
calendar year, in each case. 
In addition, in the event of a Change of Control, all of Executive’s
equity-based compensation shall immediately vest regardless whether the
Executive is retained by the Employer or successor following the Change of
Control.

 

                8.             Covenant Not To Compete.

 

                (a)           Except
as otherwise provided for in this Agreement, during the Term of this Agreement
and, if this Agreement is terminated for any reason during the Term, for one
year following such date of termination (the “Termination Period”), the
Executive shall not, directly or indirectly, compete with respect to any
services or products of Employer which are either offered or are being
developed by Employer as of the date of termination; or, without limiting the
generality of the foregoing, be or become, or agree to be or become, interested
in or associated with, in any capacity (whether as a partner, shareholder,
owner, officer, director, executive, principal, agent, creditor, trustee,
consultant, co-venturer or otherwise), any individual, corporation, firm,
association, partnership, joint venture or other business entity, which
competes with respect to any services or products of Employer which are either
offered or are being developed by Employer as of the date of termination;
provided, however, that the Executive may own, solely as an investment, not
more than 9.99% of any class of securities of any corporation in competition
with Isonics whose securities are traded on any national securities exchange in
the United States of America.

 

                (b)           Employer and Executive agree to the following: this
provision does not impose an undue hardship on Executive and is not injurious
to the public; this provision is necessary to protect the business of Employer
and its affiliates; the nature of Executive’s responsibilities with Employer
under this Agreement require Executive to have access to Confidential
Information, as such term is defined in Section 10 of this Agreement,
which is valuable and confidential to all of the business; the scope of this Section 8
is reasonable in terms of length of time and geographic scope; and adequate
consideration supports this Section 8, including consideration herein.

 

                (c)           In
the event that any of the covenants in this Section 8 shall be determined
by any court of competent jurisdiction to be unenforceable by reason of extending
for too great a period of time or by reason of being too extensive in any other
respect, it shall be interpreted to 

 

8

 

extend
over the maximum period of time for which it may be enforceable and to the
maximum extent in all other respects as to which it may be enforceable, and
enforced as so interpreted, all as determined by such court in such
action.  Executive acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Agreement is to be given the construction that renders its provisions valid and
enforceable to the maximum extent (not exceeding its express terms) possible
under applicable law.

 

                                9.             Non-solicitation.  During the term of this
Agreement and, if applicable, during the Termination Period, the Executive
shall not, directly or indirectly, (i) induce or attempt to influence any
executive or other employee of Isonics to leave its employ, (ii) aid or
agree to aid any competitor, customer or supplier of Isonics in any attempt to
hire any person who is an executive or other employee of Isonics, or (iii) induce
or attempt to influence any person or business entity who was a customer or
supplier of Isonics during any portion of said period to transact business with
a competitor of any aspect of Isonics’ business.

 

                                10.          Confidentiality.

 

                                (a)           Executive acknowledges that, during
the course of Executive’s employment with Employer, Executive may have
developed Confidential Information (as defined below) for Employer, and Executive
may have learned of Confidential Information developed or owned by Employer or
its affiliates or entrusted to Employer or its affiliates by others.  Executive agrees that Executive will not,
directly or indirectly, use any Confidential Information or disclose it to any
other person or entity, except as otherwise required by law.

 

                                (b)           “Confidential Information” means any
and all information relating to Employer that is not generally known by the
public or others with whom Employer does (or plans to) compete or do business,
as well as comparable information relating to any of Employer’s
affiliates.  Confidential Information
includes, but is not limited to, information relating to the terms of this
Agreement, as well as Employer’s business, technology, practices, products,
marketing, sales, services, finances, strategic opportunities, internal
strategies, legal affairs (including pending litigation), the terms of business
relationships not yet publicly known, intellectual property and the filing or pendency
of patent applications.  Confidential
Information also includes, but is not limited to, comparable information that
Employer may receive or has received belonging to customers, suppliers,
consultants and others who do business with Employer, or any of Employer’s
affiliates.

 

                                (c)           “Confidential Information” does not
include any information that is: (i) shown to have been developed
independently by Executive prior to Executive’s employment with Employer; or (ii) required
by a judicial tribunal or similar governmental body to be disclosed under law
(provided that Executive have first promptly notified Employer of such
disclosure requirement and have cooperated fully with Employer (at Employer’s
expense) in exhausting all appeals

 

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                                11.          Property of Employer.  Upon any termination from Employer, Executive agrees
to return to Employer any and all records, files, notes, memoranda, reports,
work product and similar items, and any manuals, drawings, sketches, plans,
tape recordings, computer programs, disks, cassettes and other physical
representations of any information, relating to Employer, or any of its
affiliates, whether or not constituting confidential information; and Executive
agrees to return to Employer any other property, including but not limited to a
laptop computer, belonging to Employer, no later than the date of Executive’s
termination from employment for any reason, and Executive further agrees not to
retain copies of any Confidential Information. 
Upon termination of this Agreement or employment hereunder, Executive
who has been using a computer owned by the Employer may purchase said computer
from the Employer for fair market value provided the information in the
computer is backed up in the Employer’s data files and all Confidential
Information has been deleted from the computer in a manner reasonably
satisfactory to the remaining senior officers of the Employer.  The Executive will pay the Employer the fair
market value of such computer as may be reasonably determined by the Employer.

 

                                12.          Section 280G
Safe Harbor Cap.  In the event it shall be determined that
any payment or distribution or any part thereof of any type to or for the
benefit of Executive whether pursuant to the Agreement or any other agreement
between Executive and the Employer, or any person or entity that acquires
ownership or effective control the Employer or ownership of a substantial
portion of the Employer’s assets (within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended, and the regulations thereunder
(the “Code”)) whether paid or payable or distributed or distributable pursuant
to the terms of the Agreement or any other agreement, (the “Total Payments”),
is or will be subject to the excise tax imposed by Section 4999 of the
Code (the “Excise Tax”), then the Total Payments shall be reduced to the
maximum amount that could be paid to Executive without giving rise to the
Excise Tax (the “Safe Harbor Cap”), if the net after-tax payment to Executive
after reducing Executive’s Total Payments to the Safe Harbor Cap is greater
than the net after-tax (including the Excise Tax) payment to Executive without
such reduction.  The reduction of the amounts payable hereunder, if
applicable, shall be made by reducing first the payment made pursuant to the
Agreement and then to any other agreement that triggers such Excise Tax, unless
an alternative method of reduction is elected by Executive.  All
mathematical determinations, and all determinations as to whether any of the
Total Payments are “parachute payments” (within the meaning of Section 280G
of the Code), that are required to be made under this Section 12,
including determinations as to whether the Total Payments to Executive shall be
reduced to the Safe Harbor Cap and the assumptions to be utilized in arriving
at such determinations, shall be made by a nationally recognized accounting
firm selected by the Employer (the “Accounting Firm”).  If the Accountant
determines that the Total Payments to Executive shall be reduced to the Safe
Harbor Cap (the “Cutback Payment”) and it is established pursuant to a final
determination of a court or an Internal Revenue Service (the “IRS”) proceeding
which has been finally and conclusively resolved, that the Cutback Payment is
in excess of the limitations provided in Section 6(e) (hereinafter
referred to as an “Excess Payment”), such Excess Payment shall be deemed for
all purposes to be an overpayment to Executive made on the date such Executive
received the Excess Payment and Executive shall repay the Excess Payment to the
Employer on 

 

10

 

demand; provided, however, if Executive shall be required to pay an
Excise Tax by reason of receiving such Excess Payment (regardless of the obligation
to repay the Employer), Executive shall not be required to repay the Excess
Payment (if Executive has already repaid such amount, the Employer shall refund
the amount to the Executive), and the Employer shall pay Executive an amount
equal to the difference between the Total Payments and the Shortfall Cap.

 

                                13.          Remedies.  Notwithstanding other provisions
of this Agreement regarding dispute resolution, Executive agrees that Executive’s
violation of any of Sections 8, 9, 10 or 11 of this Agreement would cause
Employer irreparable harm that would not be adequately compensated by monetary
damages and that an injunction may be granted by any court or courts having
jurisdiction, restraining Executive from violation of the terms of this
Agreement, upon any breach or threatened breach of Executive of the obligations
set forth in any of the Sections 8, 9, 10 or 11.  The preceding sentence shall not be construed
to limit Employer from any other relief or damages to which it may be entitled
as a result of Executive’s breach of any provision of this Agreement, including
Sections 8, 9, 10 or 11.  Executive also
agrees that a violation of any of Sections 8, 9, 10 or 11 would entitle
Employer, in addition to all other remedies available at law or equity, to
recover from Executive any and all funds, including, without limitation, wages,
salary and profits, which will be held by Executive in constructive trust for
Employer, received by Executive in connection with such violation.

 

                                14.          Indemnification.

 

                                (a)           Employer agrees
to indemnify Executive and hold Executive harmless from and against any and all
losses, claims, damages, liabilities and costs (and all actions in respect
thereof and any legal or other expenses in giving testimony or furnishing
documents in response to a subpoena or otherwise), including, without
limitation, the costs of investigating, preparing or defending any such action
or claim, whether or not in connection with litigation in which Executive is a
party, as and when incurred, directly or indirectly caused by, relating to,
based upon or arising out of any work performed by Executive in connection with
this Agreement to the full extent permitted by the California Corporation Code,
and by the Articles of Incorporation and Bylaws of Employer, as may be amended from time to time, and
pursuant to any indemnification agreement between Executive and Employer.

 

                                (b)           The indemnification provision of this
Section 14 shall be in addition to any liability which Employer may otherwise have to Executive.

 

                                (c)           If any action, proceeding or
investigation is commenced as to which Executive proposes to demand such
indemnification, Executive shall notify Employer with
reasonable promptness.  Executive shall
have the right to retain counsel of Executive’s own choice to represent
Executive and Employer shall pay
all reasonable fees and expenses of such counsel; and such counsel shall, to
the fullest extent consistent with such counsel’s professional
responsibilities, cooperate with Employer and any counsel designated by Employer.  Employer shall be liable for any settlement of any
claim against Executive made with Employer’s written consent, which consent shall not be unreasonably withheld or
delayed, to the fullest extent 

 

11

 

permitted by the California General
Corporation Law and the Certificate of Incorporation and Bylaws of Employer, as may be amended from time to time.

 

                                15.          Arbitration.

 

                                (a)           Any dispute arising between the
parties to this Agreement, including, but not limited to, those pertaining to
the formation, validity, interpretation, effect or alleged breach of this
Agreement (“Arbitrable Dispute”) will be submitted to arbitration in the Nassau
or Suffolk counties of the State of New York, before an experienced employment
arbitrator and selected in accordance with the rules of the American
Arbitration Association labor tribunal. 
Each party shall pay the fees of their respective attorneys, the
expenses of their witnesses and any other expenses connected with presenting
their claim.  Other costs of the
arbitration, including the fees of the arbitrator, cost of any record or
transcript of the arbitration, administrative fees, and other fees and costs
shall be borne equally by the parties hereto.

 

                                (b)           Should any party to this Agreement
hereafter institute any legal action or administrative proceedings against
another party with respect to any claim waived by this Agreement or pursue any
other Arbitrable Dispute by any method other than said arbitration, the responding
party shall be entitled to recover from the initiating party all damages,
costs, expenses and attorney’s fees incurred as a result of such action.

 

                                16.          Fees. 
Unless otherwise agreed, the prevailing party will be entitled to its
costs and attorneys’ fees incurred in any litigation or dispute relating to the
interpretation or enforcement of this Agreement.

 

                                17.          Professional Fees and
Costs.  Each of the Parties
shall be responsible to pay his or its respective attorneys’ and other
professional fees and costs incurred in connection with the negotiation and
drafting of this Agreement.

 

                                18.          Disclosure.  Executive agrees fully and completely to
reveal the terms of this Agreement to any future employer or potential employer
of Executive and authorizes Employer, at its election, to make such disclosure.

 

                                19.          Representation of
Executive.  Executive
represents and warrants to Employer that Executive is free to enter into this
Agreement and has no contract, commitment, arrangement or understanding to or
with any party that restrains or is in conflict with Executive’s performance of
the covenants, services and duties provided for in this Agreement.  Executive agrees to indemnify Employer and to
hold it harmless against any and all liabilities or claims arising out of any
unauthorized act or acts by Executive that, the foregoing representation and
warranty to the contrary notwithstanding, are in violation, or constitute a
breach, of any such contract, commitment, arrangement or understanding.  Executive further represents and warrants to
Employer that Executive has consulted with his legal, tax, accounting, and
investment advisors with respect to the advisability of entering into this
Agreement to the extent that the Executive has determined such consultation to
be necessary or appropriate.

 

12

 

                                20.          Assignability.  During
Executive’s employment, this Agreement may not be assigned by either party
without the written consent of the other; provided, however, that Employer may
assign its rights and obligations under this Agreement without Executive’s
consent to a successor by sale, merger or liquidation, if such successor
carries on the Employer’s business substantially in the form in which it is
being conducted at the time of the sale, merger or liquidation.  This Agreement is binding upon Executive,
Executive’s heirs, personal representatives and permitted assigns and on
Employer, its successors and assigns.

 

                                21.          Notices.  For purposes of this Agreement, notices and
all other communications provided for herein shall be in writing and shall be
deemed to have been duly given when personally delivered or when mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

 

	
  IF TO EMPLOYER TO:

  	
   

  	
  Isonics Corporation 

  5906 McIntyre Street 

  Golden, CO 80403 

  Attention: Chairman of the Compensation Committee

  
	
   

  	
   

  	
   

  
	
  IF TO EXECUTIVE TO:

  	
   

  	
  Christopher Toffales

  

 

                                22.          Severability.  If any
provision of this Agreement or compliance by any of the parties with any
provision of this Agreement constitutes a violation of any law, or is or
becomes unenforceable or void, then such provision, to the extent only that it
is in violation of law, unenforceable or void, shall be deemed modified to the extent
necessary so that it is no longer in violation of law, unenforceable or void,
and such provision will be enforced to the fullest extent permitted by
law.  If such modification is not
possible, said provision, to the extent that it is in violation of law,
unenforceable or void, shall be deemed severable from the remaining provisions
of this Agreement, which provisions will remain binding on the parties.

 

                                23.          Waivers. 
No failure on the part of either party to exercise, and no delay in
exercising, any right or remedy hereunder will operate as a waiver thereof; nor
will any single or partial waiver of a breach of any provision of this
Agreement operate or be construed as a waiver of any subsequent breach; nor
will any single or partial exercise of any right or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right or
remedy granted hereby or by law.

 

                                24.          Governing Law.  The validity, construction and
performance of this Agreement shall be governed by the laws of the State of New
York without regard to the conflicts of law provisions of such laws.

 

13

 

                                25.          Entire Agreement. 
This instrument contains the entire agreement of the parties with
respect to the relationship between Executive and Employer and supersedes all
prior agreements and understandings, and there are no other representations or
agreements other than as stated in this Agreement related to the terms and
conditions of Executive’s employment. 
This Agreement may be changed only by an agreement in writing signed by
the party against whom enforcement of any waiver, change, modification,
extension or discharge is sought, and any such modification will be signed by
the Chairman of the Compensation Committee.

 

                                26.          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.

 

                                IN WITNESS WHEREOF, the parties have duly signed and
delivered this Agreement as of the day and year first above written.

 

	
   

  	
  EMPLOYER:

  
	
   

  	
   

  
	
   

  	
  ISONICS CORPORATION

  
	
   

  	
   

  
	
  By:

  	
  /s/ Richard Hagman

  
	
   

  	
  Richard Hagman,
  Chairman

  
	
   

  	
  Compensation Committee

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  /s/ Christopher
  Toffales

  
	
   

  	
  Name: Christopher
  Toffales

  

 

14

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