Document:

Employment agreement dated October 29, 2002

   
 EXHIBIT 10.74 
 EMPLOYMENT AGREEMENT
           This EMPLOYMENT AGREEMENT (the “Agreement”), dated as of October 29, 2002, is entered into by and between Cortex Pharmaceuticals, Inc. (the
“Company”), and Roger G. Stoll, Ph.D. (the “Executive”).
 WITNESSETH
           WHEREAS, the Executive has considerable experience in management and business development; and
           WHEREAS, the Company wishes to employ the Executive as its President and Chief Executive Officer, and Chairman of the Board, and the Executive wishes to be so
employed by the Company.
           NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
           1.          Engagement.  The Company hereby employs the Executive as its President and Chief
Executive Officer, reporting to the Company’s Board of Directors, and the Executive hereby accepts such employment, on the terms and conditions hereinafter set forth.  Additionally, during the term of this Agreement, the Company shall
nominate the Executive for reelection as a member of the Board of Directors and use its best efforts to cause Executive to be so elected.
           2.          Term.  The term of this Agreement will begin on August 13, 2002 and shall continue
thereafter for a three-year period.
           3.          Duties.  During the term of
this Agreement, the Executive shall serve as the Company’s President and Chief Executive Officer, and shall have such duties and responsibilities as are set forth in the Company’s Bylaws and such other executive responsibilities as may be
assigned to him from time to time by the Board of Directors.  In particular and without limitation, the Executive’s duties shall include using diligent efforts as appropriate to (i) assist in raising additional equity capital and research
and development funds for the Company, (ii) integrate developments licensed from academic laboratories into the technology base of the Company, and pursue the acquisition of other technologies complementary to those of the Company, and (iii) develop
relationships with potential corporate partners for the development and commercialization of the Company’s technologies.  The Executive shall use his best efforts and shall act in good faith in performing all duties reasonably required to
be performed by him under this Agreement.
           4.          Availability.  Except
as herein provided, the Executive shall devote substantially all of his working time, attention and energies to the Company’s business and, except as provided herein, during the term of this Agreement shall not be engaged in any other business
activity without the prior written approval of the Board of Directors.  The Executive may engage in a reasonable level of professional activities as are typical for individuals of a comparable professional stature.
           5.          Compensation.  As compensation for the services to be rendered hereunder, the Company agrees
as follows: 

                          (a)          To pay the
Executive an annual salary of not less than $240,000 per annum, subject to increase based on an annual review by the Compensation Committee of the Board of Directors.
                         (b)          For the 
twelve (12) month period commencing as of the date hereof, to pay the Executive a monthly expense allowance of up to $6,000, promptly upon presentation of supporting documentation, for travel, local housing, incremental personal costs and other
expenses relating to the Executive’s employment in Orange County, California.   Such payments are in lieu of reimbursement for significant relocation expenses related to housing, but shall be in addition to the reimbursement of
certain expenses pursuant to Section 5(c) below.
                         (c)          To reimburse the
Executive, promptly upon presentation of itemized vouchers, for all ordinary and customary business expenses, consistent with the Company’s reimbursement policy, incurred by the Executive in the performance of his duties.
                         (d)          To allow the
Executive to participate in such employee benefit programs as are made available to the management of the Company when and as the Executive becomes eligible therefore under the terms of such programs, including, without limitation, group health,
disability and life insurance benefits and participation in other employee benefit plans.
                         (e)          To allow the
Executive to have five (5) weeks of paid vacation each year during the term of this Agreement, subject to the maximum accrual permitted by the Company’s employment policies.  The Company and the Executive agree that time devoted by the
Executive toward travel to, and attendance at, scientific meetings, boards of director meetings, and trips to meet with business leaders at trade associations shall not constitute vacation periods.  The Executive acknowledges that salary and
all other compensation payable under this Agreement shall be subject to withholding for income and other applicable taxes to the extent required by law. 
                         (f)          To reimburse the
executive for reasonable relocation expenses which may be needed for the assumption of his duties in Irvine, if such expenses are agreed to in advance by the Compensation Committee of the Board of Directors of the Company and supported by
appropriate documentation.  
           6.          Ownership of Material
Information.  All right, title and interest of every kind and nature whatsoever in and to discoveries, inventions and improvements, patents (and applications therefore), copyrights, ideas, know how, creations or other proprietary rights
arising from or connected with the Executive’s employment hereunder shall become and remain the exclusive property of the Company, and the Executive shall have no interest therein.  The Executive agrees to sign the standard proprietary
rights agreement that is required of all Company employees.
           7.          Confidential
Information.  The Executive covenants and agrees with the Company that he will not, during the term of this Agreement or thereafter, disclose to anyone (except to the extent reasonably necessary for the Executive to perform his duties
hereunder or as may be required by law) any confidential information concerning the business or affairs of the Company (or of any affiliate or subsidiary of the Company), including but not limited to business plans, joint ventures, financial or cost
information, and confidential scientific and clinical information (whether of the Company or entrusted to the Company by a third party under a confidentiality agreement or understanding), which the Executive shall have acquired in the course of or
incident to the performance of his duties pursuant to the terms of this Agreement.  Nothing herein shall be construed
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  as prohibiting the Executive from disclosing to anyone any information which is, or which becomes, available to the public (other than by reason of a violation by the Executive
of this Section 7), which is a matter of general business knowledge or experience or which the Executive is required to disclose under applicable law.
           8.          Termination for Cause; Voluntary Termination for Good Reason.  
                         (a)          The Company may
terminate the employment of the Executive under this Agreement at any time for “Cause” (as hereinafter defined) upon notice to the Executive.  As used herein, the term “Cause” shall mean only: (a) the Executive’s
willful refusal or failure to perform the duties assigned to him; provided, however, that the employment of the Executive shall not be terminated under this clause unless the Executive is given notice in writing by the Board of Directors that the
conduct in question constitutes grounds for termination under this Section 8 and the Executive is allowed a period of thirty (30) days to remedy the refusal or failure; (b) the Executive’s conviction of a crime involving moral
turpitude or constituting a felony under the laws of any state, the District of Columbia or of the United States; or (c) the Executive’s breach of any of the material terms of this Agreement.  If the employment of the Executive under
this Agreement is terminated under Section 8, the Company shall give written notice to the Executive specifying the cause of such action.  Upon the effectiveness of a termination of employment under this Section 8, (i) the Executive
agrees to immediately tender his resignation from the Company’s Board of Directors and (ii) the Company shall be relieved of all further obligations under this Agreement.  Notwithstanding such termination of employment, the Executive shall
continue to be bound by the provisions of Sections 6 and 7.
                         (b)          The Executive may
terminate his employment under this Agreement at any time for “Good Reason” (as hereinafter defined) upon notice to the Company.  As used herein, the term “Good Reason” shall mean only (a) the Company’s breach of
any of the material terms of this Agreement, (b) a change in the Executive’s title or a material reduction or alteration of the duties of the Executive, or (c) the relocation absent the Executive’s consent of the Company’s
principal place of business to a location outside of Orange County, California
           9.          Termination Without Cause or for Good Reason.
                         (a)          The Company may
terminate the employment of the Executive under this Agreement without Cause at any time upon at least thirty (30) days’ prior written notice to the Executive.  The Executive may terminate his employment under this Agreement for Good
Reason upon at least thirty (30) days’ prior written notice to the Company.  In the event of either a termination by the Company of the Executive’s employment without Cause or the Executive’s termination of his employment for
Good Reason the Company shall pay to the Executive in accordance with its normal payroll practices termination pay equal to the lesser of (a) the then current salary for the balance of the current term or (b) twelve months of the Executive’s
then current salary.  Termination of employment under this Section 9 shall not terminate the Executive’s obligations under Sections 6 and 7.
                         (b)          Nothing contained
in this Agreement shall be construed to abrogate the obligations of the Company to the Executive, or the Executive’s personal representative or heirs, as the case may be, to make payment or provide any other benefit that accrued prior to the
termination of the Executive’s employment.
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            10.          Disability of the Executive.  In the event
that the Executive during this period while employed under this Agreement shall at any time become unable, due to illness, accident, injury or otherwise, to carry out his duties under this Agreement for a period of at least three (3) consecutive
months, the Company may terminate the employment of the Executive under this Agreement.  In such event, the Company shall compensate the Executive in an amount equal to the difference between any disability insurance proceeds and twelve(12) months of the Executive’s then current salary for a period of one year.  A termination of employment under this Section 10 will not terminate the Executive’s obligations under Sections 6 and
7.
           11.          Voluntary Termination.  The Executive may terminate
his employment under this Agreement at any time by giving the Company thirty (30) days’ written notice.  Termination of employment shall not terminate the Executive’s obligations under Sections 6 and 7.
           12.          Grant of Stock Options.  The Company shall grant to the Executive options to purchase
600,000 shares of common stock of the Company with an exercise price equal to fair market value as of such date, with a ten-year term, and with 200,000 options being immediately vested and fully exercisable and the remaining 400,000 options vesting
in monthly equal amounts over a four-year period commencing one year from the date hereof, provided, however that the vesting of such options may be accelerated in accordance with Exhibit A attached hereto upon the achievement of certain milestones
detailed thereon, as may be amended from time to time by the Board of Directors.  The Executive’s stock option position will be reviewed by the Compensation Committee of the Board of Directors from time to time, but in no event less than
annually, and increases in such stock option position may be awarded dependent upon the performance of the Executive.  To the maximum extent permissible under the Internal Revenue Code of 1986, as amended (the “Code”) stock options
granted to the Executive shall be “incentive stock options” as defined in Section 422 of the Code.  The general terms and conditions of stock options granted to the Executive shall be in accordance with the stockholder-approved
plans established for the granting of options, amended from time to time and the Company’s customary form of stock option agreement; provided that in the event of the Executive’s termination of employment (i) by the Company without Cause,
or (ii) by the Executive for Good Reason, the Executive’s then outstanding stock options shall be exercisable with respect to that portion of such stock options which is vested as of the Executive’s termination for the remainder of their
original ten-year term.  In addition, notwithstanding anything herein, in any of the Company’s stock option plans or in any stock option agreement between the Company and the Executive, upon a Change of Control all stock options then held
by the Executive shall vest immediately prior to such Change of Control.
           13.          Capacity.  The Executive represents and warrants to a Company that he is not now under any
obligation of a contractual nature or otherwise, to any person, firm, corporation, association, or other entity that is inconsistent or in conflict with this Agreement or which would prevent, limit or impair in any way the performance by him of his
obligations hereunder.  
           14.          Participation in Competitive
Business.  While the Executive is employed under this Agreement, the Executive shall not directly or indirectly either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate consultant, officer, director or
in any other individual or representative capacity, engage or participate in any business that is in competition in any manner whatsoever with the business of the Company without the prior written approval of the Company; provided, however, that
nothing herein, shall preclude the Executive from owning less than one percent (1%) of the outstanding capital stock of any company whose shares are traded on the New York Stock Exchange, the American Stock Exchange or Nasdaq. 
Notwithstanding the foregoing, the 
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  Executive may continue to engage in those activities listed on Exhibit B hereto, provided such activities do not unreasonably interfere with the performance by the
Executive of his duties as President and Chief Executive Officer of the Company.
           15.          Waiver.  No act, delay, omission or course of dealing on the part of any party hereto in
exercising any right, power or remedy hereunder shall operate as, or be construed as, a waiver thereof or otherwise prejudice such party’s rights, powers and remedies under this Agreement.
           16.          Notice.  Any and all notices referred to herein shall be sufficient if furnished in writing
and delivered by hand or by registered or certified mail, return receipt requested, postage fully prepaid, to the respective parties at the following addresses or such other address as either party may from time to time designate in writing. 
Notices shall be effective when delivered.

	 To Executive:
 	 Roger G. Stoll, Ph.D.
 
	  
 	 15241 Barranca Parkway
 
	  
 	 Irvine, California 92618
 
	  
 	  
 
	 To Company:
 	 Attn: Corporate Secretary
 
	  
 	 Cortex Pharmaceuticals, Inc.
 
	  
 	 15241 Barranca Parkway
 
	  
 	 Irvine, California 92618
 

           17.          Arbitration.  All disputes arising under or in connection with this Agreement shall be
submitted to arbitration in Orange County, California, under the rules of the American Arbitration Association, and the decision of the arbitrator shall be final and binding.  Judgment upon the award rendered may be entered and enforced in any
court having jurisdiction. 
           18.          Assignability.  The rights and
obligations contained herein shall be binding on and inure to the benefit of the successors and assigns of the Company.  The Executive may not assign his rights or obligations hereunder without the prior written consent of the
Company.
           19.          Attorneys’ Fees.  If either party
hereto brings any action to enforce his or its rights hereunder, the Company agrees to compensate the Executive for his reasonable legal fees.  Additionally, the Company agrees to pay for any fees associated with the preparation of this
Agreement and, if required by the Company, any potential changes agreed to by the Executive to the terms and conditions of this Agreement in the future.
           20.          Construction.  This Agreement shall be governed by and construed in accordance with the
laws of the state of California.
           21.          Completeness.  This Agreement
sets forth all, and is intended by each party to be an integration of all, of the promises, agreements and understandings between the parties hereto with respect to the subject matter hereof. 
           22.          Counterparts.  This Agreement may be executed in multiple counterparts each of which shall
be deemed to be an original, and all of which together shall constitute one agreement binding on the parties hereto.  
           23.          Severability.  Each provision of this Agreement shall be considered severable and if for
any reason any provision that is not essential to the effectuation of the basic purpose of the 
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  Agreement is determined to be invalid or contrary to any existing or future law, such invalidity shall not impair the operation of or affect those provisions of this Agreement
that are valid.
           24.          Headings.  Headings constrained in the Agreement
are inserted for reference and convenience only and in no way define, limit, extend or describe the scope of this Agreement or the meaning or construction of any of the provisions hereof.
           25.          Survival of Terms.  If this Agreement is terminated for any reason, the provision of
Sections 6 and 7 shall survive and the Executive and the Company, as the case may be, shall continue to be bound by the terms thereof to the extent provided therein.
           26.          Change of Control.  For the purpose of this Agreement, a “Change of Control”
shall have occurred if:
                         (a)          any individual,
entity or group (within he meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 50% of either (i) the then outstanding shares of common stock of the Company (the “Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Voting Securities”); provided however that any acquisition by the Company, by any employee benefit plan (or related trust) of the Company, or by any corporation with respect to which, following
such acquisition, more than 50% of respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Common Stock and Voting Securities immediately prior to such
acquisition in substantially the same proportion as their ownership immediately prior to such acquisition, of the Common Stock and Voting Securities, as the case may be, shall not constitute a Change of Control;
                         (b)          the stockholders of
the Company approve (i) a reorganization, merger or consolidation, provided, however, that any reorganization, merger or consolidation with respect to which all or substantially of the persons who were the respective beneficial owners of the Common
Stock and the Voting Securities prior to such reorganization, merger or consolidation, beneficially own directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation shall not constitute a Change of Control or (ii) a complete
liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company.
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            27.          No Duty to Seek Employment.  The Executive
and the Company acknowledge and agree that nothing contained in the Agreement shall be construed as requiring Executive to seek or accept alternative or replacement employment in the event of his termination of employment by the Company for any
reason, and no payment or benefit payable hereunder shall be conditioned on Executive’s seeking or accepting such alternative or replacement employment.
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            IN WITNESS HEREOF, the parties hereto have executed this Employment Agreement on the day and year first above written.

	  
 	 CORTEX PHARMACEUTICALS, INC.
 
	  
 	  
 	  
 
	  
 	  
 
	  
 	 By: 
 	 /s/ M. ROSS JOHNSON, PH.D.
 
	  
 	  
 	 
 
	  
 	 Name: 
 	 M. Ross Johnson, Ph.D.
 
	  
 	 Its: 
 	 Chairman, Compensation Committee
 
	  
 	  
 
	  
 	  
 	  
 
	  
 	  
 	  
 
	  
 	 EXECUTIVE
 
	  
 	  
 
	  
 	  
 
	  
 	 /s/ ROGER G. STOLL, PH.D.
 
	  
 	 
 
	  
 	 Roger G. Stoll, Ph.D.
 
					

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  EXHIBIT A
 MILESTONES
 During the
term of this Agreement, the stock options referred to in Section 12 shall be subject to acceleration of vesting upon attainment of certain milestones set forth below:
 1.          In the event that the Company completes a third-party financing sufficient to maintain the Company for a twelve-month period, as determined by the Board of
Directors, an additional 200,000 of the 600,000 options (or such lesser amount as remain unvested) shall immediately vest upon the closing of such financing.
 2.          In the event that the Company procures an additional partnership of substantial nature, as determined by the Board of Directors, an additional 200,000 of the
600,000 options (or such lesser amount as remain unvested) shall immediately vest upon the execution of the definitive documentation evidencing such partnership.
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  EXHIBIT B

	 Company/Group
 	 Position
 
	  
 	  
 
	 Agensys, Inc.
 	 Director
 
	  
 	  
 
	 Questcor Pharmaceuticals, Inc.
 	 Director
 
	  
 	  
 
	 LifePoint, Inc.
 	 Director
 
	  
 	  
 
	 Acceleration International
 	 Consultant
 

 10<PAGE>

                                                                   EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement") is made, entered into, and
effective as of October 15, 2002 (the "Effective Date"), by and between I/O
Magic Corporation., a Nevada corporation ("Company"), and Tony Shahbaz, an
individual ("Employee") (collectively, the "Parties").

                                    RECITALS
                                    --------

         A. Company is engaged in the business of marketing and distributing
computer peripheral products and maintains its principal place of business in
the State of California.

         B. Company desires to have an employment agreement with Employee as its
President, and CEO subject to the terms and conditions of this Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the Parties hereto hereby agree as follows:

                                    AGREEMENT
                                    ---------

1. TERM OF EMPLOYMENT.

         a. SPECIFIED PERIOD. Company hereby employs Employee and Employee
accepts employment with Company for a period of Five years commencing upon the
date of this Agreement.

         b. RENEWAL. This Agreement and it's terms and conditions shall
automatically renew. The agreement may be changed upon the mutual agreement of
Employee and Company's Board of Director's.

         c. EMPLOYMENT TERM DEFINED. "Employment term" refers to the entire
period of employment of Employee by Company, whether for the period provided
above, or whether terminated earlier as hereinafter provided or extended by
mutual agreement between Company and Employee.

2. DUTIES AND OBLIGATIONS OF EMPLOYEE. Employee shall serve as President and
CEO. Employee shall report to the Board of Directors of the Company. Employee
shall faithfully and diligently perform all professional duties and acts as may
be requested and required of Employee by Company or its Directors. Employee
shall devote such time and attention to the business of Company as shall be
required to perform the required services and duties.

3. EXCLUSIVITY, NON-DISCLOSURE.

         a. DEVOTION TO COMPANY BUSINESS. Employee agrees to perform Employee's
services efficiently and to the best of Employee's ability. Employee agrees
throughout the term of this Agreement to devote his time, energy and skill to
the business of the Company.

                                       1
<PAGE>

         b. TRADE SECRETS. Employee agrees that he shall not at any time, either
during or subsequent to his employment term, unless expressly consented to in
writing by Company, either directly or indirectly use or disclose to any person
or entity any confidential information of any kind, nature or description
concerning any matters affecting or relating to the business of Company,
including, but not limited to, information concerning the customers of Company,
Company's marketing methods, compensation paid to employees, independent
contractors or suppliers and other terms of their employment or contractual
relationships, financial and business records, know-how, or any other
information concerning the business of Company, its manner of operations, or
other data of any kind, nature or description. Employee agrees that the above
information and items are important, material and confidential trade secrets and
these affect the successful conduct of Company's business and its goodwill.

4. COMPENSATION.

         a. ANNUAL SALARY. Company shall compensate Employee for his services
hereunder at the annual salary set forth in Exhibit A hereto payable in
accordance with the Company's practices, less normal payroll deductions, and
prorated for the actual employment term.

         b. SALARY INCREASES; ADDITIONAL COMPENSATION. Employee shall receive
such annual increases in salary and such additional compensation as may be
determined by the Board of Directors elected compensation committee of the
Company in its sole discretion. Such salary increases and/or additional
compensation shall be paid to Employee on the anniversary date of this Agreement
during the Employment Term, and at such other times as may be determined by the
Board of Directors.

5.       EMPLOYEE INCENTIVES.

         Employee shall be entitled to participate in all profit sharing, stock
option and other similar plans in accordance with the directives of the Board of
Directors.

6.       EMPLOYEE BENEFITS.

         a. MEDICAL COVERAGE. Company agrees to provide Employee and employee's
family full medical insurance coverage for medical and dental.

         b. PLAN PARTICIPATION. Employee shall be entitled to participate in or
to receive benefits under all of Company's employee benefit plans made available
by Company or in the future to similarly situated employees, subject to the
terms, conditions and overall administration of such plans, including but not
limited to 401(k) plans, IRA plans, E.R.I.S.A Plans, any other retirement or
benefit plans that the Company has made available to similarly situated
employees.

7. BUSINESS EXPENSES. Employee will be required to incur travel, meals,
entertainment and other business expenses on behalf of the Company in the
performance of Employee's duties hereunder. Company will reimburse Employee for
all such reasonable business expenses incurred by Employee in connection with
Company's business upon presentation of receipts or other acceptable
documentation of the expenditures. In compensating Employee for expenses, the
ordinary and usual business guidelines and documentation requirements shall be
adhered to by Company and Employee.

                                       2
<PAGE>

8. TERMINATION OF EMPLOYMENT.

         a. TERMINATION FOR CAUSE. Company may terminate this Agreement for
cause by giving written notice of termination to Employee. The Company agrees to
compensate employee four (4) times the employee's annual salary and extend any
and all warrants and options granted to the employee to an additional 7 years
from date of termination. The notice of termination required by this section
shall specify the ground for the termination and shall be supported by a
statement of all relevant facts.

         b. TERMINATION UPON DEATH OR DISABILITY.

                  i. DEATH. This Agreement shall be terminated immediately upon
the death of Employee. However, company agrees to provide employees family a
life Insurance Policy for a minimum of $2m.

                  ii. DISABILITY. Company reserves the right to terminate this
Agreement if, due to illness or injury, either physical or mental, Employee is
unable to perform Employee's customary duties as an employee of Company, unless
reasonable accommodation can be made to allow Employee to continue working, for
more than 90 days in the aggregate out of a period of twelve consecutive months.
The disability shall be determined by a certification from a physician. Such a
termination shall be effected by giving ten days' written notice of termination
to Employee. Termination pursuant to this provision shall not prejudice
Employee's rights to receive disability insurance payments or the continued
compensation pursuant to Section 4(c) of this Agreement.

         c. EFFECT OF MERGER, TRANSFER OF ASSETS, OR DISSOLUTION. Without the
prior written consent of Employee, this Agreement shall not be terminated by any
voluntary or involuntary dissolution of Company resulting from a merger or
consolidation in which Company is not the consolidated or surviving corporation,
or a transfer of all or substantially all of the assets of Company. In the event
of any such merger or consolidation or transfer of assets, Employee's rights,
benefits, and obligations hereunder shall be assigned to the surviving or
resulting corporation or the transferee of Company's assets.

         d. PAYMENT ON TERMINATION. Notwithstanding any provision of this
Agreement, if Company terminates this Agreement without cause, other than upon
death or disability as set forth above, it shall pay Employee the remaining
salary amount for the remaining outstanding term of this Agreement or any
renewal thereof at the then current rate of compensation, plus any other
benefits to which he would otherwise receive.

9. GENERAL PROVISIONS.

         a. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto their respective devisees, legatees, heirs,
legal representatives, successors, and permitted assigns. The preceding sentence
shall not affect any restriction on assignment set forth elsewhere in this
Agreement.

                                       3
<PAGE>

         b. NOTICES. Any notice, request, instruction, or other document
required by the terms of this Agreement, or deemed by any of the Parties hereto
to be desirable, to be given to any other Party hereto shall be in writing and
shall be given by facsimile, personal delivery, overnight delivery, or mailed by
registered or certified mail, postage prepaid, with return receipt requested, to
the Company at the address of its corporate office and to the Employee at the
Employee's home address as it appears in the Employee's personnel records. A
notice sent as aforesaid may change addresses from time to time. If notice is
given by facsimile, personal delivery, or overnight delivery in accordance with
the provisions of this Section, said notice shall be conclusively deemed given
at the time of such delivery. If notice is given by mail in accordance with the
provisions of this Section, such notice shall be conclusively deemed given seven
business days after deposit thereof in the United States mail.

         c. SUMS DUE DECEASED EMPLOYEE. If Employee dies prior to the expiration
of the employment term, any sums that may be due him from Company under this
Agreement as of the date of death shall be paid to Employee's executors,
administrators, heirs, personal representatives, successors, and assigns.

         d. ARBITRATION. If a dispute or claim shall arise with respect to any
of the terms or provisions of this Agreement, or with respect to the performance
by either of the Parties under this Agreement, other than a dispute with respect
to Section 3 of this Agreement, then either party may, with notice as herein
provided, require that the dispute be submitted under the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). Each party shall bear
one-half (1/2) of the cost of appointing the arbitrator and of paying such
arbitrator's fees. The written decision of the arbitrator(s) ultimately
appointed by or for both Parties shall be binding and conclusive on the Parties.
Judgment may be entered on such written decision of the single arbitrator in any
court having jurisdiction and the Parties consent to the jurisdiction of the
Municipal and Superior Court of Orange County, California for this purpose. Any
arbitration undertaken pursuant to the terms of this section shall occur in
Orange County, California.

         e. ASSIGNMENT. Subject to all other provisions of this Agreement, any
attempt to assign or transfer this Agreement or any of the rights conferred
hereby, by judicial process or otherwise, to any person, firm, Company, or
corporation without the prior written consent of the other party, shall be
invalid, and may, at the option of such other party, result in an incurable
event of default resulting in termination of this Agreement and all rights
hereby conferred.

         f. CHOICE OF LAW. This Agreement and the rights of the Parties
hereunder shall be governed by and construed in accordance with the laws of the
State of California including all matters of construction, validity,
performance, and enforcement and without giving effect to the principles of
conflict of laws.

         g. INDEMNIFICATION. Company shall indemnify, defend and hold Employee
harmless, to the fullest extent permitted by law, for all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorney's fees that
Employee shall incur or suffer that arise from, result from or relate to the
discharge of Employee's duties under this Agreement. Company shall maintain
adequate insurance for this purpose or shall advance Employee any expenses
incurred in defending any such proceeding or claim to the maximum extent
permitted by law.

                                       4
<PAGE>

         h. JURISDICTION. The Parties submit to the jurisdiction of the Courts
of the State of California or a Federal Court empaneled in the State of
California for the resolution of all legal disputes arising under the terms of
this Agreement, including, but not limited to, enforcement of any arbitration
award.

         i. ENTIRE AGREEMENT. Except as provided herein, this Agreement,
including exhibits, contains the entire agreement of the Parties, and supersedes
all existing negotiations, representations, or agreements and all other oral,
written, or other communications between them concerning the subject matter of
this Agreement. There are no representations, agreements, arrangements, or
understandings, oral or written, between and among the Parties hereto relating
to the subject matter of this Agreement that are not fully expressed herein.

         j. SEVERABILITY. If any provision of this Agreement is unenforceable,
invalid, or violates applicable law, such provision, or unenforceable portion of
such provision, shall be deemed stricken and shall not affect the enforceability
of any other provisions of this Agreement.

         k. CAPTIONS. The captions in this Agreement are inserted only as a
matter of convenience and for reference and shall not be deemed to define,
limit, enlarge, or describe the scope of this Agreement or the relationship of
the Parties, and shall not affect this Agreement or the construction of any
provisions herein.

         l. MODIFICATION. No change, modification, addition, or amendment to
this Agreement shall be valid unless in writing and signed by all Parties
hereto.

         m. ATTORNEYS' FEES. Except as otherwise provided herein, if a dispute
should arise between the Parties including, but not limited to arbitration, each
party shall pay it's own attorney's fees and shall not be entitled to
re-imbursement.

         n. TAXES. Any income taxes required to be paid in connection with the
payments due hereunder, shall be borne by the party required to make such
payment. Any withholding taxes in the nature of a tax on income shall be
deducted from payments due, and the party required to withhold such tax shall
furnish to the party receiving such payment all documentation necessary to prove
the proper amount to withhold of such taxes and to prove payment to the tax
authority of such required withholding.

         o. NOT FOR THE BENEFIT OF CREDITORS OR THIRD PARTIES. The provisions of
this Agreement are intended only for the regulation of relations among the
Parties. This Agreement is not intended for the benefit of creditors of the
Parties or other third Parties and no rights are granted to creditors of the
Parties or other third Parties under this Agreement. Under no circumstances
shall any third party, who is a minor, be deemed to have accepted, adopted, or
acted in reliance upon this Agreement.

                                       5
<PAGE>

         g. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. The Parties agree that facsimile signatures of this Agreement shall
be deemed a valid and binding execution of this Agreement.

         h. CONFLICT WAIVER. Both Employee and the Company (the "Parties")
hereby agree and acknowledge that Lawrence W. Horwitz ("Horwitz"), has
represented both the Company and the Employee in the past. The Parties hereto
further acknowledge that they have been informed of the inherent conflict of
interest associated with the drafting of this Agreement by Horwitz and waive any
action they may have against Horwitz regarding such conflict. The Parties have
been given the opportunity to consult with independent counsel of their choice
regarding their rights under this Agreement.

         IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed as of the Effective Date.

"Company"                                            "Employee"

I/O MAGIC CORPORATION,                               TONY SHAHBAZ
A NEVADA CORPORATION

/S/ STEEL SU                                         /S/ TONY SHAHBAZ
------------                                         ----------------
BY: Mr. Steel Su
ITS: Director &
        Compensation Committee Member

/S/ STEVE GILLINGS
------------------
BY: Mr. Steve Gillings
ITS: Officer/VP of Finance &
        Compensation Committee Member

/S/ TONY SHAHBAZ
----------------
BY: Mr. Tony Shahbaz
ITS: Officer, Director &
        Compensation Committee Member

                                       6
<PAGE>

                                   EXHIBIT "A"
                              TERMS OF COMPENSATION

1.       ANNUAL SALARY - Annual Salary shall be $198,500.00. The companies
         compensation committee shall consider such salary for performance
         review and increase from time to time by the companies Board of
         Director's.

2.       BONUS - The employee shall receive a quarterly bonus equal to 7% of the
         companies quarterly Net Income as reported and reviewed by the
         companies third party auditors. Such payment shall be due upon
         completion of each quarterly statement.

3.       AUTO ALLOWANCE - The Company agrees to compensate employee $1,200.00
         per month for an auto allowance. Employee agrees to forfeit such
         automobile allowance should the company directly lease a company
         automobile of equivalent value for the employee.

4.       STOCK OPTIONS - From time to time and annually the employee shall be
         granted stock options and/or the companies Compensation Committee may
         determine other incentives as it may see fit.

5.       VACATION PAY - The employee shall be entitled to vacation and sick pay
         as approved by the company for all key management.

6.       TERM OF COMPENSATION - This agreement and all compensation and benefits
         as set fourth shall be retroactive to January 1, 2002 and will follow
         the terms and conditions through the term of this agreement. The
         beginning term of this agreement is defined by the date of execution.

                                       7

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