Document:

Exhibit
10.4

 

ISONICS CORPORATION

2008 EQUITY PLAN

 

                1.             Purposes of and Benefits Under the Plan.  This 2008 Equity Plan (the “Plan”) is
intended to compensate new, continuing, and existing employees, officers,
consultants, and advisors of Isonics Corporation and its controlled, affiliated and subsidiary
entities (collectively, the “Corporation”), so that they may acquire or
increase their proprietary interest in the Corporation. The Plan is intended to
facilitate the Corporation’s efforts to: 
(i) induce qualified persons to become employees, officers,
directors, consultants and advisors of the Corporation; (ii) compensate
new, continuing and exiting employees, officers, directors, consultants and
advisors for services provided to the Corporation; and (iii) encourage
such persons to remain in the employ of or associated with the Corporation and
to put forth maximum efforts for the success of the Corporation.  Options granted by the Committee pursuant to
this Plan do not constitute “incentive stock options” within the meaning of Section 422
of the Internal Revenue code and instead are “non-qualified stock options” (“Non-qualified
Stock Options”).

 

                2.             Definitions. 
As used in this Plan, the following words and phrases shall have the
meanings indicated:

 

(a)           “Board” shall mean the Board of
Directors of the Corporation.

 

(b)           “Bonus” shall mean the grant of
shares of Common Stock pursuant to Section 8 of this Plan.

 

(c)           “Committee” shall mean any committee
appointed by the Board to administer this Plan, if one has been appointed.  If no Committee has been appointed, the term “Committee”
shall mean the Board.

 

(d)           “Common Stock” shall mean the
Corporation’s no par value common stock.

 

(e)           “Disability” shall mean a Recipient’s
inability to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or that has lasted or can be expected to last for a continuous
period of not less than 12 months.  If
the Recipient has a disability insurance policy, the term “Disability” shall be
as defined therein.

 

(f)            “Fair Market Value” per share as of
a particular date shall mean the last sale price of the Corporation’s Common
Stock as reported on a national securities exchange, or on the OTC — Bulletin
Board, or if the quotation for the last sale reported is not available for the
Corporation’s Common Stock, the average of the closing bid and asked prices of
the Corporation’s Common Stock as so reported or, if such quotations are
unavailable, the value determined by the Committee in accordance with its
discretion in making a bona fide, good faith determination of fair market
value.  Fair Market Value shall be
determined without regard to any restriction other than a restriction which, by
its terms, never will lapse.

 

 

(g)           “Option” shall mean a Non-qualified
Stock Option granted pursuant to Sections 6 and 7 of this Plan.

 

(h)           “Recipient” means any person granted
an Option or awarded a Bonus hereunder.

 

(i)            “Internal Revenue Code” shall mean
the United States Internal Revenue Code of 1986, as amended from time to time.

 

                3.             Administration.

 

(a)           The Plan shall be administered by the
Committee.  The Committee shall have the
authority in its discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all the powers
and authorities either specifically conferred under the Plan or necessary or
advisable in the administration of the Plan, including the authority:

 

·                  to grant Options and Bonuses; to determine the vesting
schedule and other restrictions, if any, relating to Options and Bonuses;

 

·                  to determine the purchase price of the shares of
Common Stock covered by each Option (the “Option Price”);

 

·                  to determine the persons to whom, and the time or
times at which, Options and Bonuses shall be granted;

 

·                  to determine the number of shares to be covered by
each Option or Bonus;

 

·                  to determine Fair Market Value per share; to interpret
the Plan;

 

·                  to prescribe, amend and rescind rules and
regulations relating to the Plan;

 

·                  to determine the terms and provisions of the Option
agreements (which need not be identical) entered into in connection with
Options granted under the Plan; and

 

·                  to make all other determinations deemed necessary or
advisable for the administration of the Plan.

 

The Committee may delegate to one or more of its
members or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan.

 

(b)           Options and Bonuses granted under the
Plan shall be evidenced by duly adopted resolutions of the Committee included
in the minutes of the meeting at which they are adopted or in a unanimous
written consent.

 

2

 

(c)           The Committee shall endeavor to
administer the Plan and grant Options and Bonuses hereunder in a manner that is
compatible with the obligations of persons subject to Section 16 of the
U.S. Securities Exchange Act of 1934 (the “1934 Act”), although compliance with
Section 16 is the obligation of the Recipient, not the Corporation.  Neither the Committee, the Board nor the
Corporation can or does assume any legal responsibility for a Recipient’s
compliance with his obligations under Section 16 of the 1934 Act.

 

(d)           No member of the Committee or the
Board shall be liable for any action taken or determination made in good faith
with respect to the Plan or any Option or Bonus granted hereunder.

 

                4.             Eligibility.

 

(a)           Subject to certain limitations
hereinafter set forth, Options and Bonuses may be granted to employees,
officers, directors, consultants and advisors of the Corporation.  In determining the persons to whom Options or
Bonuses shall be granted and the number of shares to be covered by each Option
or Bonus, the Committee shall take into account the duties of the respective
persons, their present and potential contributions to the success of the
Corporation, and such other factors as the Committee shall deem relevant to
accomplish the purposes of the Plan.

 

(b)           A Recipient shall be eligible to
receive more than one grant of an Option or Bonus during the term of the Plan,
on the terms and subject to the restrictions herein set forth.

 

                5.             Stock Reserved.

 

(a)           The stock subject to Options or
Bonuses hereunder shall be shares of Common Stock.  Such shares, in whole or in part, may be authorized
but unissued shares or shares that shall have been or that may be reacquired by
the Corporation.  The aggregate number of
shares of Common Stock as to which Options and Bonuses may be granted from time
to time under the Plan shall not exceed 25,000,000 subject to adjustment as
provided in Section 7(h) hereof.

 

(b)           If any Option outstanding under the
Plan for any reason expires or is terminated without having been exercised in
full, or if any Bonus granted is forfeited because of vesting or other restrictions
imposed at the time of grant, the shares of Common Stock allocable to the
unexercised portion of such Option or the forfeited portion of the Bonus shall
become available for subsequent grants of Options and Bonuses under the Plan.

 

                6.             Non-qualified Stock Options.  Options granted pursuant to the Plan are
intended to constitute Non-qualified Stock Options and shall be subject to the
general terms and conditions specified in Section 7 hereof.

 

                7.             Terms and Conditions of Options.  Each Option granted pursuant to the Plan
shall be evidenced by a written Option agreement between the Corporation and
the Recipient, which 

 

3

 

agreement shall, unless otherwise determined by the
Committee, be substantially in the form of Exhibit A hereto as
modified from time to time by the Committee in its discretion, and which shall,
unless otherwise determined by the Committee, comply with and be subject to the
following terms and conditions:

 

(a)           Number of Shares.  Each Option agreement shall state the number
of shares of Common Stock covered by the Option.

 

(b)           Option Price.  Subject to adjustment as provided in Section 7
(h) hereof, each Option agreement shall state the Option Price, which
shall be determined by the Committee subject only to the following
restrictions:

 

(1)           Each Option agreement shall state the
Option Price, which shall be not less than 100% of the Fair Market Value per
share on the effective date of grant of the Option.

 

(2)           The date on which the Committee
adopts a resolution expressly granting an Option shall be considered the day on
which such option is granted, unless a future date is specified in the
resolution.

 

(c)           Term of Option.  Each Option Agreement shall state the period
during and times at which the Option shall be exercisable, in accordance with
the following limitations:

 

(1)           The date on which the Committee
adopts a resolution expressly granting an Option shall be considered the day on
which such Option is granted, unless a future date is specified in the
resolution, although any such grant shall not be effective until the Recipient
has executed an Option Agreement with respect to such Option.

 

(2)           The exercise period of any Option
shall not exceed ten years from the date of grant of the Option.

 

(3)           The Committee shall have the
authority to accelerate or extend the exercisability of any outstanding Option
at such time and under such circumstances as it, in its sole discretion, deems
appropriate, but no option may be extended beyond ten years for the date of
grant.

 

(4)           The exercise period shall be subject
to earlier termination as provided in Sections 7(e) and 7(f) hereof,
and, furthermore, shall be terminated upon surrender of the Option by the
holder thereof if such surrender has been authorized in advance by the
Committee.

 

4

 

(d)           Method of Exercise and Medium and
Time of Payment.

 

(1)           An Option may be exercised as to any
or all whole shares of Common Stock as to which it then is exercisable; provided, however, that no Option may be exercised as to
less than 100 shares (or such number of shares as to which the Option is then
exercisable if such number of shares is less than 100) or $1,000, whichever is
greater.

 

(2)           Each exercise of an Option granted
hereunder, whether in whole or in part, shall be effected by written notice to
the Secretary of the Corporation designating the number of shares as to which
the Option is being exercised, and shall be accompanied by payment in full of
the Option Price for the number of shares so designated or by notice that
Recipient is exercising the Option by use of the cashless exercise rights
provided in Section 7(d)(5) hereof, together with any written
statements required by, or deemed by the Corporation’s counsel to be advisable
pursuant to, any applicable securities laws.

 

(3)           The Option Price shall be paid in
cash, or in accordance with the cashless exercise rights of Section 7(d)(5) hereof,
or in shares of Common Stock having a Fair Market Value equal to such Option
Price, or in property or in a combination of cash, shares and property and,
subject to approval of the Committee, may be effected in whole or in part with
funds received from the Corporation at the time of exercise as a compensatory
cash payment for services previously rendered.

 

(4)           The Committee shall have the sole and
absolute discretion to determine whether or not property other than cash, a
cashless exercise as described in Section 7(d)(5), or shares of Common
Stock may be used to purchase the shares of Common Stock hereunder and, if so,
to determine the value of the property received.

 

(5)           Recipient may exercise an Option
granted under this Plan through a “cashless exercise right”, whereby if the
notice of exercise to the Corporation by Recipient specifies that the exercise
of an Option is made pursuant to the cashless exercise rights of this Section 7(d)(5),
then the Corporation shall deliver to Recipient, without further payment by
Recipient of the Option Price or any cash or other consideration, the number of
shares of the Common Stock computed using the following formula:

 

X =          Y(A-B)

                    A

 

Where:

 

X =                             the number of Option Shares to be issued
to the Recipient pursuant to the exercise of the Option;

 

Y =                              the number of Shares that may be purchased
upon exercise of the Option;

 

A =                            the Fair Market Value of one share of
Common Stock; and

 

B =                              the Option’s exercise price per share of
Common Stock.

 

5

 

(6)           The Recipient shall make provision
for the withholding of taxes as required by Section 9 hereof.

 

(e)           Termination of Relationship With
Corporation.

 

(1)           Unless otherwise provided in the
Option agreement by and between the Corporation and the Recipient, if the
Recipient ceases to be an employee, officer, advisor, or consultant of the
Corporation (other than by reason of death, Disability or retirement), all
Options theretofore granted to such Recipient but not theretofore exercised
shall terminate three months following the date the Recipient ceased to be an
employee, officer, advisor or consultant of the Corporation; provided, however, that notwithstanding any other provision
in this paragraph 7(e)(1), if the Recipient’s relationship with the Corporation
is terminated for “Cause” (as such term is defined in Section 7(k)), then
the Recipient’s Options shall terminate upon the date of termination of
employment or termination of the Recipient’s other relationship with the
Corporation.

 

(2)           Nothing in the Plan or in any Option
or Bonus granted hereunder shall confer upon an individual any right to
continue in the employ of or continue any other relationship with the
Corporation or interfere in any way with the right of the Corporation to
terminate such employment or other relationship between the individual and the
Corporation.

 

(f)            Death, Disability or Retirement
of Recipient.  Unless otherwise
provided in the Option agreement by and between the Corporation and the
Recipient:

 

                (1) if a Recipient shall die: (A) while an
employee, officer, advisor, or consultant of the Corporation; or (B) within
ninety days after the termination of such Recipient as an employee, officer,
advisor or consultant, other than termination for Cause; or

 

                (2) if the Recipient’s relationship with the
Corporation shall terminate by reason of Disability or retirement;

 

                then
all Options theretofore granted to such Recipient (whether or not otherwise
exercisable) unless earlier terminated in accordance with their terms, may be
exercised at any time within one year after the date of death, Disability or
retirement of the Recipient by the Recipient or by the Recipient’s estate or by
a person who acquired the right to exercise such Options by bequest or
inheritance.

 

6

 

(g)           Transferability Restriction.

 

(1)           Options granted under the Plan shall
not be transferable other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code or Title I of the Employee Retirement Income Security
Act of 1974, or the rules thereunder. 
Options may be exercised during the lifetime of the Recipient only by
the Recipient and thereafter only by Recipient’s legal representative.

 

(2)           Any attempted sale, pledge,
assignment, hypothecation or other transfer of an Option contrary to the
provisions hereof and/or the levy of any execution, attachment or similar
process upon an Option, shall be null and void and without force or effect and
shall result in a termination of the Option.

 

(3)           (A)  As a condition to the
transfer of any shares of Common Stock issued upon exercise of an Option
granted under this Plan or granted as a Bonus, the Corporation may require (x) an
opinion of counsel, reasonably satisfactory to the Corporation, to the effect
that such transfer will not be in violation of the U.S. Securities Act of 1933,
as amended (the “1933 Act”) or any other applicable securities laws or (y) that
transfer of such shares has been registered under federal and all applicable
state securities laws.  (B) The
Corporation shall be authorized to refrain from delivering or transferring
shares of Common Stock until the Committee determines that such delivery or
transfer will not violate applicable securities laws and the Recipient has
tendered to the Corporation any federal, state or local tax owed by the
Recipient as a result of exercising the Option or disposing of any Common Stock
when the Corporation has a legal liability to satisfy such tax.  (C)  The Corporation shall not be liable
for damages due to delay in the delivery or issuance of any stock certificate
for any reason whatsoever, including, but not limited to, a delay caused by
listing requirements of any securities exchange or any registration
requirements under the 1933 Act, the 1934 Act, or under any other state,
federal or provincial law, rule or regulation, except where such delay is
due to the Corporation’s failure to act in good faith.  (D)  The Corporation is under no
obligation to take any action or incur any expense in order to register or
qualify the delivery or transfer of shares of Common Stock under applicable
securities laws or to perfect any exemption from such registration or
qualification.  (E) The Corporation
will not be liable to any Recipient for failure to deliver or transfer shares
of Common Stock if such failure is based upon the provisions of this paragraph
7(g)(3).

 

(h)           Effect of Certain Changes.

 

(1)           If there is any change in the number
of shares of outstanding Common Stock through the declaration of stock
dividends, or through a recapitalization resulting in stock splits or
combinations or exchanges of such shares, the number of shares of Common Stock
available for Options and the number of such shares covered by outstanding
Options, and the exercise price per share of the outstanding Options, shall be
proportionately adjusted by the Committee to reflect any increase or decrease
in the number of issued shares of Common Stock; provided,
however, that any fractional shares resulting from such adjustment
shall be eliminated.

 

(2)           In the event of the proposed
dissolution or liquidation of the Corporation, or any corporate separation or
division, including, but not limited to, split-up, split-off or spin-off, or a
merger or consolidation of the Corporation with another corporation, the 

 

7

 

Committee may provide
that the holder of each Option then exercisable shall have the right to
exercise such Option (at its then current Option Price) solely for the kind and
amount of shares of stock and other securities, property, cash or any
combination thereof receivable upon such dissolution, liquidation, corporate
separation or division, or merger or consolidation by a holder of the number of
shares of Common Stock for which such Option might have been exercised
immediately prior to such dissolution, liquidation, corporate separation or
division, or merger or consolidation; or, in the alternative the Committee may
provide that each Option granted under the Plan shall terminate as of a date fixed
by the Committee; provided, however, that not less
than 30 days’ written notice of the date so fixed shall be given to each
Recipient, who shall have the right, during the period of 30 days preceding
such termination, to exercise the Option as to all or any part of the shares of
Common Stock covered thereby, including shares as to which such Option would
not otherwise be exercisable.

 

(3)           Paragraph 2 of this Section 7(h) shall
not apply to a merger or consolidation in which the Corporation is the surviving
corporation and shares of Common Stock are not converted into or exchanged for
stock, securities of any other corporation, cash or any other thing of
value.  Notwithstanding the preceding
sentence, in case of any consolidation or merger of another corporation into
the Corporation in which the Corporation is the surviving corporation and in
which there is a reclassification or change (including a change to the right to
receive cash or other property) of the shares of Common Stock (excluding a
change in par value, or from no par value to par value, or any change as a
result of a subdivision or combination, but including any change in such shares
into two or more classes or series of shares) or the holders of all of the
outstanding voting securities of the Corporation immediately prior to such
consolidation or merger do not constitute the holders of a majority of the
outstanding voting securities of the Corporation immediately following such
consolidation or merger, the Committee may provide that the holder of each
Option then exercisable shall have the right to exercise such Option solely for
the kind and amount of shares of stock and other securities (including those of
any new direct or indirect parent of the Corporation), property, cash or any
combination thereof receivable upon such reclassification, change,
consolidation or merger by the holder of the number of shares of Common Stock
for which such Option might have been exercised.

 

(4)           In the event of a change in the
Common Stock of the Corporation as presently constituted into the same number
of shares with a different  par value, the
shares resulting from any such change shall be deemed to be the Common Stock of
the Corporation within the meaning of the Plan.

 

(5)           To the extent that the foregoing adjustments
relate to stock or securities of the Corporation, such adjustments shall be
made by the Committee, whose determination in that respect shall, in absence of
bad faith or mathematical error, be final, binding and conclusive.

 

(6)           Except as expressly provided in this Section 7(h) or
the applicable Option agreement, the Recipient shall have no rights by reason
of any subdivision or consolidation of shares of stock of any class, or the
payment of any stock dividend or any other increase or decrease in the number
of shares of stock of any class, or by reason of any 

 

8

 

dissolution, liquidation,
merger, or consolidation or spin-off of assets or stock of another corporation;
and any issue by the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option. 
The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structures, or to merge
or consolidate, or to dissolve, liquidate, or sell or transfer all or any part
of its business or assets.

 

(i)            No Rights as Shareholder -
Non-Distributive Intent.

 

(1)           Neither a Recipient of an Option nor
such Recipient’s legal representative or heir shall be deemed to be the holder
of, or to have any rights of a holder with respect to, any shares subject to
such Option until after the Option is exercised and the shares are issued.

 

(2)           No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other property)
or distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 7 hereof.

 

(3)           Upon exercise of an Option at a time
when there is no registration statement in effect under the 1933 Act relating
to the shares issuable upon exercise, shares may be issued to the Recipient
only if the Recipient represents and warrants in writing to the Corporation
that the shares purchased are being acquired for investment and not with a view
to the distribution thereof and provides the Corporation with sufficient
information to establish an exemption from the registration requirements of the
1933 Act.  A form of subscription
agreement containing representations and warranties deemed sufficient as of the
date of adoption of this Plan is attached hereto as Exhibit B.

 

(4)           No shares shall be issued upon the
exercise of an Option unless and until there shall have been compliance with
any then applicable requirements of the U.S. Securities and Exchange Commission
or any other regulatory agencies having jurisdiction over the Corporation.

 

(j)            Other Provisions.  Option agreements authorized under the Plan
may contain such other provisions as the Committee deems advisable, including,
without limitation, the imposition of restrictions upon the exercise.,

 

(k)           Definition of “Cause.”   For the purposes of this Plan, the term “Cause”
shall mean (a) with respect to a specific Recipient, the definition
assigned to such term in an agreement between the Recipient and the
Corporation, and (b) bad faith or willful misconduct by the Recipient.

 

9

 

                8.             Grant
of Stock Bonuses.  In addition to, or
in lieu of, the grant of an Option, the Committee may grant Bonuses.

 

(a)           At the time of grant of a Bonus, the
Committee may impose a vesting period of up to ten years, and such other
restrictions which it deems appropriate. 
Unless otherwise directed by the Committee at the time of grant of a
Bonus, the Recipient shall be considered a shareholder of the Corporation as to
the Bonus shares which have vested in the grantee at any time regardless of any
forfeiture provisions which have not yet arisen.

 

(b)           The grant of a Bonus and the issuance
and delivery of shares of Common Stock pursuant thereto shall be subject to
reasonable approval by the Corporation’s counsel of all legal matters in
connection therewith, including compliance with the requirements of the 1933
Act, the 1934 Act, other applicable securities laws, rules and regulations,
and the requirements of any stock exchanges upon which the Common Stock then
may be listed.  Any certificates prepared
to evidence Common Stock issued pursuant to a Bonus grant shall bear legends as
the Corporation’s counsel may reasonably deem necessary or advisable.  Included among the foregoing requirements,
but without limitation, any Recipient of a Bonus at a time when a registration
statement relating thereto is not effective under the 1933 Act shall execute a
Subscription Agreement substantially in the form of Exhibit B.

 

(c)           Transferability of shares granted as
a Bonus shall be restricted as set forth in Section 7(g)(3), above.

 

                9.             Agreement
by Recipient Regarding Taxes.

 

(a)           By accepting an Option or Bonus, each
Recipient agrees that the Corporation, to the extent permitted or required by
law, shall have the right to deduct a sufficient number of shares due to the
Recipient upon exercise of the Option or the grant of a Bonus to allow the
Corporation to pay federal, provincial, state and local taxes of any kind
required by law to be withheld upon the exercise of such Option or payment of
such Bonus from any payment of any kind otherwise due to the Recipient.  The Corporation shall not be obligated to advise
any Recipient of the existence of any tax or the amount which the Corporation
will be so required to withhold.

 

(b)           By accepting an Option or Bonus, each
Recipient acknowledges that the Corporation has advised such Recipient to
discuss the grant of such Option or Bonus with Recipient’s tax, legal,
investment, and other advisors as Recipient and such advisors determine to be
appropriate, and that such consultation shall include (to the extent determined
by the Recipient and such advisors to be appropriate or necessary) a discussion
of the advisability of making an election under Section 83 of the Internal
Revenue Code.

 

(c)           In connection with any Option or
receiving any shares underlying a Bonus, the Corporation may require Recipient
to affirm as correct the matters set forth in Sections 9(a) and 9(b).

 

10

 

                10.           Term
of Plan.  Options and Bonuses may be
granted under this Plan from time to time within a period of ten years from the
date the Plan is adopted by the Board.

 

                11.           Amendment
and Termination of the Plan.

 

                                (a)           Subject to the policies, rules and
regulations of any lawful authority having jurisdiction (including any exchange
with which the shares of the Corporation are listed for trading), the Board may
at any time, without further action by the shareholders, amend the Plan or any
Option granted hereunder in such respects as it may consider advisable and,
without limiting the generality of the foregoing, it may do so to ensure that
Options granted hereunder will comply with any provisions respecting stock
options in the income tax and other laws in force in any country or
jurisdiction of which any Option holders may from time to time be a resident or
citizen, or it may at any time without action by shareholders terminate the
Plan; provided, however, that any amendment
that would require shareholder approval under applicable state law, the rules and
regulations of any national securities exchange on which the Corporation’s
securities then may be listed, the Internal Revenue Code or any other applicable
law, shall be subject to the approval of the shareholders of the Corporation; further, provided, however, that any such modification that
may result from adjustments authorized by Section 7(h) hereof or
which are required for compliance with the 1934 Act, the Internal Revenue Code,
their rules or other laws or judicial order, shall not require such
approval of the shareholders.

 

                                (b)           Except
as provided in Section 7 hereof, no suspension, termination, modification
or amendment of the Plan may adversely affect any Option previously granted,
unless the written consent of the Recipient is obtained.

 

                12.           Termination
of Right of Action.  Every right of
action arising out of or in connection with the Plan by or on behalf of the
Corporation, or by any shareholder of the Corporation against any past, present
or future member of the Board, or against any employee, or by an employee
(past, present or future) against the Corporation will, irrespective of the
place where an action may be brought and irrespective of the place of residence
of any such shareholder, director or employee, cease and be barred by the
expiration of three years from the date of the act or omission in respect of
which such right of action is alleged to have risen.

 

                13.           Tax
Litigation.  The Corporation shall
have the right, but not the obligation, to contest, at its expense, any tax
ruling or decision, administrative or judicial, on any issue which is related
to the Plan and which the Board believes to be important to holders of Options and
Bonuses issued under the Plan and to conduct any such contest or any litigation
arising therefrom to a final decision.

 

                14.           No
Shareholder Approval.  The
effectiveness of this Plan and the right of the Committee to grant any Options
or Bonuses hereunder is not subject to approval by the Shareholders of the
Corporation.

 

[End of Plan]

 

11

 

Exhibit A

 

FORM OF STOCK OPTION
AGREEMENT

 

STOCK OPTION AGREEMENT

 

                STOCK
OPTION AGREEMENT made as of this        day of
                        ,
            , by
and between Isonics Corporation, a California corporation (the “Corporation”),
and
                                
                                                    
(the “Recipient”).

 

                In
accordance with the Corporation’s 2008 Equity Plan (the “Plan”), the provisions
of which are incorporated herein by reference, the Corporation desires, in
connection with the services of the Recipient, to provide the Recipient with an
opportunity to acquire shares of the Corporation’s no par value common stock (“Common
Stock”) on favorable terms and thereby increase the Recipient’s proprietary
interest in the Corporation and incentive to put forth maximum efforts for the
success of the business of the Corporation. 
Capitalized terms used but not defined herein are used as defined in the
Plan.

 

                NOW,
THEREFORE, in consideration of the premises and mutual covenants herein set
forth and other good and valuable consideration, the Corporation and the
Recipient agree as follows:

 

1.             Confirmation of Grant of Option.  Pursuant to a determination of the Committee
or, in the absence of a Committee, by the Board of Directors of the Corporation
made on
                      ,
           (the “Date of
Grant”), the Corporation, subject to the terms of the Plan and written
acceptance by the Recipient of this Agreement by not later than
                    ,
         (the “Acceptance Date”),
confirms that the Recipient has been irrevocably granted on the Date of Grant,
as a matter of separate inducement and agreement, and in addition to and not in
lieu of salary or other compensation for services, a Stock Option (the “Option”)
exercisable to purchase
              
shares of Common Stock on the terms and conditions herein set forth, subject to
adjustment as provided in Paragraph 8 hereof. 
If the Recipient does not accept this Agreement by returning a signed
copy hereof to the Corporation by not later than the Acceptance Date, the
Options granted by the Board or the Committee shall be of no further force and
effect.

 

2.             Option Price. 
The Option Price of shares of Common Stock covered by the Option will be
$           per share (the “Option
Price”) subject to adjustment as provided in Paragraph 8 hereof.

 

3.             Vesting and Exercise of Option.

 

                                a.             Except as otherwise provided herein
or in Section 8 of the Plan, the Option shall vest and become exercisable
as follows: 
(immediately upon acceptance by the Optionee executing the signature page to
this Stock Option Agreement and returning it to the 

 

12

 

Corporation (which must occur no later than
                    ),
or insert other vesting schedule                                                                                         );
provided,
however, that no
portion of the Option shall vest or become exercisable unless the Recipient is
an employee, officer, advisor, or consultant of the Corporation on such vesting
date.

 

                                b.             The Option may not be exercised at
any one time as to fewer than 100 shares (or such number of shares as to which
the Option is then exercisable if such number of shares is less than 100) or a
total Option Price of $1,000, whichever is greater.

 

                                c.             As provided in Section 7 of
the Plan, the Option may be exercised by written notice to the Secretary of the
Corporation accompanied by payment in full of the Option Price, or accompanied
by notice that Recipient is exercising such Option in accordance with the  “cashless exercise rights” as provided in Section 7(d)(5) of
the Plan.

 

4.             Term of Option. 
The term of the Option will be through
                    ,
        , subject to earlier
termination or cancellation as provided in this Agreement and the Plan.  The holder of the Option will not have any
rights to dividends or any other rights of a shareholder with respect to any
shares of Common Stock subject to the Option until such shares shall have been
issued (as evidenced by the appropriate transfer agent of the Corporation) upon
purchase of such shares through exercise of the Option.

 

5.             Transferability Restriction.  The Option may not be assigned, transferred
or otherwise disposed of, or pledged or hypothecated in any way (whether by
operation of law or otherwise) except in strict compliance with the Plan.  Any assignment, transfer, pledge,
hypothecation or other disposition of the Option or any attempt to make any
levy of execution, attachment or other process will cause the Option to
terminate immediately upon the happening of any such event; provided, however, that any such termination of the Option
under the provisions of this Paragraph 5 will not prejudice any rights or
remedies which the Corporation may have under this Agreement or otherwise.

 

6.             Exercise Upon Termination.  The Recipient’s rights to exercise this
Option upon termination of employment or cessation of service as an employee,
officer, advisor or consultant shall be as set forth in Section 7(e) of
the Plan.

 

7.             Death, Disability or Retirement of Recipient.  The exercisability of this Option upon the
death, Disability or retirement of the Recipient shall be as set forth in Section 7(f) of
the Plan.

 

8.             Adjustments. 
The Option shall be subject to adjustment upon the occurrence of certain
events as set forth in Section 7(h) of the Plan.

 

9.             No Registration Obligation.  The Recipient understands that the Option is
not registered under the 1933 Act and, unless by separate written agreement,
the Corporation has no obligation to so register the Option or any of the
shares of Common Stock subject to and issuable upon the exercise of the Option,
although it may from time to time register under the 1933 Act the shares
issuable upon exercise of Options granted pursuant to the Plan.  The Recipient 

 

13

 

represents that the Option is being acquired for the
Recipient’s own account and that unless registered by the Corporation, the
shares of Common Stock issued on exercise of the Option will be acquired by the
Recipient for investment.  The Recipient
understands that the Option is, and the underlying securities may be, issued to
the Recipient in reliance upon exemptions from the 1933 Act, and acknowledges
and agrees that all certificates for the shares issued upon exercise of the
Option may bear the following legend unless such shares are registered under
the 1933 Act prior to their issuance:

 

The
shares represented by this Certificate have not been registered under the
Securities Act of 1933 (the “1933 Act”), and are “restricted securities” as
that term is defined in Rule 144 under the 1933 Act.  The shares may not be offered for sale, sold
or otherwise transferred except pursuant to an effective registration statement
under the 1933 Act or pursuant to an exemption from registration under the 1933
Act, the availability of which is to be established to the satisfaction of the
Company.

 

                The
Recipient further understands and agrees that the Option may be exercised only
if at the time of such exercise the underlying shares are registered and/or the
Recipient and the Corporation are able to establish the existence of an
exemption from registration under the 1933 Act and applicable state or other
laws.

 

10.           Notices.  Each notice relating to this Agreement will
be in writing and delivered in person or by certified mail to the proper
address.  Notices to the Corporation
shall be addressed to the Corporation, attention:  President, at 5906 McIntyre Street, Golden,
Colorado  80403, or at such other address
as may constitute the Corporation’s principal place of business at the time,
with a copy to: Herrick K. Lidstone, Jr., Esq., Burns, Figa &
Will, P.C., 6400 S. Fiddlers Green Circle, Suite 1000, Greenwood Village,
CO 80111.  Notices to the Recipient or
other person or persons then entitled to exercise the Option shall be addressed
to the Recipient or such other person or persons at the Recipient’s address
below specified.  Anyone to whom a notice
may be given under this Agreement may designate a new address by notice to that
effect given pursuant to this Paragraph 10.

 

11.           Approval of Counsel.  The exercise of the Option and the issuance
and delivery of shares of Common Stock pursuant thereto shall be subject to the
reasonable approval by the Corporation’s counsel of all legal matters in
connection therewith, including compliance with the registration and reporting
requirements of the 1933 Act, the Securities Exchange Act of 1934, as amended,
applicable state and other securities laws, the rules and regulations
thereunder, and the requirements of any national securities exchange(s) upon
which the Common Stock then may be listed.

 

12.           Benefits of Agreement.  This Agreement will inure to the benefit of
and be binding upon each successor and assignee of the Corporation.  All obligations imposed upon the Recipient
and all rights granted to the Corporation under this Agreement will be binding
upon the Recipient’s heirs, legal representatives and successors.

 

14

 

13.           Effect of Governmental and Other
Regulations.  The exercise of the
Option and the Corporation’s obligation to sell and deliver shares upon the
exercise of the Option are subject to all applicable federal and state laws, rules and
regulations, and to such approvals by any regulatory or governmental agency
which may, in the opinion of counsel for the Corporation, be required.

 

14.           Plan Governs.  In the event that any provision in this
Agreement conflicts with a provision in the Plan, the provision of the Plan
shall govern.

 

                Executed in the name and on
behalf of the Corporation by one of its duly authorized officers and by the
Recipient all as of the date first above written.

 

	
   

  	
  ISONICS CORPORATION

  
	
   

  	
   

  	
   

  
	
  Date
                              ,

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

                The undersigned Recipient has read and understands
the terms of this Option Agreement and the attached Plan and hereby agrees to
comply therewith.

 

	
  Date
                              ,

  	
   

  
	
   

  	
  Signature of Recipient

  
	
   

  	
   

  	
   

  
	
   

  	
  Tax ID Number:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

15

 

Exhibit B

 

SUBSCRIPTION AGREEMENT

 

THE SECURITIES BEING ACQUIRED BY
THE UNDERSIGNED HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933
OR ANY OTHER LAWS AND ARE OFFERED UNDER EXEMPTIONS FROM THE REGISTRATION
PROVISIONS OF SUCH LAWS.  THESE
SECURITIES CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER CONTAINED IN THIS STOCK
SUBSCRIPTION AGREEMENT AND APPLICABLE SECURITIES LAWS.

 

                This Subscription Agreement is entered for the
purpose of the undersigned acquiring
                          
shares of the no par value common stock (the “Securities”) of Isonics
Corporation, a California corporation (the “Corporation”), from the Corporation
as a Bonus or pursuant to exercise of an Option granted pursuant to the
Corporation’s 2008 Equity Plan (the “Plan”). All capitalized terms not
otherwise defined herein shall be as defined in the Plan.

 

                It is understood that no grant of any Bonus or
exercise of any Option at a time when no registration statement relating
thereto is effective under the U.S. Securities Act of 1933, as amended (the “1933
Act”) can be completed until the undersigned executes this Subscription
Agreement and delivers it to the Corporation, and that such grant or exercise
is effective only in accordance with the terms of the Plan and this
Subscription Agreement.

 

                In connection with the undersigned’s acquisition of
the Securities, the undersigned represents and warrants to the Corporation as
follows:

 

                1.             The undersigned has been provided
with, and has reviewed the Plan, and such other information as the undersigned
may have requested of the Corporation regarding its business, operations,
management, and financial condition (all of which is referred to herein as the “Available
Information”).

 

                2.             The Corporation has given the
undersigned the opportunity to ask questions of and to receive answers from
persons acting on the Corporation’s behalf concerning the terms and conditions
of this transaction and the opportunity to obtain any additional information
regarding the Corporation, its business and financial condition or to verify
the accuracy of the Available Information which the Corporation possesses or
can acquire without unreasonable effort or expense.

 

                3.             The Securities are being acquired
by the undersigned for the undersigned’s own account and not on behalf of any
other person or entity.

 

 

                4.             The undersigned understands that
the Securities being acquired hereby have not been registered under the 1933
Act or any state or foreign securities laws, and are, and unless registered
will continue to be, restricted securities within the meaning of Rule 144
of the General Rules and Regulations under the 1933 Act and other
statutes, and the undersigned consents to the placement of appropriate
restrictive legends on any certificates evidencing the Securities and any
certificates issued in replacement or exchange therefor and acknowledges that
the Corporation will cause its stock transfer records to note such
restrictions.

 

                5.             By the undersigned’s execution
below, it is acknowledged and understood that the Corporation is relying upon
the accuracy and completeness hereof in complying with certain obligations
under applicable securities laws.

 

                6.             This Agreement binds and inures to
the benefit of the representatives, successors and permitted assigns of the
respective parties hereto.

 

                7.             The undersigned acknowledges that
the grant of any Bonus or Option and the issuance and delivery of shares of
Common Stock pursuant thereto shall be subject to the prior reasonable approval
by the Corporation’s counsel of all legal matters in connection therewith,
including compliance with the requirements of the 1933 Act and other applicable
securities laws, the rules and regulations thereunder, and the
requirements of any national securities exchange(s) upon which the Common
Stock then may be listed.

 

                8.             The undersigned acknowledges and
agrees that the Corporation has withheld
                      
shares for the payment of taxes as a result of the grant of the Bonus or the
exercise of an Option.

 

                9.             The Plan is incorporated herein by
reference.  In the event that any
provision in this Agreement conflicts with ANY provision in the Plan, the
provisions of the Plan shall govern.

 

	
  Date
                              ,

  	
   

  
	
   

  	
  Signature of Recipient

  
	
   

  	
   

  	
   

  
	
   

  	
  Tax ID Number:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
				

 

2Exhibit 10.1

 

EarthLink, Inc.

Board of Directors Compensation Plan

Effective February 2008

 

1.               Retainer

a.               Each independent director
receives a $35,000 annual retainer, paid semi-annually in advance ($17,500
following January Board meeting and $17,500 following July Board
meeting).

b.              The Lead Director receives
an additional $20,000 annual retainer, paid semi-annually in advance ($10,000
following the January Board meeting and $10,000 following the July Board
meeting).

c.               The Leadership and
Compensation Committee chair, the Corporate Governance and Nominating Committee
chair and the Finance Committee chair each receive an additional $10,000 annual
retainer, paid semi-annually in advance ($5,000 following January Board
meeting and $5,000 following July Board meeting).

d.              The Audit Committee chair
receives an additional $20,000 annual retainer, paid semi-annually in advance
($10,000 following January Board meeting and $10,000 following July Board
meeting).

e.               An independent director
designated to serve on the Board of Helio Inc. receives an additional $60,000
annual retainer, paid semi-annually in advance ($30,000 following January Board
meeting and $30,000 following July Board meeting).

 

2.               Meeting fees

a.               Each independent director is
paid $1,000 for each full Board meeting and Committee meeting he or she attends
in person and $500 for each full Board meeting and Committee meeting he or she
attends telephonically.

b.              An independent director
designated to serve on the Board of Helio Inc. is paid $1,000 for each full
Helio Inc. Board and Committee meeting he or she attends in person and $500 for
each full Helio Inc. Board and Committee meeting he or she attends
telephonically.

 

3.               Stock Options

a.               Independent directors
receive an initial option grant of 15,000 options when they join the
Board.  These options vest over four
years.

b.              Additionally, independent
directors receive an annual option grant of 10,000 options on the first
business day of January of each year. 
These also vest over four years.

 

4.               Restricted Stock Units

a.               Each independent director
receives a grant of Restricted Stock Units valued at $30,000 annually (on the
date of the July Board meeting).  

 

 

Restricted Stock Units will vest over four years, and upon vesting may
be received in shares of stock or may be deferred into a deferred compensation
plan.

i.      Note:  Each RSU is equal to one share of EarthLink
stock.  Upon vesting, the RSUs may be
received in shares of stock (in which case the recipient has taxable income
equal to the value of the shares received on the date of vesting), or may be
deferred into a deferred compensation plan where they continue to be equal to
shares of EarthLink stock but where receipt and taxation may be deferred to
later dates.

 

5.               Stock Appreciation Rights

a.               An independent director
designated to serve on the Board of Helio Inc. receives a Stock Appreciation
Right when he or she joins the Helio Inc. Board.  This Stock Appreciation Right provides for a
cash payment from EarthLink to the independent director based on the increase
in value of 100,000 shares of Helio Inc. common stock over the period set forth
in the Stock Appreciation Right.  This
Stock Appreciation Right vests over four years.

 

6.               Meeting expenses

a.               EarthLink reimburses
directors for their expenses incurred in attending Board of Directors and
Committee meetings.

 

7.               Education expenses

 

a.               EarthLink will pay up to
$4,000 per year for program fees and associated travel expenses for each
director to participate in one or more additional relevant director education
programs.  In selecting director
education programs, directors should consider general Board governance and
specific Committee focus.

b.              Unused amounts will not
carry over from year to year.

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