Document:

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                                                                    EXHIBIT 10.2

                             XENONICS HOLDINGS, INC.

                         COMMON STOCK PURCHASE AGREEMENT

      THIS COMMON STOCK PURCHASE AGREEMENT ("AGREEMENT") is made and entered
into as of _________ __, 2004 between Xenonics Holdings, Inc., a Nevada
corporation ("CORPORATION"), and the purchasers of the Corporation's common
stock listed on the signature page of this Agreement (each and "INVESTOR" and
collectively, the "INVESTORS"). In consideration of the mutual promises,
covenants and conditions hereinafter set forth, the parties hereby agree as
follows:

      1.    PURCHASE AND SALE OF COMMON STOCK. Subject to the terms and
conditions of this Agreement, at the Closing referred to in Section 2 below, the
Corporation agrees to issue and sell to Investors, and Investors hereby agree to
purchase from the Corporation, an aggregate of Six Hundred Thousand (600,000)
shares of the Corporation's Common Stock ("SHARES"), at a price of $2.50 per
share, for an aggregate purchase price of $_________. The number of Shares to be
purchased by each Investor is set forth below the Investor's name on the
signature page hereof. The obligations of each of the Investors hereunder are
several and not joint, and the sale of the Shares to each of the Investors is a
separate transaction; provided, however, that the Corporation shall not be
obligated to consummate the sale of any of the Shares unless all of the Shares
are sold.

      2.    CLOSING OF PURCHASE AND SALE. The consummation of the purchase and
sale of the Shares provided for herein ("CLOSING") will take place at the
offices of the Corporation as 2236 Rutherford Road, Suite 123, Carlsbad,
California 92008 on __________, 2004, or at such other date, time and place upon
which the Corporation and the Investors shall agree ("CLOSING DATE"). At the
Closing, the Corporation will deliver to each Investor a certificate
representing the Shares being purchased by that Investor hereunder against
delivery to the Corporation by each Investor of the full amount of the purchase
price of such Shares by a check payable to the Corporation's order or in cash.

      3.    REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF INVESTOR. As a
material inducement to the Corporation to sell and issue the Shares to
Investors, each Investor hereby represents and warrants on its own behalf to the
Corporation, and agrees with the Corporation, as follows:

            3.1   Authorization; Enforceability. Such Investor has all requisite
power and authority to enter into this Agreement and to purchase the Shares
listed under the Investor's name on the signature page of this Agreement. This
Agreement has been duly executed and delivered by such Investor.

            3.2   Purchase for Own Account. Such Investor is acquiring the
Shares solely for its own account, for investment purposes only and not with a
view to, or for resale in connection with, any distribution or public offering
of the Shares within the meaning of the Securities Act of 1933, as amended (the
"1933 ACT"). Such Investor has no present intention to sell, offer to sell,

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or otherwise dispose of or distribute any of the Shares. Such Investor will hold
the entire legal and beneficial interest in and to the Shares and does not
presently intend to divide or share such interest with any other person or
entity.

            3.3   Restrictions on Transfer. Such Investor understands and has
been advised by the Corporation that the Shares have not been registered under
the 1933 Act or qualified under the California Corporate Securities Law of 1968,
as amended (the "LAW"), in reliance on exemptions from the registration and/or
qualification requirements of such laws, and that consequently the Shares cannot
be offered, sold or otherwise transferred, and must be held indefinitely by the
Investor, unless and until they are registered with the U.S. Securities and
Exchange Commission (the "SEC") under the 1933 Act qualified under the Law, or
until exemptions from such registration and qualification requirements are
available.

            3.4   Rule 144. Such Investor is familiar with SEC Rule 144
promulgated under the 1933 Act, which permits certain limited sales of
unregistered securities in specified circumstances, and, in any event, requires
that the Shares be held for a minimum of one year (and in some cases longer)
after they have been purchased and paid for (within the meaning of Rule 144)
before they may be resold under Rule 144.

            3.5   Legends. Such Investor understands and agrees that all
certificate(s) evidencing the Investor's Shares (and any securities issued in
respect of the Shares upon any stock split, stock dividend, merger,
reorganization or recapitalization) will be imprinted with a legend that reads
substantially as set forth below, together with any other legends that, in the
opinion of legal counsel to the Corporation, are required by the 1933 Act or by
other federal or state securities laws:

            THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
            SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
            SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
            RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
            TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
            APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
            EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
            REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
            INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
            REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
            THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
            COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

            3.6   Stop Transfer Instructions. Such Investor agrees that, in
order to ensure compliance with and to enforce the restrictions on transfer
referred to in this Agreement the

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Corporation may refuse to transfer the Shares and may issue appropriate "stop
transfer" instructions to its transfer agent, if any.

            3.7   Suitability and Investment Experience. Such Investor is an
"accredited investor" as defined in SEC Rule 501 and has: (a) a pre-existing
personal and/or business relationship with the Corporation, or its officers or
directors, such that Investor is aware of the character, business acumen and
general business and financial circumstances of such persons; and/or (b) such
knowledge and experience in business and financial matters that it is capable of
evaluating the merits and risks of this investment in the Shares and is capable
of protecting its own interests in connection with this investment in the
Shares.

            3.8   Access to Data. Such Investor has had an opportunity to
discuss the Corporation's business, management and financial affairs with the
Corporation's management and has received or has had full access to all the
information it considers necessary to make an informed investment decision with
respect to the Shares to be purchased. It understands that such discussions, as
well as any written information issued by the Corporation, were intended to
describe certain aspects of the Corporation's business and prospects but were
not a thorough or exhaustive description.

            3.9   Brokers or Finders. The Corporation has not and will not
incur, directly or indirectly, as a result of any action taken by the Investor,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement or the transactions
contemplated hereby.

      4.    REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE CORPORATION. As a
material inducement to the Investors to purchase the Shares, the Corporation
hereby represents and warrants to each Investor, and agrees with each Investor,
as follows:

            4.1   Authorization; Enforceability. The Corporation has all
requisite power and authority to enter into this Agreement and to sell and issue
the Shares. This Agreement has been duly executed and delivered by the
Corporation.

            4.2   Organization and Standing. The Corporation is a corporation
duly organized and existing under, and by virtue of, the laws of the State of
Nevada and is in good standing under such laws. The Company has requisite
corporate power and authority to own and operate its properties and assets and
to carry on its business as presently conducted.

            4.3   Validity of Shares. The Shares, when issued in compliance with
the provisions of this Agreement, will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances, other than any
liens or encumbrances created by or imposed upon the holders; provided, however,
that the Shares will be subject to restrictions on transfer under state or
federal securities laws. The issuance of the Shares is not subject to any
preemptive rights or rights of first refusal.

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      5.    REGISTRATION OF SHARES. The Corporation hereby agrees to register
the Shares purchased by the Investors in the manner set forth on Exhibit A to
this Agreement. Each Investor hereby agrees to be bound by the terms and
conditions set forth on Exhibit A.

      6.    MISCELLANEOUS PROVISIONS.

            6.1   Modification; Waiver. No modification or waiver of any
provision of this Agreement or consent to departure therefrom shall be effective
unless executed in writing by all of the parties hereto.

            6.2   Successors and Assigns. Except as otherwise stated herein, all
covenants and agreements of the parties contained in this Agreement shall be
binding upon and inure to the benefit of their respective successors and
assigns.

            6.3   Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, excluding that
body of law pertaining to conflict of laws or choice of law.

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

            6.5   Entire Agreement. This Agreement, including Exhibit A,
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes any and all prior agreements or understandings,
whether oral or written, with respect to such subject matter.

                               [signature follows]

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      IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives effective as of the date and year first
above written.

INVESTOR:                                CORPORATION:

______________________________________   XENONICS HOLDINGS, INC.
                                         a Nevada corporation

By____________________________________
      Shares purchased:______________    By_____________________________________
      Purchase Price: $______________

INVESTOR:

______________________________________

By____________________________________
      Shares purchased:______________
      Purchase Price: $______________

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                                    EXHIBIT A

      1.    CERTAIN DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Common Stock
Purchase Agreement (the "Agreement") to which this Exhibit is attached. As used
in this Exhibit, the following terms shall have the following respective
meanings:

      "Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.

      "Corporation" means Xenonics Holdings, Inc., a Nevada corporation.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar federal rule or statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

      "Holder" means (i) each of White Rock Capital Partners, L.P. and Texrock,
Ltd., and (ii) any person holding Registrable Securities to whom the
registration rights under any of the Agreement have been validly transferred.

      "Registrable Securities" means the 600,000 shares of the Corporation's
Common Stock sold pursuant to this Agreement, and any Common Stock of the
Corporation issued or issuable in respect of the foregoing shares of the
Corporation's Common Stock upon any stock split, stock dividend,
recapitalization or similar event; provided, however, that securities shall only
be treated as Registrable Securities if and so long as they have not been
registered or sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction.

      "register," "registered" and "registration" shall mean a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.

      "Registration Expenses" shall mean all expenses incurred by the
Corporation in complying with Section 2.1, including without limitation, all
registration, qualification and filing fees, printing expenses, fees and
disbursements of counsel for the Corporation, blue sky fees and expenses, the
expense of any special audits incident to or required by any such registration.

      "Securities Act" shall mean the federal Securities Act of 1933, as
amended, or any similar federal rule or statute and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.

      "Selling Expenses" shall mean all underwriting discounts, selling
commissions, or stock transfer taxes and fees applicable to the securities
registered by the Holders.

      2.    REGISTRATION. The Corporation agrees to use its best efforts to
prepare and file a registration statement with the Commission, and to take all
steps necessary and proper to effect a registration of the Registrable
Securities (including, without limitation, appropriate qualification under
applicable state securities laws and appropriate compliance with applicable
regulations issued

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under the Securities Act and any other governmental requirements or
regulations), in order to permit or facilitate the sale and distribution by the
Holders of all of their Registrable Securities. The registration statement filed
by the Corporation hereunder shall be a registration statement, at the
Corporation's option, on Form S-1, Form SB-2 or, if available, Form S-3, or any
successor to such forms. If requested by all of the Holders, the Corporation
shall, together with all Holders, enter into an underwriting agreement in
customary form with an investment banking firm or firms selected for such
underwriting by all of the Holders, but subject to the Corporation's reasonable
approval.

            2.1   EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with a registration pursuant to this Section 2 shall be borne by
the Corporation; provided, however, that the Corporation shall have no
obligation to pay or otherwise bear (i) any portion of the fees or disbursements
of counsel for the Holders in connection with the registration of their
Registrable Securities, (ii) any portion of the Selling Expenses, or (iii) any
of such expenses if the payment of such expenses by the Corporation is
prohibited by the laws of a state in which such offering is qualified and only
to the extent so prohibited. Unless otherwise stated, all Selling Expenses
relating to securities registered on behalf of the Holders shall be borne by the
Holders of such securities pro rata on the basis of the number of shares so
registered or proposed to be so registered.

            2.2   REGISTRATION PROCEDURES. In the case of each registration
effected by the Corporation pursuant to this Exhibit, the Corporation will keep
each Holder advised in writing as to the initiation of such registration and as
to the completion thereof. The Corporation will:

                  (a)   Prepare and file with the Commission a registration
statement and such amendments and supplements as may be necessary and cause such
registration statement to become and remain effective until (i) the second
anniversary following the date of the Closing, or (ii) all Registrable
Securities included in the registration statement have been sold, whichever
comes first, except that the Corporation shall be permitted to suspend the use
of the registration statement during certain periods as set forth below in this
Section 2.2; and

                  (b)   Furnish to the Holders participating in such
registration and to any underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities.

      Notwithstanding the foregoing, the Corporation shall notify each Holder
whose securities are included in a registration of the happening of any event
which makes any statement made in the registration statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or which requires the making of any
changes in the registration statement or prospectus so that, in the case of the
registration statement, it will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and that in the case of the
prospectus, it will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. In
such event, the Corporation may suspend use of the prospectus

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on written notice to each participating Holder, in which case each participating
Holder shall not dispose of Registrable Securities covered by the registration
statement or prospectus until copies of a supplemented or amended prospectus are
distributed to the participating Holders or until the participating Holders are
advised in writing by the Corporation that the use of the applicable prospectus
may be resumed (the period of such suspension shall be a "Blackout Period"). The
Corporation shall ensure that the use of the prospectus may be resumed as soon
as practicable. The Corporation shall, upon the occurrence of any event
contemplated by this paragraph, prepare a supplement or post-effective amendment
to the registration statement or a supplement to the related prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such prospectus will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. In the event that the Corporation declares one or more Blackout
Periods, the two-year anniversary period set forth in Section 2.2(a) shall be
extended by the number of days that constitute any such Blackout Periods.

            2.3   INDEMNIFICATION.

                  (a)   The Corporation will indemnify each Holder, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration has been effected pursuant to this Exhibit, against all expenses,
claims, losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any amendment or
supplement thereto, incident to any such registration, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or any violation by
the Corporation of the Securities Act, the Exchange Act, state securities laws
or any rule or regulation promulgated under such laws applicable to the
Corporation in connection with any such registration, and the Corporation will
reimburse each such Holder, each of its officers and directors, and each person
controlling such Holder, for any legal and any other expenses reasonably
incurred, as such expenses are incurred, in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Corporation will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Corporation by or on behalf of such Holder for use therein.

                  (b)   Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration is being
effected, indemnify the Corporation, each of its officers and directors, each
person who controls the Corporation within the meaning of Section 15 of the
Securities Act, each other holder of the Corporation's securities covered by
such registration statement, and each such holder's officers and directors and
each person controlling such holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue

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statement (or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by the Holder of the Securities Act, the Exchange Act, state
securities laws or any rule or regulation promulgated under such laws applicable
to the Holder, and will reimburse the Corporation, such other holders, such
officers, directors, or control persons for any legal or any other expenses
reasonably incurred, as such expenses are incurred, in connection with
investigating or defending any such claim, loss, damage, liability or action,
but in the case of the Corporation or the other holders or their officers,
directors, or control persons, only to the extent that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with information furnished to the Corporation in
writing by such Holder. Notwithstanding the foregoing, the liability of each
Holder under this Section 2.3(b) shall be limited to an amount equal to the net
proceeds from the offering received by such Holder. A Holder will not be
required to enter into any agreement or undertaking in connection with any
registration under this Section 2 providing for any indemnification or
contribution on the part of such Holder greater than the Holder's obligations
under this Section 2.3(b).

                  (c)   Each party entitled to indemnification under this
Section 2.3 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Exhibit unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further, that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
there are separate and different defenses. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of each
Indemnified Party (whose consent shall not be unreasonably withheld), consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.

                  (d)   Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in any underwriting
agreement entered into in connection with an underwritten public offering of the
Registrable Securities are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall control.

      3.    TRANSFER OF RIGHTS. The rights granted under Section 2 of this
Exhibit may be assigned to any transferee or assignee in connection with any
transfer or assignment by the Holder of such Holder's Registrable Securities,
provided that: (i) such transfer is otherwise effected in accordance with
applicable securities laws and the terms of this Exhibit; (ii) written notice is
promptly given to the Corporation; and (iii) such transferee or assignee agrees
in writing to be

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bound by the provisions of this Exhibit and by any other agreement reasonably
necessary to ensure compliance with the Federal and state securities laws.

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                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT, dated as of January 1, 2003 by and between Xenonics,
Inc., a Delaware corporation (the "Company"), and Alan Magerman (the
"Executive").

      1.    Term of Employment

      Subject to the provisions of Section 10 below, the Company shall employ
the Executive, and the Executive shall serve the Company in the capacity of
Chief Executive Officer for a term commencing as of January 1, 2003 and ending
that date which is 24 months after either party provides the other party with
written notice of termination (the "Term of Employment").

      2.    Duties

      During the Term of Employment, the Executive will serve as the Company's
Chief Executive Officer and will report directly to the Board of Directors.
Executive will serve the Company faithfully, diligently, and competently and to
the best of his ability.

      3.    Compensation

      During the Term of Employment, the Company shall pay to the Executive as
compensation for the performance of his duties and obligations hereunder a
salary at the rate of $180,000 per annum during each year of the term of this
Agreement. Such salary shall be paid bi-weekly. After the first year, the
Executive's salary shall be increased on the anniversary date each year during
the Term of Employment in proportion to any upward changes in the Consumer Price
Index of the U.S. Bureau of Labor Statistics of Urban Wage Earners and Clerical
Workers, U.S. City Average (1967=100) during the calendar year immediately
preceding each such anniversary date (in the event that such index shall be
changed or discontinued, the index published by the United States Government
which is most nearly the same as such index shall be used to make the foregoing
calculations).

      4.    Expenses and Other Benefits.

      All travel, entertainment and other reasonable business expenses incident
to the rendering of services by the Executive hereunder will be promptly paid or
reimbursed by the Company subject to submission by the Executive in accordance
with the Company's policies in effect from time to time.

      The Executive shall be entitled during the Term of Employment to
participate in employee benefit and welfare plans and programs of the Company
including any employee incentive stock option plans, qualified or unqualified,
to the extent that any other executives or officers of the Company or its
subsidiaries are eligible to participate and subject to the provisions, rules,
regulations, and laws applicable thereto.

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      5.    Death or Disability

      This Agreement shall be terminated by the death of the Executive and also
may be terminated by the Board of Directors of the Company if the Executive
shall be rendered incapable by illness or any physical or mental disability
(individually, a "disability") from substantially complying with the terms,
conditions and provisions to be observed and performed on his part for a period
in excess of six months (whether or not consecutive) during any 12 months during
the Term of Employment. If this Agreement is to be terminated by reason of
illness, or any physical or mental disability of the Executive, the Company
shall give thirty days' written notice to that effect to the Executive in the
manner provided herein and the Executive shall be entitled to 75% of the
Executive's compensation that was to accrue during the balance of the Term of
Employment, including those benefits described in Section 4.

      6.    Disclosure of Information; Inventions and Discoveries

      Except as provided in the California Labor Code, the Executive shall
promptly disclose to the Company all processes, trademarks, inventions,
improvements, discoveries and other information (collectively, "developments")
directly related to the business of the Company conceived, developed or acquired
by him alone or with others during the Term of Employment by the Company,
whether or not during regular working hours or through the use of material or
facilities of the Company. All such developments shall be the sole and exclusive
property of the Company, and upon request the Executive shall deliver to the
Company all drawings, sketches, models and other data and records relating to
such development. In the event any such development shall be deemed by the
Company to be patentable, the Executive shall, at the expense of the Company,
assist the Company in obtaining a patent or patents thereon and execute all
documents and do all other things necessary or proper to obtain letters patent
and invest the Company with full title thereto.

      7.    Non-Competition

      The Company and the Executive agree that the services rendered by the
Executive hereunder are unique and irreplaceable. During his employment by the
Company, the Executive shall not become an executive officer of any business
that in the judgment of the Company is, or as a result of the Executive's
engagement or participation would become, directly competitive with any aspect
of the business of the Company.

      8.    Non-Disclosure

      The Executive will not at any time after the date of this Employment
Agreement divulge, furnish or make accessible to anyone (otherwise than in the
regular course of business of the Company) any knowledge or information with
respect to confidential or secret processes, inventions, discoveries,
improvements, formulas, plans, material, devices, ideas or other know-how,
whether patentable or not, with respect to any confidential or secret
engineering, development or research work or with respect to any

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other confidential or secret aspect of the business of the Company (including,
without limitation, customer lists, supplier lists and pricing arrangements with
customers or suppliers), except to the extent such disclosure is (a) in the
performance of his duties under this Agreement, (b) required by applicable law,
(c) lawfully obtainable from other sources, (d) authorized in writing by the
Company, or (e) when required to do so by legal process, that requires him to
divulge, disclose or make accessible such information.

      9.    Remedies

      The Company may pursue any appropriate legal, equitable or other remedy,
including injunctive relief, in respect of any failure by the Executive to
comply with the provisions of Sections 6, 7 or 8 hereof, it being acknowledged
by the Executive that the remedy at law for any such failure would be
inadequate. If the Company shall have failed to cure any material breach by the
Company of any material provision of this Agreement within 30 days after notice
by the Executive to the Company specifying such breach with particularity, the
Executive may, in addition to other remedies, give notice to the Company of
acceleration of the entire amount of compensation which was to accrue to the
Executive during the balance of the Term of Employment, and such amount shall be
immediately due and payable to the Executive.

      10.   Termination

      The Executive's employment with the Company may be terminated by the Board
of Directors of the Company (i) upon ten (10) days' notice to the Executive in
the event of the Executive's personal dishonesty, willful misconduct or breach
of fiduciary duty or (ii) upon thirty (30) days' notice to the Executive if the
Executive shall be in material breach of any material provision of this
Employment Agreement other than as provided in clause (i) above and shall have
failed to cure such breach during such thirty day period. Any such notice to the
Executive shall specify with particularity the reason for termination or
proposed termination. In the event of termination under this Section 10 or under
Section 5 (except as provided therein), the Company's unaccrued obligations
under this Agreement shall cease and the Executive shall forfeit all right to
receive any unaccrued compensation or benefits hereunder but shall have the
right to reimbursement of expenses already incurred. Notwithstanding any
termination of the Agreement pursuant to this Section 10 or by reason of
disability under Section 5, the Executive, in consideration of his employment
hereunder to the date of such termination, shall remain bound by the provisions
of Sections 6, 7 and 8 (unless this Agreement is terminated on account of the
breach hereof by the Company) of this Agreement. Termination without cause or
any attempt by the Board of Directors of the Company to reassume any of the
responsibilities or duties from the Executive or to change the duties of the
Executive without cause shall be deemed a breach of this Agreement by the
Company without cause and shall immediately entitle the Executive, as liquidated
damages therefore, to the entire remaining balance due him as compensation
pursuant to this Agreement.

                                      -3-
<PAGE>

      Subject to the provisions set forth in the immediately following
paragraph, notwithstanding anything contained herein to the contrary, if the
Company terminates the Executive's employment other than for cause, the
Executive shall be entitled to receive remaining salary and other benefits due
the Executive pursuant to the Term of Employment.

      11.   Resignation

      In the event that the Executive's services hereunder are terminated under
Section 5 or 10 of this Agreement (except by death), the Executive agrees that
he will deliver his written resignation to the Board of Directors, such
resignation to become effective immediately.

      12.   Data

      Upon expiration of the Term of Employment or termination pursuant to
Section 5 or 10 hereof, the Executive or his personal representative shall
promptly deliver to the Company all books, memoranda, plans, records and written
data of every kind relating to the business and affairs of the Company which are
then in his possession on account of his employment hereunder, but excluding all
such materials in the Executive's possession which are personal and not property
of the Company or which he holds on account of his past or current status as a
director or shareholder of the Company.

      13.   Arbitration

      Any dispute or controversy arising under this Agreement or relating to its
interpretation or the breach hereof, including the arbitrability of any such
dispute or controversy, shall be determined and settled by arbitration in San
Diego, California pursuant to the Rules then obtaining of the American
Arbitration Association. Any award rendered herein shall be final and binding on
each and all of the parties, and judgment may be entered thereon in any court of
competent jurisdiction.

      14.   Insurance

      The Company shall have the right at its own cost and expense to apply for
and to secure in its own name, or otherwise, life, health or accident insurance
or any or all of them covering the Executive, and the Executive agrees to submit
to any usual and customary medical examination and otherwise to cooperate with
the Company in connection with the procurement of any such insurance, and any
claims thereunder.

      15.   Waiver of Breach

      Any waiver of any breach of this Employment Agreement shall not be
construed to be a continuing waiver or consent to any subsequent breach on the
part either of the Executive or of the Company.

                                      -4-
<PAGE>

      16.   Assignment

      Neither party hereto may assign his or its rights or delegate his or its
duties under this Employment Agreement without the prior written consent of the
other party; provided, however, that this Agreement shall inure to the benefit
of and be binding upon the successors and assignees of the Company, all as
though such successors and assignees of the Company and their respective
successors and assignees were of the Company, upon (a) a sale of all or
substantially all of the Company's assets, or upon merger or consolidation of
the Company with or into any other corporation, and (b) upon delivery on the
effective day of such sale, merger or consolidation to the Executive of a
binding instrument of assumption by such successors and assigns of the rights
and liabilities of the Company under this Agreement, provided, however, that no
such assignment or transfer will relieve the Company from its payment
obligations hereunder in the event the transferee or assignee fails to timely
discharge them. No rights or obligations of the Executive under this Agreement
may be assigned or transferred other than his rights to compensation and
benefits, which may be transferred by will or operation of law or as otherwise
specifically provided or permitted hereunder or under the terms of any
applicable employee benefit plan.

      17.   Notices

      Any notice required or desired to be given hereunder shall be in writing
and shall be deemed sufficiently given when delivered or 3 days after mailing in
United States certified or registered mail, postage prepaid, to the party for
whom intended at the following address:

      The Company:

                              Xenonics, Inc.
                              2236 Rutherford Road
                              Suite 123
                              Carlsbad, CA 92008

      The Executive:

                              Alan Magerman
                              2236 Rutherford Road
                              Suite 123
                              Carlsbad, CA 92008

or to such other address as either party may from time to time designate by like
notice to the other.

                                      -5-
<PAGE>

      18.   General

      The terms and provisions of this Agreement shall constitute the entire
agreement by the Company and the Executive with respect to the subject matter
hereof, and shall supersede any and all prior agreements or understandings
between the Executive and the Company, whether written or oral. This Agreement
may be amended or modified only by a written instrument executed by the
Executive and the Company, and any such amendment or modification or any
termination of this Agreement shall become effective only after written approval
thereof has been received by the Executive. This Agreement shall be governed by
and construed in accordance with California law. In the event that any terms or
provisions of this Agreement shall be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remaining terms and provisions hereof. In the event of any judicial,
arbitral or other proceeding between the parties hereto with respect to the
subject matter hereof, the prevailing party shall be entitled, in addition to
all other relief, to reasonable attorneys' fees and expenses and court costs.

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

                                            Xenonics, Inc.

                                            By: /S/ Jeffrey P. Kennedy
                                                --------------------------------
                                                Secretary

AGREED TO AND ACCEPTED:

By: /S/ Alan Magerman
    --------------------------
    Alan Magerman

                                       -6-

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