Exhibit 10.3
ISONICS CORPORATION
Amended and Restated
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS AGREEMENT (the “Agreement”) amends and restates
that certain EXECUTIVE EMPLOYMENT AGREEMENT (“Original
Agreement”), that was originally effective February 6,
2008 (“Original Effective Date”), is made between
Isonics Corporation, a California corporation
(“Employer”), and Christopher Toffales
(“Executive”) effective as of October 16,
2008. Collectively Employer and Executive are referred to as
the “parties.”
RECITALS
WHEREAS, the financial situation of the Employer has deteriorated
since the Original Effective Date.
WHEREAS, the Employer and the Executive desire to amend the terms
of the Original Agreement to provide for the continued employment
of Executive. Executive is willing to commit himself to
continue to serve Employer, on the terms and conditions herein
provided, although this Agreement may be amended at any time by
written agreement among the parties; and
WHEREAS, the Executive understands that the Employer’s
financial condition is such that it has only limited working
capital available and, as a result, Employer may not be able to
perform all of its obligations hereunder timely or completely;
and
WHEREAS, in order to effect the foregoing, Employer and the
Executive wish to enter into this Agreement on the terms and
conditions set forth below.
AGREEMENT
NOW, THEREFORE, in
consideration of the mutual covenants herein contained, and other
good and valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, the parties agree to amend the
Original Agreement as follows:
1 .
Employment .
(a)
Employer hereby employs Executive, and Executive agrees to continue
to be employed as President, Chief Executive Officer and Chairman
of the Board. Executive will report to the Board of
Directors. Executive will devote substantially full time and
attention to achieving the purposes and discharging the
responsibilities of his positions.
(b)
Executive will comply with all rules, policies and procedures of
Employer as modified from time to time, including without
limitation, rules and procedures set forth in the
Employer’s employee manuals and handbooks, supervisor’s
manuals and operating manuals. Executive will perform all of
Executive’s responsibilities in compliance with all
applicable laws
and will ensure that the operations that
Executive manages are in compliance with all applicable
laws.
(c)
Notwithstanding anything to the contrary contained in this
Agreement, during the Term of employment, Executive may:
(i) engage, directly or indirectly, in other businesses and
ventures, including providing services and otherwise being
affiliated with (A) SenseIt Corp., a Delaware corporation in
which Employer is a stockholder (“SenseIt”),
(B) CTC Aero, LLC, a New York limited liability company in
which Executive (in his individual capacity and not in his capacity
as an officer, director and/or employee of Employer) is the sole
member (“CTC Aero”), and (C) other persons or
entities (and their respective affiliates) with whom Executive or
CTC Aero, has any equity interest or any other business or
financial relationship or arrangement as of the date of the
commencement of the Employment Period; (ii) become a director
of, or provide consulting or other services for, any other person
or entity that is not directly competitive with Employer so long as
such activities do not interfere with Executive’s duties and
responsibilities under this Agreement; and (iii) devote time,
attention and energies to reasonable community activities and
public affairs, provided such community activities and public
affairs efforts shall not conflict with the amount of time required
to be devoted to Employer under this Agreement (the foregoing
activities are collectively referred to as “Outside
Activities”). Neither Employer nor any of
Employer’s officers, directors, employees and stockholders
shall have any right, title or interest, by virtue of this
Agreement or otherwise, to share in any of the businesses,
ventures, equity interests, business or financial relationships or
arrangements, investments or activities to which Executive may
engage or participate in pursuant to the Outside Activities or in
any income or revenues derived from any of such businesses,
ventures, equity interests, business or financial relationships or
arrangements, investments or activities relating to Outside
Activities.
2.
Prior Agreements . The Executive and Employer agree that
all prior employment agreements and understandings between the
Executive and Employer related to Executive’s employment be
and hereby are cancelled and are of no further force or
effect. Without limitation of the foregoing, subject to
Section 4.4 below, that certain employment agreements dated
February 6, 2008 and the February 16, 2007, and any and
all other understandings between the Executive and Employer related
to Executive’s employment be and hereby are cancelled and are
of no further force or effect.
3 .
Term of Employment . The term of employment
(“Term”) shall be for 6 months or, if earlier, the sale
by the Employer directly or indirectly (through a sale or a
transfer in lieu of foreclosure or other business combination) of
assets (individually or as a group, at one time or over a period of
time) for a total resulting in Cash Proceeds of more than
$5,000,000 at which point the term of employment will automatically
revert to month to month. As used throughout this Agreement,
“Cash Proceeds” shall include the forgiveness of
indebtedness and be calculated before the deduction of any
brokerage or other selling costs.
4.
Compensation . For
the duration of Executive’s employment hereunder, the
Executive will be entitled to compensation that will be computed
and paid pursuant to the following subsections.
4.1 Base
Salary . Employer
will pay to Executive a base salary (“Base Salary”) at
an annual rate of Two Hundred Fifty Thousand Dollars ($250,000),
subject to withholdings, ratably in accordance with
Employer’s policies, so long as Executive remains
employed. Executive’s Base Salary will be reviewed
annually during the term of Executive’s employment by the
Compensation Committee or the Board of Directors of Employer and
may be increased based on such review. Effective
October 16, 2008, the Executive will defer 25% of the salary
payment otherwise due ($5,208.33 per month) (the “
Deferred Compensation ”) until the Employer directly
or indirectly (through a sale or a transfer in lieu of foreclosure
or other business combination) of assets (individually or as a
group, at one time or over a period of time) for a total resulting
in Cash Proceeds of more than $3,000,000, at which time the
Employer will pay the entire amount of the Deferred Compensation
and the deferral will cease. The deferral will also cease if
the Employer appoints a third director to its Board.
4.2
Bonus. It is
unlikely that the Employer will pay the Executive any
bonus.
4.3
Equity-based Compensation. The Executive shall be entitled to participate
in all equity-based compensation plans offered by Employer to its
employees and as determined by the Employer’s board of
directors. There is no commitment by the Employer to provide
the Executive with any equity-based compensation beyond that
compensation that the Executive possesses at the current
time.
4.4
Previously-Accrued Paid Time Off (“PTO”).
Through October 15, 2008, the Executive has accrued unused PTO
pursuant to his earlier employment relationships, totaling in value
$19,230.40. The Employer will pay the Executive the amount of
this PTO and all other accrued PTO on the earlier of the sale,
directly or indirectly, by the Employer of assets (through a sale
or a transfer in lieu of foreclosure or other business combination)
(individually or as a group, at one time or over a period of time)
for Cash Proceeds of more than $3,000,000 or the termination by the
Employer or the Executive of this Agreement (whether or not such
termination is as a result of the Employer making the Severance
Payment contemplated by Section 5.4 hereof).
5.
Other Benefits.
5.1
Certain Benefits. The Executive will be eligible to
participate in all employee benefit programs established by
Employer that are applicable to management personnel on a basis
commensurate with Executive’s position and in accordance with
Employer’s policies from time to time, including, but not
limited to, life insurance, disability insurance, retirement plans,
profit-sharing plans, savings plans, stock option plans and other
employee benefit plans and policies, but nothing herein shall
require the adoption or maintenance of any such plan.
Notwithstanding the foregoing, Employer shall provide full medical
and dental insurance coverage for the Executive as currently
provided by Administaff (or its successor) on the same terms as are
then generally available to the Company’s senior executive
officers, at no cost to the Executive.
5.2 Paid Time
Off and Expenses .
For the duration of Executive’s employment hereunder,
Executive will be provided such PTO (which includes vacations and
sick leave) as Employer makes available to its management level
employees generally as described in, and subject to the provisions
of, Employer’s employee manual. Employer will reimburse
Executive in accordance with company policies and procedures for
reasonable expenses necessarily incurred in the performance of
duties hereunder against appropriate receipts and vouchers
indicating the specific business purpose for each such
expenditure.
5.3
Directors and Officers Insurance . During the term of
this Agreement and for a three year period thereafter, and subject
to the availability of adequate financing, Employer shall use its
best efforts to have in effect at all times, at its expense and no
cost to Executive, one or more directors and officers liability
indemnification insurance policies (the “D&O
Policies”) covering liabilities which may have accrued or
that will be incurred by the performance of Executive’s
services on behalf of Employer in the minimum benefit amount to be
determined in good faith by the Board of Directors, and provided
that all officers and directors are treated alike.
5.4
Severance Pay. Upon the sale by the Employer directly or
indirectly (through a sale or a transfer in lieu of foreclosure or
other business combination) of assets (individually or as a group,
at one time or over a period of time), the Executive will have
earned severance pay (the “Severance Payment”) to be
paid to the Executive (directly from closing and not through the
Employer, if practicable) as follows:
(a) If
such assets are sold during the term of this Agreement for a total
resulting in Cash Proceeds of less than $5,000,000, the Executive
will be entitled to no Severance Payment.
(b) If
such assets are sold for a total resulting in Cash Proceeds of at
least $5,000,000 in the aggregate but less than $6,000,000
(i) during the term of this Agreement or (ii) if the
Employer terminates this Agreement (other than a termination for
Cause), within six months of the date hereof, the Executive will be
entitled to a Severance Payment of six months’ salary
($125,000) upon termination of this Agreement.
(b) If
such assets are sold for a total resulting in Cash Proceeds at
least $6,000,000 in the aggregate but less than $7,500,000
(i) during the term of this Agreement or (ii) if the
Employer terminates this Agreement (other than a termination for
Cause), within six months of the date hereof, the Executive will be
entitled to a Severance Payment of nine months’ salary
($192,500) upon termination of this Agreement.
(c) If
such assets are sold for a total resulting in Cash Proceeds that
exceed $7,500,000 (i) during the term of this Agreement or
(ii) if the Employer terminates this Agreement (other than a
termination for Cause), within six months of the date hereof, the
Executive will be entitled to nine months’ salary ($192,500)
plus an additional one months’ salary ($22,500) for each
$400,000 of Cash Proceeds received in excess of $7,500,000.
No amount will be earned for amounts less than full multiples of
$400,000 and in no event will the amount of the Severance Payment
exceed $400,000.
6.
Termination Or Discharge.
6.1 For
Cause. Employer
will have the right to immediately terminate Executive’s
services and this Agreement for “Cause.” For the
purposes of this Agreement, the term “for cause” shall
mean:
(a) any
act of fraud or embezzlement materially adversely affecting the
financial, market, reputation or other interests of
Employer,
(b) in
the event of a conviction of Executive of, or a plea of nolo
contendere to, (A) any violent felony or misdemeanor resulting
in a jail sentence, (B) any felony involving moral turpitude
or (C) a criminal violation of federal or state securities
laws,
(c) any
material failure to perform Executive’s duties as set forth
in this Agreement which results in material harm to Employer, after
reasonable notice and the opportunity to cure,
(d)
gross negligence, incompetence or willful misconduct in the
performance by the Executive of his duties,
(e)
refusal by the Executive, without proper reason, to perform his
duties,
(f)
the Executive willfully engaging in conduct that is materially
injurious to Employer or its subsidiaries (monetarily or
otherwise),
(g)
unauthorized disclosure by the Executive of Confidential
Information, as such term is defined in Section 10 of this
Agreement, or the unauthorized disclosure of proprietary material
information of Employer or an affiliate), or
(h)
Employer’s reasonable belief supported by a legal opinion
that Executive has engaged in a violation of any statute,
rule or regulation, any of which in the judgment of Employer
is harmful to Employer’s business or to Employer’s
reputation.
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