Exhibit 10.3
ISONICS CORPORATION
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”),
effective February 6, 2008 (“Effective Date”), is
made between Isonics Corporation, a California corporation
(“Employer”), and Gregory A. Meadows (“Executive”). Collectively
Employer and Executive are referred to as the
“parties.”
RECITALS
WHEREAS, the Board of Directors of Employer desires to provide for
the continued employment of Executive. Executive is willing
to commit himself to continue to serve Employer, on the terms and
conditions herein provided, although this Agreement may be amended
at any time by written agreement among the parties; and
WHEREAS, the Executive understands that the Employer’s
financial condition is such that it has only limited working
capital available and, as a result, Employer may not be able to
perform all of its obligations hereunder timely or completely;
and
WHEREAS, in order to effect the foregoing, Employer and Executive
wish to enter into this Agreement on the terms and conditions set
forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the
parties agree as follows:
1 .
Employment .
(a)
Employer hereby employs Executive, and Executive agrees to be
employed as Chief
Financial Officer, Vice President — Finance and
Treasurer . 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 Employment Period, Executive may continue to
engage directly or indirectly in other business ventures that he
was engaged in as of the effective date of this Agreement and
may
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engage in other business activities (including
associating with other executives so long as such activities do not
interfere with Executive’s duties and responsibilities under
this Agreement, and so long as the nature and extent of such
activities have been disclosed to, and approved by, the
Compensation Committee of the Board of Directors (the
“Compensation Committee”). During
Executive’s employment, Executive shall not engage in any
other business activity that, in the reasonable judgment of the
Compensation Committee of the Board of Directors, conflicts with
the duties of Executive under this Agreement, whether or not such
activity is pursued for gain, profit or other pecuniary
advantage.
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.
3 .
Term of Employment . The term of employment
(“Term”) shall be for one year from the Effective Date
unless terminated earlier in accordance with the terms and
conditions of this Agreement. The Term will automatically
renew for successive one-year terms unless and until the Employer
or the Executive provides notice at least 60 days in advance of the
expiration of the current Term that the Employer or the Executive
will not accept a renewal term.
4.
Compensation . For the duration of Executive’s
employment hereunder, the Executive will be entitled to
compensation that will be computed and paid pursuant to the
following subsections.
4.1 Base
Salary .
Employer will pay to Executive a base salary (“Base
Salary”) at an annual rate of One Hundred Eighty Thousand
Dollars ($180,000), 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.
4.2
Discretionary Cash Bonus. Executive shall be eligible for a discretionary
cash bonus (“Cash Bonus”) equal to an amount as
determined by the Compensation Committee, which shall be based on
the condition of Employer’s business and results of
operations, the Compensation Committee’s evaluation of
Executive’s individual performance for the relevant period,
and the satisfaction of goals that may be established by the
Compensation Committee of the Employer. Any Cash Bonus shall
be paid in the Compensation Committee’s
discretion.
4.3
Equity-based Compensation. Executive shall be entitled to participate in
all equity-based compensation plans offered by Employer to its
employees and as determined by the Compensation
Committee.
4.4
Performance Standards. The Executive and the Employer
agree that the Executive’s discretionary cash bonus and
equity-based compensation will be based on the Executive’s
and the Employer’s achievement of performance goals that may
be established by
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the
Compensation Committee after discussion with the Executive and his
supervisors (if any). Until the Employer and the Compensation
Committee establish performance goals, the Executive’s
discretionary cash bonus and equity based compensation will be
wholly discretionary.
4.5
Discretionary Bonus. In recognition of the Executive’s
continuing efforts on the Employer’s behalf, the substantial
risk that the Executive is taking by remaining with the Employer
notwithstanding the Employer’s financial condition, the
significant operational improvements accomplished by the Executive
with other executives of the Employer since February 2007, the
Executive’s willingness to enter into this Agreement, and
other factors, the Employer agrees to pay Executive the sum of
Fifty Thousand Dollars ($50,000) as a discretionary bonus, such
payment to be made at the earlier of:
(a) The
Employer having sufficient working capital that is not committed
for operations to allow the Employer to pay all (or a portion) of
this bonus to the Executive with such approval and direction from
the Compensation Committee. If the Employer pays any portion
of this bonus to the Executive, the Employer will pay the same
proportionate amount of the bonus to other Executives who have
entered into agreements similar to this Agreement, or
(b)
Termination of this Agreement pursuant to Sections 6.2(a), 6.2(b),
6.2(c), 6.2(d) or Article 7, below, in which case the
discretionary bonus payable pursuant to this Section 4.5 will
be payable on the same terms and over the same period as the
severance pay is determined in Section 6.4 or (in the case of
a termination under Article 7) Section 7.2.
The
amount payable pursuant to this Section 4.5 will be reduced to
zero in the event the Executive terminates this Agreement pursuant
to Section 6.2(e) or if the Employer terminates this
Agreement for Cause pursuant to Section 6.1.
5.
Other Benefits.
5.1
Certain Benefits. Executive will be eligible to
participate in all employee benefit programs established by
Employer that are applicable to management personnel on a basis
commensurate with Executive’s position and in accordance with
Employer’s policies from time to time, including, but not
limited to, life insurance, disability insurance, retirement plans,
profit-sharing plans, savings plans, stock option plans and other
employee benefit plans and policies, but nothing herein shall
require the adoption or maintenance of any such plan.
Notwithstanding the foregoing, Employer shall provide full medical
and dental insurance coverage for Executive as currently provided
by Administaff (or its successor) on the same terms as are then
generally available to the Company’s senior executive
officers, at no cost to Executive.
5.2 Paid Time
Off (“PTO”) and Expenses . For the duration of
Executive’s employment hereunder, Executive will be provided
such PTO (which includes vacations and sick leave) as Employer
makes available to its management level employees generally as
described in, and subject to the provisions of, Employer’s
employee manual. Employer will reimburse
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Executive in accordance with company policies
and procedures for reasonable expenses necessarily incurred in the
performance of duties hereunder against appropriate receipts and
vouchers indicating the specific business purpose for each such
expenditure.
5.3
Directors and Officers Insurance . During the term of
this Agreement and for a three year period thereafter, and subject
to the availability of adequate financing, Employer shall use its
best efforts to have in effect at all times, at its expense and no
cost to Executive, one or more directors and officers liability
indemnification insurance policies (the “D&O
Policies”) covering liabilities which may have accrued or
that will be incurred by the performance of Executive’s
services on behalf of Employer in the minimum benefit amount to be
determined in good faith by the Board of Directors, and provided
that all officers and directors are treated alike.
6.
Termination Or Discharge.
6.1 For
Cause. Employer will have the right to immediately
terminate Executive’s services and this Agreement for
“Cause.” For the purposes of this Agreement, the
term “for cause” shall mean:
(a) any
act of fraud or embezzlement materially adversely affecting the
financial, market, reputation or other interests of
Employer,
(b) in
the event of a conviction of Executive of, or a plea of nolo
contendere to, (A) any violent felony or misdemeanor resulting
in a jail sentence, (B) any felony involving moral turpitude
or (C) a criminal violation of federal or state securities
laws,
(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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Upon termination of Executive’s employment hereunder for
Cause, Executive will have no rights to any unvested benefits or
any other compensation or payments after the termination
date.
6.2
Termination Other Than For Cause. The Executive’s
employment hereunder may be terminated without any breach of this
Agreement under the following circumstances:
(a)
By Executive . Upon the occurrence of any of the
following events, this Agreement may be terminated by the Executive
upon not less than three business days’ written notice to
Employer specifying such reason:
1.
if Employer makes a general assignment for the benefit of
creditors, files a voluntary bankruptcy petition, files a petition
or answer seeking a reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
law, or there shall have been filed any petition or application for
the involuntary bankruptcy of Employer, or other similar
proceeding, in which an order for relief is entered or which
remains undismissed for a period of thirty days or more, or
Employer seeks, consents to, or acquiesces in the appointment of a
trustee, receiver, or liquidator of Employer or any material part
of its assets;
2.
the sale by Employer of substantially all of its assets;
3.
a decision by Employer to terminate its business and liquidate its
assets;
4.
Employer’s corporate
offices move out of the Denver Colorado metropolitan area;
or
5.
the holder of any convertible debenture issued by Employer prior to
the date of this Agreement declares a default or accelerates any
obligations under any of the terms of such debentures;
or
6.
a material breach of this Agreement by Employer except to the
extent that the material breach results directly or indirectly from
Employer’s lack of funding to cure any element of such
material breach.
(b)
By Employer Without Cause . The Employer may terminate
this Agreement without Cause at any time upon not less than 60
days’ written notice to the Executive.
(c)
Death . This Agreement shall terminate
upon the death of Executive.
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(d)
Disability . The Employer may terminate this Agreement
upon the permanent disability of the Executive. Executive
shall be considered disabled (whether permanent or temporary)
if: (i) he is disabled as defined in a disability
insurance policy purchased by or for the benefit of the Executive;
or (ii) if no such policy is in effect, he is incapacitated to
such an extent that he is unable to perform substantially all of
his duties for Employer that he performed prior to such
incapacitation.
(e)
Material Breach as a Result of Lack of Funding. If
the Employer breaches this Agreement but such breach results
directly or indirectly from Employer’s lack of funding to
cure any element of such material breach (and therefore such
material breach is not a basis for termination by Executive under
Section 6.2(a)(5), Executive may terminate this Agreement upon
not less than 30 days’ prior written notice specifying such
breach.
6.3
Notice of Termination. Any termination of the
Executive’s employment by the Employer or by the Executive
(other than termination pursuant to Section 6.2(b) above)
shall be communicated by written Notice of Termination to the other
party.
6.4
Compensation Upon Termination.
(a)
Upon a termination of this Agreement pursuant to
Section 6.2(a), Employer shall pay to Executive a cash
severance payment in an amount equal to the sum of (i) one
year of Executive’s annual salary payable in a lump sum
payment within three months of the Executive’s termination
pursuant to Section 6.2(a), and (ii) the pro-rated
portion (based on the number of days in the calendar year ending
prior to the effective date of such termination of Executive by
Employer) of any Cash Bonus for the year in which the termination
occurred that has been earned but has not been paid to Executive,
which shall not be less than any bonus with respect to the previous
calendar year, in each case.
(b)
Upon a termination of this Agreement pursuant to
Section 6.2(b), Employer shall pay to Executive:
(i) twelve months of his annual salary then in effect, and
(ii) the pro-rate
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