Exhibit 10.3
SETTLEMENT AGREEMENT AND MUTUAL
GENERAL RELEASE
This Settlement Agreement and Mutual
General Release (hereinafter, this “Agreement”) is made
and entered into as of the 13 th day of February 2007, by and between
Isonics Corporation (“Isonics”) and Boris Rubizhevsky
(“Mr. Rubizhevsky”). Isonics and Mr. Rubizhevsky
are referred to jointly herein as “the
Parties.”
RECITALS
A.
Mr. Rubizhevsky had been an officer, director, and employee of
Isonics for more than the past ten years.
B.
By this agreement, Isonics and Mr. Rubizhevsky have determined that
it is in their best interests to resolve all disagreements and
issues between them and to provide for the resolution of all issues
relating to Mr. Rubizhevsky’s employment with Isonics,
service as an officer and director thereof, and the resignation as
an officer and director (collectively the “Issues”) in
exchange for the consideration set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of
the following covenants and promises and for other valuable
consideration as described below, and without admitting any fault
or liability on the part of any of the Parties, their officers,
directors, or affiliates, the Parties hereby terminate the
employment agreement between Mr. Rubizhevsky and Isonics dated
September 22, 1997, and further enter into this
Agreement.
1.
Mr. Rubizhevsky’s Acknowledgements, Representations, and
Agreement.
a.
Mr. Rubizhevsky hereby submits his resignation as an officer and
director of Isonics and acknowledges that he has no authority to
act or to make representations on behalf of Isonics or any
affiliate or subsidiary thereof.
b.
Mr. Rubizhevsky represents that he has returned all of the property
of and information pertaining to Isonics, its subsidiaries and its
affiliates, in his possession and control. Mr. Rubizhevsky
further represents to Isonics that he does not have any complete or
partial copies of any of this property, either written or on tape,
disk, diskette or other storage media. Mr. Rubizhevsky
acknowledges that if he later learns that he has any property that
belongs to Isonics, he is obliged to notify Isonics and to make
arrangements to return all such property.
c.
Mr. Rubizhevsky agrees that he will not disparage Isonics or any of
its officers, directors, employees, affiliates, or agents.
Mr. Rubizhevsky further acknowledges that (to the extent he has
received confidential or non-public information regarding Isonics)
he will comply with his legal obligations with respect
thereto. Failure
to comply with the provisions of
this paragraph may, in addition to any other remedies available
under applicable law and at Isonics’ option, result in a
termination of any payments and benefits which have not been made
as of the first day of the month following such failure.
d.
Mr. Rubizhevsky agrees that during the period of his continuing
employment with Isonics and thereafter, he will assist
Isonics’ executive chairman, chief executive officer and
chief financial officer with transition matters and the litigation
against Grant Thornton LLP.
e.
Mr. Rubizhevsky hereby grants the enclosed proxy by which the named
proxy holder can vote all shares of Isonics common stock held in
his name, in the name of Nancy Rubizhevsky, and any other
beneficial ownership controlled by him for approval of
Isonics’ 2007 Restructuring Equity Plan and any amendment to
the Isonics 2005 Stock Option Plan that may be proposed at the next
meeting of shareholders of Isonics.
f.
Mr. Rubizhevsky agrees that, at all times from the date of this
Agreement and for a period of one years thereafter, he will not
either directly or indirectly solicit, induce, recruit or encourage
(or attempt to solicit, induce, recruit or encourage) any of
Isonics’ employees to leave their employment. Failure
to comply with the provisions of this paragraph may, in addition to
any other remedies available under applicable law and at
Isonics’ option, result in a termination of any payments and
benefits which have not been made as of the first day of the month
following such failure.
2.
Settlement Consideration .
a.
Isonics will pay Mr. Rubizhevsky compensation for continuing
employment of $186,750, in the form of three payments of $20,750
each payment, commencing February 28, 2007 (for the pay period from
February 16, 2007 through March 15, 2007) and on or before the last
day of the two months thereafter, and then twelve payments of
$10,375 thereafter. Isonics will make this payment directly
into Mr. Rubizhevsky’s account and will deduct all normal
withholdings from that payment in accordance with its normal
payroll practices, and such payments made be made semi-monthly in
accordance with Isonics’ normal payroll practices.
b.
Mr. Rubizhevsky hereby surrenders all options issued to him under
the 2005 Stock Option Plan and the 1996 Executive’s Plan for
cancellation.
c.
Mr. Rubizhevsky will continue to be an employee of Isonics during
the period ending on the last day of the month that payments are
being made to him pursuant to Section 2(a) hereof (the
“Employment Period”), and will be entitled to
participate in Isonics normal employee benefits except the accrual
of personal time off (“PTO”) which ceases on the date
hereof. Mr. Rubizhevsky will respond to reasonable requests,
spending such time as he deems necessary, for information and
assistance during the Employment Period. Isonics will use its
best efforts to avoid exposing Mr. Rubizhevsky to any material
non-public information without advising Mr. Rubizhevsky in advance
that the information it is providing with respect to a project is
material non-public information. Further, Isonics understands that
Mr. Rubizhevsky will pursue significant outside interests during
the
Employment Period and understands
that any requests for information and assistance will be
subordinate to his outside interests. Isonics does not expect
Mr. Rubizhevsky to report to Isonics’ offices or deal with
Isonics personnel except upon written or oral request of the
chairman of the audit committee, the executive chairman of Isonics,
or the chief executive officer of Isonics.
d.
Isonics will issue to Mr. Rubizhevsky 200,000 shares of common
stock from Isonics’ 2005 Stock Option Plan (such number of
shares being calculated after the effectiveness of the reverse
stock split scheduled to be completed on February 13, 2007), such
issuance being subject to: (i) Mr. Rubizhevsky executing and
returning an acceptable subscription agreement for those shares;
and (ii) either Mr. Rubizhevsky providing evidence to Isonics that
he owes no income tax liability on that amount, or that he has made
adequate provision for such liability. If the parties are
unable to achieve a method of satisfying the requirements of the
Internal Revenue Service and state taxing authorities for the
payment of any withholding necessary with respect to the issuance
of the shares, the parties will negotiate in good faith an issuance
of shares or other compensation to Mr. Rubizhevsky with a equal
economic benefit to Mr. Rubizhevsky but which will not materially
adversely impact Isonics’ cash position or other financial
obligations. In connection with the issuance of the shares of
common stock referenced in this Section 2(d), Mr. Rubizhevsky
represents and warrants to Isonics:
·
He is an accredited investors as
that term is defined in §2(a)(15) of the Securities Act of
1933 (the “1933 Act”);
·
He has received such information
about Isonics as is, in his opinion, reasonably necessary for him
to make his decision whether to accept such shares;
·
He has discussed the acceptance of
such shares with his legal, financial, tax, investment and other
advisors to the extent that he has determined such consultation to
be appropriate or necessary;
·
He understands the risks associated
with receiving and holding shares of Isonics common
stock.
e.
Reports . The Parties agree to make all necessary and
usual reports to the Internal Revenue Service, state taxing
authorities and any similar agencies and to perform all
withholdings normally applicable to the types and amounts of
payments and other consideration Mr. Rubizhevsky is to receive as a
result of this Agreement.
f.
No Other Payment or Employee Benefit . Isonics will
make only the payments expressly stated in this Agreement and will
provide no other payments or benefits to Mr. Rubizhevsky.
Notwithstanding the foregoing, Isonics will pay full
amounts accrued by Mr. Rubizhevsky
in each qualified retirement plan maintained by Isonics in which he
participates.
3.
General Release by Isonics. In consideration for Mr.
Rubizhevsky’s releases and agreements contained in this
Agreement and upon its receipt of a fully executed and notarized
copy of this Agreement, Isonics and each of Isonics’
officers, directors, employees, and agents, and for anyone who has
or obtains rights or claims f
