EMPLOYMENT AGREEMENT

(1)  

Be responsible for employing and supervising other employees of the Company, subject to the policies and procedures and direction of the Board of Directors;

Be responsible for recommending to the Board for approval all contracts between the Company and other entities for the provision of goods and services. It is understood that the Board may set, from time to time, a discretionary limit under which, Executive may operate without prior Board approval;

Generally perform the usual duties and responsibilities of a President and Chief Executive Officer of the Company.

(3)  

Compensation.  In consideration of the services rendered by the Executive, the Company agrees to compensate the Executive as follows:

Base Compensation.  The Executive’s annual base compensation initially shall be Two Hundred Fifty Thousand Dollars ($250,000), payable in accordance with the salary policies of the Company in effect from time to time but no less frequently than monthly, however Executive agrees to accumulate base compensation at his discretion during the first year.

Salary Increases.  The base compensation will increase on October 1, 2010 to $350,000.  The Company shall annually review the Executive’s performance and compensation. The Executive’s base compensation will be increased annually by not less than five percent (5%). Executive’s annual base compensation shall not be reduced below the base compensation as from time to time adjusted, unless agreed upon in writing.

Incentive Bonuses.  The Board of Directors shall grant Executive such annual bonuses as the Board of Directors, in its discretion, may determine to be appropriate in light of the Company’s performance and the Executive’s performance and contribution to the Company’s success.

Other Allowance.  The Executive shall receive an automobile allowance not to exceed Seven Hundred Fifty Dollars ($750.00) monthly for the purpose of leasing and maintaining insurance on an automobile of the Executive’s choice.

Term Life Insurance.  The Company shall purchase and provide Executive with term life insurance coverage after twelve months of employment, in the amount of $1,000,000: the beneficiary, or beneficiaries, shall be named by the Executive. The Executive agrees to permit the Company to purchase “Key man” term life insurance coverage for the benefit of the Company at its sole discretion.

Vacation and Medical Leave.  The Executive shall have three (3) weeks of vacation at times mutually convenient to Executive and the Company.  It is understood that Executive may fulfill some of his obligations under this agreement while being away from the premises and such absences shall not be deemed non compliance with his obligations under this agreement. Accrued vacation may not be carried over, but must be used in the annual period in which it accrues. Continuation of compensation during periods of absence for medical reasons will be determined by Company policy.

Signing Bonus.  The Company will issue One Million (1,000,000) shares of the Company’s Common Stock and an additional One Million (1,000,000) options to purchase the Company’s Common Stock upon the Company’s Common Stock listing on the OTC Bulletin Board at a 20% discount off the stock price quoted on the first opening trade, with a five year cashless exercise to the Executive, upon signing of this agreement.

Renewal Bonus.  The Company will issue Five Hundred Thousand (500,000) shares of the Company’s Common Stock upon renewal of this agreement as defined in section (4) below.

Withholdings.  The Executive’s salary and all other payments and benefits shall be subject to all deductions and withholdings mandated by federal, state and local laws and regulations.

Expenses.  The Executive shall be reimbursed for all necessary and reasonable expenses incurred by him in the execution of his duties and responsibilities and in accordance with policies approved by the Board or Directors.

Executive shall submit to Company for review any proposed scientific and technical articles and the text of any public speeches relating to work done for Company before they are released or delivered. Company has the right to disapprove and prohibit, or delete any parts of, such articles or speeches that might disclose Company's Trade Secrets or Confidential Information or otherwise be contrary to Company's business interests.

(4)  

Term of Agreement.  Unless terminated as provided in Paragraph  (5)C below  “Termination for Cause” hereof, the Term of this Employment Agreement shall continue for Three (3) years from October 1, 2009 to October 1, 2012, and shall be renewable by the mutual consent of the Parties. If written notice of non-renewal is not given by either Executive or Company not less than three (3) months before the expiration of the term of this Employment Agreement (or any renewal term) the Employment Agreement shall be automatically renewed, from time to time, for subsequent five (5) year terms.

(5)  

Notice and Severance Pay.  Either party may terminate this Employment Agreement at any time upon sixty (60) days written notice provided that,

If the Company should terminate such employment other than pursuant to subparagraph (5)C below“Termination for Cause”, the Executive shall be entitled to “Severance Pay” an amount equal to:

The full base Compensation that he was receiving immediately before his termination for a Term of twelve (12) months according to the Employment Agreement

Continuation of Benefits afforded regular employees of the Company for the severance pay period as defined in (5)A above.

A Bonus each year of the severance pay period (pro rated for partial years) equal to the bonus received by the Executive for the year preceding the year in which termination occurs.

If Executive is terminated following a “Change In Control” as set forth in Paragraph (5)B below, the Company shall pay Executive Severance Pay equal to two (2) times the Base Compensation that he is receiving immediately before his termination.

The date on which any person or entity (excluding any persons or entities affiliated with Executive), or persons or entities acting in concert, shall acquire the beneficial ownership of Shares or other securities having more than sixty percent (60%) of the Voting Power then outstanding other than a transfer by reason of death to a deceased Shareholder’s representatives or beneficiaries.

The Shareholders of the Company approve the merger or consolidation of the Company with or into any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the Voting Power of the Company or such surviving entity outstanding immediately after such merger or consolidation; or

The Shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or the majority of the Company’s assets.

Termination for Cause.  Notwithstanding the preceding, the Company may terminate the Executive’s employment for fraud, gross dishonesty, or non performance, acts of criminal misconduct, unwillingness to follow direct requests from the Board of Directors or willful and material violation of the Employment Agreement following reasonable written warning.

Result of Termination.  Upon termination of Executive’s employment pursuant to this Section, Employer shall pay to Executive’s estate, on the Termination Date, a lump sum payment of an amount equal to (i) all accrued and unused vacation and sick pay payable to Executive by Employer with respect to serviced rendered by Executive to Employer through the Termination Date; and, (ii) if the Termination Date occurs during the Extended Term, an amount equal to twelve (12) months salary based upon the then existing salary of Executive, payable in the same manner as salary would have been paid to Executive had he continued to work for Employer hereunder. In addition to the foregoing, and notwithstanding the provisions of any other agreement to the contrary, Employer shall continue to provide for the benefit of Executive’s family the medical benefits for twelve (12) months following the Termination Date.

Disability.  This Employment Agreement shall terminate upon the Disability of the Executive. “Disability” refers to the Executive being unable to perform substantially all the duties of his employment, for a continuous period in excess of six months, as determined by two physicians who are not affiliates of the Company or the Executive, one of whom is selected by the Company and one of whom is selected by the Executive.

Termination for Good Reason.  If Executive terminates his employment for “Good Reason”. The Executive shall be entitled to the “Severance Pay” provided in subparagraph  (5)A.ii. Termination of Employment for “Good Reason” shall include any of the following, unless the Executive shall have expressly consented in writing to:

The assignment of duties inconsistent with or a substantial alteration in the nature of, the Executives responsibilities;

A relocation of the Executive outside the metropolitan area of Orange County;

(6)  

Ownership of Work Product.  Company shall own all Work Product. Executive acknowledges that all Work Product is and shall be deemed work for hire by Executive as an employee or Consultant of Company and owned by the Company. To further evidence Company’s ownership rights and independent of this Agreement, Executive shall execute and deliver to Company the Employee Intellectual Property Acknowledgement, Assignment and Agreement attached hereto as Exhibit A. To the extent any Work Product is not, by operation of law, deemed work made for hire by Executive for Company (or if ownership of all right, title and interest of the intellectual property rights therein shall not otherwise vest exclusively in Company), Executive agrees to assign all such Work Product to Company as set forth in the Employee Intellectual Property Acknowledgement, Assignment and Agreement.

Clearance Procedure for Developments Not Claimed by Company.  In the event Executive wishes to create or develop, on his own time and with his own resources, anything that may be considered Work Product, but Executive believes he should or desires to be entitled to the personal benefit of such development or invention, Executive shall observe the following clearance procedure set forth in the Employee Intellectual Property Acknowledgement, Assignment and Agreement attached hereto as Exhibit A.

(7)  

Consequences of Entrustment with Sensitive Information.  Executive recognizes that his position with Company requires considerable responsibility and trust. Relying on Executive’s responsibilities hereunder and undivided loyalty, Company expects to entrust Executive with highly sensitive confidential, restricted, and proprietary information involving Trade Secrets and other intellectual property. Executive should recognize that it could prove very difficult to isolate these Trade Secrets from business activities that Executive might consider pursuing after termination of employment, and in some instances, Executive may not be able to compete with Company in certain ways because of the risk that Company's Trade Secrets might be compromised. Executive is responsible for protecting and preserving Company's proprietary rights for use only for Company's benefit, and these responsibilities may impose unavoidable limitations on Executive’s ability to pursue some kinds of business opportunities that might interest Executive during or after his employment.

Restrictions on Use and Disclosure of Trade Secrets.  Executive agrees not to use or disclose any Trade Secrets of Company during his employment and for so long afterwards as the pertinent information or data remain Trade Secrets, whether or not the Trade Secrets are in written or tangible form, except as required to perform any duties for Company.

Screening of Public Releases of Information.  In addition, and without any intention of limiting Executive’s other obligations under this Agreement in any way, Executive shall not, during his employment, reveal any nonpublic information concerning the technology pertaining to the proprietary products and manufacturing processes of Company (particularly technology under current development or improvement), unless Executive has obtained approval from Company in advance. In that connection, Executive shall submit to Company for review any proposed scientific and technical articles and the text of any public speeches relating to work done for Company before they are released or delivered. Company has the right to disapprove and prohibit, or delete any parts of, such articles or speeches that might disclose Company's Trade Secrets or Confidential Information or otherwise be contrary to Company's business interests.

(8)  

Return of Materials.  Upon the request of Company and, in any event, upon the termination of employment hereunder, Executive must return to Company and leave at its disposal all memoranda, notes, records, drawings, manuals, computer programs, documentation, diskettes, computer tapes, and other documents or media pertaining to the business of Company or Executive’s specific duties for Company (including all copies of such materials). Executive must also return to Company and leave at its disposal all materials involving any Trade Secrets of Company. This obligation applies to all materials made or compiled by Executive, as well as to all materials furnished to Executive by anyone else in connection with employment hereunder.

(9)  

Benefit.  This Agreement shall inure to the benefit of and shall be binding upon the Parties hereto and their respective successors and assigns but the obligations of the Executive hereunder may not be assigned by the Executive and are personal to him.

Entire Agreement.  This instrument contains the entire agreement of the Parties and supersedes any prior written or oral understandings or agreements. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought.

Governing Law.  This Agreement shall be governed by and interpreted in accordance with the substantive laws of the State of California.

Binding Arbitration.  Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration administered by the American     Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.  The arbitration shall be conducted in Orange County, California

Counterparts.  This agreement may be executed in one or more counterparts, each of which shall constitute an original.