Exhibit 10.7

 

Execution Copy

 

GUARANTY

 

This GUARANTY AGREEMENT (“Agreement”), dated as of June     , 2008 is made by
each of the undersigned (each a “Guarantor”, and collectively, the
“Guarantors”), in favor of YA GLOBAL INVESTMENTS, L.P. (the “Secured Party”).

 

WHEREAS, in connection with the Securities Purchase Agreement by and among
Isonics Corporation, a California corporation (the “Company”) and the Secured
Party of even date herewith (the “Securities Purchase Agreement”), the Company
has agreed, upon the terms and subject to the conditions of the Securities
Purchase Agreement, to issue to the Secured Party (i) an aggregate original
principal amount of $1,175,000 notes (the “Notes”); and (ii) warrants (the
“Warrants”) to be exercisable to acquire additional shares of the Company’s
common stock (“Common Stock”), no par value per share (the “Warrants Shares”)
initially in that number of shares of Common Stock set forth in the Securities
Purchase Agreement;

 

WHEREAS, each of the Guarantors is executing and delivering a Security Agreement
dated the date hereof (the “Security Agreement”) granting a lien in all of the
Pledged Property (as defined in the Security Agreement) to the Secured Party;

 

WHEREAS, it is a condition precedent to the Secured Party purchasing the Notes
and Warrants pursuant to the Securities Purchase Agreement that the Guarantors
shall have executed and delivered to the Secured Party this Agreement
guaranteeing all of the obligations of the Company under the Transaction
Documents (as defined in the Securities Purchase Agreement, the “Transaction
Documents”;

 

WHEREAS, each Guarantor has determined that the execution, delivery and
performance of this Guaranty directly benefits, and is in the best interest of,
such Guarantor;

 

NOW, THEREFORE, in consideration of the premises and the agreements herein and
in order to induce the Secured Party to perform under the Securities Purchase
Agreement, each Guarantor hereby agrees with the Secured Party as follows:

 

SECTION 1.     DEFINITIONS.  REFERENCE IS HEREBY MADE TO THE SECURITIES PURCHASE
AGREEMENT AND THE NOTES ISSUED PURSUANT THERETO FOR A STATEMENT OF THE TERMS
THEREOF.  ALL TERMS USED IN THIS GUARANTY, WHICH ARE DEFINED IN THE SECURITIES
PURCHASE AGREEMENT OR THE NOTES AND NOT OTHERWISE DEFINED HEREIN, SHALL HAVE THE
SAME MEANINGS HEREIN AS SET FORTH THEREIN.

 

SECTION 2.     GUARANTY.  THE GUARANTORS, JOINTLY AND SEVERALLY, HEREBY
UNCONDITIONALLY AND IRREVOCABLY, GUARANTY THE PUNCTUAL PAYMENT, AS AND WHEN DUE
AND PAYABLE, BY STATED MATURITY OR OTHERWISE, OF ALL OBLIGATIONS (AS DEFINED IN
THE SECURITY AGREEMENT) OF THE COMPANY FROM TIME TO TIME OWING BY IT TO THE
SECURED PARTY (SUCH OBLIGATIONS, TO THE EXTENT NOT PAID BY THE COMPANY, BEING
THE “GUARANTEED OBLIGATIONS”), AND AGREES TO PAY ANY AND ALL EXPENSES (INCLUDING
REASONABLE COUNSEL FEES AND EXPENSES) REASONABLY INCURRED BY THE SECURED PARTY
IN ENFORCING ANY RIGHTS UNDER THIS GUARANTY.  WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, EACH GUARANTOR’S LIABILITY HEREUNDER SHALL EXTEND TO ALL AMOUNTS
THAT CONSTITUTE PART OF THE GUARANTEED OBLIGATIONS AND WOULD BE OWED BY THE
COMPANY TO THE SECURED PARTY BUT FOR THE

 

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FACT THAT THEY ARE UNENFORCEABLE OR NOT ALLOWABLE DUE TO THE EXISTENCE OF AN
INSOLVENCY PROCEEDING INVOLVING ANY GUARANTOR OR THE COMPANY (EACH, A
“TRANSACTION PARTY”).

 

SECTION 3.     GUARANTY ABSOLUTE; CONTINUING GUARANTY; ASSIGNMENTS.

 

(A)           THE GUARANTORS, JOINTLY AND SEVERALLY, GUARANTY THAT THE
GUARANTEED OBLIGATIONS WILL BE PAID STRICTLY IN ACCORDANCE WITH THE TERMS OF THE
TRANSACTION DOCUMENTS, REGARDLESS OF ANY LAW, REGULATION OR ORDER NOW OR
HEREAFTER IN EFFECT IN ANY JURISDICTION AFFECTING ANY OF SUCH TERMS OR THE
RIGHTS OF THE SECURED PARTY WITH RESPECT THERETO.  THE OBLIGATIONS OF EACH
GUARANTOR UNDER THIS GUARANTY ARE INDEPENDENT OF THE GUARANTEED OBLIGATIONS, AND
A SEPARATE ACTION OR ACTIONS MAY BE BROUGHT AND PROSECUTED AGAINST ANY GUARANTOR
TO ENFORCE SUCH OBLIGATIONS, IRRESPECTIVE OF WHETHER ANY ACTION IS BROUGHT
AGAINST ANY TRANSACTION PARTY OR WHETHER ANY TRANSACTION PARTY IS JOINED IN ANY
SUCH ACTION OR ACTIONS.  THE LIABILITY OF ANY GUARANTOR UNDER THIS GUARANTY
SHALL BE IRREVOCABLE, ABSOLUTE AND UNCONDITIONAL IRRESPECTIVE OF, AND EACH
GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY
DEFENSES IT MAY NOW OR HEREAFTER HAVE IN ANY WAY RELATING TO, ANY OR ALL OF THE
FOLLOWING:

 

(I)            ANY LACK OF VALIDITY OR ENFORCEABILITY OF ANY TRANSACTION
DOCUMENT OR ANY AGREEMENT OR INSTRUMENT RELATING THERETO;

 

(II)           ANY CHANGE IN THE TIME, MANNER OR PLACE OF PAYMENT OF, OR IN ANY
OTHER TERM OF, ALL OR ANY OF THE GUARANTEED OBLIGATIONS, OR ANY OTHER AMENDMENT
OR WAIVER OF OR ANY CONSENT TO DEPARTURE FROM ANY TRANSACTION DOCUMENT,
INCLUDING, WITHOUT LIMITATION, ANY INCREASE IN THE GUARANTEED OBLIGATIONS
RESULTING FROM THE EXTENSION OF ADDITIONAL CREDIT TO ANY TRANSACTION PARTY OR
OTHERWISE;

 

(III)          ANY TAKING, EXCHANGE, RELEASE OR NON-PERFECTION OF ANY PLEDGED
PROPERTY (AS DEFINED IN THE SECURITY DOCUMENTS), OR ANY TAKING, RELEASE OR
AMENDMENT OR WAIVER OF OR CONSENT TO DEPARTURE FROM ANY OTHER GUARANTY, FOR ALL
OR ANY OF THE GUARANTEED OBLIGATIONS;

 

(IV)          ANY CHANGE, RESTRUCTURING OR TERMINATION OF THE CORPORATE, LIMITED
LIABILITY COMPANY OR PARTNERSHIP STRUCTURE OR EXISTENCE OF ANY TRANSACTION
PARTY; OR

 

(V)           ANY OTHER CIRCUMSTANCE (INCLUDING ANY STATUTE OF LIMITATIONS) OR
ANY EXISTENCE OF OR RELIANCE ON ANY REPRESENTATION BY THE SECURED PARTY THAT
MIGHT OTHERWISE CONSTITUTE A DEFENSE AVAILABLE TO, OR A DISCHARGE OF, ANY
TRANSACTION PARTY OR ANY OTHER GUARANTOR OR SURETY.

 

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of any Transaction Party or otherwise,
all as though such payment had not been made.

 

(B)           THIS GUARANTY IS A CONTINUING GUARANTY AND SHALL (I) REMAIN IN
FULL FORCE AND EFFECT UNTIL THE INDEFEASIBLE CASH PAYMENT IN FULL OF THE
GUARANTEED OBLIGATIONS (OTHER THAN INCHOATE INDEMNITY OBLIGATIONS) AND (II) BE
BINDING UPON EACH GUARANTOR AND ITS RESPECTIVE SUCCESSORS AND ASSIGNS.  THIS
GUARANTY SHALL INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY THE SECURED PARTY
AND ITS SUCCESSORS, AND PERMITTED PLEDGEES, TRANSFEREES AND ASSIGNS.  WITHOUT

 

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LIMITING THE GENERALITY OF THE FOREGOING SENTENCE, THE SECURED PARTY MAY PLEDGE,
ASSIGN OR OTHERWISE TRANSFER ALL OR ANY PORTION OF ITS RIGHTS AND OBLIGATIONS
UNDER AND SUBJECT TO THE TERMS OF ANY TRANSACTION DOCUMENT TO ANY OTHER PERSON,
AND SUCH OTHER PERSON SHALL THEREUPON BECOME VESTED WITH ALL THE BENEFITS IN
RESPECT THEREOF GRANTED TO THE SECURED PARTY HEREIN OR OTHERWISE, IN EACH CASE
AS PROVIDED IN THE SECURITIES PURCHASE AGREEMENT OR SUCH TRANSACTION DOCUMENT.

 

SECTION 4.     WAIVERS.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
GUARANTOR HEREBY WAIVES PROMPTNESS, DILIGENCE, NOTICE OF ACCEPTANCE AND ANY
OTHER NOTICE WITH RESPECT TO ANY OF THE GUARANTEED OBLIGATIONS AND THIS GUARANTY
AND ANY REQUIREMENT THAT THE SECURED PARTY EXHAUST ANY RIGHT OR TAKE ANY ACTION
AGAINST ANY TRANSACTION PARTY OR ANY OTHER PERSON OR ANY PLEDGED PROPERTY.  THE
GUARANTOR ACKNOWLEDGES THAT IT WILL RECEIVE DIRECT AND INDIRECT BENEFITS FROM
THE FINANCING ARRANGEMENTS CONTEMPLATED HEREIN AND THAT THE WAIVER SET FORTH IN
THIS SECTION 4 IS KNOWINGLY MADE IN CONTEMPLATION OF SUCH BENEFITS.  THE
GUARANTORS HEREBY WAIVE ANY RIGHT TO REVOKE THIS GUARANTY, AND ACKNOWLEDGES THAT
THIS GUARANTY IS CONTINUING IN NATURE AND APPLIES TO ALL GUARANTEED OBLIGATIONS,
WHETHER EXISTING NOW OR IN THE FUTURE.

 

SECTION 5.     SUBROGATION.  NO GUARANTOR MAY EXERCISE ANY RIGHTS THAT IT MAY
NOW OR HEREAFTER ACQUIRE AGAINST ANY TRANSACTION PARTY OR ANY OTHER GUARANTOR
THAT ARISE FROM THE EXISTENCE, PAYMENT, PERFORMANCE OR ENFORCEMENT OF ANY
GUARANTOR’S OBLIGATIONS UNDER THIS GUARANTY, INCLUDING, WITHOUT LIMITATION, ANY
RIGHT OF SUBROGATION, REIMBURSEMENT, EXONERATION, CONTRIBUTION OR
INDEMNIFICATION AND ANY RIGHT TO PARTICIPATE IN ANY CLAIM OR REMEDY OF THE
SECURED PARTY AGAINST ANY TRANSACTION PARTY OR ANY OTHER GUARANTOR OR ANY
PLEDGED PROPERTY, WHETHER OR NOT SUCH CLAIM, REMEDY OR RIGHT ARISES IN EQUITY OR
UNDER CONTRACT, STATUTE OR COMMON LAW, INCLUDING, WITHOUT LIMITATION, THE RIGHT
TO TAKE OR RECEIVE FROM ANY TRANSACTION PARTY OR ANY OTHER GUARANTOR, DIRECTLY
OR INDIRECTLY, IN CASH OR OTHER PROPERTY OR BY SET-OFF OR IN ANY OTHER MANNER,
PAYMENT OR SECURITY SOLELY ON ACCOUNT OF SUCH CLAIM, REMEDY OR RIGHT, UNLESS AND
UNTIL ALL OF THE GUARANTEED OBLIGATIONS (OTHER THAN INCHOATE INDEMNITY
OBLIGATIONS) AND ALL OTHER AMOUNTS PAYABLE UNDER THIS GUARANTY (OTHER THAN
INCHOATE INDEMNITY OBLIGATIONS) SHALL HAVE INDEFEASIBLY BEEN PAID IN FULL IN
CASH.  IF ANY AMOUNT SHALL BE PAID TO THE GUARANTOR IN VIOLATION OF THE
IMMEDIATELY PRECEDING SENTENCE AT ANY TIME PRIOR TO THE LATER OF THE PAYMENT IN
FULL IN CASH OF THE GUARANTEED OBLIGATIONS AND ALL OTHER AMOUNTS PAYABLE UNDER
THIS GUARANTY, SUCH AMOUNT SHALL BE HELD IN TRUST FOR THE BENEFIT OF THE SECURED
PARTY AND SHALL FORTHWITH BE PAID TO THE SECURED PARTY TO BE CREDITED AND
APPLIED TO THE GUARANTEED OBLIGATIONS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS
GUARANTY, WHETHER MATURED OR UNMATURED, IN ACCORDANCE WITH THE TERMS OF THE
TRANSACTION DOCUMENT, OR TO BE HELD AS PLEDGED PROPERTY FOR ANY GUARANTEED
OBLIGATIONS OR OTHER AMOUNTS PAYABLE UNDER THIS GUARANTY THEREAFTER ARISING.  IF
(A) ANY GUARANTOR SHALL MAKE PAYMENT TO THE SECURED PARTY OF ALL OR ANY PART OF
THE GUARANTEED OBLIGATIONS, AND (B) ALL OF THE GUARANTEED OBLIGATIONS (OTHER
THAN INCHOATE INDEMNITY OBLIGATIONS) AND ALL OTHER AMOUNTS PAYABLE UNDER THIS
GUARANTY (OTHER THAN INCHOATE INDEMNITY OBLIGATIONS) SHALL INDEFEASIBLY BE PAID
IN FULL IN CASH, THE SECURED PARTY WILL, AT SUCH GUARANTOR’S REQUEST AND
EXPENSE, EXECUTE AND DELIVER TO SUCH GUARANTOR APPROPRIATE DOCUMENTS, WITHOUT
RECOURSE AND WITHOUT REPRESENTATION OR WARRANTY, NECESSARY TO EVIDENCE THE
TRANSFER BY SUBROGATION TO SUCH GUARANTOR OF AN INTEREST IN THE GUARANTEED
OBLIGATIONS RESULTING FROM SUCH PAYMENT BY SUCH GUARANTOR.

 

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SECTION 6.     REPRESENTATIONS, WARRANTIES AND COVENANTS.

 

(A)           EACH GUARANTOR HEREBY REPRESENTS AND WARRANTS AS OF THE DATE FIRST
WRITTEN ABOVE AS FOLLOWS:

 

(I)            THE GUARANTOR (A) IS A CORPORATION, LIMITED LIABILITY COMPANY OR
LIMITED PARTNERSHIP DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER
THE LAWS OF THE JURISDICTION OF ITS ORGANIZATION, (B) HAS ALL CORPORATE, LIMITED
LIABILITY COMPANY OR LIMITED PARTNERSHIP POWER AND AUTHORITY TO CONDUCT ITS
BUSINESS AS NOW CONDUCTED AND AS PRESENTLY CONTEMPLATED AND TO EXECUTE AND
DELIVER THIS GUARANTY AND EACH OTHER TRANSACTION DOCUMENT TO WHICH THE GUARANTOR
IS A PARTY, AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY
AND (C) IS DULY QUALIFIED TO DO BUSINESS AND IS IN GOOD STANDING IN EACH
JURISDICTION IN WHICH THE CHARACTER OF THE PROPERTIES OWNED OR LEASED BY IT OR
IN WHICH THE TRANSACTION OF ITS BUSINESS MAKES SUCH QUALIFICATION NECESSARY
EXCEPT WHERE THE FAILURE TO BE SO QUALIFIED WOULD NOT RESULT IN A MATERIAL
ADVERSE EFFECT.

 

(II)           THE EXECUTION, DELIVERY AND PERFORMANCE BY THE GUARANTOR OF THIS
GUARANTY AND EACH OTHER TRANSACTION DOCUMENT TO WHICH THE GUARANTOR IS A PARTY
(A) HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE, LIMITED LIABILITY
COMPANY OR LIMITED PARTNERSHIP ACTION, (B) DO NOT AND WILL NOT CONTRAVENE ITS
CHARTER OR BY-LAWS, ITS LIMITED LIABILITY COMPANY OR OPERATING AGREEMENT OR ITS
CERTIFICATE OF PARTNERSHIP OR PARTNERSHIP AGREEMENT, AS APPLICABLE, OR ANY
APPLICABLE LAW OR ANY CONTRACTUAL RESTRICTION BINDING ON THE GUARANTOR OR ITS
PROPERTIES (EXCEPT WHERE THE CONTRAVENTION OF SUCH CONTRACTUAL RESTRICTION WOULD
NOT RESULT IN A MATERIAL ADVERSE EFFECT), (C) DO NOT AND WILL NOT RESULT IN OR
REQUIRE THE CREATION OF ANY LIEN (OTHER THAN PURSUANT TO ANY TRANSACTION
DOCUMENT) UPON OR WITH RESPECT TO ANY OF ITS PROPERTIES, AND (D) DO NOT AND WILL
NOT RESULT IN ANY DEFAULT, NONCOMPLIANCE, SUSPENSION, REVOCATION, IMPAIRMENT,
FORFEITURE OR NONRENEWAL OF ANY MATERIAL PERMIT, LICENSE, AUTHORIZATION OR
APPROVAL APPLICABLE TO IT OR ITS OPERATIONS OR ANY OF ITS PROPERTIES.

 

(III)          NO AUTHORIZATION OR APPROVAL OR OTHER ACTION BY, AND NO NOTICE TO
OR FILING WITH, ANY GOVERNMENTAL AUTHORITY IS REQUIRED IN CONNECTION WITH THE
DUE EXECUTION, DELIVERY AND PERFORMANCE BY THE GUARANTOR OF THIS GUARANTY OR ANY
OF THE OTHER TRANSACTION DOCUMENTS TO WHICH THE GUARANTOR IS A PARTY (OTHER THAN
EXPRESSLY PROVIDED FOR IN ANY OF THE TRANSACTION DOCUMENTS).

 

(IV)          EACH OF THIS GUARANTY AND THE OTHER TRANSACTION DOCUMENTS TO WHICH
THE GUARANTOR IS OR WILL BE A PARTY, WHEN DELIVERED, WILL BE, A LEGAL, VALID AND
BINDING OBLIGATION OF THE GUARANTOR, ENFORCEABLE AGAINST THE GUARANTOR IN
ACCORDANCE WITH ITS TERMS, EXCEPT AS MAY BE LIMITED BY APPLICABLE BANKRUPTCY,
INSOLVENCY, REORGANIZATION, MORATORIUM, FRAUDULENT CONVEYANCE, SURETYSHIP OR
OTHER SIMILAR LAWS AND EQUITABLE PRINCIPLES (REGARDLESS OF WHETHER ENFORCEMENT
IS SOUGHT IN EQUITY OR AT LAW).

 

(V)           THERE IS NO PENDING OR, TO THE KNOWLEDGE OF THE GUARANTOR,
THREATENED ACTION, SUIT OR PROCEEDING AGAINST THE GUARANTOR OR TO WHICH ANY OF
THE PROPERTIES OF THE GUARANTOR IS SUBJECT, BEFORE ANY COURT OR OTHER
GOVERNMENTAL AUTHORITY OR ANY ARBITRATOR THAT (A) IF ADVERSELY DETERMINED, COULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT OR

 

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(B) RELATES TO THIS GUARANTY OR ANY OF THE OTHER TRANSACTION DOCUMENTS TO WHICH
THE GUARANTOR IS A PARTY OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.

 

(VI)          THE GUARANTOR (A) HAS READ AND UNDERSTANDS THE TERMS AND
CONDITIONS OF THE SECURITIES PURCHASE AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS, AND (B) NOW HAS AND WILL CONTINUE TO HAVE INDEPENDENT MEANS OF
OBTAINING INFORMATION CONCERNING THE AFFAIRS, FINANCIAL CONDITION AND BUSINESS
OF THE COMPANY AND THE OTHER TRANSACTION PARTIES, AND HAS NO NEED OF, OR RIGHT
TO OBTAIN FROM THE SECURED PARTY, ANY CREDIT OR OTHER INFORMATION CONCERNING THE
AFFAIRS, FINANCIAL CONDITION OR BUSINESS OF THE COMPANY OR THE OTHER TRANSACTION
PARTIES THAT MAY COME UNDER THE CONTROL OF THE SECURED PARTY.

 

SECTION 7.     RIGHT OF SET-OFF.  UPON THE OCCURRENCE AND DURING THE CONTINUANCE
OF ANY EVENT OF DEFAULT, THE SECURED PARTY MAY, AND IS HEREBY AUTHORIZED TO, AT
ANY TIME AND FROM TIME TO TIME, WITHOUT NOTICE TO THE GUARANTORS (ANY SUCH
NOTICE BEING EXPRESSLY WAIVED BY EACH GUARANTOR) AND TO THE FULLEST EXTENT
PERMITTED BY LAW, SET-OFF AND APPLY ANY AND ALL DEPOSITS (GENERAL OR SPECIAL,
TIME OR DEMAND, PROVISIONAL OR FINAL) AT ANY TIME HELD AND OTHER INDEBTEDNESS AT
ANY TIME OWING BY THE SECURED PARTY TO OR FOR THE CREDIT OR THE ACCOUNT OF ANY
GUARANTOR AGAINST ANY AND ALL OBLIGATIONS OF THE GUARANTORS NOW OR HEREAFTER
EXISTING UNDER THIS GUARANTY OR ANY OTHER TRANSACTION DOCUMENT, IRRESPECTIVE OF
WHETHER OR NOT THE SECURED PARTY SHALL HAVE MADE ANY DEMAND UNDER THIS GUARANTY
OR ANY OTHER TRANSACTION DOCUMENT AND ALTHOUGH SUCH OBLIGATIONS MAY BE
CONTINGENT OR UNMATURED.  THE SECURED PARTY AGREES TO NOTIFY THE RELEVANT
GUARANTOR PROMPTLY AFTER ANY SUCH SET-OFF AND APPLICATION MADE BY THE SECURED
PARTY, PROVIDED THAT THE FAILURE TO GIVE SUCH NOTICE SHALL NOT AFFECT THE
VALIDITY OF SUCH SET-OFF AND APPLICATION.  THE RIGHTS OF THE SECURED PARTY UNDER
THIS SECTION 7 ARE IN ADDITION TO OTHER RIGHTS AND REMEDIES (INCLUDING, WITHOUT
LIMITATION, OTHER RIGHTS OF SET-OFF) WHICH THE SECURED PARTY MAY HAVE UNDER THIS
GUARANTY OR ANY OTHER TRANSACTION DOCUMENT IN LAW OR OTHERWISE.

 

SECTION 8.     NOTICES, ETC.  ALL NOTICES AND OTHER COMMUNICATIONS PROVIDED FOR
HEREUNDER SHALL BE IN WRITING AND SHALL BE MAILED, TELECOPIED OR DELIVERED, IF
TO ANY GUARANTOR, TO IT AT ITS ADDRESS SET FORTH ON THE SIGNATURE PAGE HERETO,
OR IF TO THE SECURED PARTY, TO IT AT ITS RESPECTIVE ADDRESS SET FORTH IN THE
SECURITIES PURCHASE AGREEMENT; OR AS TO EITHER SUCH PERSON AT SUCH OTHER ADDRESS
AS SHALL BE DESIGNATED BY SUCH PERSON IN A WRITTEN NOTICE TO SUCH OTHER PERSON
COMPLYING AS TO DELIVERY WITH THE TERMS OF THIS SECTION 8.  ALL SUCH NOTICES AND
OTHER COMMUNICATIONS SHALL BE EFFECTIVE (I) IF MAILED (BY CERTIFIED MAIL,
POSTAGE PREPAID AND RETURN RECEIPT REQUESTED), WHEN RECEIVED OR THREE BUSINESS
DAYS AFTER DEPOSITED IN THE MAILS, WHICHEVER OCCURS FIRST; (II) IF TELECOPIED,
WHEN TRANSMITTED AND CONFIRMATION IS RECEIVED, PROVIDED SAME IS ON A BUSINESS
DAY AND, IF NOT, ON THE NEXT BUSINESS DAY; OR (III) IF DELIVERED BY HAND, UPON
DELIVERY, PROVIDED SAME IS ON A BUSINESS DAY AND, IF NOT, ON THE NEXT BUSINESS
DAY.

 

SECTION 9.     GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES FURTHER AGREE THAT
ANY ACTION BETWEEN THEM SHALL BE HEARD IN HUDSON COUNTY, NEW JERSEY, AND
EXPRESSLY CONSENT TO THE JURISDICTION AND VENUE OF THE SUPERIOR COURT OF NEW
JERSEY, SITTING IN HUDSON COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW JERSEY SITTING IN NEWARK, NEW JERSEY FOR THE ADJUDICATION OF ANY
CIVIL ACTION ASSERTED PURSUANT TO THIS PARAGRAPH.

 

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SECTION 10.     WAIVER OF JURY TRIAL, ETC.  EACH GUARANTOR HEREBY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING
ANY RIGHTS UNDER THIS GUARANTY OR THE OTHER TRANSACTION DOCUMENTS, OR UNDER ANY
AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR
WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR
ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
GUARANTY OR THE OTHER TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH ACTION,
PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 
EACH GUARANTOR CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF
THE SECURED PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE SECURED
PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO
ENFORCE THE FOREGOING WAIVERS.  EACH GUARANTOR HEREBY ACKNOWLEDGES THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED PARTY ENTERING INTO THIS
AGREEMENT.

 

SECTION 11.     MISCELLANEOUS.

 

(A)           EACH GUARANTOR WILL MAKE EACH PAYMENT HEREUNDER IN LAWFUL MONEY OF
THE UNITED STATES OF AMERICA AND IN IMMEDIATELY AVAILABLE FUNDS TO THE SECURED
PARTY, AT SUCH ADDRESS SPECIFIED BY THE SECURED PARTY FROM TIME TO TIME BY
NOTICE TO THE GUARANTORS.

 

(B)           NO AMENDMENT OR WAIVER OF ANY PROVISION OF THIS GUARANTY AND NO
CONSENT TO ANY DEPARTURE BY ANY GUARANTOR THEREFROM SHALL IN ANY EVENT BE
EFFECTIVE UNLESS THE SAME SHALL BE IN WRITING AND SIGNED BY EACH GUARANTOR AND
THE SECURED PARTY, AND THEN SUCH WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN
THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN.

 

(C)           NO FAILURE ON THE PART OF THE SECURED PARTY TO EXERCISE, AND NO
DELAY IN EXERCISING, ANY RIGHT HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT
SHALL OPERATE AS A WAIVER THEREOF, NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF
ANY RIGHT HEREUNDER OR UNDER ANY TRANSACTION DOCUMENT PRECLUDE ANY OTHER OR
FURTHER EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER RIGHT.  THE RIGHTS AND
REMEDIES OF THE SECURED PARTY PROVIDED HEREIN AND IN THE OTHER TRANSACTION
DOCUMENTS ARE CUMULATIVE AND ARE IN ADDITION TO, AND NOT EXCLUSIVE OF, ANY
RIGHTS OR REMEDIES PROVIDED BY LAW.  THE RIGHTS OF THE SECURED PARTY UNDER ANY
TRANSACTION DOCUMENT AGAINST ANY PARTY THERETO ARE NOT CONDITIONAL OR CONTINGENT
ON ANY ATTEMPT BY THE SECURED PARTY TO EXERCISE ANY OF THEIR RESPECTIVE RIGHTS
UNDER ANY OTHER TRANSACTION DOCUMENT AGAINST SUCH PARTY OR AGAINST ANY OTHER
PERSON.

 

(D)           ANY PROVISION OF THIS GUARANTY THAT IS PROHIBITED OR UNENFORCEABLE
IN ANY JURISDICTION SHALL, AS TO SUCH JURISDICTION, BE INEFFECTIVE TO THE EXTENT
OF SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT INVALIDATING THE REMAINING
PORTIONS HEREOF OR AFFECTING THE VALIDITY OR ENFORCEABILITY OF SUCH PROVISION IN
ANY OTHER JURISDICTION.

 

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(E)           THIS GUARANTY SHALL (I) BE BINDING ON EACH GUARANTOR AND ITS
RESPECTIVE SUCCESSORS AND ASSIGNS, AND (II) INURE, TOGETHER WITH ALL RIGHTS AND
REMEDIES OF THE SECURED PARTY HEREUNDER, TO THE BENEFIT OF THE SECURED PARTY AND
THEIR RESPECTIVE SUCCESSORS, TRANSFEREES AND ASSIGNS.  WITHOUT LIMITING THE
GENERALITY OF CLAUSE (II) OF THE IMMEDIATELY PRECEDING SENTENCE, THE SECURED
PARTY MAY ASSIGN OR OTHERWISE TRANSFER ITS RIGHTS AND OBLIGATIONS UNDER THE
SECURITIES PURCHASE AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT TO ANY OTHER
PERSON IN ACCORDANCE WITH THE TERMS THEREOF, AND SUCH OTHER PERSON SHALL
THEREUPON BECOME VESTED WITH ALL OF THE BENEFITS IN RESPECT THEREOF GRANTED TO
THE SECURED PARTY, AS THE CASE MAY BE, HEREIN OR OTHERWISE.  NONE OF THE RIGHTS
OR OBLIGATIONS OF ANY GUARANTOR HEREUNDER MAY BE ASSIGNED OR OTHERWISE
TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF SECURED PARTY.

 

(F)            THIS GUARANTY REFLECTS THE ENTIRE UNDERSTANDING OF THE
TRANSACTION CONTEMPLATED HEREBY AND SHALL NOT BE CONTRADICTED OR QUALIFIED BY
ANY OTHER AGREEMENT, ORAL OR WRITTEN, ENTERED INTO BEFORE THE DATE HEREOF.

 

(G)           SECTION HEADINGS HEREIN ARE INCLUDED FOR CONVENIENCE OF REFERENCE
ONLY AND SHALL NOT CONSTITUTE A PART OF THIS AGREEMENT FOR ANY OTHER PURPOSE.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed by
its respective duly authorized officer, as of the date first above written.

 

 

ISONICS VANCOUVER, INC.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

Address:

 

c/o Isonics Corporation

 

5906 McIntyre Street

 

Golden, CO 80403

 

Attn: Chief Executive Officer

 

 

 

ISONICS HOMELAND SECURITY AND DEFENSE
CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

Address:

 

c/o Isonics Corporation

 

5906 McIntyre Street

 

Golden, CO 80403

 

Attn: Chief Executive Officer

 

 

 

PROTECTION PLUS SECURITY CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

Address:

 

c/o Isonics Corporation

 

5906 McIntyre Street

 

Golden, CO 80403

 

Attn: Chief Executive Officer

 

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