Exhibit 10.8


 


ESCROW AGREEMENT


 


This ESCROW AGREEMENT (the “Agreement”) is made
and entered into on June 13, 2008, by and among ISONICS CORPORATION (the “Company”),
YA GLOBAL INVESTMENTS, L.P., (the “Buyer”), YORKVILLE ADVISORS, LLC (“Investment
Manager”), and DAVID GONZALEZ, ESQ., as escrow agent (the “Escrow Agent”).  The Company, the Buyer, and Yorkville may be
referred to individually as a “Party” or collectively as the “Parties.”  All capitalized terms used herein but not
defined herein shall have the meanings ascribed to them in that certain
Securities Purchase Agreement dated June 13, 2008  entered into by and between the
Company and the Buyer (the “Securities Purchase Agreement”).


 


RECITALS


 


WHEREAS, the Company and the Buyer have entered
into a Securities Purchase Agreement, pursuant to which the Company shall issue
and sell to the Buyer, and the Buyer shall purchase certain Securities;


 


WHEREAS, at all times while the Buyer holds any of the Securities,
the Investment Manager shall perform monitoring and managing services for the
Buyer in connection with the Buyer’s purchase and investment in the Securities and
the Buyer’s rights and obligations under the Securities Purchase Agreement and
other related documents and agreements, and during such time, the Investment
Manager shall be paid on a monthly basis, a fee from the Buyer for services
performed;


 


WHEREAS, pursuant to the Securities Purchase Agreement, the Parties
desire that the Monitoring Fees (as defined in the Securities Purchase
Agreement) be deposited into a segregated escrow account to be held by the
Escrow Agent and disbursed to the Investment Manager on a monthly basis as set
forth in this Agreement as it performs its monitoring and managing services for
the Buyer;


 


WHEREAS, Escrow Agent has agreed to accept,
hold, and disburse the Monitoring Fees deposited with it hereunder in
accordance with the terms of this Agreement.


 


AGREEMENT


 


NOW THEREFORE, for and in consideration of the foregoing,
the mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereby agree as follows:


 


1.             Appointment of Escrow Agent.  The Company,
the Buyer, and the Investment Manager hereby mutually appoint and designate the
Escrow Agent to receive, hold and release, as escrow agent, the Escrow Funds (as
defined below) and Escrow Agent hereby accepts such appointment and
designation, all in accordance with the terms hereof.


 


2.             Escrow Delivery.


 


2.1. Escrow Funds. 
Escrow Agent is hereby authorized and directed to use its bank account
as an escrow account for purposes of this Agreement.  The Company shall deposit into the Escrow
Account all of the Monitoring Fees in accordance with the terms and conditions
of Section 4(g)(ii) of the Securities Purchase Agreement (such
Monitoring Fee funds actually deposited into the Escrow Account shall be
referred to as the “Escrow Funds”). 
Such Escrow Funds shall be wired to the following account in accordance
with the wire instructions below and shall be held by Escrow Agent and released
only in accordance with the terms of this Agreement.


 


	
  Bank:

  	
   

  	
  Wachovia,
  N.A. of New Jersey

  
	
  Routing
  #:

  	
   

  	
  031201467

  



 

















 


	
  Account
  #:

  	
   

  	
  2000014931121

  
	
  Name
  on Account:

  	
   

  	
  David
  Gonzalez Attorney Trust Account

  
	
  Name
  on Sub-Account:

  	
   

  	
  Isonics/Monitoring
  Fee

  



 


3.             Conditions of Escrow.


 


3.1. The Escrow Deposit.  Escrow Agent shall hold the Escrow Funds until
all funds have been disbursed in accordance with this Agreement (the “Term”)
for the benefit of the Buyer. The Escrow Funds shall be deposited into the
Escrow Account by the Company and the Buyer as set forth in the Securities
Purchase Agreement.  Upon each deposit
into the Escrow Account, the Buyer shall provide to the Escrow Agent a
completed Monitoring Fee Schedule in the form attached hereto as Exhibit A
(a “Monitoring Fee Schedule”) with respect to such deposit into escrow
setting forth the date and amount of such deposit and the schedule of
disbursements to be made from escrow.


 


3.2. Release of Escrow
Funds.   The Escrow Agent shall disburse
the Escrow Funds in accordance with the following procedures:


 


(i)            The Escrow Agent shall disburse the
designated portion of the Escrow Funds to the Investment Manager in the amounts
and at the times set forth on the Monitoring Fee Schedules promptly upon
receipt from the Buyer of a signed written instruction directing the Escrow
Agent to make such disbursement.  In
disbursing Escrow Funds, the Escrow Agent is authorized to rely upon such
written instruction from the Buyer and may accept any signatory from the Buyer
that Escrow Agent has on file.


 


(ii)           In the event that the Securities are Fully Retired (as defined in the
Securities Purchase Agreement) prior to the full disbursement of all the Escrow
Funds, the Buyer and the Company shall execute a joint written instruction
directing the Escrow Agent to disburse the remaining Escrow Funds to the
Company, or to such other Person as set forth in such joint written direction,
provided however, the Buyer may instruct, by delivery of a signed written
instruction, which the Buyer, in its sole determination may provide, the Escrow
Agent to disburse all or a portion of the remaining Escrow Funds to the Buyer,
which amount shall be credited to any fees, costs, expenses, or other amounts
owed to the Buyer from the Company pursuant to the Securities, the Securities
Purchase Agreement, or any related documents after the Securities are Fully
Retired, so long as the Buyer first provides the Company with advanced written
notice of such amounts owed to it and provides the Company with five business
days to directly pay such amounts to the Buyer.


 


3.3. Conflict.  If a controversy arises between the Parties concerning
the release of the Escrow Funds hereunder, they shall notify Escrow Agent.  In that event (or, in the absence of such
notification, if in the good faith judgment of Escrow Agent such controversy
exists), Escrow Agent shall not be required to resolve such controversy or take
an action but shall be entitled to await resolution of the controversy by joint
written instructions from the Parties or may immediately return the Escrow
Funds to the respective Parties, in which event Escrow Agent shall have no
further liability hereunder.  If a suit
is commenced against Escrow Agent, it may answer by way of interpleader and
name the Parties as additional parties to such action, and Escrow Agent may
tender the Escrow Funds into such court for determination of the respective
rights, titles and interests of the Parties. 
Upon such tender, Escrow Agent shall be entitled to receive from the
Parties its reasonable attorneys’ fees and expenses incurred in connection with
said interpleader action or in any related action or suit.  If and when Escrow Agent shall so interplead such Parties, or either of them, and deliver the
Escrow Funds to the clerk of such court, all of its duties hereunder shall
cease, and it shall have no further obligation in this regard.


 

















 


3.4. Cause of Action.           The Company agrees and acknowledges that in no event shall it have any
cause of action, standing, claim, or any other rights against the Buyer or the
Investment Manager with respect written instructions provided by the Buyer or
disbursements made to the Investment Manager in accordance with Section 3.2.
hereunder.


 


4.             Escrow Agent.


 


4.1. Liability of Escrow
Agent.  The Parties acknowledge,
understand and agree that Escrow Agent has accepted Escrow Agent’s appointment
under this Agreement and shall perform and satisfy Escrow Agent’s duties,
liabilities and obligations under this Agreement only as an accommodation to the
Parties.  The Parties, jointly and
severally, hereby indemnify Escrow Agent and each representative of Escrow
Agent and hereby agree to hold Escrow Agent and each such representative free
and harmless from and to defend and protect Escrow Agent and such
representative against any claim made, asserted or threatened against Escrow
Agent or such representative (including any such claim made, asserted or
threatened by the Parties), and any claim incurred by Escrow Agent or such
representative, excluding, however, any claim arising from the gross
negligence, willful misconduct, criminal conduct or intentionally tortuous
conduct of Escrow Agent or such representative.


 


4.2. Proceeding.  Escrow Agent, in Escrow Agent’s sole
discretion, may commence any judicial proceeding necessary or appropriate to
determining the respective rights of the Parties under this Agreement or to
interpreting or enforcing any term, condition or other provision of this
Agreement.  The Parties shall jointly and
severally be liable for any and all costs and expenses (including attorneys
fees, expert witness fees, accounting fees and related costs) incurred by
Escrow Agent in connection with such proceeding.


 


5.             Termination.  This
Agreement shall be terminated upon the occurrence of any one of the following: (i) the
release of all the Escrow Funds in accordance with the terms and conditions of Section hereof;
or (ii) otherwise by written mutual consent signed by the Parties.


 


6.             Notice.  All notices, demands,
requests, or other communications which may be or are required to be given,
served or sent by any of the Parties or the Escrow Agent to any other party pursuant
to this Agreement shall be in writing and shall be hand delivered (including
delivery by courier), sent by facsimile, sent by a nationally recognized
overnight delivery service, or mailed by first-class, registered or certified
mail, return receipt requested, postage prepaid, addressed to the parties last
known address or such other address as the addressee may indicate by written
notice to the other Parties or the Escrow Agent.  Each notice, demand, request or communication
that is given or made in the manner described above shall be deemed
sufficiently given or made for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt or the affidavit
of messenger being deemed conclusive but not exclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.


 


7.             Benefit and Assignment.  None
of the Parties may assign this Agreement without the prior written consent of
all Parties and the Escrow Agent.  This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns as permitted hereunder.  No person or entity other than the Parties
and their respective successors and assigns is or shall be entitled to bring
any action to enforce any provision in this Agreement against any of the
Parties, and the covenants and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, the Parties or
their respective successors and assigns.


 


8.             Entire Agreement; Amendment. This Agreement, along with the Purchase
Agreement and any other agreement executed on the date hereof between the
Parties, contains the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior oral or written agreements,
commitments or 


 

















 


understandings with respect to such matters. 
This Agreement may not be changed orally, but only by an instrument in
writing signed by the Party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.


 


9.             Headings.  The headings of the sections and subsections
contained in this Agreement are inserted for convenience only and do not form a
part or affect the meaning, construction or scope thereof.


 


10.           Governing Law; Venue.  This
Agreement shall be governed and constructed under and in accordance with the
laws of the State of New Jersey (but not including the conflicts of laws and rules thereof).  For purposes of any action or proceeding
involving this Agreement each of the parties to this Agreement expressly submits
to the jurisdiction of the federal and state courts located in the State of New
Jersey and consents to the service of any process or paper by registered mail
or by personal service within or without the State of New Jersey in accordance
with applicable law, provided a reasonable time for appearance is allowed.  Each Party hereby acknowledges that Hudson County,
New Jersey is the proper venue for any action brought hereunder.


 


11.           Signature in Counterparts.  This
Agreement may be executed in separate counterparts, none of which need contain
the signature of all parties, each of which shall be deemed to be an original
and all of which taken together constitute one and the same instrument.  It shall not be necessary in making proof of
this Agreement to produce or account for more than the number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.


 


12.           Attorney’s Fees. 
Should any action be commenced between any of the Parties concerning the
matters set forth in this Agreement or the right and duties of any other Party
in relation thereto, the prevailing Party in such action shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as and for
its attorney’s fees and costs; except that Escrow Agent’s attorney’s fees and
costs incurred in connection with disputes arising hereunder between Company,
the Buyer, and the Investment Manager shall be paid by Company, the Buyer and
the Investment Manager as otherwise provided herein.


 


13.           Conflict Waiver.  The
Company hereby acknowledge that the Escrow Agent is
general counsel to the Buyer, a partner of the Investment Manager and counsel
to both the Buyer and the Investment Manager in connection with the
transactions contemplated and referred herein. 
The Company agrees that in the event of any dispute arising in
connection with this Agreement or otherwise in connection with any transaction
or agreement contemplated and referred herein, the Escrow Agent shall be
permitted to continue to represent the Buyer and the Investment Manager and the
Company will not seek to disqualify such counsel.  The Company waives any right to seek the
disqualification of Escrow Agent to act as legal counsel to the Buyer or the
Investment Manager as a result of Escrow Agent’s duties hereunder.  The Buyer and the Investment Manager hereby
consents to Escrow Agent acting as escrow agent pursuant to the terms of this Agreement
and hereby acknowledge that in so acting, Escrow Agent shall be bound to act in
accordance with this Agreement and not in the best interest of the Buyer or the
Investment Manager and may be required to enforce its rights under this
Agreement against the Buyer or the Investment Manager.  The Buyer or the Investment Manager further
acknowledges and agrees that all communication delivered to Escrow Agent in
furtherance of this Agreement or Escrow Agent’s duties hereunder may not be
kept confidential by Escrow Agent and may not be protected by the
attorney-client privilege.  The Buyer or
the Investment Manager hereby waive the conflict of
interest and any potential conflict of interest that may arise as a result of
Escrow Agent’s performance of its duties or exercise of its rights under this
Agreement.


 


[Remainder of Page Intentionally
Left Blank]


 

















 


IN
WITNESS WHEREOF, each of the parties has caused this Agreement to be duly
executed and delivered in its name and on its behalf, all as of the date and
year first above written.


 


	
   

  	
  “Company”

  
	
   

  	
   

  
	
   

  	
  ISONICS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
  Gregory
  A. Meadows

  
	
   

  	
  Title:

  	
  Vice
  President/Assistant Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  “Buyer”

  
	
   

  	
   

  
	
   

  	
  YA GLOBAL INVESTMENTS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  Yorkville Advisors, LLC

  
	
   

  	
  Its:
   Investment Manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  Mark Angelo

  
	
   

  	
  Title:
  Portfolio Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “Investment Manager”

  
	
   

  	
   

  
	
   

  	
  YORKVILLE ADVISORS, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  Mark Angelo

  
	
   

  	
  Title:
  Portfolio Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “Escrow Agent”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  David Gonzalez, Esq.

  
				



 

















 


EXHIBIT A


 


MONITORING FEE SCHEDULE


 


To:          Escrow Agent


 


In
accordance with the Agreement, upon each deposit into the Escrow Account, the
Buyer shall provide to the Escrow Agent a completed Monitoring Fee Schedule
with respect to such deposit into escrow setting forth the date and amount of
such deposit and the Schedule of Disbursements to be made to the Investment
Manager from the Escrow Account.  Below
please find the Monitoring Fee Schedule in connection with the Monitoring Fee
to be deposited into the Escrow Account pursuant to a Closing under the Securities
Purchase Agreement:


 


Part I.  Deposits of Monitoring Fee Into
Escrow Account


 


Deposit
Into Escrow Account  $100,000.00                   Date of Deposit  June     ,
2008


 


Part II.  Schedule of Disbursements to Investment
Manager From Escrow Account


 


	
  Disbursement Date

  	
   

  	
  Disbursement Amount

  	
   

  	
  Remaining Escrow

  Funds

  	
   

  
	
  Initial Deposit

  	
   

  	
   

  	
   

  	
  $

  	
  100,000

  	
   

  
	
  July 1, 2008

  	
   

  	
  $

  	
  75,000

  	
   

  	
  $

  	
  25,000

  	
   

  
	
  August 1, 2008

  	
   

  	
  $

  	
  5,000

  	
   

  	
  $

  	
  20,000

  	
   

  
	
  September 1, 2008

  	
   

  	
  $

  	
  5,000

  	
   

  	
  $

  	
  15,000

  	
   

  
	
  October 1, 2008

  	
   

  	
  $

  	
  5,000

  	
   

  	
  $

  	
  10,000

  	
   

  
	
  November 1, 2008

  	
   

  	
  $

  	
  5,000

  	
   

  	
  $

  	
  5,000

  	
   

  
	
  December 1, 2008

  	
   

  	
  $

  	
  5,000

  	
   

  	
  $

  	
  0