Exhibit 10.6


 


IRREVOCABLE TRANSFER AGENT INSTRUCTIONS


 


THIS IRREVOCABLE TRANSFER AGENT INSTRUCTIONS (this “Agreement”),
dated as of June 13, 2008, by and among
ISONICS CORPORATION,
a California corporation (the “Company”), CONTINENTAL
STOCK TRANSFER AND TRUST COMPANY (the “Transfer Agent”) and YA GLOBAL INVESTMENTS, L.P. a Cayman Island exempted limited
partnership (individually, a “Buyer” or collectively “Buyers”).


 


WITNESSETH


 


WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the
Company and the Buyer are executing and delivering a Securities Purchase
Agreement dated the date hereof (the “Securities Purchase Agreement”)
pursuant to which the Company has agreed to sell and the Buyer(s) have
agreed to purchase notes (collectively, the “Notes”) in the aggregate
principal amount of One Million One Hundred Seventy-Five Thousand Dollars ($1,175,000),
plus accrued interest;


 


WHEREAS, pursuant to
the Securities Purchase Agreement the Company has issued to the Buyer(s) warrants
to purchase up to 13,000,000 shares of the Company’s common stock (“Common
Stock”), no par value per share (the “Warrant Shares”), at the Buyer’s
discretion (the “Warrant” and the “Warrant Shares”);


 


NOW, THEREFORE,
in consideration of the mutual covenants and other agreements contained in this
Agreement the Company, the Buyer(s) and the Transfer Agent hereby agree as
follows:


 


1.     WARRANT SHARES.


 


(a)           Instructions Applicable to Transfer Agent. 
The parties here to acknowledge that the Buyer(s) shall irrevocably
be entitled to deliver to the Transfer Agent on behalf of the Company an
Exercise Notice (the “Exercise Notice”) in the form attached as Exhibit A
to the Warrant.  Upon the Transfer Agents
receipt of a properly completed and duly executed Exercise Notice, the Transfer
Agent, provided they are acting as transfer agent at the time, shall without
the confirmation or instructions from the Company and within three (3) Trading
Days thereafter (i) issue and surrender to a common carrier for overnight
delivery to the address as specified in the Exercise Notice, a certificate,
registered in the name of the Buyer or its designees, for the number of shares
of Common Stock to which the Buyer shall be entitled as set forth in the
Exercise Notice or (ii) provided the Transfer Agent is participating in
The Depository Trust Company (“DTC”) Fast Automated Securities Transfer
Program, upon the request of the Buyers, credit such aggregate number of shares
of Common Stock to which the Buyers shall be entitled to the Buyer’s or their designees’
balance account with DTC through its Deposit Withdrawal At Custodian (“DWAC”)
system provided the Buyer causes its bank or broker to initiate the DWAC 


 

















 


transaction. For purposes hereof “Trading Day” shall mean any day on which the
Nasdaq Market is open for customary trading.


 


(b).          No Restrictive
Legends.     The certificates representing
the Warrant Shares shall not bear any legend restricting transfer and should
not be subject to any stop-transfer restrictions and shall otherwise be freely
transferable on the books and records of the Company; provided
that counsel to the Company delivers (i) the Notice of
Effectiveness set forth in Exhibit I attached hereto and (ii) an
opinion of counsel in the form set forth in Exhibit II attached
hereto.


 


(c)           Restrictive Legends.   In the event that the Warrant Shares are not
registered for sale under the Securities Act of 1933, as amended, and the
request for issuance of the Warrant Shares is accompanied by an opinion from
the Company’s counsel or Buyer’s counsel that the issuance of the Warrant
Shares is pursuant to an available exemption under the Securities Act of 1933,
as amended, the certificates for the Warrant Shares shall bear the following
legend, or its equivalent:


 


“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.”


 


(d)           Removal of
Restrictive Legends.       In
the event that the Buyer submits to the Transfer Agent the Warrant Shares for
the removal of the restrictive legends whether in connection with a sale of
such shares pursuant to any
exemption to the registration requirements the Securities Act of 1933, as
amended, or otherwise the Transfer Agents shall without the confirmation or
instructions from the Company and within three (3) Trading Days of receipt
of all required documentation from the Buyer, its agent or counsel, (i) issue
and surrender to a common carrier for overnight delivery to the address as
specified by the Buyer(s), a certificate, registered in the name of the Buyer or
its designees, for the number of shares of Common Stock to which the Buyer
shall be entitled as set forth pursuant to their submission or (ii) provided
the Transfer Agent is participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program, upon the request of the Buyers,
credit such aggregate number of shares of Common Stock to which the Buyers
shall be entitled to the Buyer’s or their designees’ balance account with DTC
through its Deposit Withdrawal At Custodian (“DWAC”) system
provided the Buyer causes its bank or broker to initiate the DWAC transaction.
For purposes hereof “Trading Day”
shall mean any day on which the Nasdaq Market is open for customary trading.


 

















 


(e)           Opinions
of Counsel.          In the
event that the Buyer submits to the Transfer Agent a request for the issuance
of the Warrant Shares or the Warrant Shares for the removal of the restrictive
legends whether in connection with a sale of such shares pursuant to any exemption to the registration
requirements the Securities Act of 1933, as amended, or otherwise and the
Company and or its counsels refuses or fails for any reason to render an
opinion of counsel required for the removal of the restrictive legends the
Company hereby represents and warrants that the Buyer is hereby irrevocably and
expressly authorized to have counsel to the Buyer to render any and all
opinions which may be required and relied upon by the Transfer Agent.


 


In the event the Buyer submits an opinion of counsel as contemplated in
the preceding paragraph the Transfer Agent hereby acknowledges it will rely on
and accept such opinion of counsel and all documentation submitted in
connection therewith, with out the confirmation or instructions from the
Company, and issue such Warrant Shares without restrictive legends as
instructed by the Buyer as per Section 1 (d) herein.


 


2.     RESERVATION OF SHARES OF THE COMPANY.


 


(a).          The Transfer Agent shall
reserve for issuance to the Buyers a minimum of 13,000,000 Warrant Shares, as
may be increased under the Warrant and upon advice from the Company.  Under no circumstances, including but not
limited to the exhaustion of the number of reserved shares articulated herein, increase
of the number of Warrant Shares pursuant to terms of the Warrant, the share
reserve articulated herein is not created or other wise, shall such reservation
of Warrant shares articulated herein be deemed to be a cap on the number of
Warrant Shares to be issued to the Buyer.


 


(b).          All such shares shall
remain in reserve with the Transfer Agent until the Buyers provides the
Transfer Agent instructions that the shares or any part of them shall be taken
out of reserve and shall no longer be subject to the terms of these
instructions.


 


(c)           The Company and the
Transfer Agent acknowledge that as of the date hereof other than as created in
connection with existing option plans and warrants and convertible debentures
previously purchased by the Buyer from the Company, no share reserve exists or
will exist so long as the Notes are outstanding.


 


3.     AUTHORIZED AGENT OF THE
COMPANY.


 


(a)           The Company hereby
irrevocably appoints the Buyer Escrow Agent as a duly authorized agent of the
Company for the purposes of authorizing the Transfer Agent to process issuances
and transfers specifically contemplated herein.


 


i.                      The
Transfer Agent shall accept and rely exclusively on the Exercise Notice submitted
by the Buyer(s) and shall not seek confirmation and/or instructions from
the Company to process the Exercise Notice with or without Legends.


 


ii.                     The
Transfer Agent shall accept and rely exclusively on the opinions of counsel and
other documentation submitted by the Buyer(s) for the removal of the
restrictive legends as contemplated hereunder and shall not seek confirmation
and/or instructions from the Company to process such submission by the
Buyer(s).


 

















 


iii.                    The
Transfer Agent shall have no liability for relying on such instructions.  Any Exercise Notice or request for removal of
restrictive legends and such supporting documentation delivered hereunder shall
constitute an irrevocable instruction to the Transfer Agent to process such
notice or notices in accordance with the terms thereof.  Such notice or notices may be transmitted to
the Transfer Agent by facsimile or any commercially reasonable method.


 


iv.                    The
Company hereby confirms to the Transfer Agent and the Buyers that it can NOT
and will NOT give instructions, including stop orders or otherwise, other than
as contemplated herein to Transfer Agent with regard to the issuances
contemplated herein.


 


v.                     In
the event that the Company provides instructions contrary to this Agreement to
the Transfer Agent, including but not limited to stop orders, the Transfer
Agent will disregard any contrary instructions, including but not limited to
stop orders, submitted by or on behalf of the Company and act according to such
instructions provided by the Buyer and according the time requirements set
forth herein.


 


vi.                    The
Company shall not be entitled to nor will the Transfer Agent grant a suspension
of the obligations hereunder for any time period in order for the Company to
obtain a court order or its equivalent in order to prevent the Transfer Agent
from acting hereunder.


 


vii.                   The
Company and the Transfer Agent hereby acknowledge and confirm that complying
with the terms of this Agreement does not and shall not prohibit the Transfer
Agent from satisfying any and all responsibilities and duties it may owe to the
Company.


 


viii.                  The
Transfer Agent, upon request of the Buyer(s) and with out instruction or
confirmation by the Company, will provide to the Buyer(s) the total number
of authorized shares of the Company’s Common Stock as well as the current
outstanding shares of the Company’s Common Stock as of the date of the request.


 


ix.                    Certain Notice Regarding the Escrow Agent.
The Company and the Transfer Agent hereby acknowledge that the Escrow Agent is
general counsel to the Buyers, a partner of the general partner of the Buyers
and counsel to the Buyers in connection with the transactions contemplated and
referred herein.  The Company and the
Transfer Agent agree 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 Buyers and neither the Company nor the Transfer
Agent will seek to disqualify such counsel.


 


4.   REPLACEMENT
OF TRANSFER AGENT.


 


(a)           The
Company hereby agrees that it shall not replace the Transfer Agent as the
Company’s transfer agent without the prior written consent of the Buyers.


 


(b)           The
Company agrees that, in the event the Transfer Agent resigns as the Company’s
transfer agent, the Company will engage a suitable replacement transfer agent
that has agreed to serve as transfer agent and to be bound by the terms and
conditions of these Irrevocable Transfer 


 

















 


Agent Instructions within ten business days of the resignation of the
Transfer Agent.  The Company’s obligation
to obtain a suitable replacement transfer agent shall not affect the current
Transfer Agent’s ability to resign.


 


5.     Intentionally deleted.


 


6.     Intentionally
deleted.


 


7.     MISCELLANEOUS.


 


(a)           The
Company acknowledges that the Buyers is relying on the representations and
covenants made by the Company hereunder and are a material inducement to the
Buyers purchasing Notes under the Securities Purchase Agreement.  The Company further acknowledges that without
such representations and covenants of the Company made hereunder, the Buyers
would not purchase the Notes.


 


(b)           Each party hereto
specifically acknowledges and agrees that in the event of a breach or
threatened breach by a party hereto of any provision hereof, the Buyers will be
irreparably damaged and that damages at law would be an inadequate remedy if
these Irrevocable Transfer Agent Instructions were not specifically
enforced.  Therefore, in the event of a
breach or threatened breach by a party hereto, including, without limitation,
the attempted termination of the agency relationship created by this
instrument, the Buyers shall be entitled, in addition to all other rights or
remedies, to an injunction restraining such breach, without being required to
show any actual damage or to post any bond or other security, and/or to a
decree for specific performance of the provisions of these Irrevocable Transfer
Agent Instructions.


 


(c)           Each party hereto specifically acknowledges
and agrees that in any action to enforce this Agreement or any right hereunder
the prevailing party will be entitled to recover its reasonable attorney’s fees
and expenses from the other party or parties.


 


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IN WITNESS
WHEREOF, the parties have caused this letter agreement
regarding Irrevocable Transfer Agent Instructions to be duly executed and
delivered as of the date first written above.


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  ISONICS CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: Gregory A. Meadows

  
	
   

  	
  Title:   Vice President/Assistant Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  David Gonzalez, Esq.

  
	
   

  	
   

  
	
   

  	
   

  
	
  CONTINENTAL STOCK TRANSFER AND TRUST COMPANY

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
						



 

















 


SCHEDULE I


 


SCHEDULE OF BUYERS


 


	
  Name

  	
   

  	
  Signature

  	
   

  	
  Address/Facsimile

  Number of Buyers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  YA
  Global Investments, L.P.

  	
   

  	
  By:

  	
  Yorkville
  Advisors, LLC

  	
   

  	
  101
  Hudson Street – Suite 3700

  	
   

  
	
   

  	
   

  	
  Its:

  	
  General
  Partner

  	
   

  	
  Jersey
  City, NJ 07303

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Facsimile:  (201)
  985-8266

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark
  Angelo

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Portfolio
  Manager

  	
   

  	
   

  	
   

  
								



 


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EXHIBIT I


 


TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS


 


FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT


 


                  ,
200


 


            


 


Attention:


 


RE:         ISONICS CORPORATION


 


Ladies and Gentlemen:


 


We are counsel to Isonics Corporation, (the “Company”), and have
represented the Company in connection with that certain Securities Purchase
Agreement, dated as of June 13, 2008 (the “Securities Purchase
Agreement”), entered into by and among the Company and the Buyers set forth
on Schedule I attached thereto (collectively the “Buyers”) pursuant to
which the Company has agreed to sell to the Buyers up to $1,175,000 of Notes
and warrants (“Warrants”) to purchase up to 13,000,000 shares of the
Company’s common stock (the “Common Stock”), no par value per share (the
“Warrant Shares”),.  Pursuant to
the Securities Purchase Agreement, the Company also has entered into a
Registration Rights Agreement, dated as of June 13, 2008, with the Buyers
(the “Registration Rights Agreement”) pursuant to which the Company
agreed, among other things, to upon request register the Warrant Shares under
the Securities Act of 1933, as amended (the “1933 Act”).  In connection with the Company’s obligations
under the Securities Purchase Agreement and the Registration Rights Agreement,
on               ,
200_, the Company filed a Registration Statement (File No.       -                  )
(the “Registration Statement”) with the Securities and Exchange
Commission (the “SEC”) relating to the sale of the Warrant Shares.


 


In connection with the
foregoing, we advise the Transfer Agent that a member of the SEC’s staff has
advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at          P.M.
on                     ,
200_ and we have no knowledge, after telephonic inquiry of a member of the SEC’s
staff, that any stop order suspending its effectiveness has been issued or that
any proceedings for that purpose are pending before, or threatened by, the SEC
and the Warrant Shares are available for sale under the 1933 Act pursuant to
the Registration Statement.


 


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The Buyers has confirmed it
shall comply with all securities laws and regulations applicable to it
including applicable prospectus delivery requirements upon sale of the Warrant Shares.


 


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  



 


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EXHIBIT II


 


TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS


 


FORM OF OPINION


 


                                
200  


 


VIA FACSIMILE AND REGULAR MAIL


 


 


 


Attention:


 


RE:         ISONICS CORPORATION


 


Ladies and Gentlemen:


 


We have acted as special
counsel to Isonics Corporation (the “Company”), in connection with the
registration of                       shares
(the “Shares”) of its common stock with the Securities and Exchange
Commission (the “SEC”).  We have
not acted as your counsel.  This opinion
is given at the request and with the consent of the Company.


 


In rendering this opinion we
have relied on the accuracy of the Company’s Registration Statement on Form SB-2,
as amended (the “Registration Statement”), filed by the Company with the
SEC on                          ,
200  .  The Company filed the
Registration Statement on behalf of certain selling stockholders (the “Selling
Stockholders”).  This opinion relates
solely to the Selling
Shareholders listed on Exhibit “A” hereto and number of Shares set
forth opposite such Selling Stockholders’ names.  The SEC declared the Registration Statement
effective on                     
      , 200  .


 


We understand that the Selling
Stockholders acquired the Shares in a private offering exempt from registration
under the Securities Act of 1933, as amended. 
Information regarding the Shares to be sold by the Selling Shareholders
is contained under the heading “Selling Stockholders” in the Registration
Statement, which information is incorporated herein by reference.  This opinion does not relate to the issuance
of the Shares to the Selling Stockholders. 
The opinions set forth herein relate solely to the sale or transfer by
the Selling Stockholders pursuant to the Registration Statement under the
Federal laws of the United States of America. 
We do not express any opinion concerning any law of any state or other
jurisdiction.


 


In rendering this opinion we
have relied upon the accuracy of the foregoing statements.


 


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Based on the foregoing, it is
our opinion that the Shares have been registered with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and that                 
may remove the restrictive legends contained on the Shares. This opinion
relates solely to the number of
Shares set forth opposite the Selling Stockholders listed on Exhibit “A”
hereto.


 


This opinion is furnished to
Transfer Agent specifically in connection with the sale or transfer of the
Shares, and solely for your information and benefit.  This letter may not be relied upon by
Transfer Agent in any other connection, and it may not be relied upon by any
other person or entity for any purpose without our prior written consent.  This opinion may not be assigned, quoted or
used without our prior written consent. 
The opinions set forth herein are rendered as of the date hereof and we
will not supplement this opinion with respect to changes in the law or factual
matters subsequent to the date hereof.


 


Very truly yours,


 


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EXHIBIT A


 


(LIST
OF SELLING STOCKHOLDERS)


 


	
  Name:

  	
   

  	
  No. of Shares:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


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