ACQUISITION OF A BUSINESS, PRODUCT, LICENSE, OR OTHER
ASSETS OF ANOTHER PERSON OR ENTITY,
(C) OPTIONS TO PURCHASE SHARES OF COMMON STOCK, PROVIDED (I) SUCH OPTIONS ARE
ISSUED AFTER THE DATE OF THIS WARRANT TO EMPLOYEES OF THE COMPANY WITHIN THIRTY
(30) DAYS OF SUCH EMPLOYEE'S STARTING HIS EMPLOYMENT WITH THE COMPANY, AND (II)
THE EXERCISE PRICE OF SUCH OPTIONS IS NOT LESS THAN THE CLOSING PRICE, AS QUOTED
BY BLOOMBERG, LP OF THE COMMON STOCK ON THE DATE OF ISSUANCE OF SUCH OPTION.
(D) SECURITIES ISSUED PURSUANT TO AN APPROVED STOCK PLAN;
(E) UP TO 1,000,000 WITHOUT REGISTRATION RIGHTS AND NOT PURSUANT TO FORM S-8 (IN
THE EVENT THAT SUCH ISSUANCE HAS REGISTRATION RIGHTS THE OBLIGOR SHALL OBTAIN
THE PRIOR WRITTEN APPROVAL OF THE HOLDER) SHARES THAT MAY BE ISSUED FROM TIME TO
TIME AT A PRICE NO LESS THAN THE VWAP ENDING WITHIN THREE (3) BUSINESS DAYS
PRIOR TO THE COMPLETION OF THE TRANSACTION (THE PRIMARY PURPOSE OF WHICH IS NOT
TO RAISE EQUITY CAPITAL),
(F) EXCEPT AS PROVIDED FOR IN SECTION 8(A) HEREIN, ANY ISSUANCE OF SECURITIES TO
HOLDERS OF THE OTHER SECURITIES PROVIDED SUCH TRANSACTIONS ARE IN ACCORDANCE
WITH THE TERMS OF SUCH INSTRUMENT (INCLUDING ANY ANTI-DILUTION PROTECTION
CONTAINED IN SUCH INSTRUMENT) OR ARE ON TERMS DETERMINED BY THE BOARD OF
DIRECTORS OF THE COMPANY TO BE NO LESS FAVORABLE TO THE COMPANY THAN THE
EXISTING TERMS, AND
(G)
THE SECURITIES ISSUED TO, OR UPON THE CONVERSION OR
EXERCISE OF, THE WARRANTS AND CONVERTIBLE DEBENTURES ISSUED THROUGH CLAYTON
DUNNING &
CO., INC. (THE "2007A SECURITIES"), WHICH ISONICS ANTICIPATES WILL BE
ISSUED IN APRIL 2007 OR SOON THEREAFTER, AND ARE REFERENCED IN THE WAIVER
AGREEMENT BETWEEN THE PARTIES DATED FEBRUARY 19, 2007.
(VII)
"EXPIRATION DATE" MEANS APRIL 10, 2010.
(VIII)
"ISSUANCE DATE" MEANS THE DATE HEREOF.
(IX)
"OPTIONS" MEANS ANY RIGHTS, WARRANTS OR OPTIONS TO SUBSCRIBE FOR OR
PURCHASE COMMON STOCK OR CONVERTIBLE SECURITIES.
(X)
"OTHER SECURITIES" MEANS (I) THOSE CONVERTIBLE DEBENTURES, OPTIONS
AND WARRANTS OF THE COMPANY ISSUED PRIOR TO, AND OUTSTANDING ON, THE ISSUANCE
DATE OF THIS WARRANT, (II) EXCEPT FOR AS PROVIDED IN SECTION 8(A) HEREIN OR AS
OTHERWISE AGREED BY THE HOLDER AND THE COMPANY, THE SHARES OF COMMON STOCK
ISSUABLE ON EXERCISE OF SUCH CONVERTIBLE DEBENTURES, OPTIONS AND WARRANTS,
PROVIDED SUCH CONVERTIBLE DEBENTURES, OPTIONS AND WARRANTS ARE NOT AMENDED AFTER
THE ISSUANCE DATE OF THIS WARRANT AND, AND (III) THE 660,000 SHARES OF
RESTRICTED COMMON STOCK ISSUED OR TO BE ISSUED PURSUANT TO THE SECURITIES
PURCHASE AGREEMENT DATED MAY
3
30, 2006, AND (IV) ANY OTHER SHARES OF COMMON STOCK ISSUED OR ISSUABLE PURSUANT
TO THIS WARRANT,
THE CONVERTIBLE DEBENTURE, AND THE REGISTRATION RIGHTS
AGREEMENT ENTERED INTO BETWEEN THE COMPANY AND THE INITIAL HOLDER OF THIS
WARRANT.
(XI)
"PERSON" MEANS AN INDIVIDUAL, A LIMITED LIABILITY COMPANY, A
PARTNERSHIP, A JOINT VENTURE, A CORPORATION, A TRUST, AN UNINCORPORATED
ORGANIZATION AND A GOVERNMENT OR ANY DEPARTMENT OR AGENCY THEREOF.
(XII)
"PRINCIPAL MARKET" MEANS ON ANY OF (A) THE AMERICAN STOCK EXCHANGE,
(B) NEW