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EXHIBIT 4.2
FORM OF WARRANT
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
[INSERT DATE OF ISSUANCE]
________shares Warrant No. __
INTERNATIONAL ISOTOPES INC.
STOCK PURCHASE WARRANT
Registered Owner: [INSERT REGISTERED OWNER]
This certifies that, for value received, International Isotopes Inc., a
Texas corporation, the ("Company") grants the following rights to the Registered
Owner, or assigns, of this Warrant:
1. ISSUE. Upon tender (as defined in Section 5) to the Company, the
Company, within three (3) Business Days of the date thereof, shall issue to the
Registered Owner, or assigns, up to the number of shares specified in Section 2
of fully paid and nonassessable shares of Common Stock that the Registered
Owner, or assigns, is otherwise entitled to purchase.
2. NUMBER OF SHARES. The total number of shares of Common Stock that the
Registered Owner, or assigns, of this Warrant is entitled to receive upon
exercise of this Warrant (the "Warrant Shares") is _____ shares, subject to
adjustment from time to time as set forth in Section 6. The Company shall at all
times reserve and hold available sufficient shares of Common Stock to satisfy
all conversion and purchase rights represented by outstanding convertible
securities, options and warrants, including this Warrant. The Company covenants
and agrees that all shares of Common Stock that may be issued upon the exercise
of this Warrant shall, upon issuance, be duly and validly issued, fully paid and
nonassessable, free from all taxes, liens and charges with respect to the
purchase and the issuance of the shares, and shall not have any legend or
restrictions on resale, except as required by Section 3.2(b) of the Purchase
Agreement.
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3. EXERCISE PRICE. The initial per share exercise price of this Warrant,
representing the price per share at which the shares of stock issuable upon
exercise of this Warrant may be purchased, is _______ ($_____) [insert 110% of
the Average Price on the applicable Closing Date] (the "Exercise Price").
4. EXERCISE PERIOD. This Warrant may be exercised from the Closing Date (as
defined in the Purchase Agreement) up to and including May 20, 2002 (the
"Exercise Period"). If not exercised during this period, this Warrant and all
rights granted under this Warrant shall expire and lapse.
5. TENDER; ISSUANCE OF CERTIFICATES.
a. This Warrant may be exercised, in whole or in part, by (i) actual
delivery of (a) the Exercise Price in cash, (b) a duly executed Warrant
Exercise Form, a copy of which is attached to this Warrant as Exhibit A,
properly executed by the Registered Owner, or assigns, of this Warrant, and
(c) by surrender of this Warrant, or (ii) if the resale of the Warrant
Shares by the Registered Owner is not then registered pursuant to an
effective registration statement under the Securities Act, delivery to the
Company of a written notice of an election to effect a "Cashless Exercise"
(as defined below) for the Warrant Shares specified in the Warrant Exercise
Form. The Warrant Shares so purchased shall be deemed to be issued to the
Registered Owner as of the close of business on the date on which this
Warrant shall have been surrendered, the completed Warrant Exercise Form
shall have been delivered and payment shall have been made for such shares
as set forth above. The payment and Warrant Exercise Form must be delivered
to the registered office of the Company either in person or as set for in
Section 14.
b. Commencing ninety (90) days from the Filing Date (as defined in the
Registration Rights Agreement), if, and only if, at the time of exercise of
this Warrant, the Warrant Shares are not saleable pursuant to an effective
registration statement, then in addition to the exercise of all or a part
of this Warrant by payment of the Exercise Price in cash as provided above,
and in lieu of such payment, the Registered Owner shall have the right to
effect a cashless exercise (a "Cashless Exercise"). In the event of a
Cashless Exercise, the Registered Owner may exercise this Warrant in whole
or in part by surrendering this Warrant in exchange for the number of
shares of Common Stock equal to the product of (x) the number of shares as
to which this Warrant is being exercised multiplied by (y) a fraction, the
numerator of which is the Per Share Market Value of the Common Stock less
the Exercise Price then in effect and the denominator of which is the Per
Share Market Value (in each case adjusted for fractional shares as herein
provided).
c. In lieu of physical delivery of the Warrant, provided the Company's
transfer agent is participating in the Depositary Trust Company ("DTC")
Fast Automated Securities Transfer ("FAST") program, upon request of the
Registered Owner and in compliance with the provisions hereof, the Company
shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares to the Registered Owner by crediting the
account of the Registered Owner's Prime Broker with DTC through its
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Deposit Withdrawal Agent Commission system. The time period for delivery
described herein shall apply to the electronic transmittals described
herein.
d. Certificates for the Warrant Shares so purchased, representing the
aggregate number of shares specified in the Warrant Exercise Form, shall be
delivered to the Registered Owner within a reasonable time, not exceeding
three (3) Business Days, after this Warrant shall have been so exercised.
The certificates so delivered shall be in such denominations as may be
requested by the Registered Owner and shall be registered in the name of
the Registered Owner or such other name as shall be designated by such
Registered Owner. If this Warrant shall have been exercised only in part,
then, unless this Warrant has expired, the Company shall, at its expense,
at the time of delivery of such certificates, deliver to the Registered
Owner a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised.
6. ADJUSTMENT OF EXERCISE PRICE.
a. Common Stock Dividends; Common Stock Splits; Reverse Common Stock
Splits. If the Company, at any time while this Warrant is outstanding, (a)
shall pay a stock dividend on its Common Stock, (b) subdivide outstanding
shares of Common Stock into a larger number of shares, (c) combine
outstanding shares of Common Stock into a smaller number of shares or (d)
issue by reclassification of shares of Common Stock any shares of capital
stock of the Company, then (i) the Exercise Price thereafter shall be
determined by multiplying the Exercise Price by a fraction the numerator of
which shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and the denominator of which
shall be the number of shares of Common Stock outstanding after such event
and (ii) the number of Warrant Shares shall be multiplied by a fraction,
the numerator of which shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event and the
denominator of which shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding before such event. Any
adjustment made pursuant to this paragraph (6)(a) shall become effective
immediately after the record date for the determination of shareholders
entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
b. Rights; Warrants. If the Company, at any time while this Warrant is
outstanding, shall issue rights or warrants to all of the holders of Common
Stock entitling them to subscribe for or purchase shares of Common Stock at
a price per share less than the Exercise Price, the Exercise Price shall
thereafter be determined by multiplying the Exercise Price by a fraction,
the denominator of which shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding on the date of issuance of
such rights or warrants plus the number of additional shares of Common
Stock offered for subscription or purchase, and the numerator of which
shall be the number of shares of Common Stock (excluding treasury shares,
if any) outstanding on the date of issuance of such rights or warrants plus
the number of shares which the aggregate offering price of the total number
of shares so offered would purchase at the Exercise Price. Such adjustment
shall be made whenever such rights or warrants are issued, and shall become
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effective immediately after the record date for the determination of
shareholders entitled to receive such rights or warrants.
c. Subscription Rights. If the Company, at any time while this Warrant
is outstanding, shall distribute to all of the holders of Common Stock
evidence of its indebtedness or assets or rights or warrants to subscribe
for or purchase any security (excluding those referred to in paragraphs
6(a) and (b) above), then in each such case the Exercise Price at which the
Warrant shall thereafter be exercisable shall be determined by multiplying
the Exercise Price in effect immediately prior to the record date fixed for
determination of shareholders entitled to receive such distribution by a
fraction, the denominator of which shall be the Per Share Market Value of
Common Stock determined as of the record date mentioned above, and the
numerator of which shall be such Per Share Market Value of the Common Stock
on such record date less the then fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed
applicable to one outstanding share of Common Stock as determined by the
Board of Directors in good faith; provided, however, that in the event of a
distribution exceeding ten percent (10%) of the net assets of the Company,
such fair market value shall be determined by an Appraiser selected in good
faith by the Registered Owner of the Warrant; and provided, further, that
the Company, after receipt of the determination by such Appraiser shall
have the right to select in good faith an additional Appraiser meeting the
same qualifications in which case the fair market value shall be equal to
the average of the determinations by each such Appraiser. Such adjustment
shall be made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above
d. Rounding. All calculations under this Section 6 shall be made to
the nearest cent or the nearest l/l00th of a share, as the case may be.
e. Notice of Adjustment. Whenever the Exercise Price is adjusted
pursuant to paragraphs 6(a), (b) or (c), the Company shall promptly deliver
to the Registered Owner a notice setting forth the Exercise Price after
such adjustment and setting forth a brief statement of the facts requiring
such adjustment.
f. Redemption Events. The following are "Redemption Events" under this
Section 6(f): (A) any reclassification of the Common Stock, (B) any Change
of Control (as such term is defined in the Purchase Agreement), (C) any
compulsory share exchange pursuant to which the Common Stock is converted
into other securities, cash or property, (D) any suspension from listing or
delisting of the Common Stock from the Nasdaq, the BSE, or any Subsequent
Market (as defined in the Purchase Agreement) on which the Common Stock is
listed for a period of five consecutive days, (E) the Company's notice to
any registered owner of the Warrants, including by way of public
announcement, at any time, of its intention, for any reason, not to comply
with proper requests for the exercise of any such Warrants, or (F) a breach
by the Company of any representation, warranty, covenant or other term or
condition of the Purchase Agreement, the Registration Rights Agreement, the
Preferred Stock, this Warrant or any other agreement, document, certificate
or other instrument delivered in connection with the transactions
contemplated thereby or hereby, except to the extent that such breach would
not have a
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Material Adverse Effect (as defined in Section 2.1(a) of the Purchase
Agreement) and except, in the case of a breach of a covenant which is
curable, only if such breach continues for a period of at least ten days
after the Company knows or reasonably should have known of the existence of
such breach. On and after the date of any Redemption Event, the Registered
Owner shall have the option to require the Company to redeem (the
"Redemption Right") in cash and subject to the terms of payment provisions
set forth in Section 7(e), from funds legally available therefor at the
time of such redemption, the Registered Owner's shares of Common Stock
immediately theretofore acquirable and receivable upon the exercise of such
Registered Owner's Warrants at a price per share equal to the product of
(i) the Average Price immediately preceding the effective date, the date of
the closing, date of occurrence or the date of the announcement, as the
case may be, of the Redemption Event triggering such Redemption Right and
(ii) the number of shares of Common Stock of the Company for which the
Warrant could have been exercised immediately prior to such Redemption
Event. After the occurrence of (A), (B) or (C), the Registered Owner shall
have the right at his or its option, in lieu of the Redemption Right, to
exercise the Warrant for shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common Stock
following such Redemption Event; the Registered Owner shall be entitled
upon such event to receive such amount of securities, cash or property as
if the Registered Owner had held the shares of the Common Stock for which
the Warrant could have been exercised immediately prior to such Redemption
Event (without taking into account any limitations or restrictions on the
exercisability of the Warrants). In the case of a transaction specified in
(B) in which holders of the Company's Common Stock receive cash, the
Registered Owner shall have the right at his or its option, in lieu of the
Redemption Right, to exercise the Warrant for such number of shares of the
surviving company equal to the amount of cash for which the Warrant is
excercisable divided by the fair market value of the shares of the
surviving company on the effective date of the merger. In the case of (A),
(B) or (C), the Company shall not effect any such Redemption Event unless,
prior to the consummation thereof, each Person (other than the Company)
which may be required to deliver any stock, securities, cash or property
upon the exercise of this Warrant as provided herein shall assume, by
written instrument delivered and reasonably satisfactory to, the Registered
Owner of this Warrant, (a) the obligations of the Company under this
Warrant (and if the Company shall survive the consummation of such
transaction, such assumption shall be in addition to, and shall not release
the Company from, any continuing obligations of the Company under this
Warrant), (b) the obligations of the Company under the Purchase Agreement,
the Preferred Stock, this Warrant, and the Registration Rights Agreement,
and (c) the obligation to deliver to the Registered Owner such shares of
stock, securities, cash or property as, in accordance with the foregoing
provisions of this Section 6(f), the Registered Owner may be entitled to
receive. Nothing in this Section 6(f) shall be deemed to authorize the
Company to enter into any transaction not otherwise permitted by the
Purchase Agreement. This provision shall similarly apply to successive
Redemption Events.
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g. Reclassification, Etc. If:
(i) the Company shall declare a dividend (or any other distribution)
on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash dividend on
or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to the holders of the
Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights; or
(iv) the approval of any shareholders of the Company shall be required
in connection with any reclassification of the Common Stock of the Company,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or
(v) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of exercise of this Warrant, and shall cause to be delivered to the
Registered Owner, at least 10 Business Days prior to the applicable record or
effective date hereinafter specified, a notice (provided such notice shall not
include any material non-public information) stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
h. Adjustment to Exercise Price. If the Company, at any time while this
Warrant is outstanding, takes any of the actions described in this Section 6(h),
then, in order to prevent dilution of the rights granted under this Warrant, the
Exercise Price will be subject to adjustment from time to time as provided in
this Section 6(h).
i. Adjustment of Exercise Price upon Issuance of Common Stock. If at any
time while this Warrant is outstanding the Company issues or sells, or is deemed
to have issued or sold, any shares of Common Stock (other than (1) the
Underlying Shares or shares of Common Stock deemed to have been issued by the
Company in connection
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with an Approved Stock Plan, (2) the shares of Common Stock issuable upon the
exercise of any options or warrants outstanding on the date hereof and listed in
Schedule 2.1(c) of the Purchase Agreement, (3) the securities to be issued in
the transactions set forth on such Schedule 2.1(c), (4) the shares of Common
Stock issuable upon an Underwritten Offer (as defined in the Registration Rights
Agreement) occurring before December 2000, or (5) the shares of Common Stock
issued or deemed to have been issued as consideration for an acquisition by the
Company of a division, assets or business (or stock constituting any portion
thereof) from another person) for a consideration per share less than the
Exercise Price in effect immediately prior to such issuance or sale, then
immediately after such issue or sale, the Exercise Price then in effect shall be
reduced to an amount equal to the consideration per share of Common Stock of
such issuance or sale. For the purpose of determining the adjusted Exercise
Price under this Section 6(h)(i), the following shall be applicable:
(A) Issuance of Options. If at any time while this Warrant is
outstanding the Company in any manner grants any rights or options to
subscribe for or to purchase Common Stock or any stock or other securities
convertible into or exchangeable for Common Stock (other than (1) the
Underlying Shares or shares of Common Stock deemed to have been issued by
the Company in connection with an Approved Stock Plan, (2) the shares of
Common Stock issuable upon the exercise of any options or warrants
outstanding on the date hereof and listed in Schedule 2.1(c) of the
Purchase Agreement, (3) the securities to be issued in the transactions set
forth on such Schedule 2.1(c), (4) the shares of Common Stock issuable upon
an Underwritten Offer (as defined in the Registration Rights Agreement)
occurring before December 2000, (5) the shares of Common Stock issuable
upon an Underwritten Offer (as defined in the Registration Rights
Agreement) or (6) the shares of Common Stock issued or deemed to have been
issued as consideration for an acquisition by the Company of a division,
assets or business (or stock constituting any portion thereof) from another
person) (such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon conversion or exchange
of such Convertible Securities is less than the Exercise Price in effect
immediately prior to such grant, then the Exercise Price shall be adjusted
to equal the price per share for which Common Stock is issuable upon the
exercise of such Options or upon the conversion or exchange of such
Convertible Securities. No adjustment of the Exercise Price shall be made
upon the actual issuance of such Common Stock or of such Convertible
Securities upon the exercise of such Options or upon the actual issuance of
such Common Stock upon conversion or exchange of such Convertible
Securities.
(B) Issuance of Convertible Securities. If at any time while this
Warrant is outstanding the Company in any manner issues or sells any
Convertible Securities and the price per share for which Common Stock is
issuable upon such conversion or exchange (other than the Underlying Shares
or
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shares of Common Stock deemed to have been issued by the Company in
connection with an Approved Stock Plan, shares of Common Stock issuable
upon the exercise of any options or warrants outstanding on the date hereof
and listed in Schedule 2.1(c) of the Purchase Agreement, shares of Common
Stock issued or deemed to have been issued as consideration for an
acquisition by the Company of a division, assets or business (or stock
constituting any portion thereof) from another person) is less than the
Exercise Price in effect immediately prior to issuance or sale, then the
Exercise Price shall be adjusted to equal the price per share for which
Common Stock is issuable upon the conversion or exchange of such
Convertible Securities.
(C) Change in Option Price or Rate of Conversion. If there is a change
at any time in (i) the purchase price provided for in any Options, (ii) the
additional consideration, if any, payable upon the issuance, conversion or
exchange of any Convertible Securities or (iii) the rate at which any
Convertible Securities are convertible into or exchangeable for Common
Stock, then the Exercise Price in effect at the time of such change shall
be readjusted to the Exercise Price which would have been in effect at such
time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued
or sold; provided that no adjustment shall be made if such adjustment would
result in an increase of the Exercise Price then in effect.
(D) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under this Section 6(h)(i), the
following shall be applicable:
(I) Calculation of Consideration Received. If any Common Stock,
Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will
be deemed to be the net amount received by the Company therefor. In
case any Common Stock, Options or Convertible Securities are issued or
sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company will be the fair
value of such consideration, except where such consideration consists
of securities, in which case the amount of consideration received by
the Company will be the Average Price of such security on Trading Day
immediately preceding the date of receipt thereof. In case any Common
Stock, Options or Convertible Securities are issued to the owners of
the non-surviving entity in connection with any merger in which the
Company is the surviving entity the amount of consideration therefor
will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such
Common Stock, Options or Convertible Securities, as the case may be.
The fair value of any consideration other than cash or securities will
be determined jointly by the Company and the registered owners of a
majority of the Underlying
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Shares of Warrants then outstanding. If such parties are unable to
reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the "Valuation Event"), the fair value of such
consideration will be determined within forty-eight (48) hours of the
tenth (10th) day following the Valuation Event by an Appraiser
selected in good faith by the Company and agreed upon in good faith by
the holders of a majority of the Warrants then outstanding. The
determination of such Appraiser shall be binding upon all parties
absent manifest error.
(II) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the
Options will be deemed to have been issued for an aggregate
consideration of $.01.
(III) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by
or for the account of the Company, and the disposition of any shares
so owned or held will be considered an issue or sale of Common Stock.
(IV) Record Date. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (1) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (2) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date will
be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may
be.
(V) Certain Events. If any event occurs of the type contemplated
by the provisions of this Section 6(h)(i) (subject to the exceptions
stated therein) but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate
adjustment in the Exercise Price so as to protect the rights of the
Registered Owner, or assigns, of this Warrant; provided, however, that
no such adjustment will increase the Exercise Price as otherwise
determined pursuant to this Section 6(h).
Notwithstanding the foregoing, in no event shall any provision in this
Section 6 cause the Exercise Price to be greater than the Exercise Price on the
date of issuance of this Warrant.
j. Adjustment of Number of Shares. Upon each adjustment of the
Exercise Price as a result of the calculations made in this Section 6, this
Warrant shall thereafter
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evidence the right to receive, at the adjusted Exercise Price, that number
of shares of Common Stock (calculated to the nearest one-hundredth)
obtained by dividing (i) the product of the aggregate number of shares
covered by this Warrant immediately prior to such adjustment and the
Exercise Price in effect immediately prior to such adjustment of the
Exercise Price by (ii) the Exercise Price in effect immediately after such
adjustment of the Exercise Price.
7. OPTIONAL REDEMPTION.
a. Optional Redemption. This Warrant is redeemable in whole or in part
at the option of the Company during the following time periods, from time
to time, under the following conditions and subject also to the conditions
set forth in Section 7(b) (the "Optional Redemption"):
(i) Prior to the first anniversary of the Closing Date, the
Company may redeem the Warrant, subject to the other conditions
herein, if the average closing price of the Company's Common Stock
over twenty (20) consecutive Trading Days reaches over 200% of the
Exercise Price as at the Closing Date;
(ii) During the period commencing on the First Business Day
immediately after the first anniversary of the Closing Date and ending
on the second anniversary of the Closing Date, the Company may redeem
the Warrant, subject to the other conditions herein, if the average
closing price of the Company's Common Stock over twenty (20)
consecutive Trading Days reaches over 175% of the Exercise Price as at
the Closing Date; and
(iii) After the second anniversary of the Closing Date, the
Company may redeem the Warrant, subject to the other conditions
herein, if the average closing price of the Company's Common Stock
over twenty (20) consecutive Trading Days reaches over 150% of the
Exercise Price as at the Closing Date.
b. Redemption Notice. Subject to the conditions set forth in Section
7(a), so long as (i) no Event of Default (or any event that with the
passage of time or giving of notice or both would constitute an Event of
Default) shall have occurred and be continuing, (ii) any Registration
Statement required to be filed and be effective pursuant to the
Registration Rights Agreement is then in effect and has been in effect and
sales of all of the Registrable Securities can be made thereunder for at
least twenty (20) days prior to the Redemption Notice Date (as defined
below) and (iii) the Company has a sufficient number of authorized shares
of Common Stock reserved for issuance upon full exercise of the outstanding
Warrants, upon ten (10) Business Days prior written notice to the
Registered Owner (a "Redemption Notice"), the Warrant may be redeemed by
the Company, in whole or in part, at a redemption price equal to $.01 per
Warrant (the "Redemption Price').
c. Mechanics of Redemption. The Company shall exercise its right to
redeem by delivering its Redemption Notice by facsimile and overnight
courier to each Registered Owner (such date that the Redemption Notice is
given on the "Redemption
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Notice Date"). Such Redemption Notice shall indicate (A) the Redemption
Price, (B) each Registered Owner's pro rata allocation of such maximum
amount, and (C) a confirmation of the date that the Company shall effect
the redemption (the "Redemption Date"). The Redemption Date shall be not
less than thirty (30) Business Days and not more than sixty (60) calendar
days after the Redemption Notice Date. Notwithstanding anything in this
Section 7(c), the Company shall convert any Warrant pursuant to Section 5
if the Warrant Exercise Form for a Warrant submitted for exercise is (i)
delivered before the Redemption Date, (ii) for an Exercise Price greater
than or equal to the Redemption Price (appropriately adjusted in accordance
with the terms hereof) or (iii) in excess of such Registered Owner's pro
rata allocation of the maximum Redemption Price indicated in its Redemption
Notice.
d. Payment of Redemption Price. The Company shall pay the applicable
Redemption Price to the Registered Owner of the Warrants being redeemed in
cash on the Redemption Date. If the Company shall fail to pay the
applicable Redemption Price to such Registered Owner on the Redemption
Date, in addition to any remedy such Registered Owner may have under this
Warrant and the Purchase Agreement, such unpaid amount shall bear interest
at the rate of 2.0% per month until paid in full. Until the Company pays
such unpaid applicable Redemption Price in full to each Registered Owner,
each Registered Owner of Warrants submitted for redemption pursuant to this
Section 7 and for which the applicable Redemption Price has not been paid,
shall have the option, in lieu of redemption, (A) to require the Company to
promptly return to such Registered Owner all of the Warrants that were
submitted for redemption by such Registered Owner under this Section 7 and
for which the applicable Redemption Price has not been paid or (B) to
exercise those Warrants for which the applicable Redemption Price has not
been paid at an Exercise Price equal to the lesser of (I) the Exercise
Price applicable to such exercise on the Redemption Date and (II) the
lowest Per Share Market Value from the Redemption Date to the date the
Registered Owner gives a Void Redemption Notice by sending written notice
thereof to the Company via facsimile (the "Void Redemption Notice"). Upon
the Company's receipt of such Void Redemption Notice(s) requesting the
return of the Warrants and before payment of the full applicable Redemption
Price to each Registered Owner, (i) the redemption shall be null and void
with respect to those Warrants submitted for redemption and for which the
applicable Redemption Price has not been paid, (ii) the Company shall
immediately return any Warrants submitted to the Company by each Registered
Owner for redemption under this Section 7 and for which the applicable
Redemption Price has not been paid and (iii) the Exercise Price of such
returned Warrants shall be adjusted to the lesser of (I) the Exercise Price
applicable to such conversion on the date on which such Warrants were
originally presented for redemption and (II) the lowest Per Share Market
Value from the Redemption Date to the date the Registered Owner gives a
Void Redemption Notice. If the Company fails to timely effect a redemption
in accordance with this Section 7, the Company shall not be allowed to
submit another Redemption Notice without the prior written consent of
Registered Owners of at least two-thirds (2/3) of the principal amount of
the Warrants then outstanding.
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8. NASDAQ LIMITATION. In no event shall the Issuer be required to issue
shares of Common Stock upon the exercise of a Warrant if such issuance would
violate the rules of Nasdaq.
9. RESTRICTION ON EXERCISE BY EITHER THE REGISTERED OWNER OR THE COMPANY.
Notwithstanding anything herein to the contrary, in no event shall any
Registered Owner or the Company have the right or be required to exercise this
Warrant if as a result of such conversion the aggregate number of shares of
Common Stock beneficially owned by such Registered Owner and its Affiliates
would exceed 4.99% of the outstanding shares of the Common Stock following such
exercise. For purposes of this Section 9, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. The provisions of this Section 9 may be waived by a Registered
Owner as to itself (and solely as to itself) upon not less than 65 days prior
written notice to the Company.
10. OFFICER'S CERTIFICATE. Whenever the number of shares purchasable upon
exercise shall be adjusted as required by the provisions of Section 6, the
Company shall forthwith file in the custody of its Secretary or an Assistant
Secretary at its principal office and with its stock transfer agent, if any, an
officer's certificate showing the adjusted number of shares determined as herein
provided, setting forth in reasonable detail the facts requiring such adjustment
and the manner of computing such adjustment. Each such officer's certificate
shall be signed by the chairman, president or chief financial officer of the
Company and by the secretary or any assistant secretary of the Company. Each
such officer's certificate shall be made available at all reasonable times for
inspection by any Registered Owner of the Warrants and the Company shall,
forthwith after each such adjustment, deliver a copy of such certificate to the
each of the Registered Owners.
11. DEFINITIONS. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Purchase Agreement. As
used in this Warrant, the following terms have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Appraiser" shall mean a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized
standing.
"Approved Stock Plan" shall mean any contract, plan or agreement which has
been approved by the Board of Directors of the Company, pursuant to which the
Company's securities may be issued to any employee, officer, director or
consultant.
"Average Price" has the meaning set forth in the Preferred Stock.
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"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the state of
New York generally are authorized or required by law or other government actions
to close.
"Closing" has the meaning set forth for "First Closing" as in Section
1.2(a) of the Purchase Agreement.
"Common Stock" means the shares of the Company's Common Stock, par value
$0.01 per share.
"Company" means International Isotopes Inc., a Texas corporation.
"Convertible Securities" has the meaning assigned to it in Section
6(h)(i)(A).
"Distribution Date" has the meaning assigned to it in Section 22.
"Exercise Period" has the meaning assigned to it the Section 4.
"Exercise Price" has the meaning assigned to it in Section 3
"Options" has the meaning assigned to it in Section 6(h)(i)(A).
"Per Share Market Value" means on any particular date (i) the closing bid
price per share of the Common Stock on such date on the Nasdaq SmallCap Market
or other registered national stock exchange on which the Common Stock is then
listed or if there is no such price on such date, then the closing bid price on
such exchange or quotation system on the date nearest preceding such date, or
(ii) if the Common Stock is not listed then on the Nasdaq National Market or the
Nasdaq SmallCap Market or any registered national stock exchange, the closing
bid price for a share of Common Stock in the over-the-counter market, as
reported by the National Quotation Bureau Incorporated (or similar organization
or agency succeeding to its functions of reporting prices) at the close of
business on such date, or (iii) if the Common Stock is not then publicly traded
the fair market value of a share of Common Stock as determined by an Appraiser
selected in good faith by the holder of this Warrant; provided, however, that
the Company, after receipt of the determination by such Appraiser, shall have
the right to select, in good faith, an additional Appraiser, in which case the
fair market value shall be equal to the average of the determinations by each
such Appraiser; and provided, further that all determinations of the Per Share
Market Value shall be appropriately adjusted for any stock dividends, stock
splits or other similar transactions during such period.
"Preferred Stock" means the shares of the Series A 5% convertible
redeemable preferred stock issued pursuant to the Company's Certificate Of
Designation Of Preferences and Rights and sold pursuant to the Purchase
Agreement.
"Prepayment Amount" has the meaning assigned to it in Section 8.
"Purchase Agreement" means that certain Securities Purchase Agreement,
dated May 18, 1999, among the Company and the Purchasers.
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"Purchaser" has the meaning set forth in the Purchase Agreement.
"Redemption Date" has the meaning assigned to it in Section 7(c).
"Redemption Event" has the meaning assigned to it in Section 6(f).
"Redemption Notice" has the meaning assigned to it in Section 7(b).
"Registered Owner" means the person identified on the face of this Warrant
as the registered owner hereof or such other person as shown on the records of
the Company as being the registered owner of this Warrant.
"Redemption Price" has the meaning assigned to it in Section 7(b) hereof.
"Registrable Securities" has the meaning assigned to it in the Registration
Rights Agreement.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated May 18, 1999, among the Company and the Purchasers.
"Rights" has the meaning assigned to it in Section 22.
"Trading Day(s)" means any day on which the primary market on which shares
of Common Stock are listed is open for trading.
"Underlying Shares" has the meaning assigned to it in Section 2.1(d) of the
Purchase Agreement.
"Void Redemption Notice" has the meaning assigned to it in Section 7(d).
"Warrant(s)" means the warrants issuable at the Closing.
12. REGISTRATION RIGHTS. The Company will undertake the registration of the
Common Stock into which such Warrants are exercisable at such times and upon
such terms pursuant to the provisions of the Registration Rights Agreement.
13. RESERVATION OF UNDERLYING SHARES; LISTING. The Company covenants that
it will at all times reserve and keep available out of its authorized shares of
Common Stock, free from preemptive rights, solely for the purpose of issue upon
exercise of the Warrants as herein provided, such number of shares of the Common
Stock as shall then be issuable upon the exercise of all outstanding Warrants
into Common Stock. The Company covenants that all shares of the Common Stock
issued upon exercise of the Warrant which shall be so issuable shall, when
issued, be duly and validly issued and fully paid and non-assessable. The
Company shall promptly secure the listing of the shares of Common Stock issuable
upon exercise of the Warrant upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance upon exercise of this Warrant) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock form time to time issuable upon the
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exercise of this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, as the case may be, and shall
maintain such listing of, any other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any shares of the
same class shall be listed on such national securities exchange or automated
quotation system.
14. NOTICES. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if received by 8:00 p.m. EST
where such notice is to be received), or the first Business Day following such
delivery (if received after 8:00 p.m. EST where such notice is to be received)
or (b) on the second Business Day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications are (i) if to the Company to International Isotopes Inc., 0000
Xxx Xxxxxxxx Xxxx, Xxxxxx, Xxxxx 00000, Telephone: (000) 000-0000, Facsimile:
(000) 000-0000, Attention: Xxx Xxx Xxxxxx with copies to Xxxxx Xxxxxxx & Xxxx
LLP, 000 Xxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx, 00000, Attention: Xxxxxx X. Xxxxxx
and (ii) if to the Registered Owner to ________ with copies to Xxxx, Xxxx,
Xxxxxxx, Xxxxx & Xxxx, L.L.P., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attn: Xxxxx Xxxx, fax no. (000) 000-0000 or such other address as may be
designated in writing hereafter, in the same manner, by such person.
15. COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. The Company covenants that
if any shares of Common Stock required to be reserved for purposes of exercise
of Warrants hereunder require registration with or approval of any governmental
authority under any Federal or state law, or any national securities exchange,
before such shares may be issued upon exercise, the Company will use its best
efforts to cause such shares to be duly registered or approved, as the case may
be.
16. FRACTIONAL SHARES. Upon any exercise hereunder, the Company shall not
be required to issue stock certificates representing fractions of shares of the
Common Stock, but may if otherwise permitted make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Company elects not, or is unable, to make such a cash payment, the
Registered Owner shall be entitled to receive, in lieu of the final fraction of
a share, one whole share of Common Stock.
17. PAYMENT OF TAX UPON ISSUE OF TRANSFER. The issuance of certificates for
shares of the Common Stock upon exercise of the Warrants shall be made without
charge to the Registered Owners thereof for any documentary stamp or similar
taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon exercise in a name other than that of the
Registered Owner of such Warrant so converted and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
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18. WARRANTS OWNED BY COMPANY DEEMED NOT OUTSTANDING. In determining
whether the holders of the outstanding Warrants have concurred in any direction,
consent or waiver under this Warrant, Warrants which are owned by the Company or
any other obligor on the Warrants or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Warrants shall be disregarded and deemed not
to be outstanding for the purpose of any such determination; provided that any
Warrants owned by the Purchasers (as defined in the Purchase Agreement) shall be
deemed outstanding for purposes of making such a determination. Warrants so
owned which have been pledged in good faith may be regarded as outstanding if
the pledgee establishes to the satisfaction of the Company the pledgee's right
so to act with respect to such Warrants and that the pledgee is not the Company
or any other obligor upon the Warrants or any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Warrants.
19. EFFECT OF HEADINGS; REFERENCES. The section headings herein are for
convenience only and shall not affect the construction hereof. References herein
to Sections are to Sections of this Warrant, unless otherwise expressly
provided.
20. NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle the Registered
Owner to any rights as a stockholder of the Company, including without
limitation, the right to vote, to receive dividends and other distributions, or
to receive notice of, or to attend, meetings of stockholders or any other
proceedings of the Company, unless and to the extent exercised for shares of
Common Stock in accordance with the terms hereof.
21. CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment of its
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, and (ii)
will take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
22. SHAREHOLDER RIGHTS PLAN. Notwithstanding the foregoing, in the event
that the Company shall distribute "poison pill" rights pursuant to a "poison
pill" shareholder rights plan (the "Rights"), the Company shall, in lieu of
making any adjustment pursuant to Section 6, make proper provision so that each
Registered Owner who exercises a Warrant after the record date for such
distribution and prior to the expiration or redemption of the Rights shall be
entitled to receive upon such exercise, in addition to the shares of Common
Stock issuable upon such exercise, a number of Rights to be determined as
follows: (i) if such exercise occurs on or prior to the date for the
distribution to the holders of Rights of separate certificates evidencing such
Rights (the "Distribution Date"), the same number of Rights to which a holder of
a number of shares of Common Stock equal to the number of shares of Common Stock
issuable upon such
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exercise at the time of such exercise would be entitled in accordance with the
terms and provisions of and applicable to the Rights; and (ii) if such exercise
occurs after the Distribution Date, the same number of Rights to which a holder
of the number of shares into which the Warrant to exercised was exercisable
immediately prior to the Distribution Date would have been entitled on the
Distribution Date in accordance with the terms and provisions of and applicable
to the Rights, and in each case subject to the terms and conditions of the
Rights.
23. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon and inure to
the benefit of the Registered Owners and its assigns, and shall be binding upon
any entity succeeding to the Company by merger or acquisition of all or
substantially all the assets of the Company. The Company may not assign this
Warrant or any rights or obligations hereunder without the prior written consent
of the Registered Owner. The Registered Owner may assign this Warrant without
the prior written consent of the Company.
24. GOVERNING LAW. This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Warrant and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first set forth above.
INTERNATIONAL ISOTOPES INC.
By:
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Name:
---------------------------------------------
Title:
--------------------------------------------
By:
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Name:
---------------------------------------------
Title:
--------------------------------------------
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EXHIBIT A
Warrant Exercise Form
TO: INTERNATIONAL ISOTOPES INC.
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of International Isotopes Inc., pursuant
to Warrant No. ___ heretofore issued to ___________________ on ____________,
1999; (2) encloses a payment of $__________ for these shares at a price of $____
per share (as adjusted pursuant to the provisions of the Warrant); and (3)
requests that a certificate for the shares be issued in the name of the
undersigned and delivered to the undersigned at the address specified below.
Date:
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Investor Name:
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Taxpayer Identification:
--------------------------------------
Number:
------------------------------------------------------
By:
----------------------------------------------------------
Printed Name:
------------------------------------------------
Title:
-------------------------------------------------------
Address:
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Note: The above signature should correspond exactly with the
name on the face of this Warrant Certificate or with the name
of assignee appearing in assignment form below.
AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash and delivered to the address stated above.
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