ISONICS CORPORATION
AND
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Amended and Restated
WARRANT AGREEMENT
Dated as of December 12, 2000 but effective as of
January ___, 2001
Amending and Restating that certain Warrant Agreement
Dated as of June 1, 2000, as amended as of August 9, 2000
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CLASS B and CLASS C
Amended and Restated
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement"), dated as of December 12, 2000,
by and among ISONICS CORPORATION, a California corporation (the "Company"), and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, INC., as Warrant Agent (the "Warrant
Agent"), and each of their successors and assigns, AMENDS AND RESTATES IN ITS
ENTIRETY that certain warrant agreement between the parties dated as of June 1,
2000, as amended as of August 9, 2000.
W I T N E S S E T H:
WHEREAS, in connection with (i) the Company's underwritten initial public
offering pursuant to a registration statement on Form SB-2, an unaffiliated
party as underwriter sold on behalf of the Company 810,000 Units consisting of
810,000 shares of Common Stock (as defined in Section 1), and 810,000 Class A
redeemable common stock purchase warrants (the "Class A Warrants"), each warrant
entitling the holder thereof to purchase one additional share of Common Stock;
and (ii) the sale to the underwriter of warrants (the "Underwriter's Warrants")
to purchase up to 80,000 shares of Common Stock and/or 80,000 Warrants, the
Company issued 890,000 Warrants (subject to adjustment as provided herein and in
the Underwriter's Warrant Agreement); and
WHEREAS, the Company has determined to offer the holders of the Class A
Warrants an incentive to exchange the Class A Warrants for Class B Warrants (as
defined elsewhere herein) pursuant to a registration statement on Form S-4 which
expires at the close of business in New York, New York, on April 30, 2001 (the
"Exchange Offer"); and
WHEREAS, on December 13, 2000, the Company issued 337,500 Units consisting
of one share of Common Stock and two Class B Warrants. Under certain market
conditions each Unit holder may acquire an additional 112,500 Units (the
"Adjustment Units"). Upon exercise, the Class B Warrant holder will receive one
share of Common Stock and one Class C Warrant. Including the Adjustment Units:
The total possible number of Common Stock shares which may be issued is
450,000.
The total number possible of Class B Warrants is 900,000 plus 810,000 Class
B Warrants that may be issued in exchange for the outstanding Class A
Warrants plus 80,000 Class B Warrants that may be issued in exchange for
Class A Warrants which are issuable upon exercise of the Underwriter's
Warrant.
The total number possible of Class C Warrants is 900,000 plus 810,000 Class
C Warrants that may be issued upon exercise of outstanding Class A Warrants
if
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exercised before the Exchange Offer expires or upon exercise of Class B
Warrants that may be exchanged for Class A Warrants, plus 80,000 Class C
Warrants that may be issued in exchange for Class B Warrants if any are
issued in exchange for Class A Warrants which are issuable upon exercise of
the Underwriter's Warrant.
WHEREAS, the total number of Common Stock shares that could be issued
assuming 100% exercise of all of the Warrants: (i) issued or issuable pursuant
to the December 13, 2000, placement is 2,250,000; (ii) 1,620,000 shares upon
exercise of the outstanding Class A Warrants or the Class B Warrants which may
be issuable in exchange for the Class A Warrants, together with the underlying
Class C Warrants; and (iii) 240,000 shares upon exercise of the Underwriter's
Warrant and all underlying Warrants (including warrants issuable in exchange for
the Class A Warrants issuable upon exercise of the Underwriter's Warrant;
WHEREAS, the Company has determined it is appropriate and in its best
interests and in the best interests of its shareholders and the persons who may
become holders of Class B Warrants and Class C Warrants to amend certain
provisions of the Class B Warrants and the Class C Warrants to, among other
things stated herein, reduce the exercise price of the Warrants, extend the term
of the Warrants, provide for the redemption of the Class B Warrants, and amend
the redemption provisions of the Class C Warrants;
WHEREAS, there are currently no persons who hold any Class B Warrants or
Class C Warrants except for the persons who purchased Class B Warrants in the
December offering who purchased such warrants on condition that these changes be
made;
WHEREAS, certain persons who may exercise the Class A Warrants before the
expiration of the Exchange Offer or who may exercise the Class B Warrants are,
or will be, entitled to receive Class C Warrants (as defined elsewhere herein)
for no additional consideration; and
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Class B Warrants and Class C Warrants (collectively referred to
as the "Class B/C Warrants" or (when the context requires the "Warrants"); and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange, and redemption of the Class B/C
Warrants, the issuance of certificates representing the Class B/C Warrants, the
exercise of the Class B/C Warrants and the rights of the holders thereof.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Class B/C Warrants and the certificates representing the Class B/C
Warrants and the respective rights and obligations thereunder of the Company,
the holders of certificates representing
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the Class B/C Warrants, and the Warrant Agent, the parties hereto agree to amend
and restate the agreement between them as follows and, since there are no
Registered Holders (as that term is defined herein) and since the amendment does
not adversely affect the interests of the holders of the Warrant Certificates,
without requiring the consent of any other person pursuant to Section 11 hereof
and the predecessor to this Agreement:
1. DEFINITIONS. As used herein (and in addition to the definitions set forth
above in the Recitals), the following terms shall have the following
meanings, unless the context shall otherwise require:
(a) "Act" shall mean the Securities Act of 1933, as amended.
(b) "Common Stock" shall have the meaning assigned to it in Section 8(h)
hereof.
(c) "Class A Warrants" shall mean the outstanding Class A Redeemable
Common Stock Purchase Warrants of the Corporation, which are subject
to an agreement between the Corporation, the Warrant Agent, and the
underwriter dated September 22, 1997.
(d) "Class B Warrants" shall mean the Warrants being offered in exchange
for the outstanding Class A Warrants and the additional Class B
Warrants sold in December 2000 as a part of a Unit consisting of one
share of Common Stock and two Class B Warrants.
(e) "Class C Warrants" shall mean the Warrants issuable upon exercise of
the Class B Warrants or upon exercise of the Class A Warrants, if the
Class A Warrants are exercised before the Exchange Offer Expires.
(f) "Commission" shall mean the Securities and Exchange Commission.
(g) "Corporate Office" shall mean the office of the Warrant Agent (or its
successor) at which at any particular time its business shall be
administered, which office is located on the date hereof c/o
Continental Stock Transfer & Trust Company, Inc., 0 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Exercise Date" shall mean, subject to the provisions of Section 5(b)
hereof, as to any Warrant, the date on which the Warrant Agent shall
have received both (i) the Warrant Certificate representing such
Warrant, with the exercise form thereon duly executed by the
Registered Holder hereof or his attorney duly authorized in writing;
and (ii) payment in cash or by official bank or certified check made
payable to the Warrant Agent for the
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account of the Company, in the amount in lawful money of the United
States of America equal to the applicable Purchase Price (as
hereinafter defined) in good funds.
(j) "Exercise Price" shall mean, subject to modification and adjustment as
provided in Section 8, $1.50 per share for the Class B Warrants and
$2.50 per share for the Class C Warrants, and further subject to the
Company's right, in its sole discretion, to decrease the Exercise
Price on not less than thirty (30) days prior written notice to the
Registered Holders.
(k) "Initial Warrant Exercise Date" shall mean the date of issuance with
respect to the Class B Warrants and the Class C Warrants.
(l) "Initial Warrant Redemption Date" shall mean the date of issuance with
respect to the Class C Warrants and May 1, 2001, with respect to the
Class B Warrants.
(m) "Market Price" shall mean:
(i) if the Common Stock is listed, or admitted to unlisted trading
privileges on a national securities exchange, or is traded on
the Nasdaq National Market or Nasdaq, the last reported closing
sale price on the five trading days prior to the date of the
event to which such Market Price relates, or, if no such
reported closing sale takes place on such date, then the average
of the last reported closing sales prices for the last five
trading days before such date, in each case as officially
reported by the principal securities exchange on which the
Common Stock is listed or admitted to unlisted trading
privileges or by the Nasdaq National Market or Nasdaq, or
(ii) if the Common Stock is not listed or admitted to unlisted
trading privileges, on any national securities exchange, or
traded on the Nasdaq National Market or Nasdaq, but is traded in
the over-the-counter market, then the average of the closing
sale prices (or if closing sale prices are not reported, the
average of the last reported bid and asked prices) of the Common
Stock reported by the National Quotation Bureau, Inc. or similar
bureau if the National Quotation Bureau, Inc. is no longer
reporting such information on the date of the event to which
such Market Price relates, and if no such prices are reported on
such date, then the average of the last so reported bid and
asked prices on the last five trading days on which such prices
are reported immediately preceding such date; or
(iii) if the Common Stock is neither listed, nor admitted to unlisted
trading privileges on a national securities exchange, nor traded
on
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the Nasdaq National Market or Nasdaq, nor traded in the
over-the-counter market, then the fair market value of the Common
Stock, not less than the book value thereof, as of the date of
the event to which such Market Price relates, as determined in
good faith (using customary valuation methods) by the Board of
Directors of the Company, which determination shall be evidenced
by a resolution of the Board of Directors and based on the best
information available to it.
(n) "NASD" shall mean the National Association of Securities Dealers, Inc.
(o) "Nasdaq" shall mean the Nasdaq SmallCap Market.
(p) "Redemption Date" shall mean the date (which may not occur before the
Initial Warrant Redemption Date) fixed for the redemption of the Class
B Warrants or the Class C Warrants in accordance with the terms
hereof.
(q) "Redemption Price" shall mean the price at which the Company may, at
its option, redeem the Warrants, in accordance with the terms hereof,
which price shall be $0.10 per Warrant, subject to adjustment from
time to time pursuant to the provisions of Section 8 hereof and
subject further to the provisions of Section 9, hereof.
(r) "Registered Holder" shall mean each person in whose name a Warrant
Certificate representing any of the Warrants shall be registered on
the books maintained by the Warrant Agent pursuant to Section 6.
(s) "Underwriter's Warrant Agreement" shall mean the agreement dated as of
September 22, 1997, between the Company and Xxxxxx Xxxxxx Securities,
Inc. relating to and governing the terms and provisions of the
Underwriter's Warrants.
(t) "Transfer Agent" shall mean Continental Stock Transfer & Trust
Company, Inc., or its authorized successor.
(u) "Underwriting Agreement" shall mean the underwriting agreement dated
as of September 22, 1997, between the Company and the underwriter
relating to the Offering.
(v) "Warrant Certificate" shall mean a certificate representing one or
more of the Warrants substantially in the form annexed as Exhibit A
(with respect to the Class B Warrants) or Exhibit B (with respect to
the Class C Warrants).
(w) "Warrant Expiration Date" shall mean, unless the Warrants are redeemed
as provided in Section 9 hereof prior to such date, 5:00 p.m. (New
York
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time): (i) with respect to the Class B Warrants, on December 31, 2005,
and (ii) with respect to the Class C Warrants, on December 31, 2005,
or if earlier, the Redemption Date as defined herein, whichever date
is earlier; provided that if such date shall in the State of New York
be a holiday or a day on which banks located in the State of New York
are authorized to close, then 5:00 p.m. (New York time) on the next
following day which, in the State of New York, is neither a holiday
nor a day on which such banks are authorized to close. Upon prior
written notice to the Registered Holders, the Company (in its sole
discretion) shall have the right to extend the Warrant Expiration
Date.
(x) "Warrants" mean, collectively, the Class B Warrants and the Class C
Warrants.
2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.
(a) Each Class B Warrant shall initially entitle the Registered Holder of
the Warrant Certificate representing such Warrant to purchase at the
Exercise Price therefor from the Initial Warrant Exercise Date until
the Warrant Expiration Date one share of Common Stock and one Class C
Warrant upon the exercise thereof in accordance with the terms hereof
(subject to modification and adjustment as provided in Section 8).
(b) Each Class C Warrant shall initially entitle the Registered Holder of
the Warrant Certificate representing such Warrant to purchase at the
Exercise Price therefor from the Initial Warrant Exercise Date until
the Warrant Expiration Date one share of Common Stock upon the
exercise thereof in accordance with the terms hereof (subject to
modification and adjustment as provided in Section 8).
(c) Upon execution of this Agreement, Warrant Certificates representing
the number of Class B Warrants exchanged pursuant to the exchange
offer (subject to modification and adjustment as provided in Section
8) shall be executed by the Company and delivered to the Warrant
Agent.
(d) Upon exercise of the Underwriter's Warrants as provided therein,
Warrant Certificates representing all or a portion of 80,000 Warrants
to purchase up to an aggregate of 80,000 shares of Common Stock
(subject to modification and adjustment as provided in Section 8
hereof and in the Underwriter's Warrant Agreement), shall be
countersigned, issued and delivered by the Warrant Agent upon written
order of the Company signed by its Chairman of the Board, Chief
Executive Officer, President or a Vice President and by its Chief
Financial Officer, Treasurer or an Assistant Treasurer or its
Secretary or an Assistant Secretary.
(e) From time to time, up to the Warrant Expiration Date, the Warrant
Agent
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shall countersign and deliver Warrant Certificates in required
denominations of one or whole number multiples thereof to the person
entitled thereto in connection with any transfer or exchange permitted
under this Agreement. Except as provided herein, no Warrant
Certificates shall be issued except: (i) Warrant Certificates
initially issued hereunder and those issued on or after the Initial
Warrant Exercise Date, upon the exercise of fewer than all Warrants
held by the exercising Registered Holder; (ii) Warrant Certificates
issued upon any transfer or exchange of Warrants; (iii) Warrant
Certificates issued in replacement of lost, stolen, destroyed or
mutilated Warrant Certificates pursuant to Section 7; (iv) Warrant
Certificates issued pursuant to the Underwriter's Warrant Agreement;
and (v) at the option of the Company, Warrant Certificates may be
issued in such form as may be approved by its Board of Directors, to
reflect any adjustment or change in the Exercise Price, the number of
shares of Common Stock purchasable upon exercise of the Warrants or
the Redemption Price therefor made pursuant to Section 8 hereof.
3. FORM AND EXECUTION OF WARRANT CERTIFICATES.
(a) The Warrant Certificates shall be substantially in the form annexed
hereto as Exhibits A and B (the provisions of which are hereby
incorporated herein) and may have such letters, numbers or other marks
of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company
may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Warrants may be listed,
or to conform to usage. The Warrant Certificates shall be dated the
date of issuance thereof (whether upon initial issuance, transfer,
exchange or in lieu of mutilated, lost, stolen or destroyed Warrant
Certificates) and issued in registered form. Warrants shall be
numbered serially with the letters "WB" on the Class B Warrants and
with the letters "WC" on the Class C Warrants.
(b) Warrant Certificates shall be executed on behalf of the Company by its
Chairman of the Board, Chief Executive Officer, President or any Vice
President and by its Chief Financial Officer, Treasurer or an
Assistant Treasurer or its Secretary or an Assistant Secretary, by
manual signatures or by facsimile signatures printed thereon, and
shall have imprinted thereon a facsimile of the Company's seal.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer of the Company
after the date of signature but before the date of issuance of the
Warrant Certificates or before countersignature by the Warrant Agent
and issuance and delivery thereof, such Warrant
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Certificates, nevertheless, may be countersigned by the Warrant Agent,
issued and delivered with the same force and effect as though the
person who signed such Warrant Certificates had not ceased to be such
officer of the Company. After countersignature by the Warrant Agent,
Warrant Certificates shall be delivered by the Warrant Agent to the
Registered Holder promptly and without further action by the Company.
4. EXERCISE.
(a) Warrants in denominations of one or whole number multiples thereof may
be exercised by the Registered Holder thereof commencing at any time
on or after the Initial Warrant Exercise Date, but not after the
Warrant Expiration Date, upon the terms and subject to the conditions
set forth herein and in the applicable Warrant Certificate. Warrants
may be exercised by their holders as follows: the exercise of Warrants
shall be accomplished upon surrender of the Warrant Certificate
evidencing such Warrants, with the Subscription Form on the reverse
side thereof duly filled in and executed, to the Warrant Agent at its
business office, together with payment to the Warrant Agent of the
Exercise Price (as of the date of such surrender) of the Warrants then
being exercised and an amount equal to any applicable transfer tax
and, if requested by the Company, any other taxes or governmental
charges which the Company may be required by law to collect in respect
of such exercise.
(b) Payment of the Exercise Price and other amounts may be made by wire
transfer of good funds, or by certified or bank cashier's check,
payable in lawful money of the United States of America to the order
of the Company and deliver such payment to the Warrant Agent who shall
in turn deliver the payment to the Company. No adjustment shall be
made for any cash dividends, whether paid or declared, on any
securities issuable upon exercise of a Warrant. A Warrant shall be
deemed to have been exercised immediately prior to the close of
business on the Exercise Date and upon exercise thereof, the person
entitled to receive the securities deliverable upon such exercise
shall be treated for all purposes as the holder of the securities
issuable thereby as of the close of business on the Exercise Date. If
Warrants in denominations other than whole number multiples thereof
shall be exercised at one time by the same Registered Holder, the
number of full shares of Common Stock which shall be issuable upon
exercise thereof shall be computed on the basis of the aggregate
number of full shares of Common Stock issuable upon such exercise. As
soon as practicable on or after the Exercise Date and in any event
within five business days after such date, if one or more Warrants
have been exercised in the manner described in this subsection (a),
the Warrant Agent on behalf of the Company shall cause to be issued to
the person or persons entitled to receive the same a Common Stock
certificate or certificates for the shares of Common Stock deliverable
upon such
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exercise, and the Warrant Agent shall deliver the same to the person
or persons entitled thereto. Upon the exercise of any one or more
Warrants, the Warrant Agent shall promptly notify the Company in
writing of such fact and of the number of securities delivered upon
such exercise and, subject to subsection (b) below, shall cause
payment in cash or by check made payable to the order of the Company,
equal to the Exercise Price of such Warrants, to be deposited promptly
in the Company's bank account or paid directly to the Company, as
specified by the Company.
(c) The Company shall not be required to issue fractional shares on the
exercise of Warrants. Warrants may be exercised only in such multiples
as are required to permit the issuance by the Company of one or more
whole shares. If one or more Warrants shall be presented for exercise
in full at the same time by the same Registered Holder, the number of
whole shares which shall be issuable upon such exercise thereof shall
be computed on the basis of the aggregate number of shares purchasable
on exercise of the Warrants presented. If any fraction of a share
would, except for the provisions provided herein, be issuable on the
exercise of any Warrant (or specified portion thereof), the Company
shall pay an amount in cash equal to such fraction multiplied by the
then current Market Price of a share of Common Stock.
(d) Holders of Class A Warrants may, in their discretion, exercise the
Class B Warrants at the same time the holders submit their Class A
Warrants for exchange pursuant to the Exchange Offer.
(e) If at the time of exercise of any of the Warrants, the Company does
not have in place an effective registration statement or is otherwise,
in the good faith determination of the Board of Directors of the
Company, precluded by applicable laws from issuing the shares of
Common Stock issuable upon such exercise, the Company may (but is not
required to), in lieu of issuance of those shares, elect to redeem the
Warrants duly surrendered for exercise for a price per Warrant equal
to the difference between the Market Price of a share of Common Stock
on the date of such submission and the Exercise Price, and in the
event of such redemption, the Company will pay to the Registered
Holder the above-described Redemption Price in cash within ten (10)
business days after receipt of notice from the Warrant Agent that such
Warrants have been submitted for exercise.
(f) This Warrant shall not be exercisable by a Registered Holder in any
state where such exercise would be unlawful.
5. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC.
(a) The Company covenants that it will at all times reserve and keep
available
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out of its authorized Common Stock, solely for the purpose of issue
upon exercise of Warrants, such number of shares of Common Stock as
shall then be issuable upon the exercise of all outstanding Warrants
except to the extent that, at the current time, there is insufficient
authorized capital to do so. The Company covenants that all shares of
Common Stock which shall be issued upon exercise of the Warrants
shall, at the time of delivery thereof, be validly issued, fully paid
and nonassessable and free from all preemptive or similar rights,
taxes, liens and charges with respect to the issue thereof, and that
upon issuance such shares shall be listed on each securities exchange,
if any, on which the other shares of outstanding Common Stock of the
Company are then listed.
(b) The Company covenants that if any securities to be reserved for the
purpose of exercise of Warrants hereunder require registration with,
or approval of, any governmental authority under any federal
securities law before such securities may be validly issued or
delivered upon such exercise, then the Company will file a
registration statement under the federal securities laws or a
post-effective amendment covering such securities, use its best
efforts to cause the same to become effective and to keep such
registration statement current on or after the Initial Warrant
Exercise Date and while any of the Warrants are outstanding and
deliver a prospectus which complies with Section 10(a)(3) of the Act
to the Registered Holder exercising the Warrant (except, if in the
opinion of counsel to the Company, such registration is not required
under the federal securities laws or if the Company receives a letter
from the staff of the Commission stating that it would not take any
enforcement action if such registration is not effected; PROVIDED,
HOWEVER, that if at the time of exercise of any Warrants the Company
does not have in place an effective registration statement or is
otherwise, in the good faith determination of the Board of Directors
of the Company, precluded by applicable laws from issuing the
underlying shares of Common Stock, the Company may, in lieu of
issuance of the shares of Common Stock, elect to purchase the Warrants
duly surrendered for exercise for a price per Warrant equal to the
difference between the Market Price of the securities for which such
Warrant is exercisable on the date of such submission and the Exercise
Price of such Warrants, and in the event of such redemption, the
Company will pay to the holder of such Warrants the above-described
redemption price in cash within ten (10) business days after receipt
of notice from the Warrant Agent that such Warrants have been
submitted for exercise. The Company will use its best efforts to
obtain appropriate approvals or registrations under state "blue sky"
securities laws with respect to any such securities. However, Warrants
may not be exercised by, or shares of Common Stock issued to, any
Registered Holder in any state in which such exercise or issuance
would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes and
other
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governmental charges that may be imposed with respect to the issuance
of Warrants, or the issuance or delivery of any shares of Common Stock
upon exercise of the Warrants; provided, however, that if shares of
Common Stock are to be delivered in a name other than the name of the
Registered Holder of the Warrant Certificate representing any Warrant
being exercised, then no such delivery shall be made unless the person
requesting the same has paid to the Warrant Agent the amount of
transfer taxes or charges incident thereto, if any; PROVIDED, HOWEVER,
that the Company shall not be required (i) to pay any tax which may be
payable in respect of any transfer involved in the transfer and
delivery of Warrant Certificates; or (ii) to issue or deliver any
certificate for shares of Common Stock or other securities upon the
exercise of any Warrant Certificate until any such tax shall have been
paid, all such tax being payable by the holder of such Warrant
Certificate at the time of surrender.
(d) The Warrant Agent is hereby irrevocably authorized as the Transfer
Agent to requisition from time to time certificates representing
shares of Common Stock or other securities required to be issued upon
exercise of the Warrants, and the Company will comply with all such
requisitions.
6. EXCHANGE AND REGISTRATION OF TRANSFER.
(a) Warrant Certificates may be exchanged for other Warrant Certificates
representing an equal aggregate number of Warrants of the same class
or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Warrant Agent at its Corporate
Office, and, promptly following satisfaction of the terms and
provisions hereof, the Company shall execute and the Warrant Agent
shall countersign, issue and deliver in exchange therefor the Warrant
Certificate or Certificates which the Registered Holder making the
exchange shall be entitled to receive.
(b) The Warrant Agent shall keep, at its office, books in which, subject
to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and the transfer thereof in accordance with
customary practice. Upon due presentment for registration of transfer
of any Warrant Certificate at such office, the Company shall execute
and the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing an
equal aggregate number of Warrants of the same class.
(c) With respect to all Warrant Certificates presented for registration of
transfer, or for exchange or exercise, the Subscription Form on the
reverse thereof shall be duly endorsed or be accompanied by a written
instrument or instruments of transfer and subscription, in form
satisfactory to the Company and the Warrant Agent, duly executed by
the Registered Holder
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thereof or his attorney-in-fact duly authorized in writing.
(d) A service charge may be imposed on the Registered Holder by the
Warrant Agent for any exchange or registration of transfer of Warrant
Certificates. In addition, the Company may require payment by such
holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for exchange in
case of mutilated Warrant Certificates shall be promptly canceled by
the Warrant Agent and thereafter retained by the Warrant Agent until
termination of this Agreement.
(f) Prior to due presentment for registration of transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered Holder
of any Warrant Certificate as the absolute owner thereof and of each
Warrant represented thereby (notwithstanding any notations of
ownership or writing thereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all
purposes and shall not be affected by any notice to the contrary.
7. LOSS OR MUTILATION. Upon receipt by the Company and the Warrant Agent of
evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and (in the case of
loss, theft or destruction) of indemnity satisfactory to them, and (in case
of mutilation) upon surrender and cancellation thereof, the Company shall
execute and the Warrant Agent shall (in the absence of notice to the
Company and/or the Warrant Agent that a new Warrant Certificate has been
acquired by a bona fide purchaser) countersign and deliver to the
Registered Holder in lieu thereof a new Warrant Certificate of like tenor
representing an equal aggregate number of Warrants. Applicants for
substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges and provide a
bond (if necessary) as the Warrant Agent may prescribe.
8. ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE AND EXERCISE PRICE.
The number and kind of securities or other property purchasable upon
exercise of a Warrant shall be subject to adjustment from time to time upon
the occurrence, after the date hereof, of any of the following events:
(a) DIVIDENDS, STOCK SPLITS, REVERSE SPLITS, ETC. In case the Company
shall (i) pay a dividend in, or make a distribution of, shares of
Common Stock or of capital stock convertible into Common Stock on its
outstanding Common Stock; (ii) subdivide its outstanding shares of
Common Stock into a greater number of such shares; or (iii) combine
its outstanding shares of Common Stock into a smaller number of such
shares, the total number of shares of Common Stock purchasable upon
the exercise of each
13
Warrant outstanding immediately prior thereto shall be adjusted so
that the Registered Holder of any Warrant Certificate thereafter
surrendered for exercise shall be entitled to receive, at the same
aggregate Exercise Price, the number of shares of Common Stock which
such holder would have owned or have been entitled to receive
immediately following the happening of any of the events described
above had such Warrant been exercised in full immediately prior to the
occurrence of such event. Any adjustment made pursuant to this
subsection shall, in the case of a stock dividend or distribution,
become effective as of the record date therefor and, in the case of a
subdivision or combination, be made as of the effective date thereof.
If, as a result of an adjustment made pursuant to this subsection, the
Registered Holder of any Warrant Certificate thereafter surrendered
for exercise shall become entitled to receive shares of two or more
classes of capital stock of the Company, the Board of Directors of the
Company (whose determination shall be conclusive and shall be
evidenced by a Board resolution filed with the Warrant Agent) shall
determine the allocation of the Exercise Price among shares of such
classes of capital stock.
(b) NO CHANGE IN AGGREGATE EXERCISE PRICE. In the event of any adjustment
of the total number of shares of Common Stock purchasable upon the
exercise of Warrants pursuant to subsection (a) above, the aggregate
Exercise Price of each such Warrant shall remain unchanged, but the
number of shares of capital stock obtainable on exercise of each such
Warrant shall be adjusted as provided in subsection (a) above.
(c) REORGANIZATION OR RECLASSIFICATION. In the event of a capital
reorganization or a reclassification of the Common Stock (except as
provided in subsection (a) above or subsection (e) below), each
Registered Holder of a Warrant, upon exercise of such Warrant, shall
be entitled to receive at the same aggregate Exercise Price, in
substitution for the Common Stock to which such Registered Holder
would have become entitled upon exercise immediately prior to such
reorganization or reclassification, the shares or other securities or
property of the Company (or cash) that he would have been entitled to
receive upon such reorganization or reclassification if such Warrant
had been exercised immediately prior thereto; and in any such case,
appropriate provision (as determined by the Board of Directors of the
Company, whose determination shall be conclusive and shall be
evidenced by a certified Board resolution filed with the Warrant
Agent) shall be made for the application of this Section 8 with
respect to the rights and interests thereafter of the Registered
Holders of all then outstanding Warrants (including but not limited to
the allocation of the Exercise Price among shares of classes of
capital stock), to the end that this Section 8 (including the
adjustments of the number of shares of Common Stock or other
securities purchasable and the Exercise Price thereof) shall
thereafter be
14
reflected, as nearly as reasonably practicable, in all subsequent
exercises of the Warrants for any shares or securities or other
property (or cash) thereafter deliverable upon the exercise of the
Warrants.
(d) CERTIFICATE OF ADJUSTMENT. Whenever the number of shares of Common
Stock or other securities purchasable upon exercise of a Warrant is
adjusted as provided in this Section 8, the Company will promptly file
with the Warrant Agent a certificate signed by a Chairman or
Vice-Chairman of the Board or the President or a Vice President of the
Company and by the Chief Financial Officer, Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company
setting forth the number and kind of securities or other property
purchasable upon exercise of a Warrant, as so adjusted, stating that
such adjustments in the number or kind of shares or other securities
or property conform to the requirements of this Section 8, and setting
forth a brief statement of the facts accounting for such adjustments.
Promptly after receipt of such certificate, the Company, or the
Warrant Agent at the Company's request, will deliver, by first-class
mail, postage pre-paid, a brief summary thereof (to be supplied by the
Company) to all Registered Holders of the outstanding Warrant
Certificates; provided, however, that failure to file or to give any
notice required under this subsection, or any defect therein, shall
not affect the legality or validity of any such adjustments under this
Section 8; and provided, further, that, where appropriate, such notice
may be given in advance and included as part of the notice required to
be given pursuant to Section 12 hereof.
(e) MERGER OR CONSOLIDATION. In case of any consolidation of the Company
with, or merger of the Company into another corporation (other than a
consolidation or merger which does not result in any reclassification
or change of the outstanding Common Stock) or in case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety in a transaction involving as
an element thereof the distribution of the consideration received by
the Company therefrom, the corporation formed by such consolidation or
merger or the corporation which shall have acquired such assets, as
the case may be, shall execute and deliver to the Warrant Agent a
supplemental warrant agreement provided that the Registered Holder of
each Warrant then outstanding shall have the right thereafter (until
the expiration of such Warrant) to receive, upon exercise of such
Warrant, solely the kind and amount of shares of stock and other
securities and property (or cash) receivable upon such consolidation,
merger, sale or transfer by a holder of the number of shares of Common
Stock of the Company for which such Warrant could have been exercised
immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the
adjustments provided in this
15
Section 8. The above provision of this Subsection 8(e) shall similarly
apply to successive consolidations, mergers, sales, or transfers.
(f) EFFECT OF ADJUSTMENTS ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the number or kind of shares issuable upon exercise of
Warrants, Warrant Certificates theretofore or thereafter issued may
continue to express the same price and number and kind of shares as
are stated in the Warrant Certificates initially issuable pursuant to
this Warrant Agreement.
(g) ASSISTANCE OF ACCOUNTING FIRM IN MAKING COMPUTATIONS. The Company may
retain a firm of independent public accountants of recognized
standing, which may be the accountants regularly retained by the
Company, selected by the Board of Directors of the Company or the
Executive Committee of said Board, and not disapproved by the Warrant
Agent, to make any computation required under this Section 8, and a
certificate signed by such firm shall, in the absence of fraud or
gross negligence, be conclusive evidence of the correctness of any
computation made under this Section.
(h) "COMMON STOCK". The term "Common Stock" shall mean (i) the class of
stock designated as Common Stock in the Certificate of Incorporation
of the Company, as amended, at the date of this Agreement; or (ii) any
other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in
par value, or from par value to no par value, or from no par value to
par value. In the event that at any time as a result of an adjustment
made pursuant to this Section 8, the Registered Holder of any Warrant
thereafter surrendered for exercise shall become entitled to receive
any shares of capital stock of the Company other than shares of Common
Stock, thereafter the number of such other shares obtainable upon
exercise of any Warrant shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Common Stock contained in this
Section 8, and all other provisions of this Agreement, with respect to
the Common Stock, shall apply on like terms to any such other shares.
(i) FAILURE TO MAINTAIN EFFECTIVE REGISTRATION STATEMENT. Subject to the
following sentence, if the Company fails to maintain in effect a
registration statement relating to the exercise of the Class B
Warrants after June 12, 2001 during a period of time when the Market
Price is in excess of the Exercise Price for the Class B Warrants, the
Exercise Price of the Class B Warrants shall be reduced to $0.75
unless, at the time a Class B Warrant is presented for exercise, the
Company redeems the Class B Warrant for a Redemption Price equal to
the difference between the Market Price and the Exercise Price as
permitted (in the Company's discretion) by Paragraph 4(e) hereof. If,
while a registration statement is in effect, material events occur
that require the Company to suspend
16
the use of the registration statement pending an amendment or
supplement thereto, the suspension of the registration statement
pending such filing shall not be deemed to be a breech of this duty to
maintain an effective registration statement if such amendment or
supplement is filed within fourteen days for that purpose or if the
Company is able to redeem the Class B Warrants upon presentation as
contemplated by Paragraph 4(e).
9. REDEMPTION.
(a) Commencing on the Initial Warrant Redemption Date, the Company may, on
thirty (30) days' prior written notice, redeem all, but not less than
all, of the Class B Warrants, the Class C Warrants, or both, at ten
cents ($0.10) per Warrant:
i. provided that at the time the notice of redemption is sent to the
holders as required by Paragraph 9(b) there is a current
registration statement that is effective under the Securities Act
which permits the exercise of the Warrants being redeemed; and
ii. provided further that before any such call for redemption of
Warrants can take place, the last reported closing sale price for
the Common Stock as officially reported by Nasdaq, if the Common
Stock is then traded on Nasdaq (or the last reported closing sale
price on the Nasdaq National Market or a national securities
exchange, if the Common Stock is then traded on the Nasdaq
National Market or on a national securities exchange, in each
case as officially reported by the Nasdaq National Market or such
national securities exchange, or, if the Common Stock is not then
traded on Nasdaq, the Nasdaq National Market or a national
securities exchange, but is then traded in the over-the-counter
market, then the average of the last reported bid and asked
prices of the Common Stock reported by the National Quotation
Bureau, Inc. or similar bureau if the National Quotation Bureau,
Inc. is no longer reporting such information) shall have equaled
or exceeded $3.75 per share (subject to adjustment in the event
of any stock splits or other similar events as provided in
Section 8 hereof) for at least twenty (20) out of the thirty (30)
consecutive trading days ending not more than the third day prior
to the date on which the notice contemplated by (b) and (c) below
is given.
(b) In case the Company shall exercise its right to redeem all of the
Warrants, it shall give or cause to be given notice to the Registered
Holders of the Warrants by mailing to such Registered Holders a notice
of redemption, first-class mail, postage pre-paid, at their last
address as shall appear on the records of the Warrant Agent. Any
notice mailed in the manner provided herein shall be conclusively
presumed to have been duly given whether or not the Registered Holder
receives such notice.
(c) The notice of redemption shall specify: (i) the Redemption Price; (ii)
the
17
Redemption Date, which shall in no event be less than thirty (30) days
after the date of mailing of such notice; (iii) the place where the
Warrant Certificate shall be delivered and the Redemption Price shall
be paid; (iv) that the right to exercise the Warrant shall terminate
at 5:00 p.m. (New York time) on the business day immediately preceding
the date fixed for redemption; and (v) shall include a copy of the
current effective prospectus relating to the exercise of the Warrants.
No failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of the proceedings for such
redemption except as to a holder (a) to whom notice was not mailed; or
(b) whose notice was defective. An affidavit of the Warrant Agent or
the Secretary or Assistant Secretary of the Company that notice of
redemption has been mailed shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00 p.m. (New York
time) on the business day immediately preceding the Redemption Date.
The Redemption Price payable to the Registered Holders shall be mailed
to such persons at their addresses of record.
(e) On and after the Redemption Date, the Registered Holders shall have no
rights with respect to the Warrants except to receive $0.10 per
Warrant upon surrender of their Warrant Certificates.
10. CONCERNING THE WARRANT AGENT.
(a) The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company, and its duties shall be determined solely by
the provisions hereof. The Warrant Agent shall not, by issuing and
delivering Warrant Certificates or by any other act hereunder, be
deemed to make any representations as to the validity or value or
authorization of the Warrant Certificates (except its countersignature
thereof) or the Warrants represented thereby or of any securities or
other property delivered upon exercise of any Warrant or whether any
stock issued upon exercise of any Warrant is fully paid and
nonassessable.
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause
to be made any adjustment of the Exercise Price or the Redemption
Price provided in this Agreement, or to determine whether any fact
exists which may require any such adjustments, or with respect to the
nature or extent of any such adjustments, when made, or with respect
to the method employed in making the same (except with respect to the
exercise of Warrant Certificates after actual notice of any adjustment
of the Exercise Price). The Warrant Agent shall not: (i) be liable for
any recital or statement of fact contained herein or for any action
taken, suffered or omitted by it in reliance on any Warrant
Certificate or other document or
18
instrument believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties (except its
countersignature on the Warrant Certificates and such statements or
recitals as describe the Warrant Agent or action taken or to be taken
by it); (ii) be responsible for any failure on the part of the Company
to comply with any of its covenants and obligations contained in this
Agreement or in any Warrant Certificate; or (iii) be liable for any
act or omission in connection with this Agreement except for its own
gross negligence, bad faith or willful misconduct.
(c) The Warrant Agent may at any time consult with counsel satisfactory to
it (who may be counsel for the Company) and shall incur no liability
or responsibility for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction, order, or
demand of the Company shall be sufficiently evidenced by an instrument
signed by the Chairman of the Board of Directors, Chief Executive
Officer, Chief Financial Officer, President or any Vice President
(unless other evidence in respect thereof is herein specifically
prescribed). The Warrant Agent shall not be liable for any action
taken, suffered, or omitted by it in accordance with such notice,
statement, instruction, request, direction, order or demand reasonably
believed by it to be genuine.
(e) The Company agrees to pay the Warrant Agent reasonable compensation
for its services hereunder and to reimburse it for its reasonable
expenses hereunder; the Company further agrees to indemnify the
Warrant Agent and save it harmless from and against any and all
losses, expenses and liabilities, including judgments, costs and
counsel fees, for anything done or omitted by the Warrant Agent in the
execution of its duties and powers hereunder except losses, expenses
and liabilities arising as a result of the Warrant Agent's gross
negligence, bad faith, or willful conduct.
(f) The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities resulting
as a result of the Warrant Agent's own gross negligence or willful
misconduct), after giving thirty (30) days' prior written notice to
the Company. At least fifteen (15) days prior to the date such
resignation is to become effective, the Warrant Agent shall cause a
copy of such notice of resignation to be mailed to the Registered
Holder of each Warrant Certificate at the Company's expense. Upon such
resignation, or any inability of the Warrant Agent to act as such
hereunder, the Company shall appoint in writing a new warrant agent.
If the Company shall fail to make such appointment within a period of
fifteen (15) days after it has been notified in writing of such
resignation by the resigning Warrant Agent, then the Registered Holder
of any Warrant Certificate may apply to any court of
19
competent jurisdiction for the appointment of a new warrant agent. Any
new warrant agent, whether appointed by the Company or by such a
court, shall be a bank or trust company having a capital and surplus,
as shown by its last published report to its stockholders deemed by
the Company to be adequate, or a stock transfer company. After
acceptance in writing of such appointment by the new warrant agent is
received by the Company, such new warrant agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be
necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the
Company and shall be legally and validly executed and delivered by the
resigning Warrant Agent. Not later than the effective date of any such
appointment the Company shall file notice thereof with the resigning
Warrant Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant Certificate.
(g) Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged, any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent
shall be a party, or any corporation succeeding to the corporate trust
business of the Warrant Agent or any new warrant agent shall be a
successor warrant agent under this Agreement without any further act,
provided that such corporation is eligible for appointment as
successor to the Warrant Agent under the provisions of the preceding
paragraph. Any such successor warrant agent shall promptly cause
notice of its succession as warrant agent to be mailed to the Company
and to the Registered Holders of each Warrant Certificate.
(h) The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Warrants or
other securities of the Company and otherwise deal with the Company in
the same manner and to the same extent and with like effect as though
it were not Warrant Agent. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Warrant Agent shall retain for a period of two (2) years from the
date of exercise, any Warrant Certificate received by it upon such
exercise.
(j) The Warrant Agent shall account promptly to the Company with respect
to Warrants exercised and concurrently pay to the Company all moneys
received by the Warrant Agent for the purchase of securities or other
property through the exercise of such Warrants.
11. MODIFICATION OF AGREEMENT. The Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this Agreement:
(i)
20
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or manifest mistake or error herein
contained; or (ii) that they may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Warrant
Certificates;
(a) provided, however, that this Agreement shall not otherwise be
modified, supplemented or altered in any respect except with the
consent in writing of the Registered Holders representing not less
than 66-2/3% of the Warrants then outstanding; and
(b) provided, further, that no change in the number or nature of the
securities purchasable upon the exercise of any Warrant, or to
increase the Exercise Price therefor or to accelerate the Warrant
Expiration Date shall be made without the consent in writing of the
Registered Holder of the Warrant Certificate representing such
Warrant, other than such changes as are presenting specifically
prescribed by this Agreement as originally executed.
12. NOTICES. All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class registered or certified mail, postage prepaid, as
follows: if to the Registered Holder of a Warrant Certificate, at the last
address of such holder as shown on the registry books maintained by the
Warrant Agent; if to the Company at 0000 XxXxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx
00000, Attention: CEO, or at such other address as may have been furnished
to the Warrant Agent in writing by the Company; and if to the Warrant
Agent, to the attention of the Compliance Department at 0 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000, or at such other address as any such party may
have been furnished to the Company and the Warrant Agent in writing.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without reference to
conflicts of laws or choice of law principles.
14. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Company, the Warrant Agent and their respective successors
and assigns and the Registered Holders from time to time of Warrant
Certificates or any of them. Nothing in this Agreement is intended or shall
be construed to confer upon any other person any right, remedy or claim, in
equity or at law, or to impose upon any other person any duty, liability or
obligation.
15. TERMINATION.
(a) This Agreement shall terminate at the close of business on the
Expiration Date of all of the Warrants or such earlier date upon which
all Warrants have been exercised or redeemed, except that the Warrant
Agent shall
21
account to the Company for all Warrants outstanding and all cash held
by it and the provisions of Section 10 hereof shall survive such
termination.
(b) The Company, at it sole discretion, may terminate this Agreement upon
thirty (30) days prior written notice to the Warrant Agent.
Termination of this Agreement will be without prejudice to the rights
and obligations accrued pursuant to this Agreement or any other
agreement between the Parties through the date of termination. The
provisions of this Agreement survive its termination as set forth
herein.
16. COUNTERPARTS. This Agreement may be executed in several counterparts each
of which shall be an original, but all of which taken together shall
constitute a single instrument.
17. HOLDERS OF WARRANTS NOT DEEMED SHAREHOLDERS. No holder of a Warrant, as
such, shall be entitled to vote, receive dividends or be deemed the holder
of Common Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Warrants represented thereby for
any purpose whatever, nor shall anything contained herein or in any Warrant
Certificate be construed to confer upon any holder of a Warrant, as such,
any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value or change of stock to no par value,
consolidation, merger, conveyance or otherwise), or to receive notice of
meetings or other actions affecting shareholders, or to receive dividend or
subscription rights, or otherwise, until such Warrant shall have been
exercised in accordance with the provisions hereof, including the receipt
by the Company of the Exercise Price and any other amounts payable upon
such exercise to the Warrant Agent.
18. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement or in the Warrant
Certificates shall be construed to give to any person or corporation other
than the Company, the Warrant Agent, and their respective successors and
assigns hereunder and the Registered Holders of the Warrant Certificates
any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent, their respective successors and assigns hereunder and
the Registered Holders of the Warrant Certificates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the first date first above written.
22
ATTEST: ISONICS CORPORATION
By: By:
---------------------------- -----------------------------
Xxxxxxxx X. Xxxxxxxx, Secretary Xxxxx X. Xxxxxxxxx, President
ATTEST: CONTINENTAL STOCK TRANSFER & TRUST
COMPANY, as Warrant Agent
By: By:
---------------------------- -----------------------------
Name: Name:
-------------------------- ---------------------------
Title: Title:
------------------------- --------------------------
23
Exhibit A
No. WB_____ VOID AFTER December 31, 2005
WARRANTS
CLASS B REDEEMAABLE WARRANT CERTIFICATE TO PURCHASE ONE SHARE OF
COMMON STOCK AND ONE CLASS C REDEEMABLE WARRANT
ISONICS CORPORATION
CUSIP # _________________
THIS CERTIFIES THAT, FOR VALUE RECEIVED ___________________________ or its
registered assigns (the "Registered Holder") is the owner of the number of Class
B Warrants (the "Warrants") specified above. Each Warrant initially entitles the
Registered Holder to purchase, subject to the terms and conditions set forth in
this Certificate and the Warrant Agreement (as hereinafter defined):
one fully paid and nonassessable share of Common Stock of Isonics
Corporation, a California corporation (the "Company"), and
one Class C Redeemable Common Stock Purchase Warrant,
at any time commencing on the date hereof, and the earlier to occur of the
Expiration Date (as hereinafter defined) and the Redemption Date (as hereinafter
defined) upon the presentation and surrender of this Warrant Certificate with
the Subscription Form on the reverse hereof duly executed, at the corporate
office of Continental Stock Transfer & Trust Company, Inc., as Warrant Agent, or
its successor (the "Warrant Agent"), accompanied by payment of $1.50 per share,
subject to adjustment (the "Exercise Price"), in lawful money of the United
States of America in cash or by check made payable to the Warrant Agent for the
account of the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Amended and Restated Warrant Agreement (the "Warrant Agreement"),
dated December 12, 2000, amending and restating that warrant agreement dated as
of June 1, 2000, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Exercise Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate
24
upon the surrender hereof and shall execute and deliver a new Warrant
Certificate or Warrant Certificates of like tenor, which the Warrant Agent shall
countersign, for the balance of such Warrants.
The term "Expiration Date" shall mean 5:00 p.m. (New York time) on December
31, 2005. If each such date shall in the State of New York be a holiday or a day
on which banks located in the State of New York are authorized to close, then
the Expiration Date shall mean 5:00 p.m. (New York time) the next following day
which in the State of New York is neither a holiday nor a day on which such
banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such securities
is effective or an exemption thereunder is available. The Company has covenanted
and agreed that it will file a registration statement under the Federal
securities laws, use its best efforts to cause the same to become effective, use
its best efforts to keep such registration statement current, if required under
the Act, following the date hereof and while any of the Warrants are
outstanding, and deliver a prospectus which complies with Section 10(a)(3) of
the Act to the Registered Holder exercising this Warrant; provided however, that
if at the time of exercise of any of the Warrants, the Company does not have in
place an effective registration statement or is otherwise, in the good faith
determination of the Board of Directors of the Company, precluded by applicable
laws from issuing the shares of Common Stock issuable upon such exercise, the
Company may, in lieu of issuance of those shares, elect to redeem the Warrants
duly surrendered for exercise for a price per Warrant equal to the difference
between the Market Price (as defined below) of a share of Common Stock on the
date of such submission and the Exercise Price, and in the event of such
redemption, the Company will pay to the Registered Holder the above-described
Redemption Price in cash within ten (10) business days after receipt of notice
from the Warrant Agent that such Warrants have been submitted for exercise. This
Warrant shall not be exercisable by a Registered Holder in any state where such
exercise would be unlawful.
The term "Market Price" shall mean: (i) if the Common Stock is listed, or
admitted to unlisted trading privileges on a national securities exchange, or is
traded on the Nasdaq National Market or Nasdaq, the last reported closing sale
price on the five trading days prior to the date of the event to which such
Market Price relates, or, if no such reported closing sale takes place on such
date, then the average of the last reported closing sales prices for the last
five trading days before such date, in each case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
unlisted trading privileges or by the Nasdaq National Market or Nasdaq; or (ii)
if the Common Stock is not listed or admitted to unlisted trading privileges, on
any national securities exchange, or traded on the Nasdaq National Market or
Nasdaq, but is traded in the over-the-counter market, then the average of the
closing sale prices (or if closing sale prices are not reported, the average of
the last reported bid and asked prices) of the Common Stock reported by the
National Quotation Bureau, Inc. or similar bureau if the National Quotation
Bureau, Inc. is no longer reporting such
25
information on the date of the event to which such Market Price relates, and if
no such prices are reported on such date, then the average of the last so
reported bid and asked prices on the last five trading days on which such prices
are reported immediately preceding such date; or (iii) if the Common Stock is
neither listed, nor admitted to unlisted trading privileges on a national
securities exchange, nor traded on the Nasdaq National Market or Nasdaq, nor
traded in the over-the-counter market, then the fair market value of the Common
Stock, not less than the book value thereof, as of the date of the event to
which such Market Price relates, as determined in good faith (using customary
valuation methods) by the Board of Directors of the Company, which determination
shall be evidenced by a resolution of the Board of Directors and based on the
best information available to it.
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment and payment of any tax or other
charge imposed in connection therewith or incident thereto, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a shareholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $0.10 per
Warrant, at any time during the term of this Warrant, provided that the last
reported closing sale price for the Common Stock as officially reported by the
Nasdaq SmallCap Market, if the Common Stock is then traded on the Nasdaq
SmallCap Market (or the last reported closing sale price on the Nasdaq National
Market or a national securities exchange, if the Common Stock is then traded on
the Nasdaq National Market or a national securities exchange, in each case as
officially reported by the Nasdaq National Market or such national securities
exchange, or, if the Common Stock is not then traded on the Nasdaq SmallCap
Market, the Nasdaq National Market or a national securities exchange, but is
then traded in the over-the-counter market, then the average of the last
reported bid and asked prices of the Common Stock reported by the National
Quotation Bureau, Inc. or similar bureau if the National Quotation Bureau, Inc.
is no longer reporting such information), shall have equaled or exceeded $3.75
per share for at least twenty (20) of the thirty (30) consecutive trading days
ending not later than the third day prior to the date on which the Notice of
Redemption, as defined below, is given (subject to adjustment in the event of
any stock splits or other similar events). Notice of redemption
26
(the "Notice of Redemption") shall be given not later than the thirtieth (30th)
day before the date fixed for redemption, or as provided in the Warrant
Agreement. On and after the date fixed for redemption, the Registered Holder
shall have no rights with respect to the Warrants except to receive the $0.10
per Warrant upon surrender of this Warrant Certificate.
Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and the
Company's right so to treat the Registered Holder shall not be affected by any
notice to the contrary, except as provided in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of California without reference to conflict of laws
or choice of law principles.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile, by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated:
[SEAL] ISONICS CORPORATION
By: By:
---------------------------- --------------------------
Xxxxxxxx X. Xxxxxxxx, Secretary Xxxxx X. Xxxxxxxxx, President
COUNTERSIGNED:
CONTINENTAL STOCK TRANSFER AND TRUST COMPANY
as Warrant Agent
By:
-----------------------------
Authorized Officer
27
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO EXERCISE WARRANTS
The undersigned Registered Holder hereby irrevocably elects to exercise ________
Warrants represented by this Warrant Certificate, and to purchase the securities
issuable upon the exercise of such Warrants, and requests that certificates for
such securities shall be issued in the name of (PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER):
-------------------------------
-------------------------------
-------------------------------
(please print or type name and address)
and be delivered to
-------------------------------
-------------------------------
-------------------------------
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated:
----------------------- -----------------------------------------
(PLEASE SIGN NAME AS IT APPEARS ON THE
FRONT OF THE CERTIFICATE)
ASSIGNMENT
TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO ASSIGN WARRANTS
FOR VALUE RECEIVED, __________________ hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
-------------------------------
-------------------------------
-------------------------------
-------------------------------
(please print or type name and address)
________________________________________________________________ of the Warrants
represented by this Warrant Certificate, and hereby irrevocably constitutes and
appoints ____________________________________Attorney to transfer this Warrant
Certificate on the books of the Company, with full power of substitution in the
premises.
28
Dated:
----------------------- -----------------------------------------
(PLEASE SIGN NAME AS IT APPEARS ON THE
FRONT OF THE CERTIFICATE)
-----------------------------
Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S)
MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS, AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
29
Exhibit B
No. WC_____ VOID AFTER December 31, 2005
WARRANTS
CLASS C REDEEMABLE WARRANT CERTIFICATE TO PURCHASE ONE SHARE OF COMMON STOCK
ISONICS CORPORATION
CUSIP # _________________
THIS CERTIFIES THAT, FOR VALUE RECEIVED ___________________________ or its
registered assigns (the "Registered Holder") is the owner of the number of Class
C Redeemable Warrants (the "Warrants") specified above. Each Warrant initially
entitles the Registered Holder to purchase, subject to the terms and conditions
set forth in this Certificate and the Warrant Agreement (as hereinafter
defined):
one fully paid and nonassessable share of Common Stock of Isonics
Corporation, a California corporation (the "Company"),
at any time commencing on the date hereof, and the earlier to occur of the
Expiration Date (as hereinafter defined) and the Redemption Date (as hereinafter
defined) upon the presentation and surrender of this Warrant Certificate with
the Subscription Form on the reverse hereof duly executed, at the corporate
office of Continental Stock Transfer & Trust Company, Inc., as Warrant Agent, or
its successor (the "Warrant Agent"), accompanied by payment of $2.50 per share,
subject to adjustment (the "Exercise Price"), in lawful money of the United
States of America in cash or by check made payable to the Warrant Agent for the
account of the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated December 12,
2000, amending and restating that warrant agreement dated June 1, 2000, by and
between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Exercise Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall execute and
deliver a new Warrant Certificate or Warrant Certificates of like tenor, which
the Warrant Agent shall countersign, for the
30
balance of such Warrants.
The term "Expiration Date" shall mean 5:00 p.m. (New York time) on (i)
December 31, 2005; or (ii) the date fixed for redemption hereof, whichever date
is earlier. If each such date shall in the State of New York be a holiday or a
day on which banks located in the State of New York are authorized to close,
then the Expiration Date shall mean 5:00 p.m. (New York time) the next following
day which in the State of New York is neither a holiday nor a day on which such
banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such securities
is effective or an exemption thereunder is available. The Company has covenanted
and agreed that it will file a registration statement under the Federal
securities laws, use its best efforts to cause the same to become effective, use
its best efforts to keep such registration statement current, if required under
the Act, following the date hereof and while any of the Warrants are
outstanding, and deliver a prospectus which complies with Section 10(a)(3) of
the Act to the Registered Holder exercising this Warrant; provided however, that
if at the time of exercise of any of the Warrants, the Company does not have in
place an effective registration statement or is otherwise, in the good faith
determination of the Board of Directors of the Company, precluded by applicable
laws from issuing the shares of Common Stock issuable upon such exercise, the
Company may, in lieu of issuance of those shares, elect to redeem the Warrants
duly surrendered for exercise for a price per Warrant equal to the difference
between the Market Price (as defined below) of a share of Common Stock on the
date of such submission and the Exercise Price, and in the event of such
redemption, the Company will pay to the Registered Holder the above-described
redemption price in cash within ten (10) business days after receipt of notice
from the Warrant Agent that such Warrants have been submitted for exercise. This
Warrant shall not be exercisable by a Registered Holder in any state where such
exercise would be unlawful.
The term "Market Price" shall mean: (i) if the Common Stock is listed, or
admitted to unlisted trading privileges on a national securities exchange, or is
traded on the Nasdaq National Market or Nasdaq, the last reported closing sale
price on the five trading days prior to the date of the event to which such
Market Price relates, or, if no such reported closing sale takes place on such
date, then the average of the last reported closing sales prices for the last
five trading days before such date, in each case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
unlisted trading privileges or by the Nasdaq National Market or Nasdaq; or (ii)
if the Common Stock is not listed or admitted to unlisted trading privileges, on
any national securities exchange, or traded on the Nasdaq National Market or
Nasdaq, but is traded in the over-the-counter market, then the average of the
closing sale prices (or if closing sale prices are not reported, the average of
the last reported bid and asked prices) of the Common Stock reported by the
National Quotation Bureau, Inc. or similar bureau if the National Quotation
Bureau, Inc. is no longer reporting such information on the date of the event to
which such Market Price relates, and if no such
31
prices are reported on such date, then the average of the last so reported bid
and asked prices on the last five trading days on which such prices are reported
immediately preceding such date; or (iii) if the Common Stock is neither listed,
nor admitted to unlisted trading privileges on a national securities exchange,
nor traded on the Nasdaq National Market or Nasdaq, nor traded in the
over-the-counter market, then the fair market value of the Common Stock, not
less than the book value thereof, as of the date of the event to which such
Market Price relates, as determined in good faith (using customary valuation
methods) by the Board of Directors of the Company, which determination shall be
evidenced by a resolution of the Board of Directors and based on the best
information available to it.
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment and payment of any tax or other
charge imposed in connection therewith or incident thereto, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a shareholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $0.10 per
Warrant, at any time during the term of this Warrant, provided that the last
reported closing sale price for the Common Stock as officially reported by the
Nasdaq SmallCap Market, if the Common Stock is then traded on the Nasdaq
SmallCap Market (or the last reported closing sale price on the Nasdaq National
Market or a national securities exchange, if the Common Stock is then traded on
the Nasdaq National Market or a national securities exchange, in each case as
officially reported by the Nasdaq National Market or such national securities
exchange, or, if the Common Stock is not then traded on the Nasdaq SmallCap
Market, the Nasdaq National Market or a national securities exchange, but is
then traded in the over-the-counter market, then the average of the last
reported bid and asked prices of the Common Stock reported by the National
Quotation Bureau, Inc. or similar bureau if the National Quotation Bureau, Inc.
is no longer reporting such information), shall have equaled or exceeded $3.75
per share for at least twenty (20) of the thirty (30) consecutive trading days
ending not later than the third day prior to the date on which the Notice of
Redemption, as defined below, is given (subject to adjustment in the event of
any stock splits or other similar events). Notice of redemption (the "Notice of
Redemption") shall be given not later than the thirtieth (30th) day before
32
the date fixed for redemption, or as provided in the Warrant Agreement. On and
after the date fixed for redemption, the Registered Holder shall have no rights
with respect to the Warrants except to receive the $0.10 per Warrant upon
surrender of this Warrant Certificate.
Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and the
Company's right so to treat the Registered Holder shall not be affected by any
notice to the contrary, except as provided in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of California without reference to conflict of laws
or choice of law principles.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile, by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated:
[SEAL] ISONICS CORPORATION
By: By:
---------------------------- --------------------------
Xxxxxxxx X. Xxxxxxxx, Secretary Xxxxx X. Xxxxxxxxx, President
COUNTERSIGNED:
CONTINENTAL STOCK TRANSFER AND TRUST COMPANY
as Warrant Agent
By:
----------------------------
Authorized Officer
33
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO EXERCISE WARRANTS
The undersigned Registered Holder hereby irrevocably elects to exercise ________
Warrants represented by this Warrant Certificate, and to purchase the securities
issuable upon the exercise of such Warrants, and requests that certificates for
such securities shall be issued in the name of (PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER):
-------------------------------
-------------------------------
-------------------------------
(please print or type name and address)
and be delivered to
-------------------------------
-------------------------------
-------------------------------
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated:
------------------------ -------------------------------
(PLEASE SIGN NAME AS IT APPEARS ON THE
FRONT OF THE CERTIFICATE)
ASSIGNMENT
TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO ASSIGN WARRANTS
FOR VALUE RECEIVED, __________________ hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)
-------------------------------
-------------------------------
-------------------------------
(please print or type name and address)
________________________________________________________________ of the Warrants
represented by this Warrant Certificate, and hereby irrevocably constitutes and
appoints ____________________________________Attorney to transfer this Warrant
Certificate on the books of the Company, with full power of substitution in the
premises.
34
Dated:
------------------------ -------------------------------
(PLEASE SIGN NAME AS IT APPEARS ON THE
FRONT OF THE CERTIFICATE)
----------------------------------
Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S)
MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS, AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
35
