<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
Isonics Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, no par value per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
464895-10-1
- --------------------------------------------------------------------------------
(CUSIP Number)
David G. Krall, Esq.
Vice President and General Counsel
250 East Fifth Street, Suite 500
Cincinnati, Ohio 45202
(513) 629-2417
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 1, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d- 1(b)(3) or (4), check the following box[ ].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
CUSIP No. 464895-10-1 13D
1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons
Eagle-Picher Technologies, LLC
31-1587660
Eagle-Picher Industries, Inc.
31-0268670
Eagle-Picher Holdings, Inc.
13-3989553
Granaria Industries B.V.
No EIN
Granaria Holdings, B.V.
98-0206621
Joel P. Wyler
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [ ]
(b) [X]
3) SEC Use Only
4) Source of Funds (See Instructions)
WC
5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
6) Citizenship or Place of Organization
Eagle-Picher Technologies, LLC - Delaware
Eagle-Picher Industries, Inc. - Ohio
Eagle-Picher Holdings, Inc. - Delaware
Granaria Industries, B.V. - The Netherlands
Granaria Holdings, B.V. - The Netherlands
Joel P. Wyler - The Netherlands
- 2 -
<PAGE> 3
===============================================================================
NUMBER OF SHARES 7) Sole Voting Power -0-
BENEFICIALLY OWNED BY
EACH REPORTING
PERSON WITH =============================================
8) Shared Voting Power 4,000,000
==============================================
9) Sole Dispositive Power 4,000,000
==============================================
10) Shared Dispositive Power -0-
================================================================================
11) Aggregate Amount Beneficially Owned by Each Reporting Person
4,000,000
12) Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
13) Percent of Class Represented by Amount in Row (11)
37.7%
14) Type of Reporting Person (See Instructions)
CO
- 3 -
<PAGE> 4
Item 1. Security and Issuer
-------------------
This statement relates to the Common Stock, no par value per
share ("Common Stock"), of Isonics Corporation (the "Issuer"). The name and
address of the principal executive offices of the Issuer are as follows:
Isonics Corporation
5906 McIntyre Street
Golden, California 80403
Item 2. Identity and Background
-----------------------
The persons filing this statement are Eagle-Picher
Technologies, LLC, a Delaware limited liability company, Eagle-Picher
Industries, Inc., an Ohio corporation, Eagle-Picher Holdings, Inc., a Delaware
corporation, Granaria Industries, B.V., a Netherlands corporation, Granaria
Holdings, B.V., a Netherlands corporation, and Joel P. Wyler.
The business address of each of such persons is set forth on
Schedule A hereto.
The names of the executive officers and directors of each of
such persons and their principal occupations, citizenships and addresses are as
set forth on Schedules B through E hereto.
Eagle-Picher Technologies, LLC is a wholly owned subsidiary of
Eagle-Picher Industries, Inc., which is a wholly owned subsidiary of
Eagle-Picher Holdings, Inc., which is a majority owned subsidiary of Granaria
Industries, B.V., which is a majority owned subsidiary of Granaria Holdings
B.V., which is controlled by Mr. Wyler.
During the last five years none of the persons listed on
Schedules B through E has been convicted in a criminal proceeding or has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which he was or is subject to a judgment, decree or
final order enjoining future violations or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
The Common Stock subject to this Schedule 13D consists of
4,000,000 shares of Common Stock subject to a Warrant (the "Warrant") held by
Eagle-Picher Technologies, LLC. The Warrant was issued to Eagle-Picher
Technologies, LLC pursuant to the Asset Purchase Agreement (the "Agreement")
dated as of November 30, 1999 among the Issuer, Eagle-Picher Technologies, LLC
and Eagle-Picher Industries, Inc. Pursuant to the Agreement, as payment in full
for the Warrant, Eagle-Picher Technologies, LLC has agreed to manufacture and
sell to the Issuer 200 kilograms of Silicon-28 (the "Silicon Purchase"). The
source of funds to produce the Silicon-28 subject to the Silicon Purchase will
be the working capital of Eagle-Picher Technologies,
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<PAGE> 5
LLC.
Item 4. Purpose of Transaction.
-----------------------
The purpose of the acquisition of the Common Stock is
investment. Pursuant to the Agreement, Eagle-Picher Technologies, LLC has agreed
that until December 1, 2001 it and its affiliates will not acquire any other
shares of Common Stock, will vote all shares of such Common Stock owned by them
with respect to the election or removal of directors of the Issuer in accordance
with the recommendation of a majority of the Board of Directors of the Issuer
and will not form, join, or in any other way participate in a partnership,
pooling agreement, syndicate, voting trust, or other "group" with respect to
voting securities of the Issuer or enter into any agreement or arrangement or
otherwise act in concert with any other person for the purpose of acquiring,
holding, voting or disposing of such voting securities.
Subject to the foregoing, the persons filing this statement
may acquire additional shares of Common Stock or dispose of such shares if they
deem such transaction to be financially advantageous. They also reserve the
right to change such intent if circumstances change. Subject to the foregoing
and the transactions contemplated by the Agreement and the Warrant, such persons
currently have no plan or proposal which relates to or would result in:
(a) The acquisition by any person of additional
securities of the Issuer, or the disposition of
securities of the Issuer;
(b) An extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the
Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets
of the Issuer or any of its subsidiaries;
(d) Any change in the present board of directors or
management of the Issuer, including any plans or
proposals to change the number or term of directors
or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or
dividend policy of the Issuer;
(f) Any other material change in the Issuer's business
or corporate structure;
(g) Changes in the Issuer's charter, bylaws or
instruments corresponding thereto or other actions
which may impede the acquisition of control of the
Issuer by any person;
(h) Causing a class of securities of the Issuer to be
delisted from a national securities exchange or to
cease to be authorized to be quoted in an
inter-dealer quotation system
- 5 -
<PAGE> 6
of a registered national securities association;
(i) Causing a class of equity securities of the Issuer
becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Act; or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
-------------------------------------
As described above, pursuant to the Agreement Eagle-Picher
Technologies, LLC acquired the Warrant in exchange for 200 kilograms of
Silicon-28, which has an estimated value of approximately $400,000. The Warrant
entitles the holder to purchase 4,000,000 shares of Common Stock of the Issuer
at a price of $3.75 per share, subject to adjustment as provided therein. The
Warrant expires on May 30, 2003 and is redeemable by the Issuer on 20 days'
notice at a price of $.10 per underlying share if the market price of the Common
Stock equals or exceeds $7.50 per share for 20 consecutive trading days. Such
shares, if issued, would constitute 37.7% of the outstanding Common Stock. The
persons filing this Schedule 13D have shared voting power and sole dispositive
power with respect to such shares. The Warrant was acquired in a privately
negotiated transaction. The persons filling this Schedule 13D have not engaged
in any other transactions with respect to the Common Stock in the last 60 days.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of Issuer.
---------------------------------------------------
Reference is made to Items 4 and 5 above.
Item 7. Material to be Filed as Exhibits.
--------------------------------
1. Asset Purchase Agreement dated as of November 30,
1999 among Isonics Corporation, Eagle-Picher
Technologies, LLC and Eagle-Picher Industries,
Inc.
2. Common Stock Purchase Warrant.
3. Agreement pursuant to Rule 13d-1(f)(iii).
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
EAGLE-PICHER INDUSTRIES, INC.
December 9, 1999 By: /s/ DAVID G. KRALL
- ---------------- -----------------------------
Date David G. Krall
Vice President and
General Counsel
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<PAGE> 7
Schedule A
----------
Addresses
---------
Granaria Holdings, B.V., Granaria Industries, B.V. and Joel P. Wyler
Lange Voorhout 16
2514 EE The Hague
The Netherlands
Eagle-Picher Industries, Inc. and Eagle-Picher Holdings, Inc.
150 East Fifth Street
Suite 500
Cincinnati,Ohio 45202
Eagle-Picher Technologies, LLC
"C" and Porter Streets
Joplin, Missouri 64801
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<PAGE> 8
Schedule B
----------
Granaria Holdings, B.V.
-----------------------
Directors and Executive Officers
--------------------------------
<TABLE>
<CAPTION>
Name Title Principal Occupation Citizenship
- ---- ----- -------------------- -----------
<S> <C> <C> <C>
Joel P. Wyler Chairman Same The Netherlands
Daniel C. Chief
Wyler Executive Officer Same The Netherlands
Peter J. Ph. Chief Financial
Kostenhorst Officer Same The Netherlands
</TABLE>
The address of all such persons is c/o Granaria Holdings B.V. at Lange
Voorhout 16, 2514 EE The Hague, The Netherlands.
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<PAGE> 9
<TABLE>
<CAPTION>
Schedule C
----------
Eagle-Picher Industries, Inc.
-----------------------------
Directors and Executive Officers
--------------------------------
Name Title Principal Occupation Citizenship
- ---- ----- -------------------- -----------
<S> <C> <C> <C>
Joel P. Wyler Director Chairman-Granaria The Netherlands
Holdings, B.V.
Daniel C. Wyler Director CEO - Granaria The Netherlands
Holdings, B.V.
Dr. Wendelin Director CEO - Porsche A.G. Germany
Wiedeking
Andries
Ruijssenaars President, Same U.S.
CEO & Director
Wayne R. Wickens Sr. V.P. Same U.S.
Michael E. Group V.P.- Same U.S.
Aslerian Automotive
Philip F. Schultz Sr. V.P. & CFO Same U.S.
David G. Krall V.P. & General Same U.S.
Counsel
Carroll D. Curless V.P. & Same U.S.
Controller
</TABLE>
The address of all such persons is c/o Eagle-Picher Industries, Inc. at
250 East Fifth Street, Suite 500, Cincinnati, Ohio 45202.
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<PAGE> 10
<TABLE>
<CAPTION>
Schedule D
----------
Eagle-Picher Technologies, LLC
------------------------------
Directors and Executive Officers
--------------------------------
Name Title Principal Occupation Citizenship
- ---- ----- -------------------- -----------
<S> <C> <C> <C>
Joel P. Wyler Director Chairman-Granaria The Netherlands
Holdings, B.V.
Andries Director CEO-Eagle-Picher U.S.
Ruijssenaars Industries, Inc.
Wayne R. Wickens Director Sr. V.P.-Eagle-Picher U.S.
Industries, Inc.
Neil A. Armstrong Director Chairman-AIL Systems, U.S.
Inc.
Paul G. Kaminski Director CEO-Technovation, Inc. U.S.
William E. Long Chairman of Same U.S.
the Board,
President &
Chief Executive
Officer
L. Rex Erisman Executive V.P. Same U.S.
and Secretary
Dallas D. Mayfield V.P. Same U.S.
Donald D. Leggert V.P. Same U.S.
James C. Wiley, Jr. V.P. Same U.S.
Dennis W. Thomas V.P. Same U.S.
Mitchell L. Eddy V.P. Same U.S.
Rolan C. Farmer V.P. Same U.S.
Randall R. Lepper V.P. Same U.S.
R. Doug Wright V.P., Chief Same U.S.
Financial
Officer &
Treasurer
</TABLE>
The address of all such persons is c/o Eagle-Picher Technologies, LLC at "C" and
Porter Streets, Joplin, Missouri 64801.
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<PAGE> 11
<TABLE>
<CAPTION>
Schedule E
----------
Granaria Industries, B.V.
-------------------------
Directors and Executive Officers
--------------------------------
Name Title Principal Occupation Citizenship
- ---- ----- -------------------- -----------
<S> <C> <C> <C>
Joel P. Wyler Chairman Chairman-Granaria The Netherlands
Holdings, B.V.
Daniel C. Wyler Chief CEO-Granaria The Netherlands
Executive Holdings, B.V.
Officer
Peter J. Ph. Chief CFO-Granaria The Netherlands
Kostenhorst Financial Holdings, B.V.
Officer
</TABLE>
The address of all such persons is c/o Granaria Holdings B.V. at Lange
Voorhout 16, 2514 EE The Hague, The Netherlands.
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<PAGE> 12
Exhibit 1
ASSET PURCHASE AGREEMENT
Dated as of November 30, 1999
By and Among
ISONICS CORPORATION
a California corporation,
and
EAGLE-PICHER TECHNOLOGIES, LLC
a limited liability company formed under Delaware law
and
EAGLE-PICHER INDUSTRIES, INC.
an Ohio corporation
<PAGE> 13
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
I. DEFINITIONS................................................................... 1
1.1. Definitions..................................................... 1
II. PURCHASE AND SALE OF ZINC ASSETS ............................................. 1
2.1 Zinc Assets..................................................... 1
2.2 Assumed Liabilities............................................. 2
2.3 Purchase Price ................................................. 2
2.4 Net Current Asset Value and Closing Purchase Price Adjustment... 3
2.5 Allocation of Purchase Price.................................... 5
2.6 Assignment of Contracts and Rights.............................. 5
2.7 Availability of Personnel....................................... 6
2.8 Parent Guarantee................................................ 6
III. SILICON TRANSACTION.......................................................... 6
3.1 Silicon Purchase................................................ 6
IV. REPRESENTATIONS AND WARRANTIES OF ISONICS..................................... 7
4.1 Representations and Warranties of ISONICS....................... 7
V. REPRESENTATIONS AND WARRANTIES OF E-P.......................................... 7
5.1 Representations and Warranties of E-P........................... 7
VI. COVENANTS AND AGREEMENTS OF ISONICS........................................... 7
6.1 Corporate and Other Action...................................... 7
6.2 Access to Information........................................... 7
6.3 Conduct of Business to Closing.................................. 7
6.4 Consents........................................................ 9
6.5 Covenant Not to Compete......................................... 10
6.6 Confidentiality................................................. 10
6.7 Access to Information; Cooperation After Closing................ 10
VII. COVENANTS AND AGREEMENTS OF E-P.............................................. 11
7.1 Corporate and Other Action...................................... 11
7.2 Assumed Liabilities............................................. 11
7.3 Confidentiality................................................. 11
7.4 Nonsolicitation................................................. 11
7.5 Agreement Concerning Acquisition and Voting of ISONICS Common
Stock or Derivative Securities.................................. 11
7.6 Agreement Not To Cause a Rule 13e-3 Transaction................. 12
7.7 Compliance with SEC Reporting Requirements...................... 12
</TABLE>
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<PAGE> 14
<TABLE>
<S> <C>
VIII. SURVIVAL; INDEMNIFICATION................................................... 13
8.1 Survival of Representations, Warranties and Covenants........... 13
8.2 Indemnification................................................. 13
8.3 Procedures...................................................... 13
8.4 Limitations..................................................... 15
IX. CONDITIONS OF E-P'S OBLIGATIONS............................................... 15
9.1 Representations and Warranties True............................. 15
9.2 Covenants and Agreements--No Default............................ 15
9.3 No Material Adverse Change...................................... 15
9.4 Consents........................................................ 16
9.5 Closing Documents............................................... 16
9.6 Adverse Proceedings............................................. 16
X. CONDITIONS OF OBLIGATIONS OF ISONICS........................................... 16
10.1 Representations and Warranties True............................. 16
10.2 Covenants and Agreements; No Default............................ 16
10.3 Consents........................................................ 16
10.4 Closing Documents............................................... 17
10.5 Adverse Proceedings............................................. 17
XI. CLOSING....................................................................... 17
11.1 Time and Place of Closing....................................... 17
11.2 Performance by ISONICS.......................................... 17
11.3. Performance by E-P.............................................. 18
XII. TERMINATION.................................................................. 19
12.1 Termination..................................................... 19
12.2 Effect of Termination........................................... 19
XIII. MISCELLANEOUS PROVISIONS.................................................... 19
13.1 Expenses........................................................ 19
13.2 Further Assurances.............................................. 20
13.3 Notices......................................................... 20
13.4 References and Construction..................................... 21
13.5 Entire Agreement................................................ 22
13.6 No Public Announcement.......................................... 22
13.7 Counterparts; Effectiveness..................................... 22
13.8 Severability of Provisions...................................... 22
13.9 Exhibits and Schedules.......................................... 22
13.10 Waivers and Amendments.......................................... 22
13.11 Successors and Assigns.......................................... 23
13.12 Governing Law................................................... 23
13.13 Dispute Resolution.............................................. 23
</TABLE>
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<PAGE> 15
<TABLE>
<S> <C>
EXHIBIT A DEFINITIONS............................................................. 1
EXHIBIT B REPRESENTATIONS AND WARRANTIES OF ISONICS............................... 1
EXHIBIT C REPRESENTATIONS AND WARRANTIES OF E-P................................... 1
SCHEDULES:
A - Zinc Assets
2.2 - Assumed Liabilities
2.4(a) - Inventory
2.5 - Tax Allocation
3.1(a) - Specifications and delivery schedule for Silicon - 28
3.1(b) - Form of Warrant
11.2(a) - Form of Bill of Sale
11.2(b) - Form of Assignment and Assumption Agreement
11.2(c) - Opinion of Counsel to Isonics
11.2(g) - Form of Registration Rights Agreement
11.3(c) - Form of Bill of Sale - Silicon-28
11.3(d) - Opinion of counsel to E-P
B1.2 - Capitalization
B2.2 - Consents of ISONICS
B5 - Lawsuits
B6.1 - Subsidiaries
B6.3 - Organization of Subsidiaries
B6.4 - Investments
B8 - Licenses and Permits
B12 - Environmental Matters
B15 - Tax Matters
B21 - Contracts
C4 - Consents of E-P
</TABLE>
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<PAGE> 16
ASSET PURCHASE AGREEMENT
------------------------
This ASSET PURCHASE AGREEMENT (this "Agreement") is made as of this
30th day of November 1999 by and among EAGLE-PICHER TECHNOLOGIES, LLC, a limited
liability company formed under Delaware law ("E-P"), EAGLE-PICHER INDUSTRIES,
INC., an Ohio corporation ("EPI"), and ISONICS CORPORATION, a California
corporation ("ISONICS").
R E C I T A L S
---------------
A. ISONICS has been engaged in the business of selling depleted zinc
directly or indirectly to commercial and governmental operators of
nuclear power plants as described in more detail in ISONICS's annual
report on Form 10-KSB for the year ended April 30, 1999 (the "DZ
Business") and owns certain assets (including inventory and certain
contract rights) associated with the DZ Business (which assets are more
specifically described on SCHEDULE A);
B. ISONICS desires to sell, assign and convey all of the Zinc Assets to
E-P and EPI, and E-P and EPI are willing to purchase the Zinc Assets
and assume certain specified liabilities relating to the DZ Business,
all as more fully described and upon the terms and conditions contained
in this Agreement (collectively referred to as the "DZ Transaction");
and
C. ISONICS desires to purchase 200 kilograms of Silicon-28 from E-P (the
"Silicon Purchase"), and E-P is willing to enter into the Silicon
Purchase in exchange for a warrant (the "Warrant") to purchase
4,000,000 shares of ISONICS common stock, all as more fully described
and upon the terms and conditions contained in this Agreement
(collectively referred to as the "Silicon Transaction").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties, intending
to be legally bound, agree as follows:
I.
DEFINITIONS
1.1. DEFINITIONS. Capitalized terms in this Agreement shall have the
meanings specified in this Agreement or in Exhibit A.
II.
PURCHASE AND SALE OF ZINC ASSETS
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<PAGE> 17
2.1 ZINC ASSETS. On the Closing Date and on the terms and subject to
the conditions set forth in this Agreement, ISONICS will sell, transfer, assign
and deliver to E-P and EPI, or either of them, as they may direct, free and
clear of any Encumbrance, other than the Assumed Liabilities (as defined in
Section 2.2), and E-P and EPI, or one of them, as they may direct, will
purchase, acquire and accept from ISONICS, all right, title and interest in and
to the Zinc Assets. Except for the express representations and warranties set
forth in this Agreement, the sale of the Zinc Assets will be "as is, where is"
and without warranties of merchantability or fitness for any particular
purpose, and FOB ISONICS' facility in Golden, Colorado; E-P and EPI will pay
for the packaging and delivery of the Zinc Assets to E-P's facility.
2.2 ASSUMED LIABILITIES. Upon the terms of and subject to the
conditions set forth in this Agreement, E-P shall assume at Closing and accept
only the liabilities and obligations of ISONICS listed on SCHEDULE 2.2 to this
Agreement (the "Assumed Liabilities"). Neither E-P nor EPI shall assume any
other liabilities of ISONICS.
2.3 PURCHASE PRICE.
2.3(a). Subject to adjustment as contemplated by Section 2.4,
the aggregate consideration to be received by ISONICS for the Zinc
Assets (the "Purchase Price") consists of (i) cash equal to (A)
$5,000,000 (the "Cash Portion"), PLUS (B) an estimate of Net Current
Asset Value (as calculated pursuant to Section 2.4(a) at the Closing
Date); (ii) the Additional Payments described in Section 2.3(b) and
(iii) the assumption by E-P of the Assumed Liabilities.
2.3(b). Subject to the terms and conditions set forth herein,
the Purchase Price shall be payable as follows:
(i) At the Closing, E-P and EPI, jointly and
severally, shall pay ISONICS cash equal to the Cash Portion
and the estimated Net Current Asset Value by wire transfer of
immediately available funds to such account or accounts as
ISONICS shall specify in writing at least two Business Days
prior to Closing.
(ii) First Additional Payment.
-------------------------
(A) Not later than November 30, 2000, E-P
and EPI, jointly and severally, will pay ISONICS
$500,000, unless there is a Supplier Non-Performance
during the period from the date hereof to November
30, 2000. AO Techsnabexport/Electrochemical Plant is
the "Supplier." The term "Supplier Non-Performance"
is defined to mean the Supplier's failure to supply
to E-P or EPI, as the case may be, the quantities of
zinc oxide powder required by the Supply Contract
upon the terms and conditions, including price, set
forth in the Supply Contract, unless the reason for
the Supplier's failure is a breach of the Supply
Contract by E-P
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<PAGE> 18
or EPI, as the case may be. The term "Supply
Contract" means that certain contract
#08843672/70034-02D dated February 10, 1997, as
amended, between ISONICS and the Supplier for the
supply of zinc oxide powder in accordance with the
terms of such contract (which contract will be
assigned to E-P or EPI, as the case may be, at the
Closing).
(B) If the Supplier partially performs under
the Supply Contract but such partial performance
constitutes a Supplier NonPerformance, the First
Additional Payment will be pro-rated, based on the
amount of zinc oxide powder actually provided by the
Supplier upon the terms and conditions of the Supply
Contract divided by the amount of zinc oxide powder
required to be provided under the Supply Contract
(the "Additional Payment Pro-ration").
(C) E-P or EPI, as the case may be, may only
declare a Supplier Non-Performance under this Section
2.3(b)(ii), Section 2.3(b)(iii) or Section
2.3(b)(iv), or claim a partial performance if E-P or
EPI, as the case may be, gives ISONICS prompt notice
of and information with respect to the Supplier
Non-Performance and an opportunity for ISONICS to
assist E-P or EPI, as the case may be, in correcting
or seeking to remedy the Supplier Non-Performance.
(iii) Second Additional Payment.
-------------------------
(A) Not later than November 30, 2001, E-P
and EPI, jointly and severally, will pay ISONICS an
additional $500,000, unless there is a Supplier
Non-Performance for the period from December 1, 2000
to November 30, 2001.
(B) If during the period for which the
Second Additional Payment is calculated, the Supplier
partially performs under the Supply Contract but such
partial performance constitutes a Supplier
NonPerformance, E-P and EPI, jointly and severally,
will pay ISONICS an amount calculated pursuant to the
Additional Payment Pro-ration.
(iv) Third Additional Payment.
-------------------------
(A) Not later than November 30, 2002, E-P
and EPI, jointly and severally, will pay ISONICS an
additional $500,000, unless there is a Supplier
Non-Performance for the period from December 1, 2001
to November 30, 2002.
(B) If during the period for which the Third
Additional Payment is calculated, the Supplier
partially performs under the Supply Contract but
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<PAGE> 19
such partial performance constitutes a Supplier
Non-Performance, E-P and EPI, jointly and severally,
will pay ISONICS an amount calculated pursuant to
the Additional Payment Pro-ration.
2.4 NET CURRENT ASSET VALUE AND CLOSING PURCHASE PRICE ADJUSTMENT.
2.4(a). Not later than five Business Days prior to the Closing
Date, ISONICS shall prepare and submit to E-P a closing statement
estimating Net Current Asset Value for the DZ Business (the "Estimated
Closing Statement"), and setting forth, in reasonable detail, ISONICS'
estimation of the inventory less accounts payable of the DZ Business as
of the Closing Date (the "Estimated Net Current Asset Amount"). For
purposes of calculating the Estimated Net Current Asset Amount and the
Final Net Current Asset Amount (as defined below), (x) inventory
("Inventory") shall be valued as set forth in SCHEDULE 2.4(a) and (y)
accounts payable shall consist only of current accounts payable
incurred in the ordinary course of the DZ Business ("Accounts
Payable"). The Estimated Closing Statement shall be accompanied by such
supporting documentation as E-P may reasonably request.
(i) If E-P disputes the correctness of the Estimated
Net Current Asset Amount, E-P shall (not later than the second
Business Day prior to the Closing Date) notify ISONICS of its
objections and shall set forth, in writing and reasonable
detail, the reasons for E-P's objections and the amount E-P
estimates for the Estimated Net Current Asset Amount. If E-P
and ISONICS differ on the amount of the Estimated Net Current
Asset Value and are unable to resolve their differences prior
to the Closing Date, the amount to be included in the Purchase
Price will be the Estimated Net Current Asset Value as
estimated by ISONICS.
(ii) If E-P fails to deliver a notice of objections
within the timeframe set forth in Section 2.4(a)(i), E-P shall
be deemed to have accepted ISONICS' calculation for the
purpose of the payment of the Purchase Price as of the Closing
Date.
2.4(b). Promptly following the Closing Date, but in no event
later than 60 days after the Closing Date, E-P shall prepare and submit
to ISONICS a closing statement of Net Current Assets for the DZ
Business (the "Closing Statement"), setting forth, in reasonable
detail, E-P's calculation of the actual Inventory and Accounts Payable
of the DZ Business as of the Closing Date (the "Final Net Current Asset
Amount"). The Closing Statement shall be accompanied by such supporting
documentation as ISONICS may reasonably request.
(i) If ISONICS disputes the correctness of the Final
Net Current Asset Amount, ISONICS shall notify E-P of its
objections within 20 days after the receipt of the Closing
Statement and shall set forth, in writing and reasonable
detail, the reasons for ISONICS' objections. E-P and ISONICS
shall endeavor in
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good faith to resolve any disputed items within 20 days after
E-P's receipt of ISONICS' notice of objections. If they are
unable to do so, E-P and ISONICS shall select a nationally
known independent accounting firm (the "Independent
Accountants") to resolve the dispute, and the determination
of such firm in respect of the correctness of each item
remaining in dispute shall be conclusive and binding on
ISONICS and E-P. ISONICS and E-P shall cooperate with the
Independent Accountants and shall provide the Independent
Accountants with such background materials and other
information as the Independent Accountants shall request. The
fees and expenses, if any, of the Independent Accountants
shall be paid one-half by ISONICS and one-half by E-P.
(ii) If ISONICS fails to deliver a notice of
objections within such time, ISONICS shall be deemed to have
accepted E-P's calculation.
(iii) If the Final Closing Statement reflects a Net
Current Asset Value higher than included in the Estimated
Closing Statement, E-P and EPI, jointly and severally, will
pay ISONICS the difference within seven Business Days; if the
Final Closing Statement reflects a Net Current Asset Value
lower than included in the Estimated Closing Statement,
ISONICS will pay E-P or EPI, as they may direct, the
difference within seven Business Days. If there is any dispute
as to the Final Closing Statement, final payment, if any, will
be made within seven Business Days after the resolution of the
dispute.
2.4(c). The Closing Statement and the Final Net Current Asset
Amount shall be determined in accordance with GAAP, except that
Inventory shall be valued as set forth in SCHEDULE 2.4(a).
2.5 ALLOCATION OF PURCHASE PRICE. E-P and ISONICS agree to allocate the
Purchase Price and the components of the Purchase Price consideration among the
Zinc Assets pursuant to the tax allocation schedule set forth on SCHEDULE 2.5
attached hereto. E-P and ISONICS shall not take any position on their respective
Tax Returns that is inconsistent with such allocation of the Purchase Price and
the components of the Purchase Price consideration pursuant to SCHEDULE 2.5, and
ISONICS and E-P shall prepare and timely file such reports and information
returns as may be required to report the allocation of the Purchase Price
pursuant to this Section 2.5. Within 20 Business Days after the determination of
the Final Net Current Asset Amount, ISONICS and E-P shall adjust SCHEDULE 2.5 to
be consistent with the amount of, and the components of, the Final Net Current
Asset Amount.
2.6 ASSIGNMENT OF CONTRACTS AND RIGHTS. Anything in this Agreement to
the contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any Zinc Asset or any claim or right or any benefit arising thereunder
or resulting therefrom if an attempted assignment thereof, without the consent
of a third party thereto, would constitute a breach or other contravention
thereof or in any way would adversely affect the rights of E-P or EPI
thereunder. ISONICS will use its best efforts to obtain the consent of the other
parties to any
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<PAGE> 21
such Zinc Asset or any claim or right or any benefit arising thereunder for the
assignment thereof to E-P or EPI as E-P or EPI may reasonably request. If such
consent is not obtained, or if an attempted assignment thereof would be
ineffective or would adversely affect the rights of E-P or EPI or E-P or EPI
would not in fact receive all such rights, ISONICS and E-P or EPI will
cooperate in a mutually agreeable arrangement under which ISONICS would provide
to E-P or EPI the benefits thereunder in accordance with the intent of this
Agreement, including subcontracting, sub-licensing, or sub-leasing to E-P or
EPI, or under which ISONICS would enforce for the benefit of E-P or EPI any and
all rights of ISONICS against a third party thereto. From and after the
Closing, ISONICS will pay to E-P or EPI within five (5) Business Days of
receipt all monies received by ISONICS in respect of any Zinc Asset or any
claim or right or any benefit arising thereunder. The covenants of each of
ISONICS and E-P or EPI set forth in this Section 2.6 shall survive the Closing
until the assignment or novation of all Contracts that constitute a portion of
the Zinc Assets to E-P or EPI. Nothing in this Section 2.6 will limit the
applicability of the condition set forth in Section 9.4.
2.7 AVAILABILITY OF PERSONNEL. ISONICS will make the services of Boris
Rubizhevsky available as an independent consultant at times and place reasonably
requested by E-P (not to exceed 160 hours in any 12 month period) to assist E-P
in its dealings with the Supplier. E-P shall pay directly or reimburse ISONICS
for expenses incurred by Mr. Rubizhevsky in the performance of his duties
requested by E-P, and compensate ISONICS for Mr. Rubizhevsky's services at the
rate of $107 per hour.
III.
SILICON TRANSACTION
3.1 SILICON PURCHASE.
3.1(a). On the terms and subject to the conditions set forth
in this Agreement and for the consideration set forth in Section 3.2,
E-P will sell, transfer, assign and deliver to ISONICS, free and clear
of any Encumbrance, and ISONICS will purchase, acquire and accept from
E-P, all right, title and interest in and to 200 kilograms of
Silicon-28 meeting the specifications set forth on SCHEDULE 3.1(a),
and subject to the delivery obligations set forth in SCHEDULE 3.1(a)
(the "Silicon Purchase"). The Silicon- 28 included in the Silicon
Purchase will be packaged in a manner meeting the regulations of the
U.S. Department of Transportation for transportation over interstate
highways and made available for ISONICS FOB E-P's facility in
Oklahoma. E-P represents and warrants that it will use all
commercially reasonable efforts to cause its pilot plant to meet the
delivery commitments for the Silicon-28 set forth on SCHEDULE 3.1(a)
(including without limitation if necessary and if available on
commercially reasonable terms obtaining enrichment of its Silicon-28
production to meet such specifications), which representation and
warranty will survive the Closing until the delivery commitments have
been met. E-P will keep ISONICS informed of its progress in producing
the Silicon-28 and will consult and co-operate with ISONICS in seeking
to perform its obligations under this Section 3.1(a). Notwithstanding
the foregoing, E-P shall not be
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<PAGE> 22
liable for any failure to meet such delivery commitments if and to the
extent that such failure results from any fire, flood, windstorm,
strike or labor unrest, shortage of raw materials, act of God or other
cause beyond the reasonable control of E-P.
3.1(b). Consideration. On the Closing Date, and only after the
completion of the DZ Transaction between the Parties, ISONICS will pay
E-P in full for the Silicon Purchase (for which E-P will receive
payment in full upon receipt of the Warrant) by issuing to E-P the
Warrant in the form attached hereto as Schedule 3.1(b).
3.1(c). Remedy. Notwithstanding any other provision of this
Agreement, ISONICS' sole remedy for any breach by E-P of its obligation
under this ARTICLE III shall be as follows: (i) If after using
commercially reasonable efforts (including using third parties to
enrich the Silicon-28 where reasonable), and after regular consultation
with and advice from ISONICS, E-P's pilot plant is incapable of
producing and beneficiating (or providing for the beneficiation of)
Silicon-28, and if E-P gives written notice to such effect to ISONICS
on or before March 31, 2000, E-P may cancel its obligation to deliver
Silicon-28 to ISONICS on or before December 31, 2000, in accordance
with this Article III. If E-P cancels its obligation under this Article
III pursuant to this Clause 3.1(c)(i), E-P must return the Warrant and
the Registration Rights Agreement to ISONICS for cancellation. In such
case, E-P will be liable for no additional damages to ISONICS; and (ii)
If E-P does not cancel its obligation under this Article III in
accordance with Clause 3.1(c)(i), E-P must deliver the Silicon-28 to
ISONICS in accordance with this Article III or be liable to ISONICS for
damages in accordance with Section 12.2.
IV.
REPRESENTATIONS AND WARRANTIES OF ISONICS
4.1 REPRESENTATIONS AND WARRANTIES OF ISONICS. ISONICS represents and
warrants to E-P as set forth on Exhibit B.
V.
REPRESENTATIONS AND WARRANTIES OF E-P
5.1 REPRESENTATIONS AND WARRANTIES OF E-P. E-P represents and warrants
to ISONICS as set forth on Exhibit C.
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<PAGE> 23
VI.
COVENANTS AND AGREEMENTS OF ISONICS
6.1 CORPORATE AND OTHER ACTION. ISONICS shall take all action,
corporate or otherwise, which is necessary or reasonably appropriate to complete
the Contemplated Transactions, including the execution and delivery of all
documents and instruments that are necessary to effect the Contemplated
Transactions and obtaining all consents of third parties.
6.2 ACCESS TO INFORMATION. Except as prohibited or limited by law or
regulation, ISONICS shall, from and after the date of this Agreement and until
the Closing Date, give E-P and its employees, counsel, accountants and other
representatives full and complete access upon reasonable notice during normal
business hours, to all officers, employees, offices, properties, Contracts,
records and affairs of ISONICS and the DZ Business, and will provide copies of
such information concerning ISONICS and the DZ Business as E-P may reasonably
request.
6.3 CONDUCT OF BUSINESS TO CLOSING. Except with the prior written
consent of E-P or as otherwise provided in this Agreement, from the date of this
Agreement until the Closing Date, ISONICS shall conduct the DZ Business in the
ordinary course consistent with historical and customary operating practices and
shall use its reasonable commercial efforts to preserve the Zinc Assets and the
DZ Business, and maintain the relations and goodwill with suppliers, landlords,
creditors, agents, customers and others having business relationships with
ISONICS, and ISONICS shall not:
6.3(a). make any individual capital expenditure, or group of
related capital expenditures, relating to the DZ Business in excess of
$5,000;
6.3(b). sell or dispose of more than an aggregate of $5,000 of
assets that would constitute Zinc Assets if owned, held or used by
ISONICS on the Closing Date except sales of inventory by ISONICS in the
ordinary course of its business;
6.3(c). sell, transfer, license or otherwise dispose of, any
Intellectual Property that would constitute Zinc Assets if owned, held
or used by ISONICS on the Closing Date;
6.3(d). terminate or materially reduce the coverage of any
policies of title, liability, fire, workers' compensation, property and
any other form of insurance covering the Zinc Assets or the operations
of ISONICS or the DZ Business;
6.3(e). settle any material lawsuit, claim or other material
dispute nor settle any other lawsuit, claim or other dispute if such
settlement imposes a continuing non-monetary obligation on the DZ
Business or any of the Zinc Assets or any material monetary obligation
that will not be satisfied prior to the Closing;
6.3(f). except as contemplated by this Agreement, grant or
implement any new or modified severance, termination or other employee
benefit or compensation arrangement or increase or accelerate any
benefits payable under the severance or termination pay policies or
other employee benefit or compensation arrangements (including
increasing the rate at which any Employee accrues vacation) with
respect to any Employee;
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<PAGE> 24
6.3(g). except as otherwise may be permitted or required by
this Agreement or Applicable Law, adopt or amend in any material
respect any Employee Plan or Benefit Arrangement in respect of any
Employee or increase the compensation or fringe benefits of any such
Employee or pay any benefit not required by any Employee Plan or
Benefit Arrangement with respect to such Employee as in effect on the
date hereof;
6.3(h). fail to keep the equipment, machinery and systems used
in the DZ Business in compliance, in all material respects, with all
Applicable Laws and with all licenses and permits, and reasonably
maintain all such assets and replace any thereof which shall be worn
out, lost, stolen, or destroyed, in accordance with past practices
(other than assets that are no longer necessary for the operation of
the DZ Business);
6.3(i). fail to maintain the files and records of the DZ
Business in the usual, regular and ordinary manner, consistent with
past practices or change its accounting systems;
6.3(j). fail to manage or cause to be managed the collection
and payment of the accounts receivable and accounts payable of the DZ
Business and otherwise maintain and manage its inventories and other
current assets and current liabilities in the ordinary course of
business and consistent with past practice, including making payment
with respect to all of their respective accounts payable, current
maturities of long term debt and other current payables in a timely
manner and in accordance with the terms of such payable or such
indebtedness, as the case may be, provided that no such indebtedness
(other than intercompany indebtedness) shall be prepaid or otherwise
retired in whole or in part prior to the date on which such
indebtedness or portion thereof is due to be repaid, it being
understood that the covenant set forth in this Section 6.3 shall not
prohibit ISONICS from disputing any accounts payable in good faith, in
the ordinary course of business and consistent with past practice;
6.3(k). fail to take commercially reasonable steps to protect
all Intellectual Property and use commercially reasonable efforts to
prevent any Intellectual Property from falling into the public domain;
6.3(l). enter into any agreement, contract, lease, license,
commitment or instrument (or series of related agreements, contracts,
leases, licenses, commitments or instruments) that would be required
to be listed on Schedule B21 or accelerate, terminate, modify or
cancel in a manner adverse to the DZ Business any agreement, contract,
lease, license, commitment or instrument (or series of related
agreements, contracts, leases, licenses, commitments or instruments)
that is required to be listed on Schedule B21;
6.3(m). impose any Encumbrance upon any of the Zinc Assets;
6.3(n). enter into any consulting or other agreement which
requires payment of commissions based on the performance of the DZ
Business; or
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<PAGE> 25
6.3(o). commit to any of the foregoing.
6.4 CONSENTS. ISONICS shall use its best efforts to:
6.4(a). obtain all consents, waivers and authorizations and
make all filings with and give all notices that may be necessary or
reasonably required to complete the Contemplated Transactions, and
6.4(b). cause each of the conditions precedent to the
obligations of E-P to be satisfied.
6.5 COVENANT NOT TO COMPETE. ISONICS agrees that for a period beginning
on the Closing Date and ending on the fifth anniversary of the Closing Date (the
"Noncompete Period"), it will not directly or indirectly, own, manage, operate,
join, control or participate in the ownership, management, operation or control
of, any business whether in corporate, limited liability company, proprietorship
or partnership form or otherwise as more than a five percent owner in such
business if such business is competitive with the DZ Business as of the Closing
Date. The parties hereto specifically acknowledge and agree that the remedy at
law for any breach of the foregoing will be inadequate and that E-P, in addition
to any other relief available to it, shall be entitled to temporary and
permanent injunctive relief without the requirement of bond. In the event that
the provisions of this Section 6.5 should ever be deemed to exceed the
limitation provided by applicable law, then the parties agree that such
provisions shall be reformed to set forth the maximum limitations permitted.
6.6 CONFIDENTIALITY. During the Noncompete Period, ISONICS will, and
will cause its Affiliates to, treat and hold as confidential any confidential
information relating to the operations or affairs of E-P or the DZ Business. If
ISONICS or any of its Affiliates is requested or required (by oral or written
request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand or similar process or by Applicable Law)
to disclose any such confidential information then ISONICS shall notify E-P
promptly of the request or requirement so that E-P, at its expense, may seek an
appropriate protective order or waive compliance with this Section. If, in the
absence of a protective order or receipt of a waiver hereunder, ISONICS or any
of its Affiliates is, on the advice of counsel, compelled to disclose such
confidential information, ISONICS or any of its Affiliates, as the case may be,
may so disclose the confidential information, provided that ISONICS or any of
its Affiliates, as the case may be, shall use reasonable commercial efforts to
obtain reliable assurance that confidential treatment will be accorded to such
confidential information. No obligation of confidentiality shall apply to any
confidential information of E-P that ISONICS (i) can reasonably demonstrate in
writing was already known or in ISONICS' possession, (ii) can reasonably
demonstrate in writing was developed independently by ISONICS or (iii) ISONICS
rightfully receives from a third party without knowledge of a violation of any
obligation of confidentiality, provided, however, that if ISONICS later learns
that any such information was received in violation of any obligation of
confidentiality, from that point ISONICS shall treat such information pursuant
to the terms of this Agreement. In addition, no obligation of
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<PAGE> 26
confidentiality shall apply to any information that is known to, or becomes
generally available to, the public without breach of this Agreement.
6.7 ACCESS TO INFORMATION; COOPERATION AFTER CLOSING. On and after the
Closing Date, ISONICS shall, at E-P's expense, (i) afford E-P reasonable access
upon reasonable prior notice during normal business hours to all employees,
offices, properties, contracts, records, books and affairs of ISONICS to the
extent relating to the conduct of the DZ Business prior to the Closing, and (ii)
cooperate fully with E-P with respect to matters relating to the conduct of the
DZ Business prior to the Closing, including, without limitation, in the defense
or pursuit of any Zinc Asset or Assumed Liability or any claim or action that
relates to occurrences involving the DZ Business prior to the Closing Date.
VII.
COVENANTS AND AGREEMENTS OF E-P
7.1 CORPORATE AND OTHER ACTION. E-P shall take all action, corporate or
otherwise, which is necessary or reasonably appropriate to complete the
Contemplated Transactions, including the execution and delivery of all documents
and instruments that are necessary to effect the Contemplated Transactions.
7.2 ASSUMED LIABILITIES. E-P shall pay and discharge the Assumed
Liabilities in accordance with its normal business practices.
7.3 CONFIDENTIALITY. For a period of five years from and after the
Closing Date, E-P will, and will cause its Affiliates to, treat and hold as
confidential, any confidential information relating to the operations or
affairs of ISONICS other than the DZ Business or the Zinc Assets. In the event
that E-P, or any of its Affiliates, is requested or required (by oral or
written request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand or similar process or by
Applicable Law) to disclose any such confidential information then E-P shall
notify ISONICS promptly of the request or requirement so that ISONICS, at its
expense, may seek an appropriate protective order or waive compliance with this
Section. If, in the absence of a protective order or receipt of a waiver
hereunder, E-P, or any of its Affiliates, is, on the advice of counsel,
compelled to disclose such confidential information, E-P, or its Affiliates, as
the case may be, may so disclose the confidential information, provided that
E-P, or its Affiliates, as the case may be, shall use reasonable commercial
efforts to obtain reliable assurance that confidential treatment will be
accorded to such confidential information. No obligation of confidentiality
shall apply to any confidential information of ISONICS that E-P (i) can
reasonably demonstrate in writing was already known or in E-P's possession,
(ii) can reasonably demonstrate in writing was developed independently by E-P
or (iii) E-P rightfully receives from a third party without knowledge of a
violation of any obligation of confidentiality, provided, however, that if E-P
later learns that any such information was received in violation of any
obligation of confidentiality, from that point E-P shall treat such information
pursuant to the terms of this Agreement. In addition, no obligation of
confidentiality shall apply to any information that is known to, or becomes
generally
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available to, the public without breach of this Agreement.
7.4 NONSOLICITATION. In the event that the Closing does not occur for
any reason, for a period of one year after the termination of this Agreement,
without the prior consent of ISONICS, E-P will not solicit the employment of any
person who is employed by ISONICS; provided, that the foregoing shall not apply
to responses to or follow-up hiring in respect of general solicitations or
advertisements for job positions not specifically or generally directed to any
employee of ISONICS.
7.5 AGREEMENT CONCERNING ACQUISITION AND VOTING OF ISONICS COMMON STOCK
OR DERIVATIVE SECURITIES. E-P, on behalf of itself and its Affiliates, agrees
that it (including its Affiliates) will not acquire a beneficial interest in
shares of common stock of ISONICS in public transactions or private transactions
except pursuant to the exercise of the Warrant. In addition, to the extent E-P
or any Affiliate owns, or acquires any ISONICS common stock (whether through the
exercise of the Warrant or otherwise, whether or not in violation of this
Agreement):
7.5(a). E-P will vote any and all Company Voting Securities
owned of record by E-P, and shall cause any and all Company Voting
Securities owned beneficially by E-P, to be voted with respect to the
election or removal of directors of ISONICS in accordance with the
recommendations of a majority of the Board of Directors of ISONICS;
7.5(b). E-P will not form, join, or in any other way
participate in a partnership, pooling agreement, syndicate, voting
trust, or other "group" with respect to Company Voting Securities or
enter into any agreement or arrangement or otherwise act in concert
with any other person for the purpose of acquiring, holding, voting, or
disposing of Company Voting Securities.
7.5(c). E-P shall be present, in person or by proxy, at all
meetings of stockholders of ISONICS so that any and all Company Voting
Securities owned of record or beneficially owned by E-P may be counted
for the purpose of determining the presence of a quorum at such
meetings. E-P shall not directly or indirectly take any action, along
or in concert with any other person to circumvent the limitations of
this Agreement.
7.5(d). E-P will use its best efforts to cause its Affiliates
to act in accordance with the requirements of Paragraphs (a), (b), and
(c) of this Section 7.5 as though they were each a party to this
Agreement and bound by such provisions.
These covenants shall survive the Closing or termination of this Agreement for a
period of two years.
7.6 AGREEMENT NOT TO CAUSE A RULE 13E-3 TRANSACTION. E-P agrees that it
will not take, directly or indirectly (and it will not cause or permit any
Affiliate to take, directly or
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indirectly) actions to cause ISONICS to accomplish a going-private transaction
or other transaction of the type described in Rule 13e-3 under the Securities
Exchange Act of 1934, as amended. This covenant shall survive the Closing or
termination of this Agreement for a period of two years.
7.7 COMPLIANCE WITH SEC REPORTING REQUIREMENTS. E-P acknowledges that
the acquisition of the Warrant will result in it becoming the beneficial holder
of more than 10% of the outstanding common stock of ISONICS. E-P further
acknowledges its understanding that the common stock of ISONICS is registered
under the Securities Exchange Act of 1934, as amended. E-P hereby covenants and
agrees that it will comply with the reporting requirements of Section 13(d) and
Section 16(a) of the Securities Exchange Act of 1934 (and the rules thereunder)
to the extent such requirements are applicable to E-P and its Affiliates.
VIII.
SURVIVAL; INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties made in this Agreement by ISONICS and E-P,
respectively, shall survive the Closing until the second anniversary of Closing
(or, if applicable, for the period set forth in the particular representation or
warranty), provided that the representations and warranties set forth in B2, B14
and C2 shall survive for the applicable statute of limitations.
8.2 INDEMNIFICATION.
8.2(a). E-P shall defend, hold harmless and indemnify ISONICS
and its Affiliates (each a "Seller Indemnified Party") from and against
any and all Damages to which a Seller Indemnified Party may become
subject insofar as the Damages (or actions in respect thereof) arise
out of or are based upon (i) any failure by E-P to perform its
obligations under this Agreement; (ii) the failure of E-P to satisfy
the Assumed Liabilities; or (iii) any breach by E-P of its
representations, warranties, covenants and agreements set forth in this
Agreement (provided that a notice contemplated by Section 8.3 of a
claim for indemnification is provided to the Indemnitor (as defined in
Section 8.3) on or prior to the time of the expiration of the
applicable representation or warranty).
8.2(b). ISONICS shall defend, hold harmless and indemnify E-P
and its Affiliates (each, a "Buyer Indemnified Party") from and against
any and all Damages, to which a Buyer Indemnified Party may become
subject, insofar as the Damages (or actions in respect thereof) arise
out of or are based upon (i) any failure by ISONICS to perform its
obligations under this Agreement; (ii) any breach by ISONICS of any of
the representations, warranties, covenants and agreements set forth in
this Agreement (provided that a notice contemplated by Section 8.3 of a
claim for indemnification is provided to the Indemnitor on or prior to
the time of the expiration of the applicable representation or
warranty), (iii) any liability of ISONICS other than the Assumed
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Liabilities or (iv) any liability of ISONICS under Environmental Laws
incurred prior to the Closing Date.
8.3 PROCEDURES.
8.3(a). Promptly after receipt by a party eligible for
indemnification under this ARTICLE VIII (an "Indemnified Party") of
notice of the commencement of any action, arbitration proceeding,
governmental investigation or any other claim (a "Third Party Claim"),
the Indemnified Party shall, if a claim in respect thereof is to be
made against a party liable for indemnification under this ARTICLE VIII
(an "Indemnitor"), notify the Indemnitor of the commencement thereof;
provided, however, that the failure of the Indemnified Party to notify
the Indemnitor shall not relieve the Indemnitor from any liability
under this ARTICLE VIII, except to the extent and only to the extent it
is proved that the Indemnitor suffered actual prejudice from the
failure to notify in connection with or in defending against such Third
Party Claim.
8.3(b). If any action is brought against an Indemnified Party
and the Indemnified Party notifies the Indemnitor of the commencement
thereof, the Indemnitor shall be entitled to participate in and, to the
extent that the Indemnitor may wish, to assume the defense of the
action, with counsel reasonably satisfactory to the Indemnified Party
(who shall not, except with the consent of the Indemnified Party, be
counsel to the Indemnitor), and after notice from the Indemnitor to the
Indemnified Party of its election to assume the defense, the Indemnitor
shall not be liable to the Indemnified Party under this ARTICLE VIII
for any legal fees or legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation. Notwithstanding anything in this
Section 8.3 to the contrary, if the Indemnitor does not assume the
defense and control of any such Third Party Claim as provided in this
Section 8.3, the Indemnified Party shall have the right to defend such
Third Party Claim in such manner as it may deem appropriate.
8.3(c). The Indemnitor shall be authorized to consent to a
settlement of, or the entry of any judgment arising from, any Third
Party Claim, and the Indemnified Party shall consent to such settlement
of, or the entry of any such judgment arising from, such Third Party
Claim; provided, however, that the Indemnitor shall:
(i) pay or cause to be paid all amounts arising out
of such settlement or judgment concurrently with the
effectiveness thereof;
(ii) not encumber any of the assets of the
Indemnified Party or agree to any restriction or condition
that would apply to the Indemnified Party or to the conduct of
the Indemnified Party's business; and
(iii) obtain, as a condition of any settlement or
other resolution, a complete release of each Indemnified
Party.
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8.3(d). Except to the extent of the foregoing, no settlement
or entry of judgment in respect of any Third Party Claim shall be
consented to by any Indemnitor or Indemnified Party without the express
written consent of the other party. If the Indemnified Party fails to
give its consent to a proposed compromise or settlement of a claim that
would otherwise be permitted pursuant to this Section 8.3, the
Indemnitor shall have no obligation whatsoever to the Indemnified Party
with respect to Damages related to such claim in an amount in excess of
the proposed compromise or settlement.
8.3(e). The parties agree to cooperate fully with each other
in connection with the defense, negotiation or settlement of any
prospective claim and to provide each other with all materials,
information and data that is reasonably requested by the other in
connection with a prospective claim.
8.4 LIMITATIONS. Notwithstanding the foregoing, an Indemnitor shall
have no liability under this ARTICLE VIII for any breach of representation or
warranty unless and until the aggregate amount of Damages directly or indirectly
suffered or incurred by an Indemnified Party equals or exceeds One Hundred
Thousand Dollars ($100,000) (the "Threshold Amount"). At such time as the
aggregate Damages directly or indirectly suffered or incurred by an Indemnified
Party equals or exceeds the Threshold Amount, the Indemnified Party shall be
indemnified to the extent such Damages exceed the Threshold Amount. Furthermore,
an Indemnitor shall have no liability under this ARTICLE VIII for any indirect
or consequential damages.
IX.
CONDITIONS OF E-P'S AND EPI'S OBLIGATIONS
The obligations of E-P and EPI to complete the Contemplated
Transactions which are to be completed on the Closing Date and to perform the
other covenants and agreements in accordance with the terms and conditions of
this Agreement are subject to satisfaction of each of the following conditions
which, if not satisfied, may be waived, but only in a writing executed by E-P,
it being understood and agreed that any such waiver by E-P shall not be deemed
to constitute a waiver of a claim for Damages in respect of any matter for which
indemnification is provided under ARTICLE VIII.
9.1 REPRESENTATIONS AND WARRANTIES TRUE. Except for representations and
warranties that by their terms speak only as of a specified date, each of the
representations and warranties of ISONICS contained in this Agreement shall have
been true and complete when made and shall be true and complete in all material
respects on and as of the Closing Date as if made on and as of the Closing Date,
and E-P shall have received a certificate to that effect from the President of
ISONICS.
9.2 COVENANTS AND AGREEMENTS--NO DEFAULT. ISONICS shall not be in
default in respect of any material obligation under this Agreement and shall
have performed or complied in all respects with all covenants and agreements
required by this Agreement to be performed or
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<PAGE> 31
complied with by ISONICS prior to or as of the Closing Date, and E-P shall have
received a certificate to that effect from the President of ISONICS.
9.3 NO MATERIAL ADVERSE CHANGE. Since July 31, 1999, ISONICS shall not
have suffered a Material Adverse Effect on its business (including the DZ
Business) or financial condition, and E-P shall have received a certificate to
such effect from the President of ISONICS. E-P acknowledges that the continuing
losses reported by ISONICS in the ISONICS 1934 Act Reports do not constitute a
Material Adverse Effect. E-P also acknowledges that the pro forma and actual
impact on ISONICS and its financial statements as a result of the sale of the DZ
Business to E-P will result in increased operating losses and other impacts,
none of which individually or in the aggregate will constitute a Material
Adverse Effect on ISONICS.
9.4 CONSENTS. E-P shall have received all third-party and governmental
consents, novations, waivers, authorizations and approvals identified on
Schedule B2.2 or C4 and shall have made all filings and given all notices
required in connection with the Contemplated Transactions that are referenced in
Section 7.1 or are set forth on Schedule B2.2 or C4.
9.5 CLOSING DOCUMENTS. ISONICS shall have provided E-P with duly
executed copies of all of the documents required by Section 11.2 to be delivered
at Closing by ISONICS.
9.6 ADVERSE PROCEEDINGS. No action, proceeding or governmental
investigation shall have been instituted or threatened against the completion of
the Contemplated Transactions.
X.
CONDITIONS OF OBLIGATIONS OF ISONICS
The obligations of ISONICS to complete the Contemplated Transactions
which are to be completed on the Closing Date and to perform the other
covenants and agreements in accordance with the terms and conditions of this
Agreement are subject to satisfaction of each of the following conditions
which, if not satisfied, may be waived, but only in a writing executed by
ISONICS, it being understood and agreed that any such waiver by ISONICS shall
not be deemed to constitute a waiver of a claim for Damages in respect of any
matter for which indemnification is provided under ARTICLE VIII.
10.1 REPRESENTATIONS AND WARRANTIES TRUE. Except as otherwise permitted
or contemplated by this Agreement and except for representations and warranties
that by their terms speak only as of a specified date, each of the
representations and warranties of E-P contained herein shall have been true and
complete when made and shall be true and complete in all material respects on
and as of the Closing Date as if made on and as of the Closing Date and ISONICS
shall have received a certificate to such effect from an authorized officer of
E-P.
10.2 COVENANTS AND AGREEMENTS; NO DEFAULT. Neither E-P nor EPI shall be
in default in respect of any material obligation under this Agreement and E-P or
EPI shall have performed or complied in all respects with all material covenants
and agreements required by this
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<PAGE> 32
Agreement to be performed or complied with by E-P or EPI, as the case may be,
prior to or as of the Closing Date, and ISONICS shall have received a
certificate to such effect from an authorized officer of E-P.
10.3 CONSENTS. ISONICS shall have obtained all of the third-party and
governmental consents, novations, waivers, authorizations and approvals
identified on Schedule B2.2 and shall have made all material filings and given
all notices required in connection with the Contemplated Transactions that are
referenced in Section 6.1 or are set forth in Schedule B2.2.
10.4 CLOSING DOCUMENTS. E-P shall have provided ISONICS with duly
executed copies of all of the documents required by Section 11.3 to be delivered
at Closing by E-P.
10.5 ADVERSE PROCEEDINGS. No action, proceeding or governmental
investigation shall have been instituted or threatened against the completion of
the Contemplated Transactions.
XI.
CLOSING
11.1 TIME AND PLACE OF CLOSING.
11.1(a). The closing of the Contemplated Transactions (the
"Closing") shall take place at 11:00 a.m. (local time) on November 30,
1999, or at such other time and date as may be mutually agreed upon in
writing, upon fulfillment of (a) all the conditions set forth in
ARTICLE IX, which have not been waived in writing by E-P, and (b) all
the conditions set forth in ARTICLE X, which have not been waived by
ISONICS. If such conditions have not been fulfilled or waived by
November 30, 1999, the Closing shall take place within five Business
Days after fulfillment or waiver of all such conditions but in no
event later than December 31, 1999, unless otherwise mutually agreed
in writing by E-P and ISONICS. The Closing shall be deemed to be
effective as of the close of business on the Closing Date.
11.1(b). All proceedings to be taken and all documents to be
executed and delivered by ISONICS in connection with the completion of
the Contemplated Transactions shall be reasonably satisfactory in form
and substance to E-P and its counsel. All proceedings to be taken and
all documents to be executed and delivered by E-P in connection with
the completion of the Contemplated Transactions shall be reasonably
satisfactory in form and substance to ISONICS and its counsel. All
proceedings to be taken and all documents to be executed and delivered
at the Closing shall be deemed to have been taken and executed
simultaneously, and no proceedings shall be deemed taken nor any
documents executed or delivered until all have been taken, executed or
delivered.
11.2 PERFORMANCE BY ISONICS. At the Closing, ISONICS shall deliver or
cause to be delivered to E-P or EPI, as they may direct, the following:
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<PAGE> 33
11.2(a). A bill of sale for the Zinc Assets in the form set
forth on SCHEDULE 11.2(a) (the "Bill of Sale").
11.2(b). An assignment and assumption agreement executed in
counterpart by ISONICS in the form set forth on SCHEDULE 11.2(b) (the
"Assignment and Assumption Agreement"), together with all required
consents to assignments in respect of Zinc Assets and the issuance of
the Warrant (the "Consents").
11.2(c). An opinion of counsel to ISONICS substantially in the
form set forth on SCHEDULE 11.2(c).
11.2(d). The Warrant.
11.2(e). A release of the lien of Coast Business Credit and
any other Encumbrances on the Zinc Assets.
11.2(f). Intentionally omitted.
11.2(g). A registration rights agreement (the "Registration
Rights Agreement") in the form set forth on SCHEDULE 11.2(g) executed
by ISONICS.
11.2(h). Such other documents, articles of transfer,
instruments or agreements as may be reasonably requested by E-P to
effectuate the Contemplated Transactions.
11.3. PERFORMANCE BY E-P. At or prior to the Closing, E-P and EPI,
jointly and severally, shall deliver, or cause to be delivered, to ISONICS the
following:
11.3(a). A wire transfer of funds to ISONICS in the aggregate
amount equal to the Cash Portion and the Estimated Net Current Asset
Amount.
11.3(b). The Assignment and Assumption Agreement executed in
counterpart by E-P.
11.3(c). A bill of sale and undertaking by E-P to supply the
Silicon Purchase meeting the specifications and pursuant to the
delivery schedule set forth in SCHEDULE 11.3(c).
11.3(d). An opinion of counsel to E-P and EPI substantially in
the form set forth on SCHEDULE 11.3(d).
11.3(e). Such other documents, articles of transfer,
instruments or agreements as may be reasonably requested by ISONICS to
effectuate the Contemplated Transactions.
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<PAGE> 34
XII.
TERMINATION
12.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing only as follows:
12.1(a). by mutual written agreement of E-P and ISONICS;
12.1(b). by either E-P or ISONICS if there shall be any law or
regulation that makes completion of the Contemplated Transactions
illegal or otherwise prohibited or if completion of the Contemplated
Transactions would violate any nonappealable final order, decree or
judgment of any court or Governmental Authority having competent
jurisdiction;
12.1(c). by either E-P or ISONICS if the Closing shall not
have been completed by December 31, 1999; provided, however, that
neither E-P nor ISONICS may terminate this Agreement pursuant to this
Section 12.1(c) if the Closing shall not have been completed by
December 31, 1999, by reason of the failure of such party or any of its
Affiliates to perform in any material respects any of its or their
respective covenants or agreements contained in this Agreement.
Any party desiring to terminate this Agreement pursuant to this Section 12.1
shall give written notice of such termination to the other parties to this
Agreement.
12.2 EFFECT OF TERMINATION. If this Agreement is terminated as
permitted by Section 12.1, such termination shall be without liability of any
party (or any Affiliate, shareholder, director, officer, employee, agent,
consultant or representative of such party) to any other party to this
Agreement; provided, however, that if the Contemplated Transactions fail to
close as a result of a breach by ISONICS on the one hand, or E-P on the other
hand, such breaching party shall be fully liable for any and all actual damages
incurred or suffered by the other party as a result of all such breaches.
Notwithstanding the foregoing, the provisions of Sections 6.6, 7.3, 7.4, 7.5 and
this Section 12.2 shall survive any termination hereof pursuant to Section 12.1.
XIII.
MISCELLANEOUS PROVISIONS
13.1 EXPENSES. Except as otherwise provided herein, ISONICS on the one
hand, and E-P and EPI on the other hand, shall bear and pay for their own legal,
accounting and other costs and fees incurred in connection with the Contemplated
Transactions. All sales, use and other transfer Taxes resulting from or relating
to the transfer of any of the Zinc Assets and the Silicon-28 shall be split
equally between E-P and ISONICS.
13.2 FURTHER ASSURANCES. Each party shall execute and deliver such
additional documents or take such additional actions as may be requested by
another party to this
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<PAGE> 35
Agreement if such requested document or action is reasonably necessary to effect
the Contemplated Transactions.
13.3 NOTICES. Any notice, request, instruction or other document or
communication required or permitted to be given under this Agreement shall be in
writing and shall be deemed given upon delivery in person; upon being deposited
in the mail, postage prepaid, for mailing by certified or registered mail; or
upon being transmitted by facsimile, as follows:
If to E-P or EPI, delivered or mailed to:
Boron Department
Eagle-Picher Technologies LLC
798 Highway 69A
Quapaw, OK 74363
Attention: Vice President and General Manager
Facsimile: 918-673-1052
Telephone: 918-673-2201
with copies delivered or sent by facsimile to:
Taft, Stettinius & Hollister LLP
1800 Firstar Tower
425 Walnut Street
Cincinnati, OH 45202-3957
Attention: Gerald S. Greenberg, Esq.
Facsimile: (513) 381-0205
Telephone: (513) 381-2838
and
Eagle-Picher Industries Inc.
250 East Fifth Street, Suite 500
Cincinnati, Ohio 45202
Attention: Vice President and General Counsel
Facsimile: (513) 629-2572
Telephone: (513) 629-2417
If to ISONICS, delivered or mailed to:
Isonics Corporation
5906 McIntyre Street
Golden, CO 80403
Attention: James E. Alexander, President
Facsimile 303-279-7300
Telephone: 303-279-7900
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<PAGE> 36
with a copy (which does not constitute notice) delivered or
sent by facsimile to:
Herrick K. Lidstone, Jr.
Norton A Lidstone, P.C.
The Quadrant
5445 DTC Parkway
Suite 850
Englewood, Colorado 80111
Facsimile: 303-221-5553
Telephone: 303-221-5552
or to such other address or addresses as may be specified in writing from time
to time by any party to the other parties.
13.4 REFERENCES AND CONSTRUCTION.
13.4(a). References in this Agreement to Sections or Schedules
are to sections of or schedules to this Agreement unless otherwise
indicated and references to clauses are to clauses of the Section in
which the reference appears unless specifically noted otherwise.
13.4(b). When used in this Agreement, the word "including"
shall have its normal common meaning and any list of items that may
follow such word shall not be deemed to represent a complete list of
the content of the referent of the subject.
13.4(c). Unless the context otherwise requires, the singular
shall include the plural and vice versa, references to any gender shall
include all other genders and references to persons shall include
individuals, bodies corporate, unincorporated associations,
partnerships and other entities in each case whether or not having a
separate legal personality.
13.4(d). The parties have participated jointly in the
negotiation and drafting of this Agreement. If any ambiguity or
question of intent arises, no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement.
13.4(e). Section headings are for convenience only and shall
not limit or otherwise affect any of the provisions of this Agreement.
13.4(g). Except as set forth in the following sentence, this
Agreement is not intended to and shall not be construed so as to create
any rights in any third party beneficiary. The Affiliates of E-P are
intended to be express third-party beneficiaries of the terms contained
in this Agreement.
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<PAGE> 37
13.5 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits to
this Agreement and any other agreements contemplated by this Agreement
(including the Confidentiality Agreement) constitute the entire agreement and
understanding of the parties hereto with respect to the matters herein set
forth, and all prior negotiations, writings and understandings relating to the
subject matter of this Agreement are merged herein and are superseded and
canceled by this Agreement.
13.6 NO PUBLIC ANNOUNCEMENT. No party shall make any press release or
other public announcement regarding this Agreement or the Contemplated
Transactions, without prior consultation with and consent of the other party,
which consent may not unreasonably be withheld.
13.7 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original copy of
this Agreement and all of which, when taken together, shall be deemed to
constitute one in the same agreement. This Agreement shall become effective when
each party hereto shall have received a counterpart hereof signed by the other
parties hereto.
13.8 SEVERABILITY OF PROVISIONS. If a court in any proceeding holds any
provisions of this Agreement or its application to any person or circumstance
invalid, illegal or unenforceable, the remainder of this Agreement, or the
application of such provisions to Persons or circumstances other than those to
which it was held to be invalid, illegal or enforceable, shall be not affected,
and shall be valid, legal and enforceable to the fullest extent permitted by
law, but only if and to the extent such enforcement would not materially and
adversely frustrate the parties? essential objectives as expressed in this
Agreement. Furthermore, in lieu of any such invalid or unenforceable term or
provision, the parties intend that the court add to this Agreement a provision
as similar in terms to such invalid or unenforceable provision as may be valid
and enforceable, so as to effect the original intent of the parties to the
greatest extent possible.
13.9 EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this
Agreement shall constitute part of this Agreement and shall be deemed to be
incorporated in this Agreement by reference and made a part of this Agreement as
if set out in full at the point where first mentioned.
13.10 WAIVERS AND AMENDMENTS. Any of the terms or conditions of this
Agreement may be waived but only in writing by the party which is entitled to
the benefit thereof, and this Agreement may be amended or modified in whole or
in part only by an agreement in writing, executed by all the parties to this
Agreement.
13.11 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns; provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent, which consent shall not be unreasonably withheld, of E-P in the case of
ISONICS, and ISONICS in the case of E-P.
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<PAGE> 38
13.12 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware (without
regard to the choice of law provisions thereof).
13.13 DISPUTE RESOLUTION.
13.13(a). SENIOR OFFICERS TO RESOLVE. All claims, disputes or
other controversies arising out of, or relating to, this Agreement or
the Contemplated Transactions (hereinafter collectively referred to as
a "Dispute") shall initially be submitted to a senior officer from each
party for resolution by mutual agreement between said officers. Any
mutual determination by the senior officers shall be final and binding
upon the parties. However, should such senior officers fail to arrive
at a mutual decision as to the Dispute within 20 days after notice to
both parties of the Dispute, the parties shall then attempt to resolve
such Dispute by mediation in accordance with the terms and provisions
set forth in the following paragraph.
13.13(b). MEDIATION. Notice of the demand for mediation for
any Dispute which has not been resolved in accordance with the previous
paragraph shall be filed with the other party to this Agreement, and
shall be made within a reasonable time after such party is permitted to
mediate the Dispute as provided herein. All mediation proceedings shall
take place in Dallas, Texas and shall be conducted in accordance with
rules mutually determined by the parties. The mediator shall be an
individual mutually selected by ISONICS and E-P, which individual shall
(i) have at least 10 years experience in the discipline which is the
subject of the Dispute, or (ii) be an attorney of at least 10 years of
experience in the realm of business transactions or commercial
litigation. Any mutual decision by the parties pursuant to any such
mediation shall be final and binding upon the parties. However, should
the parties fail to arrive at a mutual decision as to the Dispute
within 30 days after commencement of the mediation proceedings, the
parties shall then be entitled to refer such Dispute to arbitration as
provided in the following paragraph.
13.13(c). ADDITIONAL PROCEEDINGS. To the extent that any
Dispute continues to exist after the mediation provided for in the
preceding paragraph, the parties agree to resolve the Dispute by
binding arbitration, unless the remedy sought is injunctive relief.
Respecting any Disputes which ultimately become the subject of court
proceedings wherein the remedy sought is injunctive relief, the parties
irrevocably agree that (i) the venue and jurisdiction for such
proceedings shall be in any court of competent jurisdiction, and (ii)
trial by jury is waived by both parties. Arbitration of disputes shall
be conducted in Dallas, Texas and shall apply the substantive law
governing this Agreement. The arbitration proceedings will be conducted
by a panel of three arbitrators in accordance with the Rules of
Commercial Arbitration of the American Arbitration Association ("AAA")
and under the professional administration of the AAA, except that the
parties shall have the rights of discovery as to one another such as
are provided by Federal Rules of Civil Procedure 26 through 37 in
effect at the time of the arbitration
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<PAGE> 39
and rights of discovery as to third parties in effect at the time of
the arbitration as are provided by law. The arbitration award shall be
binding upon the parties.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed on the day and year first above written.
EAGLE-PICHER TECHNOLOGIES, LLC
By: /s/ DALLAS MAYFIELD
-----------------------------
Name: Dallas Mayfield
Title: General Manager -
Boron Division
ISONICS CORPORATION
By: /s/ JAMES E. ALEXANDER
-----------------------------
James E. Alexander, President
EAGLE-PICHER INDUSTRIES, INC.
By: /s/ DAVID G. KRALL
-----------------------------
Name: David G. Krall
Title: Vice President
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<PAGE> 40
EXHIBIT A
DEFINITIONS
I. Terms defined in the Agreement shall have the meaning ascribed to such
terms in the Agreement. In addition, the following terms have the
following meanings:
A. "Accounts Payable" shall have the meaning set forth in Section
2.4(a).
B. "Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by, or under
common control with such other Person, and (ii) any family
member of a party to this Agreement. For purposes of
determining whether a Person is an Affiliate, the term
"control" shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership
of securities, contract or otherwise.
C. "Applicable Law" means, with respect to any Person, any
domestic or foreign, federal, state or local statute, law,
ordinance, rule, administrative interpretation, regulation,
order, writ, injunction, directive, judgment, decree or other
requirement of any Governmental Authority (including any
environmental law) applicable to such Person or any of its
properties, assets, officers, directors, employees,
consultants or agents (in connection with such officer's,
director's, employee's, consultant's or agent's activities on
behalf of such Person).
D. "Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York are
authorized or required by law to close.
E. "Closing Date" means the date of Closing.
F. "Closing Statement" shall have the meaning set forth in
Section 2.4(b).
G. "Company Subsidiary" means any Subsidiary of ISONICS.
H. "Company Voting Securities" shall mean, collectively, common
stock, any preferred stock of ISONICS that is entitled to vote
generally for the election of directors, any other class or
series of ISONICS securities that is entitled to vote
generally for the election of directors, and any other
securities, warrants, options or rights of any nature (whether
or not issued by ISONICS) that are convertible into or
exchangeable for, or exercisable for the purchase of or
otherwise give the holder thereof any rights in respect of,
ISONICS common stock, ISONICS preferred stock that is entitled
to vote generally for the election of directors, or any other
class or series of ISONICS securities that is entitled to vote
generally
EXHIBIT A
<PAGE> 41
for the election of directors.
I. "Contemplated Transactions" means the transactions
contemplated by this Agreement.
J. "Contracts" means all contracts, agreements, leases, licenses,
commitments, sales, consulting and independent contractor
arrangements and purchase orders, whether written or oral,
that relate to or arise out of the DZ Business.
K. "Damages" means all demands, claims, actions or causes of
action, assessments, losses, damages, costs, expenses,
liabilities, judgments, awards, fines, sanctions, penalties,
charges and amounts paid in settlement, including, without
limitation, reasonable costs, fees and expenses of attorneys,
experts, accountants, appraisers, consultants, witnesses,
investigators and any other agents or representatives of such
Person (with such amounts to be determined net of any
resulting tax benefit and net of any refund or reimbursement
of any portion of such amounts, including, without limitation,
reimbursement by way of insurance or third party
indemnification but subject to the increase in cost of
insurance attributable to such reimbursement).
L. "DZ Business" shall have the meaning set forth in Recital A.
M. "Encumbrance" means any liability, obligation, mortgage, lien
(including, but not limited to, Tax liens), pledge, charge,
security interest, encumbrance, claim or similar right.
N. "Environmental Laws" means any and all past, present or future
federal, state, local and foreign statutes, laws, regulations,
ordinances, judgments, orders, codes, or injunctions, which
relate to or otherwise impose liability for or standards of
conduct concerning discharges or releases of any pollutants,
contaminants or hazardous or toxic wastes, substances or
materials into ambient air, water or land, or otherwise
relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup,
transport or handling of Hazardous Materials including (but
not limited to), The Resource Conservation and Recovery Act of
1976, as amended, The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, The
Superfund Amendment and Reauthorization Act of 1984, as
amended, The Toxic Substances Control Act, as amended
("TSCA"), and any other so-called "Superfund" or "Superlien"
law, the Clean Water Act, Clear Air Act, or any other similar
federal, state or local statutes in the United States or
elsewhere.
O. "Estimated Closing Statement" shall have the meaning set forth
in Section 2.4(a).
P. "Estimated Net Current Asset Amount" shall have the meaning
set forth in
EXHIBIT A
<PAGE> 42
Section 2.4(a).
Q. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
R. "Final Net Current Asset Amount" shall have the meaning set
forth in Section 2.4(b).
S. "GAAP" means United States generally accepted accounting
principles as in effect on the date of this Agreement.
T. "Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority,
quasi-governmental authority, instrumentality, court,
government or self-regulatory organization, commission,
tribunal or organization or any regulatory, administrative or
other agency, or any political or other subdivision,
department or branch of any of the foregoing.
U. "Hazardous Materials" means any flammable explosives,
radioactive materials, hazardous waste, toxic substances or
related materials, including, without limitation, asbestos,
PCBs, petroleum product, ureaformaldehyde (in situations where
considered hazardous or toxic), radon and any substances
defined as "hazardous substances," "hazardous materials" or
"hazardous waste" in The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and The
Resource Conservation and Recovery Act of 1976, as amended,
those substances defined as "hazardous wastes" in the
regulations adopted and publications promulgated pursuant to
said laws, those substances defined as "toxic substances" in
The Toxic Substances Control Act, as amended, and any other
substance, pollutant, contaminant, chemical, or industrial
toxin or hazardous substance or waste, including without
limitation hazardous materials, which by law is prohibited or
otherwise regulated.
V. "Inventory" shall have the meaning set forth in Section
2.4(a).
W. "Intellectual Property" means any patent, trademark,
copyright, tradename, or trade secret or any rights relating
thereto, including any license.
X. "IRS" means the Internal Revenue Service.
Y. "ISONICS 1934 Act Reports" means the report on Form 10-KSB
filed by ISONICS with the Securities and Exchange Commission
for the year ended April 30, 1999, as such report may be
amended, together with all reports ISONICS has filed with the
Securities and Exchange Commission subsequent to that date.
Z. "Material Adverse Effect" means (i) with respect to the DZ
Business, a material adverse effect on the assets, properties,
business, financial condition or results of
EXHIBIT A
<PAGE> 43
operations of the DZ Business taken as a whole, or (ii) with
respect to any other Person, a material adverse effect on the
assets, properties, business, financial condition or results
of operations of such Person and its Subsidiaries taken as a
whole.
AA. "Person" means any individual, corporation, unincorporated
association, business trust, estate, partnership, limited
liability company, trust, nation, political subdivision or
agency thereof or any other entity.
BB. "Securities Act" means the Securities Act of 1933, as amended.
CC. "Silicon Purchase" shall have the meaning set forth in Section
3.1.
DD. "Subsidiary" as it relates to any Person, means another Person
controlled by or under common control with such Person. For
purposes of this definition, "control" shall mean the legal,
beneficial, or equitable ownership, directly or indirectly, of
50% or more of the shares eligible to vote for the election of
directors or similar right to elect the governing body of such
Person.
EE. "Successor" means any Person who assumes the place of either
of the parties hereto, whether by merger, consolidation,
assignment, acquisition of all or any substantial portion of
the assets of such party or otherwise.
FF. "Warrant Shares" means the shares of common stock of ISONICS
or other securities to be issued upon exercise of the Warrant.
GG. "Yale License" means the License Agreement dated October 21,
1997 between ISONICS and Yale University.
HH. "Zinc Assets" means all inventory, equipment, and Contracts
held or used by ISONICS at the Closing Date primarily in the
conduct of the DZ Business. Zinc Assets do not include cash,
accounts receivable, or assets used by ISONICS in any other
line of business.
II. Unless otherwise specifically provided, "knowledge," "to the
knowledge," "known by" or "known" (and any similar phrase) means (i) with
respect to E-P, to the actual knowledge after reasonable inquiry of the
executive officers of its Boron Division, or any of them, and (ii) with respect
to ISONICS, to the actual knowledge after reasonable inquiry of its executive
officers, or any of them, as of the date of this Agreement.
III. Unless otherwise specifically provided, "including" (and any
similar phrase) is inclusive, without limitation, and is not intended to be
exclusive to the list set forth.
EXHIBIT A
<PAGE> 44
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF ISONICS
ISONICS hereby represents and warrants to E-P as follows:
1. ORGANIZATION, GOOD STANDING AND CAPITALIZATION.
1.1 ISONICS (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California, (ii) has full power and authority to own, operate and lease
its properties, to carry on the DZ Business as now being conducted, and
to enter into this Agreement and perform its obligations hereunder and
(iii) and is duly qualified and in good standing as a foreign
corporation authorized to do business in every jurisdiction where the
failure so to qualify, individually or in the aggregate, would have a
Material Adverse Effect.
1.2 The authorized capital of ISONICS consists of 20,000,000
shares of Common Stock, no par value ("Common Stock"), of which
6,607,670 shares are outstanding, and 10,000,000 shares of Preferred
Stock, no par value, of which 1,830,000 shares are outstanding. All
outstanding shares were, and the Warrant Shares when issued will be,
issued in compliance with all applicable Federal and State securities
laws. Except as set forth in the ISONICS 1934 Act Reports or on
SCHEDULE B1.2, there are (i) no outstanding subscriptions, warrants,
options, conversion privileges or other rights or agreements to
purchase or otherwise acquire or issue any shares of capital stock of
ISONICS (or shares reserved for such purpose), (ii) no preemptive
rights or rights of first refusal with respect to the issuance of
additional shares of capital stock of ISONICS, including the Warrant
Shares and (iii) no commitments or understandings (oral or written) of
the Company to issue any shares, warrants, options or other rights. To
the best of ISONICS knowledge, except as set forth in the ISONICS 1934
Act Reports or on SCHEDULE B1.2, none of the shares of Common Stock are
subject to any shareholders' agreement, voting trust agreement or
similar arrangement or understanding. Except as set forth in the
ISONICS 1934 Act Reports or on SCHEDULE B1.2, the Company has no
outstanding bonds, debentures, notes or other obligations the holders
of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the
stockholders of ISONICS on any matter.
1.3 The issuance of the Warrant Shares has been duly
authorized and the Warrant Shares have been, and at all times prior to
exercise will have been, duly reserved for issuance and, when so
issued, will be validly issued, fully paid and non-assessable.
<PAGE> 45
2. EXECUTION AND EFFECT OF AGREEMENT.
2.1 The execution, delivery and performance of this Agreement,
the Registration Rights Agreement and the Warrant and the completion of
the Contemplated Transactions, including, without limitation, the sale,
transfer and assignment of the Zinc Assets to E-P and the Silicon
Purchase, have been duly and effectively authorized by all necessary
action on the part of ISONICS. This Agreement has been, and at the
Closing the Warrant and Registration Rights Agreement will have been,
duly executed and delivered by ISONICS and constitutes, or will
constitute, legal, valid and binding obligations of ISONICS enforceable
in accordance with their terms subject to limitations on enforceability
under bankruptcy and insolvency laws and principles of equity.
2.2 Except as set forth on SCHEDULE B2.2, and subject to
receiving the Consents listed thereon, neither the execution, delivery
and performance of this Agreement, the Warrant or the Registration
Rights Agreement nor the completion of the Contemplated Transactions,
with or without the passage of time, or the giving of notice, or both,
will (i) violate or conflict with any of the provisions of the
organizational documents of ISONICS, (ii) violate the provisions of any
Applicable Law, (iii) result in the creation of any Encumbrance upon
any of the Zinc Assets, (iv) conflict with or result in a breach of or
give rise to the right of termination of, or constitute a default of,
or accelerate the performance required by, the terms of any judgment,
court order, consent decree, or any agreement, indenture, mortgage,
deed of trust, lease, Contract, note, bond, license, permit,
authorization or other instrument, or any statute, ordinance,
regulation or any other restriction of any kind or character, to which
ISONICS, any of the Company Subsidiaries or any of the Zinc Assets is
bound (with the understanding that an existing loan to ISONICS from
Coast Business Credit which includes substantially all of ISONICS"
assets as collateral will be repaid at the Closing from the proceeds to
be paid to ISONICS from the Contemplated Transactions), or (v) cause
ISONICS or any of the Company Subsidiaries to lose the benefit of any
legal right that it presently enjoys or require the consent of any
third party.
2.3 Except as set forth on SCHEDULE B2.2 or as described in
ISONICS" 1934 Act Reports, there are no loan agreements, credit
agreements, guarantees, notes, mortgages, deeds of trust, subordination
agreements, pledges, powers of attorney, consents, assignments,
Contracts, notices, leases, security agreements or similar agreements
or arrangements by which ISONICS, any of the Company Subsidiaries or
the Zinc Assets are bound or in any way affected and neither ISONICS
nor any of the Company Subsidiaries is not in breach or default of any
such agreements or arrangements.
<PAGE> 46
3. SEC DOCUMENTS
3.1 FILED DOCUMENTS. ISONICS has filed all forms, reports and
documents required to be filed by it with the Securities and Exchange
Commission (the "SEC") since its formation (collectively, the "ISONICS
SEC Reports"). As of their respective dates, except as set forth in
SCHEDULE B3.1, the ISONICS SEC Reports filed prior to the date hereof
(i) complied as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations thereunder and (ii) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. The
representation in clause (ii) of the preceding sentence shall not apply
to any misstatement or omission in any ISONICS SEC Report filed prior
to the date of this Agreement which was superseded by a subsequent
ISONICS SEC Report filed prior to the date of this Agreement. No
Company Subsidiary is required to file any report, form or other
document with the SEC. Except as set forth in SCHEDULE B3.1 neither
ISONICS nor any Company Subsidiary is a party or is subject to any
note, bond, mortgage, indenture, contract, lease, license, agreement,
understanding, instrument, bid or proposal that is required to be
described in or filed as an exhibit to any ISONICS SEC Report that is
not described in or filed as an exhibit to such ISONICS SEC Report as
required by the Securities Act or the Exchange Act, as the case may be.
Except as disclosed on SCHEDULE B3.1, no event has occurred prior to
the date hereof as a consequence of which ISONICS would be required to
file a Current Report on Form 8-K pursuant to the requirements of the
Exchange Act as to which such a report has not been timely filed with
the SEC. Any reports, statements and registration statements and
amendments thereto (including, without limitation, Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, as amended) filed by ISONICS with the SEC after the date hereof
shall be provided to E-P no later than the date of such filing.
3.2 FINANCIAL STATEMENTS. Each of the consolidated balance
sheets of ISONICS included in or incorporated by reference into the
ISONICS SEC Reports (including the related notes and schedules) fairly
presents the consolidated financial position of ISONICS and the Company
Subsidiaries as of its date, and each of the consolidated statements of
income, retained earnings and cash flows of ISONICS included in or
incorporated by reference into the ISONICS SEC Reports (including any
related notes and schedules) fairly presents the results of operations,
retained earnings or cash flows, as the case may be, of ISONICS and the
Company Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit adjustments
which would not be material in amount or effect), in each case in
accordance with GAAP consistently applied during the periods involved,
except as may be noted therein. Neither ISONICS nor any of the Company
Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to
be reflected on, or reserved against in, a balance sheet of ISONICS or
in the notes thereto, prepared in accordance with GAAP consistently
applied, except for (i) liabilities or obligations that were so
reserved on, or
<PAGE> 47
reflected in (including the notes to), the consolidated balance sheet
of ISONICS as of April 30, 1999; (ii) liabilities or obligations
arising in the ordinary course of business since April 30, 1999 and
(iii) liabilities or obligations which would not, individually or in
the aggregate, have a Material Adverse Effect.
3.3 ABSENCE OF CERTAIN CHANGES. Since July 31, 1999, except as
disclosed in the ISONICS 1934 Act Reports, there has not been (i) any
event, occurrence, fact, condition, change, development or effect
("Event") that has had a Material Adverse Effect on ISONICS or the DZ
Business; (ii) any declaration, payment or setting aside for payment of
any dividend (except to ISONICS or a Company Subsidiary wholly owned by
ISONICS) or other distribution or any redemption, purchase or other
acquisition of any shares of capital stock or securities of ISONICS or
any Company Subsidiary; (iii) any return of any capital or other
distribution of assets to stockholders of ISONICS or any Company
Subsidiary (except to ISONICS or a Company Subsidiary wholly owned by
ISONICS); (iv) any acquisition (by merger, consolidation, acquisition
of stock or assets or otherwise) of any person or business; (v) any
other action or agreement or undertaking by ISONICS or any Company
Subsidiary that, if taken or done on or after the date hereof would
reasonably be expected to have a Material Adverse Effect; (vi) any
material change in ISONICS' accounting principles, practices or
methods; or (vii) any material loss or destruction of, or material
amount of damage to, the Zinc Assets.
4. BOOKS AND RECORDS. The regular books of account of ISONICS fairly
and accurately reflect all transactions since July 31, 1999, and are true,
correct and complete.
5. LAWSUITS AND PROCEEDINGS. Except as set forth in the ISONICS 1934
Act Reports or on SCHEDULE B5, there is no suit, claim, action, civil or
criminal investigation or proceeding before or involving any court (at law or in
equity), arbitration or mediation panel, or Governmental Authority involving
ISONICS or any of Company Subsidiaries, and ISONICS is not aware of the
existence of facts or circumstances the consequence of which reasonably could be
expected to lead to any such suit, claim, action, audit or investigation,
pending or threatened against ISONICS or any of the Company Subsidiaries
including but not limited to, OSHA claims, workers' compensation claims,
employment discrimination claims, wage and hour claims, claims arising from or
relating to the violation of Environmental Laws or the handling of or disposal
of Hazardous Materials, claims arising out of laws, rules or regulations
relating to government contractors generally or under any government contract
laws or claims involving disputes between employees and ISONICS. Neither ISONICS
nor any Company Subsidiaries is in default with respect to any decree,
injunction or other order of any court or Governmental Authority.
<PAGE> 48
6. SUBSIDIARIES.
6.1 Except as set forth in the ISONICS 1934 Act Reports or
SCHEDULE B6.1, ISONICS has no Subsidiaries and does not otherwise
directly or indirectly control any other business entity.
6.2 Each Company Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its properties and to carry on its business as it is
now being conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of its
property or the conduct of its business requires such qualification,
except for jurisdictions in which such failure to be so qualified or to
be in good standing would not, individually or in the aggregate, have a
Material Adverse Effect. The copies of the Certificates of
Incorporation and Bylaws of ISONICS and the Company Subsidiaries
previously made available to E-P are true and correct.
6.3 Except as set forth in the ISONICS 1934 Act Reports
SCHEDULE B6.3, ISONICS owns directly or indirectly all of the
outstanding shares of capital stock (or other ownership interests
having by their terms ordinary voting power to elect a majority of
directors or others performing similar functions with respect to such
Company Subsidiary) of each of the Company Subsidiaries. Each of the
outstanding shares of capital stock of each of the Company Subsidiaries
is duly authorized, validly issued, fully paid and nonassessable, and
is owned, directly or indirectly, by ISONICS. Except as set forth in
SCHEDULE B6.3, each of the outstanding shares of capital stock of each
Company Subsidiary is owned, directly or indirectly, by ISONICS free
and clear of all liens, pledges, security interests, claims or other
encumbrances other than liens imposed by local law which are not
material. There are no irrevocable proxies, voting agreements or
similar obligations with respect to such capital stock of the Company
Subsidiaries, and no equity securities or other interests of any of the
Company Subsidiaries are or may become required to be issued or
purchased by reason of any options, warrants, rights to subscribe to,
puts, calls, reservation of shares of commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any capital stock of any Company
Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Company Subsidiary is bound to issue
additional shares of its capital stock, or options, warrants or rights
to purchase or acquire any additional shares of its capital stock or
securities convertible into or exchangeable for such shares. The
ISONICS 1934 Act Reports or SCHEDULE B6.3, sets forth the following
information for each Company Subsidiary, if applicable: (i) its name
and jurisdiction of incorporation or organization; (ii) its authorized
capital stock or share capital; (iii) the number of issued and
outstanding shares of capital stock or share capital, and (iv) the
percentage of such shares owned by ISONICS.
6.4 Except as set forth in the ISONICS 1934 Act Reports or
SCHEDULE B6.4, except for interests in the Company Subsidiaries,
neither ISONICS nor any Company
<PAGE> 49
Subsidiary owns directly or indirectly any interests or investment
(whether equity or debt) in any corporation, partnership, joint
venture, business, trust or entity.
7. COMPLIANCE WITH LAWS. Each of ISONICS and each Company Subsidiary
has, in all material respects, conducted its business (including the DZ
Business) and maintained its assets (including the Zinc Assets) in compliance
with all (and has not received notice of a claimed violation of any) Applicable
Laws and all orders, judgments and decrees of any court or Governmental
Authority applicable to, binding upon or affecting ISONICS or any of its assets.
All equipment owned, leased or used by ISONICS or any Company Subsidiary,
including the Zinc Assets, conforms in all material respects with all Applicable
Laws (including, without limitation all fire, health and safety regulations). No
ordinance or law, administrative regulation or any other impediment of any kind
prohibits, interferes with, limits or impairs, or could, if enforced, prohibit,
interfere with, limit or impair the use, operation or maintenance of the Zinc
Assets or the conduct of the DZ Business.
8. LICENSES AND PERMITS. ISONICS and the Company Subsidiaries possess
all licenses, permits, and other governmental consents, certificates, approvals,
or other authorizations (the "Permits") necessary for the operation of their
business at the locations and in the manner presently operated. Except as set
forth on SCHEDULE B8, (a) ISONICS and each of the Company Subsidiaries have
complied with the terms and conditions of all Permits and all such Permits are
in full force and effect and (b) there has occurred no event nor is any event,
action, investigation or proceeding pending or threatened which could cause or
permit revocation or suspension of or otherwise adversely affect the maintenance
of any Permits. Except with respect to the Encumbrances created by the loan
agreement with Coast Business Credit (which will be repaid, and which
Encumbrances will be released, at the Closing with the proceeds to be paid to
ISONICS), there are no provisions in, or other Contracts to which ISONICS or any
of the Company Subsidiaries is a party relating to, any Permits which would
preclude or limit E-P from acquiring and operating the Zinc Assets substantially
as they are now operated. ISONICS has delivered to E-P copies of all filings
made by it in connection with the TSCA registration of depleted zinc oxide.
9. INSURANCE. ISONICS and each of the Company Subsidiaries have in
force and effect policies of fire, casualty, liability, worker's compensation,
life and other forms of insurance standard for its industries. Neither ISONICS
nor any of the Company Subsidiaries is in default with respect to any provision
contained in any insurance policy nor has ISONICS or any of the Company
Subsidiaries failed to give any notice or present any claim thereunder in due
and timely fashion and no cancellation or non-renewal has been threatened or
occurred with respect to any policy. ISONICS and each of the Company
Subsidiaries have currently, and during each of its two past fiscal years have
had, in full force and effect, all insurance coverages required by Applicable
Law and have not been denied any insurance coverage for which they have applied.
10. INTELLECTUAL PROPERTY. The Yale License is the only Intellectual
Property material to ISONICS and the Company Subsidiaries. To the knowledge of
ISONICS, the Yale License is valid and enforceable and does not infringe upon,
conflict with, or violate the rights of others, and neither ISONICS nor any
Company Subsidiary has received any notice or claim, and no
<PAGE> 50
proceedings are pending or threatened, that the Yale License is not valid or
enforceable or that ISONICS or any Company Subsidiary has infringed upon,
conflicted with or violated any Intellectual Property of any third party.
Neither ISONICS nor any Company Subsidiary has given any notice to a third
party, and is not aware, that any Intellectual Property has been infringed upon,
conflicted with or violated. The use by ISONICS and the Company Subsidiaries of
the Yale License as it is presently used does not violate the terms thereof and
the Yale License is adequate and enforceable and in full force and effect.
11. BROKER AND FINDER FEES. Neither ISONICS nor any Company Subsidiary
has engaged any broker or finder in connection with this transaction, and no
action by any of the foregoing will cause or support any claim to be asserted
against E-P by any broker, finder or intermediary in connection with the
Contemplated Transactions.
12. ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE B12 or in
the ISONICS 1934 Act Reports, to the knowledge of ISONICS:
12.1 The facilities occupied or used by ISONICS or any Company
Subsidiary and any real property presently or formerly owned by, used
by or leased to or by ISONICS or any Company Subsidiary or any
predecessor of ISONICS or any Company Subsidiary (collectively, the
"Property"), the existing and prior uses of such Property and all
operations of the businesses of ISONICS and each Company Subsidiary
comply and have at all times complied in all material respects with all
Environmental Laws, and ISONICS and each Company Subsidiary is not in
violation of nor has it violated, in connection with the ownership,
use, maintenance or operation of such Property or the conduct of its
business, any Environmental Law.
12.2 ISONICS and each Company Subsidiary have all permits,
registrations, approvals and licenses required by any Governmental
Authority or Environmental Law.
12.3 There has been no spill, discharge, leak, emission,
injection, disposal, escape, dumping or release of any kind on, beneath
or above such Property or into the environment surrounding such
Property of any Hazardous Materials or any other similar event or
condition which has given rise to or will give use to liability on the
part of ISONICS or any Company Subsidiary.
13. ENVIRONMENTAL REPRESENTATIONS. Except as set forth in SCHEDULE B13:
13.1 There has been no past, and there is no current or
anticipated storage, disposal, generation, manufacture, refinement,
transportation, production or treatment of any Hazardous Materials at,
upon or from such Property. No asbestos-containing materials,
underground storage tanks or polychlorinated biphenyls ("PCBs") are
located on such Property.
13.2 There are no claims, notices of violations, notice
letters, investigations, inquiries or other proceedings now pending or
threatened by any Governmental Authority or third party with respect to
the DZ Business, the other businesses of
<PAGE> 51
ISONICS or any Company Subsidiary, or any Property in connection with
any actual or alleged failure to comply with any requirement of any
Environmental Law.
14. ZINC ASSETS. ISONICS has good and marketable title to the Zinc
Assets, free and clear of all Encumbrances except for the Encumbrance to Coast
Business Credit (which will be released at Closing), and Encumbrances for
personal property taxes not yet due and payable. The Zinc Assets constitute all
operating assets owned by ISONICS or any of its Subsidiaries which are necessary
to conduct the DZ Business in the manner previously conducted by ISONICS.
15. TAX RETURNS AND TAXES.
15.1 All Tax Returns required to be filed by or on behalf of
ISONICS or any Company Subsidiary have been duly filed and such Tax
Returns are complete and accurate in all material respects. All Taxes
with respect to ISONICS and each Company Subsidiary or its assets shown
to be payable on the Returns or on subsequent assessments with respect
thereto have been paid in full, and no other Taxes are payable by
ISONICS with respect to ISONICS or its assets. There are no liens on
any of ISONICS" assets with respect to Taxes, other than liens for
Taxes not yet due and payable. For the purposes of the foregoing:
(a) "Returns" means all reports, estimates, declarations of
estimated tax, information statements and returns relating to, or
required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding and
other payments to third parties; and
(b) "Tax" means any tax imposed of any nature including
federal, state, local or foreign net income tax, alternative or add-on
minimum tax, profits or excess profits tax, franchise tax, gross
income, adjusted gross income or gross receipts tax, employment related
tax (including employee withholding or employer payroll tax, FICA, or
FUTA), real or personal property tax or ad valorem tax, sales or use
tax, excise tax, stamp tax or duty, any withholding or backup
withholding tax, value added tax, severance tax, prohibited transaction
tax, premiums tax, occupation tax, together with any interest or any
penalty, addition to tax or additional amount imposed by any
governmental authority responsible for the imposition of any such tax.
15.2 Except as disclosed in SCHEDULE B15, there are no
agreements, waivers of statutes of limitations, or other arrangements providing
for extensions of time in respect of the assessment or collection of any unpaid
Taxes against ISONICS or any Company Subsidiary.
16. ERISA AND EMPLOYEE BENEFIT PLANS.
16.1 REPRESENTATIONS.
(a) No Employee of ISONICS or any Company Subsidiary is a
member of any collective bargaining unit; neither ISONICS nor any
Company Subsidiary is a party
<PAGE> 52
to any union agreement covering the Employees and no union organizing
activities are taking place or have taken place within the past two
years; nor does ISONICS or any Company Subsidiary have any employment
agreements with any of its Employees except as described in the ISONICS
1934 Act Reports.
(b) Except as set forth in the ISONICS 1934 Act Reports and
the Financial Statements contained therein, neither ISONICS nor any
Company Subsidiary is liable for any arrearage of wages, any accrued or
vested vacation pay or any tax or penalty for failure to comply with
any applicable local, state or federal law relating to employment or
labor, and there is not a controversy pending, threatened or in
prospect between ISONICS or any Company Subsidiary and its Employees
nor does ISONICS or any Company Subsidiary have knowledge that there is
any basis for such a controversy.
(c) Completion of the Contemplated Transactions will not (A)
entitle any individual to any bonus, incentive or severance pay or
payments, (B) accelerate the time of payment or vesting of any benefit
under any Plan, increase the amount of compensation due to any
individual following Closing, or increase any benefits otherwise
payable under any Employee Plan, or (C) result in the payment of an
amount subject to the provisions of Section 280G of the Internal
Revenue Code of 1986 (the "Code").
(d) Each of ISONICS and the Company Subsidiaries is in
compliance in all material respects with all laws respecting
occupational health and safety, employment, employment practices, and
terms and conditions of employment, wages and hours, and is not engaged
in any unfair labor practice and there is not now pending or threatened
any charge or complaint against ISONICS or any Company Subsidiary by
any governmental labor or employment agency or any representative
thereof, and the completion of the Contemplated Transactions will not
result in any such charge or complaint.
(e) Each of ISONICS or any Company Subsidiary is in compliance
in all material respects with the provisions of ERISA related to the
operation and maintenance of Employee Benefit Plans. Each Benefit
Arrangement is in material compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit Arrangement, including
without limitation the Code.
16.2 For the purposes of the foregoing, the following
definitions apply:
(a) "Benefit Arrangement" means each employment, severance,
continuation pay, termination pay, layoff, or other similar written
contract, arrangement or policy and each written plan or arrangement
providing for health, medical, life or other welfare or fringe benefit
coverage (including any insurance, self-insurance or other
arrangements), workers' compensation, severance pay, retention
agreements, disability benefits, supplemental unemployment benefits,
holiday, education or vacation benefits, retirement benefits or
deferred compensation, profit-sharing, benefits in the event of a sale
of
<PAGE> 53
ISONICS or any Company Subsidiary or other change in the control,
management or the ownership of ISONICS or any Company Subsidiary,
bonuses, stock options, stock appreciation rights and other forms of
incentive compensation or post-retirement insurance, compensation or
benefits which (i) is not an Employee Plan, (ii) is or has been entered
into, maintained, administered or contributed to, as the case may be,
by ISONICS or any of its Affiliates and (iii) covers any Employee
and/or Beneficiary or for which an Employee of ISONICS or any Company
Subsidiary would be eligible upon retirement or other termination of
service.
(b) "Beneficiary" means any Person who, at Closing, is not an
Employee of ISONICS or any Company Subsidiary but who is the spouse,
former spouse, dependent or beneficiary of an Employee if that spouse,
dependent or beneficiary is or may become entitled to any coverage or
benefit (whether or not contingent) provided under any Employee Plan or
Benefit Arrangement as a result of that Person's relationship to an
Employee.
(c) "Employee" means any Person who is actively employed as a
common law employee or as an independent contractor by ISONICS or any
Company Subsidiary or who, with respect to ISONICS or any Company
Subsidiary, is on vacation, approved illness absence, long-term
disability, authorized leave of absence (including leave under the
Family and Medical Leave Act) or military service leave of absence as
of the Closing Date.
(d) "Employee Plan" means each "employee benefit plan", as
such term is defined in Section 3(3) of ERISA, which (i) is subject to
any provision of ERISA, (ii) is or has been entered into, maintained,
administered or contributed to by ISONICS or any of its Affiliates, and
(iii) covers any Employee, Beneficiary or both, or for which an
Employee would be eligible upon retirement or other termination of
service.
(e) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
17. ADVERSE BUSINESS CONDITIONS. Except as disclosed in the ISONICS
1934 Act Reports, ISONICS has no knowledge or information of any conditions,
facts, developments or circumstances which would have a Material Adverse Effect
upon ISONICS and its Subsidiaries, taken as a whole. Except as disclosed in the
ISONICS 1934 Act Reports, without limiting the foregoing, ISONICS has no
knowledge of any written or oral communication, fact, event or action that
exists or has occurred that would tend to indicate that (i) any customer will
terminate its business relationship with ISONICS or any Company Subsidiary or,
following Closing, E-P in respect of the DZ Business, or (ii) any current
supplier to ISONICS or any Company Subsidiary will terminate its business
relationship with ISONICS or any Company Subsidiary or, following Closing, E-P
in respect of the DZ Business.
18. YEAR 2000. All of the computer software programs, databases and
compilations, computer hardware (whether general or special purpose), and other
similar or related items of
<PAGE> 54
automated, computerized, and software system that are used or relied on by
ISONICS or a Company Subsidiary in the conduct of its business will not
malfunction, will not cease to function, will not generate incorrect data, and
will not provide incorrect results when processing, providing, or receiving
date-related data into and between the twentieth and twenty-first centuries,
except for such problems which collectively would not have a Material Adverse
Effect.
19. NO DISCRIMINATION. Neither ISONICS (or any Company Subsidiary) nor
any Employee of ISONICS (or any Company Subsidiary) has (i) committed any unfair
labor practice, (ii) discriminated against any Employee or any other Person
whether or not an Employee, based on that Employee's or Person's age, race,
creed, color, sex, religion, handicap or disability, or (iii) received any
complaints or notices from any Employee, other Person, or any Governmental
Authority alleging any such act.
20. EMPLOYMENT OBLIGATIONS. Except as described in the ISONICS 1934 Act
Reports, neither ISONICS nor any of the Company Subsidiaries has any material
obligations, contingent or otherwise, under any employment, severance or
consulting agreement.
21. CONTRACTS. Except as set forth in the ISONICS 1934 Act Reports or
SCHEDULE B21, neither ISONICS nor any Company Subsidiary is a party or is
subject to, and their property and assets are not bound or affected by, any
contract which is material to the business or financial condition of ISONICS,
the DZ Business or the DZ Assets (a "Company Material Contract"). Except as set
forth in SCHEDULE B21, all Company Material Contracts are or will be valid and
binding and are or will be in full force and effect and enforceable in
accordance with their respective terms. Except as set forth in SCHEDULE B21, no
consent of any person is needed in order that each such Company Material
Contract shall continue in full force and effect in accordance with its terms
without penalty, acceleration or rights of early termination by reason of the
consummation of the transactions contemplated by this Agreement, except for
consents the absence of which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Neither ISONICS nor
any Company Subsidiary is in violation or breach of or default under any such
Company Material Contract, nor to ISONICS' knowledge is any other party to any
such Company Material Contract in violation or breach of or default under any
such Company Material Contract, in each case where such violation or breach
would give rise to a right of termination or modification. For purposes of this
Agreement "Government Bid" shall mean any quotation, bid or proposal submitted
to any Governmental Body or any proposed prime contractor or higher-tier
subcontractor of any Governmental Body. For purposes of this Agreement
"Government Contract" shall mean any prime contract, subcontract, letter
contract, purchase order or delivery order executed or submitted to or on behalf
of any Governmental Body or any prime contractor or higher-tier subcontractor,
or under which any Governmental Body or any such prime contractor or
subcontractor otherwise has or may acquire any right or interest.
22. FULL DISCLOSURE. The representations and warranties made herein by
ISONICS do not contain any untrue statement of material fact and do not omit to
state any material fact necessary to make any statement, in light of the
circumstances under which the statement is made, not misleading.
<PAGE> 55
EXHIBIT C
REPRESENTATIONS AND WARRANTIES
OF E-P
E-P hereby represents and warrants to ISONICS as follows:
1. ORGANIZATION AND GOOD STANDING. E-P is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full power and authority to carry on its business as
it is now being conducted.
2. EXECUTION AND EFFECT OF AGREEMENT. E-P has the power and authority
to enter into this Agreement and to perform the obligations to be performed by
E-P hereunder, and the execution and delivery of this Agreement and the
completion of the Contemplated Transactions hereby have been duly authorized by
all necessary action. This Agreement has been duly executed and delivered by E-P
and constitutes a legal, valid and binding obligation of E-P, enforceable
against E-P in accordance with its terms, subject to limitations on
enforceability under bankruptcy and insolvency laws and principles of equity.
3. RESTRICTIONS. Neither the execution and delivery of this Agreement
nor the completion of the Contemplated Transactions hereby will violate any of
the provisions of the Certificate of Formation and Operating Agreement of E-P.
4. CONSENTS. Except as set forth on SCHEDULE C4, no consent or approval
of any court, governmental agency or other public authority, or of any other
person, corporation or entity is required as a condition to (a) the validity or
enforceability of this Agreement or any other instruments to be executed by E-P
to effectuate this Agreement, or (b) the completion or validity of any of the
transactions contemplated by this Agreement, except for consents or approvals
contemplated by this Agreement.
5. LAWSUITS AND PROCEEDINGS. There is no suit, claim, action, civil or
criminal investigation or proceeding before or involving any court (at law or in
equity), arbitration or mediation panel or Governmental Authority involving E-P
or any of its Affiliates and, to E-P's knowledge, no such proceeding is
threatened, that would limit or prohibit its ability to perform its ability to
execute, deliver and perform this Agreement and the Contemplated Transactions.
6. BROKER AND FINDER FEES. Neither E-P nor any Affiliate of E-P has
engaged any broker or finder in connection with this transaction, and no action
by E-P or any Affiliate will cause or support any claim to be asserted against
ISONICS by any broker, finder or intermediary in connection with the
Contemplated Transactions.
7. RISKS OF FUTURE OPERATIONS. E-P understands that the future conduct
of ISONICS" business is dependent upon a number of factors, including historic
working capital shortages, an existing default in the indebtedness owed to Coast
Business Credit, and the other factors set forth in the ISONICS SEC Reports and
elsewhere herein, and there is no assurance that ISONICS will be able to conduct
its operations as contemplated in this Agreement or any other information given
to E-P. In that connection, E-P understands that certain statements
<PAGE> 56
contained herein, in the ISONICS SEC Reports, and which have been given to E-P
using the terms "may", "expects to", and other terms denoting future
possibilities, are forward-looking statements. The accuracy of these statements
cannot be guaranteed as they are subject to a variety of risks which are beyond
ISONICS" ability to predict or control. These risks may cause actual results to
differ materially from the projections or estimates contained in this report.
These risks include, but are not limited to, the possibility that the described
operations or other activities will not be completed on economic terms, if at
all, and the other risks described herein and the other documents incorporated
herein or attached hereto. It is important that E-P understands the significant
risks which accompany the establishment of a new business and the proposed
conduct of ISONICS' future operations.
8. REVIEW OF INFORMATION.
8.1 E-P represents and warrants that it has reviewed the
ISONICS SEC Reports and such other information regarding ISONICS which
E-P, its management and advisors, have deemed necessary or appropriate
in connection with the Silicon Purchase and the acquisition of the
warrant to purchase ISONICS common stock. E-P acknowledges that
information about ISONICS is available on the EDGAR Web site maintained
by the Securities and Exchange Commission (http://www.sec.gov),
although all of such information is subject to the qualifications set
forth therein. E-P acknowledges that ISONICS will continue to file
reports with the Securities and Exchange Commission and that such
reports will contain more current information regarding ISONICS than
set forth above. E-P acknowledges that such information will be
available on the Web sites described above, and ISONICS will provide
E-P copies of such information upon telephonic or written request.
8.2 E-P represents that it has conducted such due diligence
investigation of the market for depleted zinc and the DZ Business, and
that in determining to purchase the DZ Business it has relied solely on
its own investigation into the DZ Business and on the express
representations and warranties of ISONICS in this Agreement.
8.3 ISONICS has given E-P the opportunity to ask questions of
and to receive answers from persons acting on ISONICS' behalf
concerning ISONICS, its business, management, financial condition, and
the ISONICS SEC Reports, and the opportunity to obtain any additional
information regarding ISONICS, its business and financial condition
which ISONICS possesses or can acquire without unreasonable effort or
expense including (without limitation) all minutes of meetings of the
Board of Directors of the Company or committees thereof, and other
relevant documents requested by E-P. In addition, E-P has (or prior to
the Closing will have) conducted such other financial or other inquiry
as E-P deems necessary or appropriate in the conduct of E-P's due
diligence investigation and has not relied on due diligence of any
other party in connection herewith.
8.4 E-P acknowledges and understands, however, that ISONICS
has not authorized any person to make any statements on its behalf
which would in any way contradict any of the information which ISONICS
has provided to E-P in writing,
<PAGE> 57
including the information set forth in this Agreement or documents
which are incorporated herein, and E-P further represents to ISONICS
that E-P has not relied upon any such representations regarding
ISONICS, its business or financial condition, or this transaction in
making any decision to acquire the Warrant or to complete the
Contemplated Transactions.
8.5 E-P has reviewed the terms of this Agreement and all of
the documents delivered in connection herewith or otherwise referenced
herein with its legal, investment, tax, and financial advisors, and E-P
has also consulted with such advisors with regard to the advisability
of this investment to the extent E-P deems such consultation to be
appropriate. E-P acknowledges that ISONICS has advised E-P that it
recommends that E-P obtain such advice and consultation. E-P further
acknowledges that it has neither sought nor received any advice from
ISONICS or any of its agents or affiliates with respect to any aspect
of this Agreement or completion of the Contemplated Transactions.
9. LACK OF LIQUIDITY. E-P acknowledges and understands that although
ISONICS common stock is currently trading on the over-the-counter market and is
quoted on the OTC Bulletin Board operating by the National Association of
Securities Dealers, Inc. (the "OTCBB"), such market is extremely limited and
volatile, and the continuation of that market on the OTCBB or elsewhere is
dependent on a number of factors beyond the control of ISONICS and,
consequently, there can be no assurance that the market for ISONICS's common
stock will continue. Because ISONICS's common stock is traded on the OTCBB, many
broker-dealers will not participate in the market for ISONICS's common stock and
those that do participate may do so only in compliance with the limitations
established by strict rules promulgated by the SEC (including without limitation
Rule 15c2-6) and the National Association of Securities Dealers, Inc. (the
"NASD"), which rules may change from time-to-time as deemed necessary or
appropriate by the SEC or the NASD to protect the public interest as such
agencies determine "public interest" to be.
10. ACCREDITED INVESTOR. E-P has reviewed the definition of the term
"accredited investor" contained in Section 2(a)(15) of the Securities Act and in
Rules 215 and 501(a) thereunder. Based on that review and the advice of its
legal advisors, E-P represents and warrants that it is an accredited investor as
defined in those provisions.
11. INVESTMENT REPRESENTATION. E-P is acquiring the Warrant pursuant to
this Agreement for its own account and not on behalf of any other Person or
entity, or with a view to or for sale in connection with any distribution other
than in accordance with federal and state securities laws. E-P has received all
information regarding ISONICS that has been requested. E-P further represents
that it has had an opportunity to ask questions and receive answers from ISONICS
regarding the terms and conditions of the proposed acquisition of the Warrant.
E-P has experience as an investor in securities of companies and acknowledge
that it can bear the economic risk of its investment in the ISONICS Warrant. E-P
has, by reason of its business or financial experience or financial experience
of its professional advisors who are unaffiliated with, and who are not
compensated by, ISONICS or any Affiliate thereof, directly or indirectly,
<PAGE> 58
the capacity to protect its interest in connection with the acquisition of the
Warrant. E-P has the financial capacity to bear the risk of its investment.
12. RESTRICTED NATURE OF UNDERLYING COMMON STOCK. E-P understands that
the shares of ISONICS common stock issuable upon exercise of the Warrant are
not, and will not be, registered. Therefore, E-P will only be able to exercise
the Warrant to the extent an exemption from registration for the exercise exists
under federal law and applicable state law at the time of exercise.
Consequently, should E-P exercise the Warrant E-P will be acquiring shares of
common stock which are "restricted" and E-P will be required to execute an
appropriate investment letter as a condition to the exercise of the Warrant.
ISONICS may, in its discretion, require E-P to make additional representations
and warranties which are, in its reasonable judgment, necessary to establish the
availability of an appropriate exemption from registration.
13. LEGENDS AND STOP TRANSFER INSTRUCTION.
13.1 The Warrant and any certificates representing shares of
common stock issuable upon exercise of the Warrant will bear a legend
substantially similar to the following:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or any state or foreign
securities laws and are therefore (and will continue to be) restricted
securities within the meaning of Rule 144 of the General Rules and
Regulations promulgated under the Securities Act of 1933, as amended
(the "Act"), and applicable state statutes. The securities cannot be
sold unless they are registered under the Act and any applicable state
securities laws or unless an exemption from such registration
requirements is available. The availability of such an exemption must
be established to the satisfaction of ISONICS. Consequently, the holder
must bear the economic risks of the investment in the securities for an
indefinite period of time because they have not been registered under
the Act or any state securities laws. ISONICS is the only person which
may register the securities under the Act and state securities statutes
and ISONICS has not made any representations to the holder regarding
the registration of the securities or compliance with Regulation A or
some other exemption under the Act. The holder will not sell or attempt
to sell the securities without registration under the Act and any
applicable state securities laws, unless exemptions from such
registration requirements are available and the undersigned has
satisfied ISONICS that an exemption is available for such sale.
13.2 ISONICS shall have the right to issue stop transfer
instructions to its transfer agent to bar the transfer of any of the
certificates representing the Warrant and the ISONICS common stock
issuable upon exercise of the Warrant except in accordance with the
Act.
14. FULL DISCLOSURE. The representations and warranties made herein by
E-P do not contain any untrue statement of material fact and do not omit to
state any material fact necessary to make any statement, in light of the
circumstances under which the statement is made, not misleading.
<PAGE> 59
Exhibit 2
Void after December 1, 2003 Warrant No. EP-1
Eagle-Picher Technologies, LLC to acquire 4,000,000 shares
This Warrant and any shares acquired upon the exercise of this
Warrant have not been registered under the Securities Act of 1933. This
Warrant and such shares may not be sold or transferred in the absence
of such registration or an exemption therefrom under said Act which
exemption must be established to the reasonable satisfaction of the
Company. This Warrant and such shares may not be transferred except
upon the conditions specified in this Warrant, and no transfer of this
Warrant or such shares shall be valid or effective unless and until
such conditions shall have been complied with.
ISONICS CORPORATION
COMMON STOCK PURCHASE WARRANT
Isonics Corporation (the "Company"), having its principal office at
5906 McIntyre Street, Golden, Colorado, 80403 hereby certifies that, for value
received, EAGLE-PICHER TECHNOLOGIES, LLC, or permitted assigns, is entitled,
subject to the terms set forth below, to purchase from the Company at any time
on or from time to time after the date hereof (the "Original Issue Date") and
before 5:00 P.M., New York City time, on May 30, 2003, or as otherwise defined
herein (the "Expiration Date"), 4,000,000 fully paid and non-assessable shares
of Common Stock of the Company, at the initial Purchase Price per share (as
defined below) of $3.75. The number and character of such shares of Common Stock
and the Purchase Price per share are subject to adjustment as provided herein.
1. DEFINITIONS. As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
The term "Affiliate" means, with respect to any Person, (i)
any Person directly or indirectly controlling, controlled by, or under common
control with another Person, including, without limitation, any director or
executive officer thereof, or (ii) any family member of such controlling Person.
For purposes of determining whether a Person is an Affiliate, the term "control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of securities, contract or otherwise.
The term "Company" includes the Company and any corporation
which shall succeed to or assume the obligations of the Company hereunder.
The term "Common Stock" includes all stock of any class or
classes (however designated) of the Company, authorized upon the Original Issue
Date or thereafter, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the
<PAGE> 60
balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference, and the
holders of which shall ordinarily, in the absence of contingencies, be entitled
to vote for the election of a majority of directors of the Company (even though
the right so to vote has been suspended by the happening of such a contingency).
The term "Exchange Act" means the Securities Exchange Act of
1934 as the same shall be in effect at the time.
The term "Expiration Date" means the date set forth in the
first paragraph above.
The term "Holder" means any record owner of this Warrant or
Underlying Securities.
The term "Nasdaq" shall mean the Nasdaq Small Cap Market or
other principal market on which the Common Stock is traded.
The term "Original Issue Date" shall mean November 30, 1999.
The term "Person" shall mean any person or entity.
The term "Purchase Price per share" shall be the then
applicable exercise price for one share of Common Stock.
The term "Securities Act" means the Securities Act of 1933 as
the same shall be in effect at the time.
The term "Underlying Securities" shall mean any Common Stock
or other securities issued or issuable upon exercise of Warrants.
The term "Warrant" shall mean, as applicable, this Warrant or
each right as set forth in this Warrant to purchase one share of Common Stock,
as adjusted.
2. EXERCISE OF WARRANT.
2.1 EXERCISE IN FULL. Subject to the provisions hereof, this
Warrant may be exercised in full by the Holder hereof by surrender of this
Warrant, with the form of subscription at the end hereof duly executed by such
Holder, to the Company at its principal office accompanied by payment, in cash
or by certified or official bank check payable to the order of the Company, in
the amount obtained by multiplying the number of shares of Common Stock called
for on the face of this Warrant (without giving effect to any adjustment
therein) by the Purchase Price per share.
2.2 PARTIAL EXERCISE. Subject to the provisions hereof, this
Warrant may be exercised in part by surrender of this Warrant in the manner and
at the place provided in Section 2.1 except that the amount payable by the
Holder upon any partial exercise shall be the amount
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<PAGE> 61
obtained by multiplying (a) the number of shares of Common Stock (without giving
effect to any adjustment therein) designated by the Holder in the subscription
at the end hereof by (b) the Purchase Price per share. No partial exercise may
be accomplished for fewer than 1,000,000 shares. Upon any such partial exercise,
the Company at its expense will forthwith issue and deliver to or upon the order
of the Holder hereof a new Warrant or Warrants of like tenor, in the name of the
Holder hereof or (upon payment by such Holder of any applicable transfer taxes)
as such Holder may request, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock equal (without giving effect to
any adjustment therein) to the number of such shares called for on the face of
this Warrant minus the number of such shares designated by the Holder in the
subscription at the end hereof.
2.3 EXERCISE BY SURRENDER OF WARRANT OR SHARES OF COMMON
STOCK. In addition to the method of payment set forth in Sections 2.1 and 2.2
and in lieu of any cash payment required thereunder, the Holder of the Warrants
shall have the right at any time and from time to time to exercise the Warrants
in full or in part by surrendering shares of Common Stock or the Warrant
Certificate in the manner and at the place specified in Section 2.1 as payment
of the aggregate Purchase Price per share for the Warrants to be exercised. The
number of Warrants or shares of Common Stock to be surrendered in payment of the
aggregate Purchase Price for the Warrants to be exercised shall be determined by
multiplying the number of Warrants to be exercised by the Purchase Price per
share, and then dividing the product thereof by an amount equal to the Market
Price (as defined below). As used herein, the phrase "Market Price" at any date
shall be deemed to be (i) if the principal trading market for such securities is
any exchange, the last reported sale price, or, in case no such reported sale
takes place on such date, the last reported sale prices for the previous ten
(10) trading days in which a sale was reported, in either case as officially
reported on any consolidated tape, (ii) if the principal market for such
securities is the over-the-counter market, the high bid price on such trading
days as set forth by Nasdaq or, (iii) if the security is not quoted on Nasdaq,
the high bid price as set forth in the National Quotation Bureau sheet listing
such securities for such day. Notwithstanding the foregoing, if there is no
reported closing price or high bid price, as the case may be, on any of the ten
trading days preceding the event requiring a determination of Market Price
hereunder, then the Market Price shall be determined in good faith by resolution
of the Board of Directors of the Company, based on the best information
available to it.
2.4 EXERCISE PURSUANT TO EXEMPTION. The Holder may only
exercise the Warrant if, at the time of exercise, there is an exemption
available for the exercise of the warrant established under federal and
applicable state laws regulating the offer and sale of securities. The Company
agrees to cooperate with the Holder in establishing such exemption, and the
Company will provide the Holder with an investment letter prior to the time of
exercise to assist the Holder in establishing the availability of appropriate
exemptions.
3. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within fifteen business days thereafter, the Company at its own expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct, a
certificate or certificates for the number of fully paid and non-assessable
shares of Common Stock to which such Holder
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<PAGE> 62
shall be entitled upon such exercise, plus, in lieu of any fractional share to
which such Holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current Market Price of one full share, together with any
other stock or other securities and property (including cash, where applicable)
to which such Holder is entitled upon such exercise pursuant to Section 4 or
otherwise.
4. ADJUSTMENT FOR DIVIDENDS AND STOCK SPLITS. If the Company
shall at any time or from time to time while the Warrant is outstanding, pay a
dividend or make a distribution on its Common Stock in shares of Common Stock,
subdivide its outstanding shares of Common Stock into a greater number of shares
or combine its outstanding shares into a smaller number of shares or issue by
reclassification (or by way of a forward or reverse stock split) of its
outstanding shares of Common Stock any shares of its capital stock, then the
number of Warrant Shares purchasable upon exercise of the Warrant and the
Purchase Price per share in effect immediately prior to the date upon which such
change shall become effective, shall be adjusted by the Company so that the
Holder thereafter exercising the Warrant shall be entitled to receive the number
of shares of Common Stock or other capital stock which the Holder would have
received if the Warrant had been exercised immediately prior to such event. Such
adjustment shall be made successively whenever any event listed above shall
occur. An adjustment shall become effective immediately after the record date in
the case of each dividend or distribution and immediately after the effective
date of each other event which requires an adjustment.
5. MERGER. If notice has been given as provided in Section 9, this
Warrant shall terminate upon the occurrence of a transaction described in
Section 9(b) with an entity which is not an Affiliate of the Company and in
which the stock of the Company is changed into the right to receive cash,
property or the securities of the other entity.
6. OTHER ADJUSTMENTS.
6.1 GENERAL. In any case in which Section 4 hereof is not
applicable, where the Company shall issue or sell shares of its Common Stock
after the Original Issue Date to any Affiliate of the Company (an "Affiliate
Sale") for a consideration per share less than the Purchase Price per share then
in effect (the "Prior Exercise Price") then the Purchase Price per share in
effect hereunder shall be decreased to an amount equal to the Prior Exercise
Price multiplied by a fraction, the numerator of which is the sum of (x) the
total number of shares of Common Stock outstanding immediately prior to such
issuance and (y) the number of shares of Common Stock which the aggregate
consideration received from Affiliates in the Affiliate Sale would purchase at
the Prior Exercise Price, and the denominator of which is the sum of (a) the
total number of shares of Common Stock outstanding immediately prior to the
Affiliate Sale plus (b) the number of shares of Common Stock issued or deemed to
be issued to Affiliates in the Affiliate Sale. In the event of an adjustment to
the Purchase Price per share under this Section 6.1, the number of shares of
Common Stock issuable upon exercise hereof shall be increased so that the
aggregate exercise price of this Warrant is not reduced as a result of such
reduction of Purchase Price per share.
6.2 CONVERTIBLE SECURITIES. (a) In case the Company shall
issue or sell any securities convertible into Common Stock of the Company which
would result in an adjustment
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<PAGE> 63
pursuant to Section 4 or 6.1, above ("Convertible Securities") after the date
hereof, there shall be determined the price per share for which Common Stock is
issuable upon the conversion or exchange thereof, such determination to be made
by dividing (a) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (b) the maximum number of
shares of Common Stock of the Company issuable upon the conversion or exchange
of all of such Convertible Securities.
(b) If the price per share so determined is nominal or zero,
then this Warrant shall be adjusted pursuant to Section 4 above. If the price
per share so determined is less than Prior Exercise Price and the issuance is
subject to Section 6.1 above, then the Warrant shall be adjusted pursuant to
Section 6.1 above, provided further, that upon the expiration of such rights of
conversion or exchange of such Convertible Securities, if any thereof shall not
have been exercised, the adjusted Purchase Price per share shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made on the basis that the only shares of Common Stock so issued
or sold were issued or sold upon the conversion or exchange of such Convertible
Securities, and that they were issued or sold for the consideration actually
received by the Company upon such conversion or exchange, plus the
consideration, if any, actually received by the Company for the issue or sale of
all of such Convertible Securities which shall have been converted or exchanged.
6.3 RIGHTS AND OPTIONS. (a) In case the Company shall grant
any rights or options to subscribe for, purchase or otherwise acquire Common
Stock, there shall be determined the price per share for which Common Stock is
issuable upon the exercise of such rights or options, such determination to be
made by dividing (i) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options, plus the
minimum aggregate amount of additional consideration payable to the Company upon
the exercise of such rights or options, by (ii) the maximum number of shares of
Common Stock of the Company issuable upon the exercise of such rights or
options.
(b) If the price per share so determined is nominal or zero,
then this Warrant shall be adjusted pursuant to Section 4 above. If the price
per share so determined is less than Prior Conversion Price and the issuance is
subject to Section 6.1 above, then the Warrant shall be adjusted pursuant to
Section 6.1 above, provided that, if such rights or options shall by their terms
provide for an increase or increases or decrease or decreases, with the passage
of time, in the amount of additional consideration payable to the Company upon
the exercise thereof, the adjusted Purchase Price per share shall, forthwith
upon any such increase or decrease becoming effective, be readjusted and
thereafter be the price which it would have been had an adjustment been made on
the basis that the only shares of Common Stock so issued or sold were those
issued or sold upon the exercise of such rights or options and that they were
issued or sold for the consideration actually received by the Company upon such
exercise, plus the consideration, if any, actually received by the Company for
the granting of all such rights or options, whether or not exercised.
(c) The provisions of this Section 6.3 and Section 6.1 shall
not apply to any
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<PAGE> 64
stock option, warrant or convertible security issued to an Affiliate prior to
the date hereof or any stock option hereafter issued to an Affiliate at an
exercise price per share not less than the Market Price on the date of grant.
6.4 SILICON PURCHASE. If the Holder fails to perform in whole
or in part its obligations under Article III of the Asset Purchase Agreement
dated as of November 30, 1999 between the Holder and the Company, and such
failure continues for a period of 30 days after notice from the Company to the
Holder, the number of Underlying Securities shall be multiplied by a fraction,
the numerator of which is the quantity (in kilograms) of Silicon-28 actually
delivered in accordance with the provisions of such Article III and the
denominator of which is 200.
7. FURTHER ASSURANCES. The Company will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of stock upon the exercise of all Warrants
from time to time outstanding.
8. ACCOUNTANTS' CERTIFICATE AS TO ADJUSTMENTS. In each case of any
adjustment or readjustment in the shares of Common Stock issuable upon the
exercise of the Warrants, the Company at its expense will promptly cause the
Company's regularly retained auditor to compute such adjustment or readjustment
in accordance with the terms of the Warrants and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, and the number of shares of Common
Stock outstanding or deemed to be outstanding. The Company will forthwith mail a
copy of each such certificate to each Holder.
9. NOTICES OF RECORD DATE, ETC. In the event of
(a) any taking by the Company of a record of the Holders of
any class of securities for the purpose of determining the Holders
thereof who are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to
receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to each
Holder of a Warrant a notice specifying
(i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and stating
the amount and character of
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<PAGE> 65
such dividend, distribution or right,
(ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and
the time, if any, as of which the Holders of record of
Underlying Securities (if the Warrant were exercised prior to
such date) shall be entitled to exchange their shares of
Underlying Securities for securities or other property
deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up, and
(iii) the amount and character of any stock or other securities, or
rights options with respect thereto, proposed to be issued or
granted, the date of such proposed issue or grant and the
Persons or class of Persons to whom such proposed issue or
grant is to be offered or made.
Such notice shall be mailed at least 20 days prior to the date therein
specified.
10. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS. The
Company will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of the Warrants, all shares of Common Stock (or other
securities) from time to time issuable upon the exercise of the Warrants.
11. LISTING ON SECURITIES EXCHANGES. In furtherance and not in
limitation of any other provision of this Warrant, if the Company at any time
shall list any Common Stock on any national securities exchange and shall
register such Common Stock under the Exchange Act, the Company will, at its
expense, simultaneously list the Underlying Securities on such exchange or
Nasdaq, upon official notice of issuance upon the exercise of the Warrants, and
maintain such listing of all shares of Common Stock from time to time issuable
upon the exercise of the Warrants; and the Company will so list on any national
securities exchange or Nasdaq, will so register and will maintain such listing
of, any Other Securities if and at the time that any securities of like class or
similar type shall be listed on such national securities exchange or Nasdaq by
the Company.
12. EXCHANGE OF WARRANTS. Subject to the provisions of Section 17, upon
surrender for exchange of any Warrant, properly endorsed, to the Company, as
soon as practicable (and in any event within three business days) the Company at
its own expense will issue and deliver to or upon the order of the Holder
thereof a new Warrant or Warrants of like tenor, in the name of such Holder or
as such Holder (upon payment by such Holder of any applicable transfer taxes)
may direct, calling in the aggregate on the face or faces thereof for the number
of shares of Common Stock called for on the face or faces of the Warrant or
Warrants so surrendered.
13. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and
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<PAGE> 66
cancellation of such Warrant, the Company at is expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
14. WARRANT AGENT. The Company may, by written notice to each Holder of
a Warrant, appoint an agent having an office in New York, New York or Denver,
Colorado, for the purpose of issuing Common Stock (or Other Securities) upon the
exercise of the Warrants pursuant to Section 2, exchange of Warrants pursuant to
Section 12, and replacement of Warrants pursuant to Section 13, or any of the
foregoing, and thereafter any such issuance, exchange or replacement, as the
case may be, shall be made at such office by such agent.
15. REMEDIES. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
16. NOTICES, ETC. All notices and other communications from the Company
to the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, or overnight carrier service, at such address
as may have been furnished to the Company in writing by such Holder, or, until
an address is so furnished, to and at the address of the last Holder of this
Warrant who has so furnished an address to the Company.
17. COMPLIANCE WITH THE SECURITIES ACT OF 1933. Any transfer of this
Warrant or the Underlying Securities must be made in conformity with the
Securities Act of 1933, as amended, and then only against receipt of an
agreement of such Person to whom such offer or sale is made to comply with the
provisions of this Section 17 with respect to any resale or other disposition of
such security. The Company may cause the legend set forth on the first page of
this Warrant to be set forth on each Warrant or similar legend on any security
issued or issuable upon exercise of this Warrant, unless counsel for the Company
is of the opinion as to any such security that such legend is unnecessary.
18. PAYMENT OF TAXES. The Company will not be obligated to pay or
provide for any income or other taxes which are assessable or which may accrue
on the exercise of the Warrant. The Holder shall be solely responsible for
income taxes due under federal or state law, if any such tax is due.
19. OPTIONAL REDEMPTION OF WARRANTS
(a) The Company, at its option, may call the Warrants
represented by this Agreement, in whole or in part, for redemption upon not less
than 20 days' notice nor more than 60 days' notice at any time after the Market
Price shall have equaled or exceeded $7.50 per share for 20 consecutive trading
days. The Redemption Price is and will be $.10 per Warrant.
(b) In the event that fewer than all the outstanding Warrants
are to be redeemed, the shares to be redeemed will be determined pro rata or by
lot, in the sole discretion
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<PAGE> 67
of the Company.
(c) The notice required by Subsection (a), above (the
"Redemption Notice"), must be in writing, and must set forth: (i) the Redemption
Date (which may be no less than 20 days nor more than 60 days after the notice);
(ii) the address to which any notification of exercise of the Warrant prior to
the Redemption Date must be sent; and (iii) other information the Company
determines to include in such notification.
(d) On or before any Redemption Date, the Holder must either
(i) exercise the Warrant in accordance with the terms hereof; or (ii) surrender
the Warrant for redemption to the Company in accordance with the terms of the
Redemption Notice.
(e) On the Redemption Date, regardless whether the Warrants
have been surrendered for redemption, all Warrants issued pursuant to this
Agreement which are subject to redemption pursuant to the Redemption Notice and
which have not been properly exercised prior to the Redemption Date shall be
deemed cancelled and of no further force and effect.
(f) On the first business day following the Redemption Date,
the Company shall pay or deliver to any Holder who has not exercised the Warrant
in accordance with the terms thereof (or who has only exercised the Warrant in
part) and who has delivered the Warrant to the Company in accordance with the
terms of the Redemption Notice, the full Redemption Price due such Holder in
cash.
(g) If fewer than all the Warrants represented by any Warrant
Agreement are to be redeemed, a new Warrant shall be issued representing the
unredeemed Warrants, without cost to the Holder.
(h) If any Holder whose Warrants are called for redemption
fails to surrender the Warrant representing such Warrants, such Holder shall not
be entitled to receive payment of the Redemption Price until the Warrant has
been surrendered for cancellation. Such Holder will not be entitled to receive
any interest on the Redemption Price from the Redemption Date.
20. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant is being delivered in the State of Colorado and shall be
construed and enforced in accordance with and governed by the laws of the State
of Delaware. The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof.
21. REGISTRATION, ETC. The Holder shall have the rights to registration
of Underlying Securities issuable upon exercise of the Warrants that are set
forth in the Registration Rights Agreement, dated the date hereof between the
Company and the first Holder of this Warrant (the "Registration Rights
Agreement").
22. SALE OR EXERCISE WITHOUT REGISTRATION. If, at the time of any
exercise, transfer or surrender for exchange of a Warrant or of Underlying
Securities previously issued upon the
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<PAGE> 68
exercise of Warrants, such Warrant or Underlying Securities shall not be
registered under the Securities Act, the Company may require, as a condition of
allowing such exercise, transfer of exchange, that the Holder or transferee of
such Warrant or Underlying Securities, as the case may be, furnish to the
Company a satisfactory opinion of counsel to the effect that such exercise,
transfer or exchange may be made without registration under the Securities Act,
provided that the disposition thereof shall at all times be within the control
of such Holder or transferee, as the case may be, and provided further that
nothing contained in this Section 21 shall relieve the Company from complying
with any request for registration pursuant to the Registration Rights Agreement.
The first Holder of this Warrant, by acceptance hereof, represents to the
Company that it is acquiring the Warrants for investment and not with a view to
the distribution thereof.
23. COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at the time of
any exercise of this Warrant, upon the request of the Holder hereof, acknowledge
in writing its continuing obligation to afford to such Holder hereof,
acknowledge in writing its continuing obligation to afford to such Holder any
rights (including, without limitation, any right to registration of the
Underlying Securities) to which such Holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant, provided that
if the Holder of this Warrant shall fail to make any such request, such failure
shall not affect the continuing obligation of the Company to offer such Holder
any such rights.
24. EXTENDED EXPIRATION. The right to exercise this Warrant shall
expire at 5:00 P.M., New York City time, on the Expiration Date, provided,
however, that if the Holders of Warrants issued hereunder have, in accordance
with the terms thereof, requested a registration statement pursuant to the
Registration Rights Agreement of ninety (90) days or more prior to the
Expiration Date and such registration statement has not become effective prior
to the Expiration Date then the right to exercise this Warrant shall be extended
and shall expire 30 days after the effective date of such registration
statement. Alternatively, in the Company's sole discretion, the Company may
redeem the Warrants in accordance with Section 19 above, but the Redemption
Price per Warrant in such case will be equal to the difference between Market
Price (as determined pursuant to Section 2.3 above) for the period ending on the
Expiration Date and the Purchase Price per share.
Dated: November 30, 1999
ISONICS CORPORATION
By: /s/ JAMES E. ALEXANDER
---------------------------------
James E. Alexander,
President
[Corporate Seal]
Attest: /s/ BRANTLEY J. HALSTEAD
-------------------------
Brantley J. Halstead,
Secretary
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<PAGE> 69
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: ISONICS CORPORATION
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, __*_____ shares of Common Stock of Isonics Corporation, and
herewith makes payment of $ * therefor, and requests that the certificates for
such shares be issued in the name of, and delivered to, ,
whose address is
Dated:
-----------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant)
-----------------------------------
(Address)
* Insert here the number of shares called for on the face of the Warrant
(or, in the case of a partial exercise, the portion thereof as to which
the Warrant is being exercised), in either case without making any
adjustment for additional Common Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment
provisions of the Warrant, may be deliverable upon exercise.
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<PAGE> 70
FORM OF ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns and transfers
unto _________________ the right represented by the within Warrant to purchase
_______________ shares of Common Stock of Isonics Corporation to which the
within Warrant relates, and appoints __________________ Attorney to transfer
such right on the books of Isonics Corporation with full power of substitution
in the premises.
Dated:
--------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant)
--------------------------------
(Address)
- -----------------------------
Signature guaranteed by a Bank
or Trust Company having its
principal office in New York City
or by a Member Firm of the New
York or American Stock Exchange
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<PAGE> 71
Exhibit 3
---------
Each of the undersigned hereby agrees that Eagle-Picher Industries,
Inc. may file on behalf of the undersigned a Schedule 13D (and any amendments
thereto) with respect to shares of Isonics Corporation owned by any of them.
This agreement may be executed in counterparts.
Dated: December 9, 1999.
EAGLE-PICHER TECHNOLOGIES, LLC
By: /s/ WILLIAM E. LONG
------------------------------------
EAGLE-PICHER INDUSTRIES, INC.
By: /s/ DAVID G. KRALL
------------------------------------
EAGLE-PICHER HOLDINGS, INC.
By: /s/ DAVID G. KRALL
------------------------------------
GRANARIA INDUSTRIES, B.V.
By: /s/ JOEL P. WYLER
------------------------------------
GRANARIA HOLDINGS, B.V.
By: /s/ JOEL P. WYLER
------------------------------------
/s/ JOEL P. WYLER
------------------------------------
Joel P. Wyler
