REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into this 30th day of November, 1999, by and between Isonics
Corporation, a California corporation (the "Company"), and Eagle-Picher
Technologies, LLC, a Delaware limited liability company ("E-P").
BACKGROUND. The Company has entered into an Asset Purchase Agreement
dated as of November 30, 1999 (as amended, the "Asset Purchase Agreement")
with E-P pursuant to which the Company will issue to E-P a common stock
purchase warrant (the "Warrants"), entitling the holder thereof to purchase
four million (4,000,000) shares of common stock of the Company. In addition,
simultaneously with the closing of the Asset Purchase Agreement, the Company
and E-P will enter into an "Isotope Supply Agreement." An aggregate of
4,000,000 authorized but unissued shares of common stock, no par value per
share, of the Company ("Common Stock") are reserved for issuance upon
exercise of the Warrants.
In consideration of the completion of the transactions set forth in
the Asset Purchase Agreement and the other documents and agreements entered
into at the completion of those transactions, and the mutual covenants and
agreements herein set forth, the parties to this Agreement hereby agree,
effective at the Effective Date (as defined below), subject to the terms and
conditions hereinafter set forth, as follows:
1. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
AGREEMENT: As defined in the introductory paragraph of this Agreement.
ASSET PURCHASE AGREEMENT: As defined in the paragraph of this Agreement
entitled "Background."
COMMISSION: The U.S. Securities and Exchange Commission or any other
governmental authority at the time administering the Securities Act or the
Exchange Act.
COMMON STOCK: As defined in the paragraph of this Agreement entitled
"Background."
COMPANY: As defined in the introductory paragraph of this Agreement.
EFFECTIVE DATE: The date on which the Warrants are issued to E-P.
E-P: As defined in the introductory paragraph of this Agreement.
EXCHANGE ACT: The U.S. Securities Exchange Act of 1934, as amended, or
any similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange
Act shall include a reference to the comparable section, if any, of any such
similar or successor federal statute.
PERSON: A corporation, an association, a partnership, a limited
liability company, an individual, a joint venture, a trust or estate, an
unincorporated organization, or a government or any department or agency
thereof.
REGISTRABLE SECURITIES: (a) Any shares of Common Stock issued or
issuable upon exercise of the Warrant and (b) any securities issued or
issuable with respect to any Common Stock referred to in the foregoing
clauses by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable Securities,
once issued, such securities shall cease to be Registrable Securities when
(v) they may be sold without restriction pursuant to Rule 144(k) (or any
successor provision) under the Securities Act, (w) a registration statement
with respect to the sale of such securities in the United States shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (x) they shall
have been transferred pursuant to Rule 144 (or any successor provision) under
the Securities Act, (y) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall
not require registration or qualification under the Securities Act or any
similar state law then in force, or (z) they shall have ceased to be
outstanding. While the Warrants outstanding from time to time are not
Registrable Securities for the purpose of registration, holders of Warrants
shall, for purposes of giving of notices or the calculation of percentages of
Registrable Securities, be treated as the holders of the Registrable
Securities issuable upon exercise of their Warrants. In addition, for
purposes of calculation of percentages of Registrable Securities, all
Warrants shall be treated as if they were the number of shares of Common
Stock which may be purchased upon exercise thereof.
REGISTRABLE SECURITIES - JULY 1999: Securities defined as
"Registrable Securities" in the registration rights agreement dated the 29th
day of July, 1999, by and among the Company, ▇▇▇▇ ▇▇▇▇▇ & Company, Inc.
("ASC"), and the individuals and trusts whose names are set forth on the
signature pages thereof, in the form filed by the Company as an exhibit to
its current report on Form 8-K reporting an event of July 29, 1999.
REGISTRATION EXPENSES: All expenses incident to the Company's
performance of or compliance with Section 2 of this Agreement, including,
without limitation, all registration, filing and listing or Nasdaq fees, all
fees and expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, all messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including without limitation the expenses of
any special audits or "cold comfort" letters required by or incident to such
performance and compliance, premiums and other costs of policies of
insurance, if any, against liabilities arising out of the public offering of
the Registrable Securities being registered, and any fees and disbursements
of underwriters for the Company customarily paid by issuers of securities,
but excluding underwriting discounts and commissions, transfer taxes, if any,
and the fees and disbursements of any counsel and accountants retained by
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the holder or holders of the Registrable Securities being registered.
SECURITIES ACT: The U.S. Securities Act of 1933, as amended, or any
similar or successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act shall include a
reference to the comparable section, if any, of any such similar or successor
federal statute.
WARRANTS: As defined in the paragraph of this Agreement entitled
"Background."
2. Registration under Securities Act
2.1. (a) REGISTRATION ON REQUEST. Upon the written request of E-P
which can only be made after one year following the date of this Agreement
(or, if earlier, commencing on the date the Company calls the Warrants for
redemption pursuant to Section 19 of the Warrants), or the holder or holders
of a majority or more of the Registrable Securities, that the Company effect
the registration of all or part of such holders' Registrable Securities under
the Securities Act in connection with a sale of such shares in the United
States and specifying the intended method of disposition thereof (including
whether or not such disposition is intended to be effected as an underwritten
offering), the Company will promptly give written notice of such requested
registration to all other holders of Registrable Securities and thereupon the
Company will use its best efforts to effect the registration under the
Securities Act of:
(i) the Registrable Securities which the Company has
been so requested to register by the holder or holders submitting the
request, and
(ii) all other Registrable Securities which the Company
has been requested to register by the holder or holders thereof by
written request given to the Company within fifteen (15) days after the
giving of such written notice by the Company (which request shall specify
the intended method of disposition of such Registrable Securities), all
to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so
to be registered.
(b) PRIORITY IN REQUESTED REGISTRATIONS. If a requested
registration pursuant to this Section 2.1 involves an underwritten offering,
and the managing underwriter shall advise the Company in writing (with a copy
to each holder of Registrable Securities requesting registration) that, in
its opinion, the number of Registrable Securities and other securities of the
Company held by any other party requested to be included in such registration
exceeds the number which can be sold in (or during the time of) such offering
within a price range acceptable to the holders of a majority (by number of
shares) of the Registrable Securities requested to be included in such
registration, the Company will include in such registration all Registrable
Securities and Registrable Securities - July 1999 requested to be included in
such registration (unless the provisions of the following sentence apply) and
will include in such registration other securities of the Company (including
any securities proposed to be issued and sold by the Company) held by any
other party only to the extent that the number of
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shares which the Company is advised can be so sold in (or during the time of)
such offering exceeds the number of Registrable Securities and Registrable
Securities - July 1999 to be included in such registration. If, after
application of the preceding sentence, the number of Registrable Securities
and Registrable Securities - July 1999 still exceed such maximum number, such
Registrable Securities and Registrable Securities - July 1999 will be
included in such registration only to the extent of the number of shares
which the Company is advised can be so sold in (or during the time of) such
offering; the Registrable Securities and the Registrable Securities - July
1999 to be included in such registration shall be taken up pro rata from the
holders of Registrable Securities and the Registrable Securities - July 1999
requesting such registration on the basis of the percentage of Registrable
Securities and Registrable Securities - July 1999 requested to be included in
such registration; and all shares proposed to be sold by the Company or any
other party shall be deleted from such registration prior to effecting any
reduction of Registrable Securities and Registrable Securities - July 1999
under this paragraph (b).
(c) REGISTRATION STATEMENT FORM. Registrations under this
Section 2.1 shall accomplished by the Company on such appropriate
registration form of the Commission (i) for which the Company qualifies, and
which the Company's counsel (after consultation with counsel or counsels for
the holders of the Registrable Securities) deems appropriate, and (ii) as
shall permit the disposition of such Registrable Securities in accordance
with the intended method or methods of disposition specified in the request
for such registration. The Company agrees to include in any such registration
statement all information as to the holders of the Registrable Securities to
be registered which the holders of the Registrable Securities being
registered shall reasonably request or which shall be required by applicable
law.
(d) EXPENSES. Except as provided in paragraph (g) of this
Section 2.1 the Company will pay all Registration Expenses incurred in
connection with any registration requested pursuant to this Section 2.1 which
the Company is obligated to effect, whether or not such registration is
effected.
(e) EFFECTED REGISTRATION STATEMENT. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been
effected unless a registration statement with respect thereto has become
effective except: (i) if the registration statement is withdrawn prior to
its effectiveness pursuant to the request of a majority of the holders of
Registrable Securities who have requested the inclusion in such registration
statement of some or all of their Registrable Securities or one or more of
the holders of Registrable Securities have not paid the Registration Expenses
relating thereto in accordance with paragraph (g) of this Section 2.1, (ii)
if, after the registration statement has become effective, such registration
is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason, and such stop order, injunction or other order or requirement results
from any action or inaction of a holder or holders of Registrable Securities,
or (iii) if the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are
not satisfied due to a failure by a holder of Registrable Securities to
satisfy a condition required to be satisfied by such holder pursuant to the
purchase agreement or underwriting agreement and one or more of the holders
of Registrable Securities have not paid the Registration Expenses relating
thereto in accordance with paragraph
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(g) of this Section 2.1.
(f) SELECTION OF UNDERWRITER. If a requested registration
pursuant to this Section 2.1 involves an underwritten offering, the
underwriter or underwriters thereof shall be selected by the holders of a
majority of the Registrable Securities to be so registered.
(g) LIMITATION ON REGISTRATIONS. The Company's obligations
under this Section 2.1 shall be limited to effecting a single registration
within the meaning of paragraph (e) of this Section 2.1; provided, however,
that (i) if all of the holders who have requested the inclusion of
Registrable Securities held by them in a registration requested under this
Section 2.1 withdraw such request prior to the time the registration
statement has become effective and any or all of such persons pay all
Registration Expenses relating thereto, such proposed registration shall not
count as the registration provided for by this Section 2.1; (ii) if a
registration is deemed to be effected pursuant to paragraph (e) of this
Section 2.1 because a condition to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration is not satisfied due to a failure by a holder of Registrable
Securities to satisfy a condition required to be satisfied by such holder
pursuant to such agreement and one or more of the holders of Registrable
Securities elects to pay (and shall actually have paid) all Registration
Expenses relating to the registration statement, such registration shall not
count as the registration provided for by this Section 2.1; and (iii) if as a
result of the application of the last sentence of Section 2.1(b), less than
67% of the number of Registrable Securities requested to be included in such
registration were included, such registation shall not count as the
registration provided for by this Section 2.1..
(h) COMPANY'S RIGHT TO DELAY REGISTRATION. Notwithstanding
the foregoing provisions of this Section 2.1, the Company shall not be
obligated to effect a registration pursuant to this Section 2.1 within a
period of one (1) year after the effective date of a registration statement
previously filed as a result of a request pursuant to this Section 2.1. In
addition, if the Company has issued and sold to the public, pursuant to a
registration statement filed under the Securities Act, any of its securities
within three (3) months prior to the date of its receipt of a request for
registration pursuant to this Section 2.1, and the Company's investment
banker has advised the Company in writing that the registration of
Registrable Securities would materially adversely affect the market for the
Common Stock, the Company shall have the right, which may not be exercised
more than once in a twelve (12) month period, to delay the requested
registration of Registrable Securities for such period as the investment
banker may so advise, but no more than one hundred twenty (120) days after
the date on which such request was made.
(i) LIMITATION ON SALES. Notwithstanding the foregoing
provisions of this Section 2.1, no Registrable Securities may be sold
pursuant to a registration requested under this Section 2.1 until twelve (12)
months after the date of this Agreement.
2.2. INCIDENTAL REGISTRATION.
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(a) RIGHT TO INCIDENTAL REGISTRATION. If the Company at any
time after twenty-four (24) months from the date of this Agreement proposes
to register any of its securities under the Securities Act (other than by a
registration on Form S-8 or Form S-4 or any successor or similar form and
other than pursuant to Section 2.1 of this Agreement), whether or not for
sale for its own account, it will each such time give prompt written notice
to all holders of Registrable Securities of its intention to do so and of
such holders' rights under this Section 2.2. Upon the written request of any
such holder made within fifteen (15) days after any such notice (which
request shall specify the Registrable Securities intended to be disposed of
by such holder and the intended method of disposition thereof), the Company
will use its best efforts to effect the registration under the Securities Act
in connection with a sale of such shares in the United States of all
Registrable Securities which the Company has been so requested to register by
the holders of Registrable Securities, to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered, provided that if, at any time
after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason, the
Company may, at its election, give written notice of such determination to
each holder of Registrable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any holder or
holders of Registrable Securities entitled to do so to request that such
registration be effected as a registration under Section 2.1 above, and (ii)
in the case of a determination to delay rgistering, shall be permitted to
delay registering any Registrable Securities for the same period as the delay
in registering such other securities. No registration effected under this
Section 2.2 shall relieve the Company of its obligation to effect any
registration upon request under Section 2.1 above. The Company will pay all
Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 2.2.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If (i) a
registration pursuant to this Section 2.2 involves an underwritten offering
of the securities so being registered, whether or not for sale for the
account of the Company, and (ii) the managing underwriter of such
underwritten offering shall inform the Company and the holders of the
Registrable Securities requesting such registration by letter of its belief
that the number of securities requested to be included in such registration
exceeds the number which can be sold in (or during the time of) such
offering, then (A) in the case of an offering for the account of the Company
or which was demanded by the holders of the Registrable Securities - July
1999 pursuant to the rights of the holders of the Registrable Securities -
July 1999, registration for the Registrable Securities shall be cut back such
that (i) no holder of Registrable Securities shall be entitled to participate
in such underwritten public offering unless all shares of Common Stock
proposed to be sold by the Company for its own account have been included in
such underwritten public offering, and (ii) after the Company has included
its own shares of Common Stock, the holders of Registrable Securities and the
holders of other securities as to which the Company has granted registration
rights including (without limitation) the Registrable Securities - July 1999
("Other Registrable Securities"), including incidental registration rights,
shall be entitled to include their Registrable Securities and Other
Registrable Securities in an amount up to the
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amount that such managing underwriter or underwriters advise may be included
therein (allocated among the holders of Registrable Securities and the
holders of other Registrable Securities pro rata on the basis of the number
of securities requested to be included therein by each such holder) and (B)
in the case of an offering that was commenced as a result of the exercise of
demand registration rights by Persons other than E-P or other holders of
Registrable Securities, the Persons commencing such registration and the
holders of Registrable Securities shall be entitled to include their
Registrable Securities and Other Registrable Securities in an amount up to
the amount such managing underwriters or underwriters advise may be included
therein (allocated among the persons commencing such registration and the
holders of Registrable Securities pro rata on the basis of the number of
securities requested to be so included therein by each such person or
holder). If, however, the registration was initiated by the Company within
one hundred twenty (120) days of a requested registration and is in lieu
thereof, then the Company shall include in the registration all Registrable
Securities requested to be included in such registration and shall decrease
the number of securities proposed to be sold by the Company and to be
included in such registration to the extent necessary to reduce the number of
securities to be included in the registration to the level recommended by the
managing underwriter.
2.3. REGISTRATION PROCEDURES. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Section 2.1 or
2.2 above, the Company will, as expeditiously as possible:
(i) prepare and (as soon thereafter as possible or in any event
no later than seventy-five (75) days after the end of the period within
which requests for registration may be given to the Company (ninety (90)
days in the case of requests for registration made during the last
quarter of a fiscal year or the first fifteen (15) days of the first
quarter of any fiscal year) or such longer period as the Company shall in
good faith require to produce the financial statements required in
connection with such registration) file with the Commission the requisite
registration statement to effect such registration and thereafter use its
best efforts to cause such registration statement to become effective,
provided that the Company may discontinue any registration of its
securities which are not Registrable Securities (and, under the
circumstances specified in Section 2.2(a) above, its securities which are
Registrable Securities) at any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof as set forth in such registration
statement but in no event for a period which would exceed one hundred
twenty (120) days from the date on which the registration statement
became effective;
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(iii) furnish to each seller of Registrable Securities covered by
such registration statement such number of conformed copies of such
registration statement and of each amendment and supplement thereto (in
each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents, as
such seller may reasonably request;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions in the
United States as each seller thereof shall reasonably request, to keep
such registration or qualification in effect for so long as such
registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the securities owned
by such seller, except that the Company shall not for any such purpose be
required to either qualify generally to do business as a foreign
corporation, or subject itself to taxation or to general service of
process in any jurisdiction wherein it would not, but for the
requirements of this clause (iv), be obligated to be so qualified or
subject to taxation or service of process, other than as to matters and
transactions related to such registration or qualification;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved
by such other United States governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a copy of
each of the following, if any, addressed to the underwriters:
(A) an opinion of counsel for the Company, dated
the effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated the
date of the closing under the underwriting agreement) reasonably
satisfactory in form and substance to such seller, and
(B) a "comfort" letter, dated the effective date
of such registration statement (and, if such registration includes
an underwritten public offering, dated the date of the closing
under the underwriting agreement), signed by the independent
public accountants who have certified the Company's financial
statements included in such registration statement, covering
substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case
of the accountants' letter, with respect to events subsequent to
the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters
delivered to the underwriters in underwritten public offerings of
securities and, in the case of the accountants, letter, such other
financial matters, and, in the case of the legal
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opinion, such other legal matters, as such seller (or the
underwriters, if any) may reasonably request;
(vii) (A) notify each seller of Registrable Securities covered
by such registration statement, their counsel and the managing
underwriters, if any, promptly, and (if requested in writing by any such
Person), confirm such notice in writing: (1) when a registration
statement or any amendment thereto has been filed, and, with respect to a
registration statement or any post-effective amendment, when the same has
become effective, (2) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to
a registration statement or related prospectus or for additional
information, (3) of the issuance by the Commission of any stop order
suspending the effectiveness of a registration statement or the
initiation of any proceedings for that purpose, (4) if at any time the
representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated by this Section 2
cease to be true and correct, (5) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for
sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, and (6) of the happening of any event that
makes any statement made in such registration statement or related
prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires the
making of any changes to such registration statement, prospectus or
documents so that, in the case of the registration statement, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, not misleading, and that in the case of the
prospectus, it will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances unde which they were
made, not misleading, and (B)at the request of any such seller promptly
prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary (and
a post-effective amendment to such registration statement as may be
necessary in connection therewith) so that, as thereafter delivered to
the purchasers of such securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were
made;
(viii) Use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the lifting
of any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction;
(ix) If requested by the managing underwriters, if any, or the
Holders of a majority in interest of the Registrable Securities being
sold in connection with an underwritten offering, promptly include in a
prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, and such Holders may
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reasonably request in order to permit the intended method of distribution
of such securities and make all required filings of such prospectus
supplement or such post-effective amendment as soon as practicable after
the Company has received such request;
(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, a historical
earnings statement covering the period of at least twelve (12) months,
but not more than eighteen (18) months, beginning with the first month of
the first full fiscal quarter after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11 (a) of the Securities Act, and will furnish to
each such seller at least five business days prior to the filing thereof
a copy of any amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which any such seller shall
have reasonably objected on the grounds that such amendment or supplement
does not comply in all material respects with the requirements of the
Securities Act or the rules or regulations thereunder;
(xi) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement;
(xii) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange or
trading system on which any of the Common Stock is then listed;
(xiii) cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall be in a form eligible for
deposit with The Depository Trust Company; and enable such Registrable
Securities to be in such denominations and registered in such names as
the managing underwriters, if any, or holders may request in writing at
least two (2) business days prior to any sale of Registrable Securities;
(xiv) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of any registration statement at
the earliest possible moment; and
(xv) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation
by any underwriter (including any "qualified independent underwriter"
that is required to be retained in accordance with the rules and
regulations of the NASD).
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish the Company such information
regarding such seller and
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the distribution of such securities as the Company may from time to time
reasonably request in writing.
Each holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described
in clause (vii) (A) (3) or (6) of this Section 2.3, such holder will
forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by clause (vii) of this Section 2.3 and, if
so directed by the Company, will deliver to the Company (at the Company's
expense) all copies, other than permanent file Copies, then in such holder's
possession of the prospectus relating to such Registrable Securities current
at the time of receipt of such notice.
2.4. UNDERWRITTEN OFFERINGS. (a) COOPERATION; UNDERWRITING
AGREEMENTS. If requested by the underwriters for any underwritten offering
by holders of Registrable Securities pursuant to a registration requested
under Section 2.1 above, the Company will enter into an underwriting
agreement with such underwriters for such offering, such agreement to contain
such representations and warranties by the Company and such other terms as
are generally prevailing in agreements of this type, including, without
limitation, indemnities to the effect and to the extent provided in Section
2.6 below. The holders of the Registrable Securities will reasonably
cooperate with the Company in the negotiation of the underwriting agreement,
provided that nothing herein contained shall diminish the foregoing
obligations of the Company. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting
agreement and any necessary or appropriate custody agreements and execute
appropriate powers of attorney, and may, at their option, require that any or
all of the representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders of Registrable Securities and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such holders of Registrable Securities. Any such holder of
Registrable Securities shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law.
(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at
any time proposes to register any of its securities under the Securities Act,
as contemplated by Section 2.2 above, and such securities are to be
distributed by or through one or more underwriters, the Company will, if
requested by any holder of Registrable Securities as provided in said Section
2.2 and subject to the provisions of Section 2.2(b), arrange for such
underwriters to include all the Registrable Securities to be offered and sold
by such holder among the securities to be distributed by such underwriters.
The holders of Registrable Securities to be distributed by such underwriters
shall be parties to the underwriting agreement between the Company and such
underwriters and any necessary or appropriate custody agreements and execute
appropriate powers of attorney, and may, at their option, require that any or
all of the
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representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made to
and for the benefit of such holders of Registrable Securities and that any or
all of the conditions precedent to the obligations of such underwriters under
such underwriting agreement be conditions precedent to the obligations of
such holders of Registrable Securities. Any such holder of Registrable
Securities shall not be required to make any representations or warranties to
or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law.
2.5. PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the holders of
Registrable Securities registered under such registration statement, the
underwriters, if any, and their respective counsel and accountants, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such
access to its books and records and such opportunities to discuss the
business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be
necessary, in the opinion of such holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
2.6. INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY. In the
event of any registration of any securities of the Company under the
Securities Act, the Company will, and hereby does, indemnify and hold
harmless the seller of any Registrable Securities covered by such
registration statement, its directors and officers, each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which such seller or any such director
or officer or underwriter or controlling Person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities
Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse such seller and each such director, officer,
underwriter and controlling Person for any legal or any other expenses
incurred by them in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided that the Company shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out
of or is based upon an untrue statement or omission made in such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and inconformity with
written information furnished to the Company through an instrument
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duly executed by such seller specifically stating that it is for use in the
preparation thereof and, provided further that the Company shall not be
liable to any Person who participates as an underwriter in the offering or
sale of Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of such Person's failure to send or
give a copy of the final prospectus, as the same may be then supplemented or
amended, to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect, regardless of any investigation made
by or on behalf of such seller or any such director, officer, underwriter or
controlling Person and shall survive the transfer of such securities by such
seller and the termination or expiration of this Agreement.
(b) INDEMNIFICATION BY THE SELLERS. The Company may
require, as a condition to including any Registrable Securities in any
registration statement filed pursuant to Section 2.3 above, that the Company
shall have received an undertaking reasonably satisfactory to it from the
prospective seller of such securities, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subparagraph (a) of this
section 2.6) the Company, each director of the Company, each officer of the
Company and each other Person, if any, who controls the Company within the
meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such statement
or alleged statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by such seller specifically stating that
it is for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement.
Such indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director,
officer or controlling Person and shall survive the transfer of such
securities by such seller and the termination or expiration of this
Agreement. The obligations of any seller under this subparagraph (b) shall
be limited to the net proceeds to such seller of the Registrable Securities
sold pursuant to the registration statement to which the loss, claim, damage,
judgment, expense or liability relates.
(c) CONTRIBUTION. If the indemnification provided for in
subparagraphs (a) and (b) above for any reason is held by a court of
competent jurisdiction to be unavailable to an indemnified party in respect
of any losses, claims, damages, judgments, expenses or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, judgments, expenses or liabilities in such proportion as is
appropriate to reflect the relative fault, if any, of the Company and the
other selling holders in connection with the statements or omissions which
resulted in such losses, claims, damages, expenses or liabilities, as well as
any other relevant equitable considerations. The relative fault of the
Company and the selling holders shall be determined by
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reference to, among other things, whether the untrue statement or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
selling holders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the holders, and the underwriters agree that it would not be
just and equitable if contribution pursuant to this subparagraph (c) were
determined by pro rata or per capita allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to in the immediately preceding sentence. The obligations of any
seller under this subparagraph (c) are several, not joint, and shall be
limited to an amount equal to the net proceeds to such seller of Registrable
Securities sold pursuant to the registration statement to which the loss,
claim, damage, judgment expense or liability relates. No person found guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
theSecurities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(d) NOTICES OF CLAIMS AND PROCEDURES. Promptly after
receipt by an indemnified Person of notice of the commencement of any action
or proceeding involving a claim referred to in the preceding subparagraphs of
this Section 2.6, such indemnified Person will, if a claim in respect thereof
is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action, provided that the failure of any
indemnified Person to give notice as provided herein shall not relieve the
indemnifying party of his, her or its obligations under the preceding
subparagraphs of this Section 2.6, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any
such action is brought against an indemnified Person, unless in such
indemnified Person's reasonable judgment a conflict of interest between such
indemnified Person and such indemnifying party may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified Person, and after notice from the
indemnifying party to such indemnified Person of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified Person for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs
of investigation. No indemnifying party shall, without the consent of the
indemnified Person, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified Person of a release from all
liability in respect to such claim or litigation and otherwise in form and
substance reasonably satisfactory to the indemnified Person.
(e) INDEMNIFICATION PAYMENTS. The indemnification required
by this Section 2.6 shall be made by prompt payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
(f) NOT EXCLUSIVE. The indemnification and contribution
provisions of Section 2.6 are in addition to any other rights to
indemnification or contribution that an indemnified party may have under law
or contract.
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2.7. ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will
not effect or permit to occur any combination or subdivision of shares which
would materially adversely affect the ability of the holders of Registrable
Securities to include such Registrable Securities in any registration of its
securities contemplated by this Section 2 or the marketability of such
Registrable Securities under any such registration.
3. RULES 144 AND 144A. The Company will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the Commission thereunder (or, if the Company is
not required to file such reports, the Company will, upon the request of any
holder of Registrable Securities, make publicly available other information)
and will take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable
such holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rules
144 and 144A under the Securities Act, as such Rules may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
4. REPRESENTATIONS OF THE COMPANY. The Company hereby represents
and warrants to E-P that the execution, delivery and performance of this
Agreement will not conflict with, result in a breach of, constitute a default
under, or require the consent or waiver of another under, any other agreement
to which the Company is a party, except for those consents or waivers which
have been obtained prior to the date hereof.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended and the
Company may take any action herein prohibited or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained the written consent to such amendment, action or omission to act, of
the holder or holders of fifty-one percent (51%) or more of the Registrable
Securities at the time outstanding. Each holder of Registrable Securities at
the time or thereafter outstanding shall be bound by a consent authorized by
this Section 5.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any
Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at his, her or its election, be
treated as the holder of such Registrable Securities for purposes of any
request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage
of shares of Registrable Securities held by any holder or holders of
Registrable Securities contemplated by this Agreement. If the beneficial
owner of any Registrable Securities so elects, the Company may require
assurances reasonably satisfactory to it of such owner's beneficial ownership
of such Registrable Securities.
7. NOTICES. All notices and other communications required or
permitted hereunder shall be in writing, and shall be deemed to have been
delivered on the date delivered by hand, telegram, facsimile or by similar
means, on the third (3rd) day following the day when sent by recognized
courier or overnight delivery service (fees prepaid), or on the fifth (5th)
day following the day when deposited in the mail, registered or certified
(postage prepaid), addressed
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(a) if to E-P, to its attention at the address set forth in Section 13.3 of
the Asset Purchase Agreement or in the stock records of the Company, or to
the attention of such other Person or Persons, as E-P shall have furnished to
the Company in writing, or (b) if to the Company, Isonics Corporation, ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, fax: (303)
▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq., ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇,
P.C., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, fax: (303)
▇▇▇-▇▇▇▇, or such other address, or to the attention of such other Person or
Persons, as the Company shall have furnished to each holder of Registrable
Securities at the time outstanding; provided, however, that any such
communication to the Company may also, at the option of E-P, be delivered to
any officer of the Company.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are
for the benefit of E-P shall also be for the benefit of and enforceable by
any subsequent holder of any Registrable Securities who has executed a copy
of this Agreement or otherwise indicated its agreement to be bound hereby,
subject to the provisions respecting the minimum numbers or percentages of
shares of Registrable Securities required in order to be entitled to certain
rights or take certain actions contained herein.
9. CONSISTENT INTERPRETATION. The parties acknowledge that this
agreement requires delivery of certain documents in connection with the
Company's performance of its obligations under this agreement which may also
be required under other registration rights agreements to which the Company
is a party including (without limitation) the agreements establishing the
rights for the Registrable Securities - July 1999. Where this agreement
provides for the delivery of a document "reasonably satisfactory to the
seller" or other words to a similar import and where other registration
rights agreement require the delivery of similar documents pursuant to its
terms, the seller agrees that the holders of securities defined as
"Registrable Securities" under similar registration rights agreements which
are dated prior to the date of this agreement will determine the form and
substance of any opinion or other document required under this Agreement.
The Company shall not at any time grant registration rights to any other
holder of the Company's capital stock which conflict with the rights of the
Registrable Securities set forth herein.
10. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
11. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the
laws of the State of Delaware, U.S.A., without regard to principles of
conflicts of laws.
12. COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute one and the same instrument.
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13. TERMINATION. This Agreement shall terminate only upon written
consent of the Company and E-P. Notwithstanding the foregoing, the Company
may unilaterally terminate this Agreement if E-P fails to meet its
requirements to deliver Silicon-28 under Article III of the Asset Purchase
Agreement to the extent such breach is material and continues for 30 days
after notice of such breach from ISONICS or from another person on behalf of
ISONICS..
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement, or have caused this Agreement to be executed and delivered by
their respective duly authorized officers, on the date first above written.
ISONICS CORPORATION
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
EAGLE-PICHER TECHNOLOGIES, LLC
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, General Manager-Boron
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