AMENDED AND RESTATED
CERTIFICATE OF DETERMINATION OF
PREFERENCES AND RIGHTS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
ISONICS CORPORATION
* * * *
The undersigned, James E. Alexander and Brantley J. Halstead, certify that:
1. They are the duly acting President and Secretary, respectively, of
ISONICS CORPORATION, a corporation organized and existing under the
Corporations Code of the State of California (the "Corporation").
2. That, pursuant to authority conferred upon the Board of Directors by the
Articles of Incorporation of the Corporation, and pursuant to the provisions
of Section 401 of Title 1 of the Corporations Code of the State of
California, said Board of Directors, pursuant to an action by unanimous
consent dated July 26, 1999, adopted a resolution mending and restating the
rights, preferences, privileges and restrictions of, and the number of shares
comprising, the Corporation's Series A Convertible Preferred Stock, which
resolution is as follows:
RESOLVED, that a series of Preferred Stock in Isonics Corporation, a
California corporation (the "Corporation"), having the rights, preferences,
privileges and restrictions, and the number of shares constituting such
series and the designation of such series, set forth below be, and it
hereby is, authorized by the Board of Directors of the Corporation pursuant
to authority given by the Corporation's Articles of Incorporation.
1. NUMBER AND DESIGNATION. This series shall consist of 1,850,000
shares of Preferred Stock of the Corporation and shall be designated the
Series A Convertible Preferred Stock ("Series A Stock"). The number of
authorized shares of Series A Stock may be reduced to the extent any shares
are not issued and outstanding by further resolution duly adopted by the
Board of Directors of the Corporation and by filing amendments to the
Certificate of Determination pursuant to the provisions of the Corporations
Code of the State of California stating that such reduction has been so
authorized, but the number of authorized shares of this Series shall not be
increased except pursuant to majority vote of the Series A Holders. None
of the shares of Series A Stock has been issued.
2. DIVIDENDS. When and as any dividend or distribution is declared
or paid by the Corporation on Common Stock, whether payable in cash,
property, securities or rights to acquire securities, the Series A Holders
will be entitled to participate with the holders of Common Stock in such
dividend or distribution as set forth in this Section 2. At the time such
dividend or distribution is payable to the holders of Common Stock, the
Corporation will pay to each Series A Holder such holder's share of such
dividend or distribution equal to the amount of the dividend or
distribution per share of Common Stock payable at such time multiplied by
the number of shares of Common Stock then obtainable upon conversion of
such holder's Series A Stock.
3. VOTING RIGHTS.
A. The Series A Holders shall be entitled to notice of any
shareholders' meeting and to vote as a single class with the Common Stock
upon any matter submitted for approval by the holders of Common Stock on
the following basis: the Series A Holders shall have that number of votes
equal to the number of shares of Common Stock into which such Series A
Stock is then convertible.
B. In addition to any other rights provided by law, so long as
any Series A Stock is outstanding, the Corporation, without first obtaining
the affirmative vote or written consent of the holders of not less than a
majority of such outstanding shares of Series A Stock, will not:
(i) amend or repeal any provision of, or add any provision to,
the Corporation's Articles of Incorporation or By-Laws if such action
would alter adversely the liquidation preferences of, or the rights or
restrictions provided for the benefit of, any Series A Stock;
(ii) authorize or issue shares of any class or series of stock
not expressly authorized herein having any preference or priority as
to
dividends, voting or liquidation or other rights superior to any
such preference or priority of the Series A Stock, or authorize or
issue shares of stock of any class or any bonds, debentures, notes or
other obligations convertible into or exchangeable for, or having
option rights to purchase, any shares of stock of the Corporation
having any preference or priority as to dividends, voting or
liquidation or other rights superior to any such preference or
priority of the Series A Stock;
(iii) reclassify any class or series of stock junior to the
Series A Stock into stock senior to the Series A Stock with respect to
any preference or priority;
(iv) issue any class(es) or series of equity security(ies)
which (a) is (are) convertible directly or indirectly into Common
Stock at a rate related to the market price of the Common Stock or
other such variable basis (other than normal anti-dilution provisions)
or (b), in any transaction or series of transactions over a 12 month
period, constitute(s) 15% or more of the outstanding Common Stock of
the Corporation, assuming conversion or exercise in full of any
Convertible Securities included in such securities;
(v) elect to windup, dissolve or liquidate the Corporation or
revoke any such election; or
(vi) sell or otherwise dispose of (including without limitation
through lease, mortgage, licensing, joint venture, exchange, transfer
or similar arrangements) all or a significant portion of the Silicon
Isotope Business.
4. PREFERENCE UPON LIQUIDATION.
A. Upon any liquidation, dissolution or winding up of the
Corporation, each Series A Holder will be entitled to be paid, before any
distribution or payment is made upon any Junior Securities of the
Corporation, an amount in cash equal to the aggregate Liquidation Value (as
defined in Section 7C below) of all shares of Series A Stock held by such
holder, plus accrued dividends, if any; thereafter, each Series A Holder
will participate in any distribution or payment on a pro rata basis with
all Junior Securities as if the Series A Stock had been converted into
Common Stock.
B. The reorganization, consolidation or the merger of the
Corporation into or with any other corporation(s) or other entity(ies)
("Reorganization"), the sale, lease, licensing, exchange or other transfer
by the Corporation of all or any significant part of its assets or the
commencement by the Corporation of a voluntary case under the United States
bankruptcy laws or any applicable bankruptcy, insolvency or similar law of
any other country, or consent to the entry of an order for relief in an
involuntary case under any such law or to the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Corporation or of any substantial part of its property, or
the making of an assignment for the benefit of its creditors, or an
admission in writing of its inability to pay its debts generally as they
become due, will be deemed to be a liquidation, dissolution or winding up
of the Corporation within the meaning of this Section 4; PROVIDED THAT,
with the consent of the Series A Holders acting by a majority vote (the
"Reorganization Consent"), a Reorganization of the Corporation shall not be
deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning of this Section 4 if (i) the principal agreement for
such Reorganization shall expressly provide that the Series A Stock shall
become preferred stock of such surviving entity with the equivalent rights
to the rights set forth herein ("Surviving Entity Preferred Stock"), (ii)
the holders of Junior Securities receive, in exchange for such Junior
Securities, common stock or preferred stock in the surviving entity
(whether or not the surviving entity is the Corporation) of such
Reorganization, or common stock or preferred stock of another entity, which
is junior as to dividends and upon liquidation, dissolution or winding up
to the Series A Stock or Surviving Entity Preferred Stock, as applicable,
and (iii) the Series A Holders shall be entitled to receive at the option
of each Series A Holder (A) either the Surviving Entity Preferred Stock or
(B) the kind and amount of shares or other securities or property which
they would have been entitled to receive had they converted their shares of
Series A Stock into shares of Common Stock of the Corporation as of the
record date for the determination of holders of Common Stock entitled to
cast their votes for or against or to express any dissent to such
Reorganization. After any such Reorganization and Reorganization Consent,
the rights of such holders of Surviving Entity Preferred Stock with respect
to the adjustment of the Conversion Price shall be appropriately continued
and preserved in order to afford, as nearly as possible, protection against
dilution of the conversion rights and privileges comparable to those
conferred herein.
5. CONVERSION INTO CONVERSION STOCK; SILICON ISOTOPE TRANSACTION.
A. CONVERSION.
(i) At any time prior to the Redemption Date (as
defined in Section 6 B below), any Series A Holder may convert all or
any portion of such holder's shares of Series A Stock into a number of
shares of the Conversion Stock computed by multiplying the number of
shares to be converted by $1.50 and dividing the result by the
Conversion Price then in effect. For purposes of this Section,
"Conversion Stock" means the Common Stock.
(ii) Each conversion of Series A Stock will be deemed
to have been effected as of the close of business on the date on which
the certificate or certificates representing the Series A Stock to be
converted have been surrendered at the principal office of the
Corporation. At such time as such conversion has been effected, the
rights of the holder of such Series A Stock as such holder will cease
and the person or persons in whose name or names any certificate or
certificates for shares of Conversion Stock are to be issued upon such
conversion will be deemed to have become the holder or holders of
record of the shares of Conversion Stock represented thereby.
(iii) As soon as possible after a conversion has been
effected, the Corporation will deliver to the converting holder:
(a) a certificate or certificates representing the
number of shares of Conversion Stock issuable by reason of such
conversion in such name or names and such denomination or
denominations as the converting holder has specified; and
(b) a certificate representing any shares of Series A
Stock which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion
but which were not converted.
(iv) If any fractional share of Conversion Stock would
be issuable upon any conversion, the Corporation will pay the holder
of the Conversion Stock the fair market value of such fractional
share.
(v) The issuance of certificates for shares of
Conversion Stock upon conversion of Series A Stock will be made
without charge.
(vi) The Corporation will not close its books against
the transfer of Series A Stock or of Conversion Stock issued or
issuable upon conversion of Series A Stock in any manner which
interferes with the conversion of Series A Stock.
B. CONVERSION PRICE. The initial Conversion Price for the
Series A Stock will be $1.50. In order to prevent dilution of the
conversion rights granted under this Section, the Conversion Price will be
subject to adjustment from time to time pursuant to this Section 5.
C. SUBDIVISION OR COMBINATION OF COMMON STOCK; DISSOLUTION.
(i) If the Corporation at any time subdivides (by any stock
split, stock dividend or otherwise) its outstanding shares of Common Stock
into a greater number of shares, the Conversion Price in effect immediately
prior to such subdivision will be proportionately reduced, and if the
Corporation at any time combines (by reverse stock split or otherwise) its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination will be
proportionately increased.
(ii) In the event of a judicial or non-judicial dissolution of
the Corporation, the conversion rights and privileges of the Series A
Holders shall terminate on a date, as fixed by the Board of Directors of
the Corporation, not more than 45 days and not less than 30 days before the
date of such dissolution. The reference to shares of Common Stock herein
shall be deemed to include shares of any class into which said shares of
Common Stock may be changed.
D. OTHER ADJUSTMENTS.
(i) GENERAL. In any case to which Section 5C hereof is not
applicable, where the Corporation shall issue or sell shares of its
Common Stock after the Original Issue Date for a consideration per
share less than the Conversion Price in effect pursuant to the terms
of the Series A Stock at the time of issuance or sale of such
additional shares (the "Lower Exercise Price"), then the Conversion
Price in effect hereunder shall simultaneously with such issuance or
sale be reduced to the Lower Exercise Price.
(ii) CONVERTIBLE SECURITIES.
(a) In case the Corporation shall issue or sell any
securities convertible into Common Stock of the Corporation
("Convertible Securities") after the Original Issue Date, 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 (1) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion
or exchange thereof, by (2) the maximum number of shares of Common
Stock of the Corporation issuable upon the conversion or exchange of
all of such Convertible Securities.
(b) If the price per share so determined shall be less
than the applicable Conversion Price, then such issue or sale shall be
deemed to be an issue or sale for cash (as of the date of issue or
sale of such Convertible Securities) of such maximum number of shares
of Common Stock at the price per share so determined, provided that,
if such Convertible Securities 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, if any, to the
Corporation, or in the rate of exchange, upon the conversion or
exchange thereof, the adjusted Conversion Price shall, forthwith upon
any such increase or decrease becoming effective, be readjusted to
reflect the same, and 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 Conversion
Price 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 Corporation upon such conversion or exchange, plus the
consideration, if any, actually received by the Corporation for the
issue or sale of all of such Convertible Securities which shall have
been converted or exchanged.
(iii) RIGHTS AND OPTIONS.
(a) In case the Corporation shall grant any rights or
options to subscribe for, purchase or otherwise acquire Common Stock
(other than pursuant to an incentive plan for employees adopted by a
majority of the stockholders of the Corporation providing for the
issuance of options to purchase no more than an aggregate of 500,000
shares of Common Stock at
a price of no less than 85% of fair market value), 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 (1) the total amount, if any, received or receivable
by the Corporation as consideration for the granting of such rights
or options, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the exercise of such
rights or options, by (2) the maximum number of shares of Common
Stock of the Corporation issuable upon the exercise of such rights
or options.
(b) If the price per share so determined shall be less
than the applicable Conversion Price, then the granting of such rights
or options shall be deemed to be an issue or sale for cash (as of the
date of the granting of such rights or options) of such maximum number
of shares of Common Stock at the price per share so determined,
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 Corporation upon the exercise thereof, the adjusted Conversion
Price shall, forthwith upon any such increase or decrease becoming
effective, be readjusted to reflect the same, and provided, further,
that upon the expiration of such rights or options, if any thereof
shall not have been exercised, the adjusted Conversion Price 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 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 Corporation
upon such exercise, plus the consideration, if any, actually received
by the Corporation for the granting of all such rights or options,
whether or not exercised.
E. SILICON ISOTOPE TRANSACTION. In the event that on or
before January 1, 2001 the Corporation sells or otherwise disposes of
(including, without limitation, through lease, mortgage, joint venture,
exchange, transfer or similar arrangements), or enters into a contract to
sell or dispose of, all or a significant portion of the Silicon Isotope
Business (a "Silicon Isotope Transaction"), the Corporation shall cause to
be delivered to each Series A Holder, concurrently with the consummation of
the Silicon Isotope Transaction, its pro rata share of the Exchange
Interests and Transaction Cash Proceeds (as defined in Section 7C below).
The Corporation shall not effect any Silicon Isotope Transaction unless
prior to or simultaneous with the consummation thereof, the Silicon Isotope
Successor Entity shall (i) deliver to each Series A Holder such holder's
pro rata share of the Exchange Interests and Transaction Cash Proceeds;
(ii) enter into a Registration Rights
Agreement on terms substantially similar to that entered into between the
Corporation and the Series A Holders, dated as of the Original Issue Date
and (iii) provide the holders of Exchange Interests with equivalent rights
to the rights set forth herein.
F. CERTAIN EVENTS. If any event occurs of the type
contemplated by the provisions of this Section 5 but not expressly provided
for by such provisions, then the Board of Directors of the Corporation will
make (i) an appropriate adjustment in the Conversion Price so as to protect
the rights of the Series A Holders; provided that no such adjustment will
increase the Conversion Price as otherwise determined pursuant to this
Section 5 or decrease the number of shares of Conversion Stock issuable
upon conversion of each share of Series A Stock and (ii) an appropriate
adjustment in the terms of the Silicon Isotope Transaction so as to protect
the rights of the Series A Holders.
G. NOTICES.
(i) Immediately upon any adjustment of the Conversion
Price, the Corporation will send written notice thereof to all Series
A Holders.
(ii) The Corporation will send written notice to all
Series A Holders at least 20 days prior to the date (a) on which the
Corporation closes its books or takes a record (1) with respect to any
dividend or distribution upon Common Stock, (2) with respect to any
PRO RATA subscription offer to holders of Common Stock, (3) for
determining rights to vote on or approve any matter or (b) proposes to
take any action on which the Series A Holders are entitled to vote
pursuant to Section 3B or Section 4B.
(iii) In addition to the notice required under
paragraph (ii) above, the Corporation will send written notice (the
"Exchange Notice") to all Series A Holders at least 30 days prior to
the date of any proposed Silicon Isotope Transaction setting forth in
reasonable detail the material terms of the Silicon Isotope
Transaction and the capitalization, financial condition, business plan
and other material facts of the Silicon Isotope Successor Entity.
(iv) All notices and other communications from the
Corporation to a Series A Holder shall be mailed by first class
registered or certified mail, postage prepaid, at such address as may
have been furnished to the Corporation in writing by such holder, or,
until an address is so
furnished, to and at the address of the last holder who has so
furnished an address to the Corporation.
H. CONVERTED OR REDEEMED SHARES. Any shares of Series A
Stock which are converted pursuant to this Section 5 or redeemed pursuant
to Section 6 will be canceled and will not be reissued, sold or
transferred.
I. INSUFFICIENT AUTHORIZED SHARES. In the event at the time
any Series A Holder requests conversion of any of such shares and the
Corporation does not have a sufficient (for other events) number of shares
of Common Stock authorized and unreserved to provide for conversion of all
outstanding shares of Series A Stock, the Corporation shall give at least
10 days prior written notice of such requested conversion to all other
Series A Holders in order to enable such other holders to request
conversion of their respective shares. In the event that Series A Holders
request conversion of shares or Series A Stock into a greater number of
shares of Common Stock than the Corporation then has authorized and
unreserved (for other events), the Corporation shall issue all of its
authorized and unreserved (for other events) shares of Common Stock to such
holders PRO RATA in accordance with the number of shares of Series A Stock
of which each holder has requested conversion. The unconverted balance of
the shares of Series A Stock will remain as shares of Series A Stock until
the Corporation has authorized a sufficient number of additional shares of
Common Stock to provide for conversion of all shares of Series A Stock then
outstanding. In the event at the time any Series A Holder requests
conversion of any of such shares and the Corporation does not have a
sufficient number of shares of Common Stock authorized and reserved to
provide for conversion of all outstanding shares of Series A Stock, the
Corporation will promptly reserve such number of shares of authorized
Common Stock as are sufficient to provide for conversion of all outstanding
shares of Series A Stock, but if the Corporation does not have a sufficient
number of shares of Common Stock authorized and unreserved (for other
events) to reserve such number of shares, the Corporation will promptly
reserve the authorized and unreserved (for other events) Common Stock and
provide for such meetings to be held, and approvals to be solicited, as are
necessary to authorize and reserve a sufficient number of shares of Common
Stock to provide for conversion of all outstanding shares of Series A
Stock.
6. OPTIONAL REDEMPTION.
A. After the Redemption Trigger Date (as defined in Section
7C below) all or any part of the Series A Stock may be redeemed by the
Corporation at its election at any time and from time to time, in the
manner prescribed in this Section 6, provided that (i) in any redemption
under this Section 6A the Corporation shall redeem no less than all
outstanding shares of Series A Stock and
(ii) the Corporation may not make any redemption unless and until the
Corporation has registered under the Securities Act of 1933, as amended,
either the issuance of the shares of Common Stock issuable on conversion
of the Series A Stock or the resale of such shares by the holders thereof.
B. Before making any redemption, the Corporation shall mail
by certified or registered mail, return receipt requested, to each record
holder of any Series A Stock at the address shown on the Corporation's
records, a written notice (a "Redemption Notice") stating: (i) the number
of shares of Series A Stock held of record by such holder which the
Corporation proposes to redeem; (ii) the date (herein called the
"Redemption Date") on which the Corporation proposes to pay the Redemption
Price for the shares to be redeemed; (iii) the Redemption Price which under
this Section 6 is to be paid for each share to be redeemed; (iv) the place
at which the shares to be redeemed may be surrendered in exchange for the
Redemption Price for such shares; and (v) the then current Conversion
Price. Upon the mailing of a Redemption, the Corporation shall become
obligated to redeem the Series A Stock specified in such notice on the date
specified in such notice as the Redemption Date. Each Redemption Notice
shall be mailed at least 30 days before the Redemption Date, provided that
if the Corporation fails to pay the Redemption Price on such date (for a
reason other than a holders' failure to deposit Series A Stock certificates
pursuant to Section 6D below), the Redemption Date shall be the date on
which the Corporation actually pays the Redemption Price.
C. The number of shares of Series A Stock to be redeemed from
each holder thereof in repurchases under Section 6A shall be determined by
multiplying the total number of shares of Series A Stock to be redeemed by
a fraction, the numerator of which shall be the total number of shares of
Series A Stock held by such holder and the denominator of which shall be
the total number of shares of Series A Stock outstanding.
D. (i) For each share of Series A Stock which shall be
redeemed by the Corporation at any time under Section 6A, the Corporation
shall be obligated to pay to the holder of such share an amount in cash
(herein called the "Redemption Price" for such share) equal to the
Liquidation Value of such share. The Corporation shall be obligated to pay
on any Redemption Date on which the Corporation shall be required to redeem
any Series A Stock both the Redemption Price for each share and all
dividends which shall have been declared on each share to and including the
Redemption Date and which shall not previously have been paid. Such
payments which the Corporation shall be obligated to make on any Redemption
Date shall be deemed to become "due" for all purposes of this Section 6
regardless of whether the Corporation shall be able to legally permitted to
make such payments on such Redemption Date.
(ii) Each holder of Series A Stock shall be entitled
to receive on or at any time after any Redemption Date the full
Redemption Price, plus declared but unpaid dividends, for each share
of Series A Stock held by such holder which the Corporation shall be
obligated to redeem on such Redemption Date upon surrender by such
holder at the Corporation's principal office of the certificate
representing such share duly endorsed in blank or accompanied by an
appropriate form of assignment duly endorsed in blank. After the
payment by the Corporation in cash of the full Redemption Price for
any Series A Stock, plus accrued unpaid dividends, all rights of the
holder of such stock shall (whether or not the certificate
representing such stock shall have been surrendered for cancellation)
cease and terminate with respect to such stock.
7. MISCELLANEOUS.
A. REGISTRATION OF TRANSFER. The Corporation will keep at
its principal office a register for the registration of Series A Stock.
Upon the surrender of any certificate representing Series A Stock at such
place, the Corporation will, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a new
certificate or certificates in exchange therefor representing in the
aggregate the number of shares represented by the surrendered certificate.
Each such new certificate will be registered in such name and will
represent such number of shares as is requested by the holder of the
surrendered certificate and will be substantially identical in form to the
surrendered certificate.
B. REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the registered holder will
be satisfactory) of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing one or more shares of Series A
Stock, and in the case of any such loss, theft or destruction, upon receipt
of indemnity reasonably satisfactory to the Corporation, the Corporation
will (at its expense) execute and deliver in lieu of such certificate a new
certificate representing the number of shares represented by such lost,
stolen, destroyed or mutilated certificate.
C. DEFINITIONS. For purposes hereof:
"APPLICABLE PERCENTAGE" shall mean the percentage that results
from multiplying 25% by a fraction, the numerator of which is the number of
shares of Series A Stock issued on, or within 30 days of, the date this
Certificate is filed with the Secretary of State of the State of California
and the denominator of which is 1,850,000.
"COMMON STOCK" means the Common Stock of the Corporation, no par
value per share, and 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 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).
"CONVERSION PRICE" and "CONVERSION STOCK" shall have the meaning
set forth in Sections 5B and 5A(i), respectively.
"CORPORATION" shall have the meaning set forth in the first
paragraph of this Certificate of Determination.
"EXCHANGE INTERESTS" shall mean equity interests (whether in the
form of stock, limited liability company interests, partnership interests,
a percentage of profits and losses, or otherwise) entitling the holders
thereof to the Applicable Percentage of the profits, votes and
distributions of the Silicon Isotope Successor Entity and having
substantially similar terms, preferences and other rights as the Series A
Stock.
"JUNIOR SECURITIES" means the Common Stock and any equity
securities of any kind (but not including any debt securities convertible
into equity securities) which the Corporation or any Subsidiary at any time
issues or is authorized to issue other than the Series A Stock unless the
terms of such security explicitly state that such security shall be senior
to or on a par with the Series A Stock.
"LIQUIDATION VALUE" of any share of Series A Stock as of any
particular date will be $1.50.
"ORIGINAL ISSUE DATE" means the date the Series A Stock is first
issued.
"PERSON" and "PERSON" means an individual, a partnership, a
corporation, a limited liability company, a trust, a joint venture, an
unincorporated organization and a government or any department or agency
thereof.
"REDEMPTION TRIGGER DATE" shall mean the business day immediately
following the thirtieth consecutive trading day that the average Closing
Price during such trading days (or, if no closing price is reported, the
average of the bid and ask
prices) of the shares of Common Stock was above $8.00 per share (which
minimum price shall be proportionately adjusted for stock splits, stock
dividends, reverse stock splits and any other subdivision or combination
of the Common Stock.
"SERIES A HOLDER" shall mean a registered holder of Series A
Stock.
"SERIES A STOCK" shall have the meaning set forth in Section 1.
"SILICON ISOTOPE BUSINESS" shall mean all the assets and business
of the Corporation relating to the development, production, use or sale of
isotopes of silicon metal and related products, including without
limitation all related patents, know-how, procedures, business plans,
customer lists and other intellectual property.
"SILICON ISOTOPE SUCCESSOR ENTITY" shall mean the Person or other
entity that will conduct the Silicon Isotope Business upon the consummation
of the Silicon Isotope Transaction.
"SUBSIDIARY" means any corporation of which the shares of stock
having a majority of the general voting power in electing the board of
directors are, at the time as of which any determination is being made,
owned by the Corporation either directly or indirectly through
Subsidiaries.
"TRANSACTION CASH PROCEEDS" shall mean the Applicable Percentage
of the cash paid or payable in connection with a Silicone Isotope
Transaction
D. AMENDMENT AND WAIVER. No amendment, modification or
waiver will be binding or effective with respect to any provision hereof
without the prior approval of a majority of the outstanding Shares of
Series A Stock; provided notwithstanding Section 3.B above that no such
action will change or affect (a) the Conversion Price of the Series A Stock
or the number of shares or the class of stock into which the Series A Stock
is convertible, (b) the Liquidation Value of the Series A Stock, or (c) the
amount of cash, securities or other property receivable or to be received
by the Series A Holders.
E. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. When any
accounting determination or calculation is required to be made, such
determination or calculation (unless otherwise provided) will be made in
accordance with generally accepted accounting principles, consistently
applied, except that if because of a change in generally accepted
accounting principles the Corporation would have to alter a previously
utilized accounting method or policy in order to remain in compliance with
generally accepted accounting principles, such determination or
calculation will continue to be made in accordance with the Corporation's
previous accounting methods and policies unless the Corporation has
obtained the prior written consent of the holders of a majority of the
Series A Stock then outstanding.
3. The number of authorized shares of Preferred Stock of the Corporation is
10,000,000, and the number of shares of Series A Stock, none of which has
been issued, is 1,850,000.
IN WITNESS WHEREOF, the undersigned officers of the Corporation have
executed this Amended and Restated Certificate this _____ day of July, 1999.
ISONICS CORPORATION
By:
-------------------------------
James E. Alexander, President
By:
-------------------------------
Brantley J. Halstead, Secretary
VERIFICATION
The undersigned, James E. Alexander and Brantley J. Halstead, the
President and Secretary, respectively, of Isonics Corporation, each declares
under penalty of perjury that the matters set out in the foregoing Amended
and Restated Certificate are true of his own knowledge. Executed at Golden,
Colorado, on this _____ day of July, 1999.
-----------------------------
James E. Alexander
-----------------------------
Brantley J. Halstead