Unassociated Document
United
States Securities And Exchange Commission
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of Earliest Event Reported): November 22,
2010
(November
22, 2010)
ISORAY,
INC.
(Exact
name of registrant as specified in its charter)
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Minnesota
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001-33407
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41-1458152
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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350 Hills Street, Suite 106,
Richland, Washington 99354
(Address
of principal executive offices) (Zip Code)
(509)
375-1202
(Registrant's
telephone number)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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ITEM
1.01 Entry into a Material Definitive Agreement.
On
November 22, 2010, IsoRay, Inc., a Minnesota corporation (the "Company"),
entered into a Securities Purchase Agreement (the "Agreement") with a certain
purchaser identified on the signature pages thereto (the
"Buyer"). Pursuant to the terms of the Agreement, the Company will
sell (the "Offering") to the Buyer, in a registered offering, an aggregate of
2,250,000 shares of the Company's common stock, par value $0.001 per share (the
"Shares"). As part of the transaction, the Buyer will also receive
four series of warrants (collectively, the "Warrants") - (i) Series A Warrants
in an amount equal to $500,000 divided by the lower of $1.50 and 90% of the
average of the 3 lowest volume weighted average prices out of the 15 trading
days preceding the exercise date (with a floor of $0.75 for a maximum of 666,667
shares of common stock issuable upon exercise of the Series A Warrants); (ii)
Series B Warrants in an amount equal to 25% of the number of shares of common
stock issued at the Closing, or Series B Warrants exercisable for 562,500 shares
of common stock; (iii) Series C Warrants in an amount equal to 125% of the
number of shares of common stock issued at the Closing, or Series C Warrants
exercisable for 2,812,500 shares of common stock; and (iv) Series D Warrants in
an amount equal to 125% of the number of shares of common stock issued at the
Closing, or Series D Warrants exercisable for 2,812,500 shares of common stock
but the Series D Warrants will only be exercisable to the extent that any of the
Series C Warrants may not be exercised due to NYSE AMEX shareholder approval
requirements limiting the number of overall below-market securities issuable to
no greater than 4,418,026 shares of common stock. As a result of this
limitation, the total number of Series A, B and C Warrants that may be issued
will not exceed Warrants exercisable for an aggregate of 2,168,026 shares of
common stock, and Series D Warrants are expected to be issued to purchase
1,873,641 shares of common stock, assuming the Series A Warrants are exercisable
for the maximum number of shares of common stock.
The
exercise price of each of the Series A, B and C Warrants will be equal to the
lower of (i) $1.50 and (ii) 90% of the average of the 3 lowest volume weighted
average prices out of the 15 trading days preceding the exercise date, but in no
event will the exercise price of the Series A Warrants be less than $0.75 per
share. The Warrants will have terms varying from ninety days from the
Offering closing date for the Series A Warrants to six months from the Offering
closing date for the Series B Warrants to five years from the initial
exercisability date for the Series C and D Warrants. The Series A, B
and C Warrants will be immediately exercisable following the closing of the
Offering. The Series D Warrants will not be exercisable until six
months after the Closing and will have an exercise price equal to
$1.56.
The
Shares will be issued pursuant to the Company's shelf registration statement
(the "Registration Statement") on Form S-3 (File No. 333-162694), which became
effective on November 13, 2009, and a prospectus supplement to be filed on
November 24, 2010.
By letter
agreement dated October 27, 2010, LifeTech Capital, a division of Aurora
Capital, LLC, acted as placement agent in connection with the placement of the
securities in this offering. LifeTech will receive a cash fee of 5%
of the gross proceeds received under the Offering (excluding proceeds received
on the exercise of C or D Warrants), and will also receive warrants to purchase
3% of the common stock sold in the Offering and 3% of the Series A, B
and C Warrants exercised at any time, which warrants issued to
LifeTech shall not be exercisable for six months following the
closing, shall have a five year term, and an exercise price of $1.56 per
share.
The
Series A warrants will be eligible to be exercised at the option of the Company
beginning on the 75th day
after issuance and ending on the 90th day
after issuance subject to the exercise price being above $0.75 for the 15 day
period prior to expiration and to meeting other equity conditions.
All of
the Series B warrants and 562,500 of the Series C warrants will be eligible to
be exercised at the option of the Company at any time on or before 6 months
after their issuance provided the common stock is trading at or above $2.45 for
20 cumulative trading days and to meeting other equity
conditions.
After
payment of expenses, management believes that the net proceeds to the Company of
the common stock sold in the Offering will be approximately $2,000,000 if all
offered shares are sold. As the warrants are exercised, the Company
will receive additional proceeds that are indeterminable at this time as the
exercise prices for the warrants are subject to change based on the market price
of the stock at the time of exercise.
IsoRay
anticipates using a portion of the net proceeds from the financing to fund
working capital and its new applications for its Cesium-131 technology to treat
lung, head and neck, breast and brain cancers.
The
Company has also agreed to reimburse LifeTech and the Buyers for certain
expenses incurred in connection with entering into the Agreement and has
provided LifeTech and the Buyers with customary indemnification
rights.
On
November 22, 2010, the Company issued a press release announcing the Offering, a
copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
The
foregoing summaries of the offering, the securities to be issued in connection
therewith, the Agreement and the form of Warrants do not purport to be complete
and are qualified in their entirety by reference to the definitive transaction
documents, copies of which are attached as exhibits to this Current Report on
Form 8-K. The Agreement contains representations and warranties that the parties
made solely for the benefit of each other, in the context of all of the terms
and conditions of the Agreement. Accordingly, other investors and stockholders
may not rely on such representations and warranties. Furthermore, such
representations and warranties are made only as of the date of the Agreement.
Information concerning the subject matter of such representations and warranties
may change after the date of the Agreement, and any such changes may not be
fully reflected in the Company's reports or other filings with the
SEC.
A copy of
the opinion of Keller Rohrback, PLC, relating to the legality of the securities
to be issued in the Offering is expected to be filed via amendment to this
Current Report concurrent with the filing of the prospectus
supplement.
ITEM
9.01 Financial Statements and Exhibits.
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4.22
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Form
of Series A, B and C Warrant
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4.23
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Form
of Series D Warrant
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10.62
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Letter
Agreement between IsoRay, Inc. and LifeTech Capital, a division of Aurora
Capital, LLC, dated October 27, 2010
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10.63
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Form
of Securities Purchase Agreement by and among IsoRay, Inc. and the
signatories thereto, dated November 22, 2010
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10.64
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Form
of Lock-Up Agreement
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99.1
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Press
Release of IsoRay, Inc., dated November 22,
2010
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Dated: November
22, 2010
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IsoRay,
Inc., a Minnesota corporation
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By:
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/s/ Dwight Babcock
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Dwight
Babcock, Chairman and CEO
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