COMMON STOCK PURCHASE WARRANT No._____
NEITHER
THIS WARRANT NOR THE STOCK FOR WHICH IT MAY BE EXERCISED HAS BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR ANY OTHER
FEDERAL OR STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT AS EXPRESSLY PROVIDED HEREIN.
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No._____
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This
certifies that, for value received, __________________________ ("Holder"),
is
entitled to subscribe for and purchase from IsoRay, Inc., a Minnesota
corporation ("Company"), ________ shares, subject to adjustment as set forth
in
Article II below
("Warrant Shares"), of Common Stock of the Company, par value $0.001 per share
("Common Stock"), at the exercise price of $6.00 per share, which price is
subject to adjustment as set forth in Article II below
(the "Exercise Price"), at any time and from time to time beginning on the
date
of this Warrant as set forth below ("Exercise Date"), and ending on the date
that is two (2) years after the date of this Warrant ("Expiration Date"), upon
written notice from the Holder to the Company ("Notice") and subject to the
terms provided herein.
This
Warrant is subject to the following provisions, terms and conditions:
ARTICLE
I.
EXERCISE;
RESERVATION OF SHARES
Section
1.01 Warrant
Exercise.
The
rights represented by this Warrant may be exercised by the Holder at any time
and from time to time prior to the expiration of this Warrant, upon Notice,
by
the surrender at the principal office of the Company of this Warrant together
with a duly executed subscription in the form annexed hereto as Exhibit A
("Subscription Form") and accompanied by payment, in certified or immediately
available funds, of the Exercise Price for the number of Warrant Shares
specified in the Subscription Form. The shares so purchased shall be deemed
to
be issued to the Holder as the record owner of such shares as of the close
of
business on the date on which this Warrant shall be exercised as hereinabove
provided. No fractional shares or scrip representing fractional shares shall
be
issued upon exercise of this Warrant and the number of shares that shall be
issued upon such exercise shall be rounded to the nearest whole share without
the payment or receipt of any additional consideration.
Section
1.02 Certificates. Certificates for the shares purchased pursuant to
Section 1.01 shall be delivered to the Holder
within ten (10) days after the rights represented by this Warrant shall have
been so exercised, and a new Warrant in the name of the Holder representing
the
rights, if any, that shall not have been exercised prior to the Expiration
Date
with respect to this Warrant shall also be delivered to such Holder within
such
time, with such new Warrant to be identical in all other respects to this
Warrant. The Holder shall for all purposes be deemed to have become the holder
of record of the Warrant Shares on the date this Warrant was exercised (the
date
the Holder has fully complied with the requirements of Section 1.01),
irrespective of the date of delivery of the certificate or certificates
representing the Warrant Shares; provided that, if the date such exercise is
made is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of record of the Warrant Shares
at the close of business on the next succeeding date on which the stock transfer
books are open. The term "Warrant," as used herein, includes any Warrants into
which this Warrant may be divided or combined and any subsequent Warrants issued
upon the transfer or exchange or reissuance upon loss hereof.
Section
1.03 Optional
Call.
At any
time after the date of this Warrant and following the first consecutive two
month period thereafter in which the Company's common stock was trading at
or
above $9.00 per share, the Company shall have the option to call all or a
portion of this Warrant (and as to which no Subscription Form has been received
by the Company), at $0.01 per share (the "Call Price"). Notice of the call
(the "Call Notice") shall be given to the Holder at least 30 days
prior to the date on which the call will occur (the "Call Date"). Such notice
shall be deemed received 2 days after it is deposited in the United States
mail,
certified or registered mail, postage prepaid, or 1 day after it is
deposited with an express mail courier for overnight delivery, or on the same
day that it is delivered via hand delivery or telefacsimile transmission. This
Warrant may be exercised in accordance with Section 1.01 at any time prior
to
the Call Date.
Section
1.04 Company
Covenants.
The
Company represents, warrants, covenants and agrees:
(a) That
all
shares of Common Stock that may be issued upon exercise of this Warrant will,
upon issuance, be validly issued, fully paid and nonassessable and free from
all
taxes, liens and charges with respect to the issue thereof; and
(b) That
during the period the rights represented by this Warrant may be exercised,
the
Company will at all times have authorized, and reserved for the purpose of
issue
and delivery upon exercise of the rights evidenced by this Warrant, a sufficient
number of shares of Common Stock to provide for the exercise of the rights
represented by this Warrant.
2
ARTICLE
II.
ADJUSTMENTS
Section
2.01 Adjustment
Events.
(a) Capital
Events.
If any
reorganization or reclassification of the capital stock of the Company, or
any
consolidation or merger of the Company with another corporation, or the sale
of
all or substantially all of its assets to another corporation (in any instance,
a "Capital Event") shall be effected in such a way that holders of Common Stock
shall be entitled to receive stock, securities or assets (including cash) with
respect to or in exchange for their Common Stock, then, as a condition of such
Capital Event, lawful and adequate provisions shall be made whereby the Holder
hereof shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified in this Warrant and in lieu of
the
shares of the Common Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby, an amount
of
such shares of stock, securities or assets (including cash) as may have been
issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby had such Capital Event not taken place.
(b) Preservation
of Value.
In the
case of any Capital Event, appropriate provision shall be made with respect
to
the rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustment
of
the number of shares that may be issued upon exercise of this Warrant and the
Exercise Price hereof) shall thereafter be applicable, as nearly as may be,
in
relation to any shares of stock, securities or assets (including cash)
thereafter deliverable upon the exercise of the rights represented hereby.
(c) Obligation
Expressly Assumed.
The
Company shall not effect any consolidation, merger or sale of all or
substantially all of its assets, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger, or the corporation into or for the securities of which
the previously outstanding stock of the Company shall be changed in connection
with such consolidation or merger, or the corporation purchasing such assets,
as
the case may be, shall assume by written instrument executed and mailed or
delivered to the registered Holder at the last address of such Holder appearing
on the books of the Company, the obligation to deliver to such Holder, upon
exercise of this Warrant, such shares of stock, securities or assets (including
cash) as, in accordance with the foregoing provisions, such Holder may be
entitled to purchase.
3
Section
2.02 Subdivision
or Combination of Stock.
In the
event that the Company shall at any time subdivide or split its outstanding
shares of Common Stock into a greater number of shares, the number of Warrant
Shares subject to issuance upon exercise of this Warrant at the opening of
business on the day upon which such subdivision becomes effective shall be
proportionately increased. In the event that the outstanding shares of Common
Stock of the Company shall be combined into a smaller number of shares, the
number of shares subject to issuance upon exercise of this Warrant at the
opening of business on the day upon which such subdivision becomes effective
shall be proportionately decreased. Any such increase or decrease, as the case
may be, shall become effective immediately after the opening of business on
the
day following the day upon which such subdivision or combination, as the case
may be, becomes effective.
Section
2.03 Stock
Dividends.
In the
event that the Company shall at any time declare any dividend or distribution
upon its Common Stock payable in stock, the number of Warrant Shares subject
to
issuance upon exercise of this Warrant shall be increased by the number (and
the
kind) of shares which would have been issued to the holder of this Warrant
if
this Warrant were exercised immediately prior to such dividend. Such increase
shall become effective immediately after the opening of business on the day
following the record date for such dividend or distribution.
Section
2.04 Treasury
Shares.
The
number of shares of Common Stock outstanding at any given time shall not include
shares of the Company owned or held by or for the account of the Company.
Section
2.05 Minimum
Adjustment.
No
adjustment in the number of shares that may be issued upon exercise of this
Warrant as provided in this Article II shall be required unless such adjustment
would require an increase or decrease in such number of shares of at least
one
percent (1%) of the then adjusted number of shares of Common Stock that may
be
issued upon exercise of this Warrant; provided, however, that any such
adjustments that by reason of the foregoing are not required to be made shall
be
carried forward and taken into account and included in determining the amount
of
any subsequent adjustment; and provided further, that if the Company shall
at
any time subdivide or combine the outstanding shares of Common Stock or issue
additional shares of Common Stock as a dividend, said percentage shall forthwith
be proportionately adjusted so as to appropriately reflect the same.
Section
2.06 Adjustment
of Exercise Price.
Whenever the number of shares of Common Stock that may be issued upon exercise
of this Warrant is adjusted, and effective at the time such adjustment is
effective, as provided in Sections 2.01, 2.02 and 2.03 of this Article II,
the Exercise Price shall be adjusted (to the nearest whole cent) by multiplying
each such Exercise Price immediately prior to such adjustment by a fraction
(x)
the numerator of which shall be the number of shares of Common Stock which
may
be issued upon the exercise of each such Warrant immediately prior to such
adjustment, and (y) the denominator of which shall be the number of shares
of
Common Stock so purchasable immediately thereafter. The Company may retain
a
firm of independent certified public accountants (which may not be the regular
accountants employed by the Company) to make any required computation, and
a
certificate signed by such firm shall be conclusive evidence of the correctness
of such adjustment.
4
Section
2.07 Record
Date.
In the
event that the Company shall not take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend payable in Common
Stock, then such record date shall be deemed for the purposes of this Article
II
to be the date of the issue or sale of the shares of Common Stock deemed to
have
been issued or sold upon the declaration of such dividend.
Section
2.8 Officer's
Certificate.
Whenever the Exercise Price shall be adjusted as provided in this Article II,
the Company shall forthwith file with its Secretary and retain in the permanent
records of the Company, an officer's certificate showing the adjusted Exercise
Price determined as provided in this Article II, setting forth in reasonable
detail the facts requiring such adjustment, including a statement of the number
of additional or fewer shares of Common Stock, and such other facts as may
be
reasonably necessary to show the reason for and the method of computing such
adjustment. Each such officer's certificate shall be made available at all
reasonable times for inspection by the Holder.
Section
2.9 Notice
of Adjustment.
Upon
any adjustment of the number of shares that may be issued upon exercise of
this
Warrant or the Exercise Price, the Company shall give notice thereof to the
Holder, which notice shall state the increase or decrease, if any, in the number
of shares that may be issued upon the exercise of this Warrant and the Exercise
Price, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
Section
2.10 Definition
of "Common Stock".
As used
in this Article II, the term "Common Stock" shall mean and include all of the
Company's authorized Common Stock of any class as constituted on the date of
this Warrant as set forth below, and shall also include any capital stock of
any
class of the Company thereafter authorized that shall not be limited to a fixed
sum or stated value in respect of the rights of the holders thereof to
participate in dividends or the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Company.
ARTICLE
III.
TRANSFER
RESTRICTIONS
Section
3.01 Securities
Law Transfer Restrictions.
By
taking and holding this Warrant, the Holder (i) acknowledges that neither this
Warrant nor any shares of Common Stock that may be issued upon exercise of
this
Warrant have been registered under the Securities Act or any applicable state
securities or blue sky law (collectively, "Securities Laws"); (ii) agrees not
to
sell, transfer or otherwise dispose of this Warrant, and agrees not to sell,
transfer or otherwise dispose of any such shares of Common Stock without
registration unless the sale, transfer or disposition of such shares can be
effected without registration and in compliance with the Securities Laws; and
(iii) agrees not to sell, transfer or otherwise dispose of this Warrant or
any
portion thereof or interest therein except as otherwise expressly permitted
herein. No part of this Warrant or any portion thereof or interest therein
may
be transferred, whether voluntarily, involuntarily or by operation of law,
except to a Permitted Transferee as hereinafter defined. “Permitted Transferee”
shall mean a transferee or assignee that (a)(i) is an entity as to which the
Holder is the beneficial owner of at least a majority of the equity therein
and
the Holder has voting control thereover, (ii) is a member of the Holder's family
or a trust for the benefit of an individual Holder or (iii) a successor by
inheritance or intestate succession to any interest in this Warrant or any
portion thereof and (b) accepts by written instrument reasonably acceptable
to
the Company each of the terms and conditions that govern this Warrant. Any
certificate for shares of Common Stock issued upon exercise of this Warrant
shall bear an appropriate legend describing the foregoing restrictions, unless
such shares of Common Stock have been effectively registered under the
applicable Securities Laws.
5
Section
3.02 Provision
of Information by Holder.
The
Holder shall make available to the Company such written information, presented
in form and content satisfactory to the Company, as the Company may reasonably
request, from time to time, in order to make the determination provided for
in
Section 3.01.
ARTICLE
IV.
MISCELLANEOUS
Section
4.01 Transfer
of Warrants.
No
right or interest in this Warrant shall be transferable except as provided
in
Article III.
Section
4.02 Notices.
Any
notice or communication to be given pursuant to this Warrant shall be in writing
and shall be delivered in person or by certified mail, return receipt requested,
in the United States mail, postage prepaid. Notices to the Company shall be
addressed to the Company's principal office. Notices to the Holder shall be
addressed to the Holder's address as reflected in the records of the Company.
Notices shall be effective upon delivery in person, or, if mailed, at midnight
on the fifth business day after mailing.
Section
4.03 No
Shareholder Rights.
This
Warrant shall not entitle the Holder to any voting rights or other rights as
a
shareholder of the Company.
Section
4.04 Governing
Law.
This
Warrant shall be governed by and construed in accordance with the laws of the
State of Washington.
Section
4.05 Headings;
Interpretation.
The
section headings used herein are for convenience of reference only and are
not
intended to define, limit or describe the scope or intent of any provision
of
this Warrant. When used in this Warrant, the term "including" shall mean
"including, without limitation.”
6
Section
4.06 Successors.
The
covenants, agreements and provisions of this Warrant shall bind the parties
hereto and their respective successors and permitted assigns.
Section
4.07 Integrated
Agreement; Modification.
This
Warrant is a complete statement of the agreement of the parties with respect
to
the subject matter hereof and may be modified only by written instrument
executed by the parties.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be issued effective
as
of the _____ day of _____, 2005.
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IsoRay,
Inc.,
a
Minnesota corporation
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| By: | ||
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▇▇▇▇▇
▇. ▇▇▇▇▇▇, CEO
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7
Exhibit
A
SUBSCRIPTION
FORM
(To
be Executed only upon Exercise of Warrant)
The
undersigned registered owner of this Warrant irrevocably exercises this Warrant
and purchases __________ shares of Common Stock of IsoRay, Inc., a Minnesota
corporation, that may be issued under this Warrant and herewith delivers the
sum
of $____________ in full payment of the Exercise Price for such shares, all
on
the terms and conditions specified in this Warrant. Such shares are to be
delivered to such holder at the address reflected in the records of the Company
unless contrary instructions are herein given.
Deliver
certificates to:
________________________
Dated: ______________________
__________________________________
(Signature
of Registered Owner)
__________________________________
(Street
Address)
__________________________________
(City)
(State) (Zip Code)