Item 1.01
Entry into a Material Definitive Agreement
.
Entry into Letter Agreement
On July 9, 2018, IsoRay, Inc. (“IsoRay” or the “Company”) entered into a letter agreement (the “Letter Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”). Pursuant to the Letter Agreement, Wainwright will serve as the exclusive placement agent or underwriter, as applicable, for IsoRay in connection with one or more proposed offerings (an “Offering”) of IsoRay’s securities. The term of the Letter Agreement is 45 days. IsoRay will pay to Wainwright a cash fee, or in an underwritten Offering an underwriter discount, equal to 6.0% of the aggregate gross proceeds raised in each Offering. Additionally, IsoRay will issue to Wainwright or its designee at each closing of an Offering warrants to purchase that number of shares of common stock of IsoRay equal to 3.0% of the aggregate number of Shares of common stock placed in each Offering. Such warrants will have the same terms as the warrants issued to investors in the applicable Offering except that such warrants will have an exercise price equal to 125% of the offering price per share of common stock in the applicable Offering, or, if the offering price is not available, the market price of the common stock on the date an Offering is commenced (the “Offering Price”), and a term of five years commencing on the effective date of an Offering.
The Company has also agreed to pay to Wainwright a management fee equal to 1.0% of the gross proceeds raised in each Offering, $25,000 for non-accountable expenses and up to $30,000 for fees and expenses of legal counsel and other out-of-pocket expenses (to be increased to $100,000 in case of a public Offering).
A copy of the Letter Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Entry into Securities Purchase Agreement
and Warrant
On July 9, 2018, the Company entered into Securities Purchase Agreements (collectively, the “Purchase Agreement”) with several institutional and accredited investors (each an “Investor”) for the sale of a total of 11,000,000 shares of common stock of the Company (“Shares”) at a price per share of $0.75, for an aggregate gross proceeds to the Company of $8.25 million (the “Registered Direct Offering”).
In addition, in a concurrent private placement, the Company sold to each Investor, at no additional consideration, an unregistered warrant to purchase up to the number of shares of common stock of the Company equal to 50% of such Investor’s Shares (the “Warrant”), with an exercise price equal to $0.75, exercisable commencing six months following the date of issuance with a term of 5.5 years. The aggregate number of shares of our common stock issuable upon the exercise of the Warrants (the “Warrant Shares”) is 5,500,000 shares.
The Warrants may be exercised on a “cashless” basis in certain circumstances, including while there is no effective registration statement registering the Warrant Shares issuable upon exercise of the Warrants.
The Company estimates that the net proceeds from the Registered Direct Offering will total approximately $7.6 million, which the Company intends to use for working capital and general corporate purposes, with particular focus on marketing the brain applications and Build-Blu™ delivery system for real-time prostate brachytherapy.
The Company has agreed with the Investors that, for a period of 30 days from the date of the closing of each Registered Direct Offering, it will not take down and sell shares of its common stock under its existing at-the-market sales agreement with Wainwright dated as of May 8, 2018, which was suspended as of the date of the Purchase Agreement.
The Shares (but not the Warrants or the Warrant Shares) are being offered by the Company pursuant to a “shelf” registration statement on Form S-3 that was originally filed on August 25, 2015 and declared effective by the Securities and Exchange Commission on November 23, 2015, and the base prospectus contained therein (File No. 333-206559).
The closing date of the sale of the Shares and Warrants is expected to take place on or about July 11, 2018, subject to customary closing conditions.
Copies of the form of Purchase Agreement and Warrant are attached hereto as Exhibits 10.2 and 10.3 and are incorporated herein by reference. A copy of the opinion of Gallagher & Kennedy, P.A., relating to the legality of the Shares is filed as Exhibit 5.1 hereto, and is incorporated herein by reference.
The foregoing summaries of the Letter Agreement, the Purchase Agreement, and the Warrant do not purport to be complete and are qualified in their entirety by reference to the definitive transaction documents.