Document:

SHARE PURCHASE AGREEMENT

This SHARE PURCHASE AGREEMENT (“Agreement”) is made and entered into as of the 22nd day of September, 2011 by and among China LianDi Energy Resources Engineering Technology Limited, a corporation organized under the laws of the British Virgin Islands (hereinafter referred to “BVI Law”) having registered office at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (hereinafter referred to “the Seller”), SJ Asia Pacific Limited, a corporation organized under the BVI Law having registered office at P.O. Box 146, Road Town, Tortola, British Virgin Islands (hereinafter referred to as “the Buyer”), and Zuo Jianzhong, a CEO of the Seller, (hereinafter referred to “Zuo”).  The Seller or the Buyer sometimes is referred to as “Party” and collectively as “Parties”.

RECITALS

A.   The Seller is the owner of 5,400,000 outstanding ordinary shares of LianDi Clean Technology Inc., a corporation organized under the laws of the State of Nevada, (hereinafter referred to “The Company”).

B.   The Buyer desires to purchase from the Seller, and the Seller desires to sell to the Buyer, all of the said 5,400,000 shares held by The Seller.

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and agreements contained herein, the Parties and Zuo, intending to be legally bound, hereby agree as follows:

Article 1   Sales and Purchase of Shares

	
1.1

	
The Parties agree that the Seller sells to the Buyer and the Buyer purchases from the Seller 5,400,000 outstanding ordinary shares of 10,684,660 outstanding ordinary shares of the Company held by the Seller (hereinafter referred to as “Shares”) at the total price of US Dollars 25,920,000 (US$4.8 per share) (such total price is hereinafter referred to as “Purchase Price” and this transfer of Shares is hereinafter referred to as “Transaction”).

	
1.2

	
The Purchase Price may not be modified unless agreed in writing by the Parties.

  

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1.3

	
All taxes imposed with respect to the Transaction shall be borne by the Seller.

 

Article 2   Closing

	
2.1

	
The closing of the Transaction (“Closing”) shall take place at Tokyo, Japan on September 27 , 2011(“Closing Date”).

	
2.2

	
On the Closing Date, the Seller shall transfer the Shares to the Buyer . In connection with the Transaction, the Seller shall apply for the registration of transfer of the Shares from the Seller to the Buyer on the Closing Date. Further, the Seller and Zuo shall cause the Company to provide the necessary cooperation in such registration of transfer of the Shares.

	
2.3

	
The Seller shall deliver to the Buyer a certificate for the application of transfer of the Shares by September 29, 2011.

	
  

	 

	
2.4

	
On the Closing Date, the Buyer shall make arrangement for the payment of the Purchase Price by bank transfer to the Seller’s bank account designated below.  US$7,517,472.60 of The Purchase Price shall be paid in US Dollars and the remaining US$18,402,597.40 of the Purchase Price shall be converted into Japanese Yen 1,417,000,000 based on the exchange rate on September 13, 2011 and remitted to the following the Seller’s bank account unless otherwise agreed between the Parties.  Costs for the remittance shall be borne by the Buyer.

	
  

	
(1) Bank account information for the transfer in Japanese Yen

	
Bank name

	
:

	
Mizuho bank(SWIFT code; MHBKJPJT)

	 	 	 
	
Branch

	
:

	
KABUTOCHO Branch

	 	 	 
	
Branch Code

	
:

	
027

	
Branch Address

	:  	
4-3 Nipponbashi - Kabuto-cho, Chuo-ku, Tokyo 103-0026 JP

	
Account Number

	
:

	
2134871

	
Account Name:

	
  CHINA LIANDI ENERGY RESOURCES

	  	
  ENGINEERING TECHNOLOGY LIMITED

(2) Bank account information for the transfer in US Dollar

	
Bank Name:

	 	
The Hong Kong and Shanghai Banking Corporation Limited

	
Bank Address:

	 	
Lever 10, HSBC Main building

	  	 	
1 Queen's Road Central, Hong Kong

 

  

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Swift Code:

	 	
HSBCHKHHHKH

	
Account Number:

	 	
848-141891-838

	
Account Name:

	 	
China Liandi Energy Resources Engineering Technology Limited

	
Company Address:

	 	
Unit 1103, 11/F., Tower Two, Lippo Centre

	  	 	
89 Queensway, Admiralty, Hong Kong

	
2.5

	
Notwithstanding the preceding clause, the Seller shall extend the due date of the payment to October 17, 2011 for the payment of US$18,402,597.40 (Japanese Yen 1,417,000,000) of the Purchase Price by the Buyer.

	
2.6

	
Upon the completion of the procedures as set forth in this Article, the Transaction is fully completed.

Article 3   Conditions Precedent

	
3.1

	
The obligation of the Seller under this Agreement shall be subject to the fulfillment as of the Closing Date of the following conditions:

	 	
(i)

	
the representations and warranties of the Buyer set forth in Article 4 shall be true and correct as of the Closing Date and the date of this Agreement; and

	 	
(ii)

	
all procedures required for the Transaction under the laws and other internal rules of the Buyer shall have been completed.

	
3.2

	
The obligation of the Buyer under this Agreement shall be subject to the fulfillment as of the Closing Date of the following conditions:

	 	
(i)

	
the representations and warranties of the Seller set forth in Article 5 shall be true and correct as of the Closing Date and the date of this Agreement;

	 	
(ii)

	
the number of outstanding shares of the Company is the total of 36,444,850 (ordinary shares and preferred shares), and The Seller solely, lawfully and effectively owns 10,684,660 of such ordinary shares;

	 	
(iii)

	
during the period from the date of this Agreement to the Closing Date there shall not have occurred any events which would likely to have a material adverse effect on the value of the Transaction;

	 	
(iv)

	
all procedures required for the Transaction under the laws and other internal rules of the Seller shall have been completed;

 

  

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(v)

	
all governmental approvals, consents or filings required for the Transaction shall have been obtained or completed;

	 	
(vi)

	
subscription agreement for the newly issued ordinary shares of SJI Inc. shall have been effectively executed by and among SJI Inc.,  Zuo, and The Seller; and

	 	
(vii)

	
all procedures required for the Transaction under the laws and other internal rules of the Company shall have been completed.

Article 4   Representations and Warranties of the Buyer

	
4.1

	
The Buyer hereby represents and warrants to The Seller that the following shall be true and correct as of the Closing Date and the date of this Agreement:

	 	
(i)

	
the Buyer is a corporation duly organized, validly existing and in good standing under the BVI Laws, and has all requisite power and authority to execute the Agreement and to perform its obligations hereunder;

	 	
(ii)

	
with respect to the execution and performance of this Agreement, the Buyer is in conformity with laws, government orders, official  notices, rules, orders, ordinances, guidelines and other regulations (“Laws and Ordinances”) or internal rules of the Buyer and has completed all procedures required under the same;

	 	
(iii)

	
the Buyer has obtained and completed all governmental licenses, approvals, consents, filings and other legal procedures required for the execution and performance of this Agreement, and neither the execution nor the performance of this Agreement by the Buyer will violate, breach or be in conflict with any administrative order issued by any governmental authorities;

	 	
(iv)

	
neither the execution nor the performance of this Agreement by the Buyer will violate, breach or be in conflict with any judgment, ruling, order, judicial compromise or other decisions made by courts, arbitrators, arbitral institutions, other judicial institutions and self-regulatory organizations;

	 	
(v)

	
no agreements which prevent the performance of the Buyer’s obligations hereunder have been executed between the Buyer and any third party; and

 

  

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(vi)

	
there has not been any facts, with respect to the business, assets, operation and financial situation of the Buyer, which would likely to have a material adverse effect on the performance of obligations hereunder.    The Buyer especially represents and warrants that the Buyer has the capacity to pay the Purchase Price to the Seller.

Article 5   Representations and Warranties of the Seller and Zuo

5.1   The Seller and Zuo hereby jointly and severally represent and warrant to the Buyer that the following shall be true and correct as of the Closing Date and the date of this Agreement:

	 	
(i)

	
the Seller is a corporation duly organized, validly existing and in good standing under the BVI Laws, and has all requisite power and authority to execute the Agreement and to perform its obligations hereunder;

	 	
(ii)

	
with respect to the execution and performance of this Agreement, the Seller is in conformity with laws and ordinances or internal rules of the Seller and has completed all procedures required under the same;

	 	
(iii)

	
the Seller has obtained and completed all governmental licenses, approvals, consents, filings and other legal procedures required for the execution and performance of this Agreement, and has caused the Company obtained and completed all governmental licenses, approvals, consents, filings and other legal procedures required for the execution and performance of this Agreement, and neither the execution nor the performance of this Agreement by the Seller will violate, breach or be in conflict with any administrative order issued by any governmental authorities;

	 	
(iv)

	
neither the execution or the performance of this Agreement by the Seller will violate, breach or be in conflict with any judgment, ruling, order, judicial compromise or other decisions made by courts, arbitrators, arbitral institutions, other judicial institutions and self-regulatory organizations;

	 	
(v)

	
no agreements which prevent the performance of obligations hereunder, including but not limited to an agreement by which other shareholders or creditors of the Company can bring damage claim against the Company for the execution or the performance of the Agreement, have been executed between the Seller or Zuo, and any third party;

 

  

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(vi) 

	
the number of outstanding stock of the Company under its articles of incorporation is the total of 36,444,850 (ordinary shares and preferred shares), and the shares of the Company are free of preemptive rights, stock acquisition rights, convertible bonds, other securities convertible to or exchangeable for the Company’s shares, warrants, rights to purchase or otherwise acquire shares, or options or any other rights, except as provided in clause (vii) below;

	 	
(vii) 

	
it is unlikely that any warrant or option issued by the Company is exercised. If any of the warrants or options is exercised, the Seller immediately sells to the Buyer at its exercised price the number of ordinary shares of the Company held by the Seller equal to fifty-one percent (51%) of the number of ordinary shares of the Company purchased by exercising such warrants or options;

	 	
(viii) 

	
as of the date of this Agreement, the Seller lawfully and effectively owns 10,684,660 of ordinary shares in the Company, is the beneficial and sole record shareholder of all of such ordinary shares and such ordinary shares are free of pledges, liens, mortgages, other charges or any other encumbrances;

	 	
(ix) 

	
the Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and has all requisite power and authority to operate businesses it presently conducts;

	 	
(x) 

	
the Company (including its affiliates it directly or indirectly owns) complies with applicable laws and regulations with respect to businesses it presently conducts;

	 	
(xi) 

	
financial statements of the Company (including its affiliates it directly or indirectly owns) as of June 30, 2011 have been prepared in accordance with generally accepted accounting principle in the United States, present fairy financial conditions and results of operations of the Company (including its affiliates it directly or indirectly owns) as of the times and for the periods referred to therein, are consistent with the books and records of the Company (including its affiliates it directly or indirectly owns) and contain no undisclosed liabilities;

	 	
(xii) 

	
all taxes due and payable have been paid in full by the Company  (including its affiliates it directly or indirectly owns);

 

  

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(xiii)

	
there has not been any facts, with respect to the business, assets, operation and financial situation of the Seller and the Company (including its affiliates it directly or indirectly owns), which would likely to have a material adverse effect on the performance of obligations hereunder;

	 	
(xiv)

	
even if there happens any change in shareholders of the Company, The Seller makes its best efforts to retain major officers, employees and customers of the Company (including its affiliates it directly or indirectly owns) and to prevent outflow of property of the Company (including its affiliates it directly or indirectly owns);

	 	
(xv)

	
certificates of shares to be delivered by the Seller to the Buyer for the Transaction are true and effective certificates of shares of the Company;

	 	
(xvi)

	
the Company has disclosed to the Buyer all the information which would have material effect on decisions by the Buyer related to this Agreement, all the information which has been disclosed by the Company to the Buyer (including to certified accountants, attorneys and other advisors retained by the Buyer) is true and correct and no facts have been deleted or omitted from such information which are necessary for descriptions and information contained in this Agreement to be free of any misunderstanding;

	 	
(xvii)

	
the Seller and Zuo provide SJI Inc and the Buyer with assistance and advice as to all procedures required in U.S. including correction of any mistake if any.

 

Article 6   Cooperate Governance

	
6.1

	
Considering that the Seller and the Buyer continue to be major shareholders of the Company, the Seller and the Buyer continue to cooperate in the governance of the Company after the Transaction.

	
6.2

	
Being an incorporator and a major shareholder through the Seller, Zuo shall carry out the business of the Company by cooperating with SJI Inc. even after the Transaction.

	
6.3

	
The Seller and Zuo shall develop the business plan of the Company for the next 3 years and deliver it to the Buyer.

	
6.4 

	
Considering that SJI Inc. become to hold the majority of voting rights of the Company through the Buyer and Hua Shen (International) Limited, when carrying out the business as described in 6.2, Zuo shall cause the Company to obtain prior written consent of SJI Inc for the material matters of the Company provided below.

 

  

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(i)

	
sale, merger, acquisition, or other corporate restructuring of the Subsidiaries of the Company (hereinafter, “the Subsidiary of the Company” includes both subsidiary of the Company and company controlled by the subsidiary of the Company. );

	 	
(ii)

	
merger or other corporate restructuring of the Company;

	 	
(iii)

	
deregistration of the Company from the OTC Bulletin Board;

	 	
(iv)

	
listing or preparation for listing on security market by the Company;

	 	
(v)

	
sale, morgage or any other disposal of material assets (more than ten (10) % of the consolidated net assets) of the Company or the Subsidiary of the Company;

	 	
(vi)

	
issuance or cancellation of its shares, warrants, corporate bond, or any other securities or rights by the Company or the Subsidiary of the Company; or

	 	
(viii)

	
any other matter discussed and agreed as material matter between the Seller and the Buyer, or the Seller and SJI Inc.

	
6.5

	
The Seller or SJI Inc may dispatch its personnel to the Company after the Closing Date.

	
6.6

	
The Buyer has an option to request the Seller or Zuo to purchase a part or all of the Shares subject to the terms and conditions as agreed separately, if the business plan developed by the Seller and Zuo as specified in Article 6.3 is not accomplished.

Article 7   Compensation

	
7.1

	
If either Party incurs any damage, loss or costs (including, without limitations, attorney’s fees) (hereinafter referred to as “Damages”) resulting from any breach of the other Party of this Agreement or of its representations and warranties as respectively set forth in Article 4 or Article 5 occurring during the period of five (5) years after the Closing Date, the breaching Party shall immediately indemnify the non-breaching Party for such Damages. Below article 6.1 in this Agreement, “the other Party” means both the Seller and Zuo, if the main Party is the Buyer, and “the other Party” means the Buyer, if the Party is the Seller or Zuo.

 

  

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7.2

	
In case the Company incurs the Damages due to the breach of any obligation of this Agreement by Seller or Zuo or the breach of the representations and warranties under Article 4 or 5, such all Damages is deemed to be damages incurred by Buyer.

	
7.3

	
In case the Seller, the Buyer or Zuo fails to perform the obligation under the Agreement, the other Party may seek the enforcement, and in case any of them proceed any action which is prohibited under this Agreement, the other Party may seek injunction. The other Party may bring both claims under this article and article 7.1.

Article 8   Termination for Cause

	
8.1

	
If any of the followings occurs to the Seller, the Buyer or Zuo prior to the completion of the Transaction, the other Party may terminate this Agreement by giving written notice to the Party:

	 	
(i)

	
attachment, provisional attachment, provisional disposition or other execution;

	 	
(ii)

	
dissolution, commencement of proceedings of bankruptcy, civil rehabilitation, corporate reorganization or liquidation (or other similar proceedings) is ordered or petition for such proceedings is filed;

	 	
(iii)

	
collection procedures for tax delinquency;

	 	
(iv)

	
material or significant deterioration of financial situation or threat thereof;

	 	
(v)

	
any false entry due to willful misconduct or gross negligence is found in The Buyer’s publicly released financial statements;

	 	
(vi)

	
revocation of business license, suspension of business or other dispositions are made by regulatory agencies;

	 	
(vii)

	
dissolution, merger, corporate split or transfer of business is made without prior consultation; or

	 	
(viii)

	
substantial change in the control of the Party, including, without limitation, changes in major shareholders.

	
8.2

	
If any of the following events of default occurs to the Seller, the Buyer or Zuo prior to the completion of the Transaction and the Party in default fails to cure the events of default within thirty (30) days of the other Party’s written notice demanding such cure, the other Party may terminate this Agreement by giving a written notice to the Party in default:

	 	
(i)

	
breach of any obligation under this Agreement; or

	 	
(ii)

	
breach of its representations or warranties.

 

  

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8.3

	
If this Transaction is not consummated on or before November 15, 2011 and such failure of consummation is confirmed in writing upon consultations between the Seller and the Buyer, the Seller or the Buyer may terminate this Agreement except where there is a breach by the terminating Party of its obligations, representations or warranties.

Article 9   Termination for Force Majeure

	
9.1

	
If performance of this Agreement is objectively deemed difficult due to a substantial change in the economic situation, acts of God or any other inevitable cause, either Party may terminate this Agreement upon consultations without assuming any liability for such termination.

  

Article 10   Confidentiality

	
10.1

	
For two (2) years after execution of this Agreement, the Seller, the Buyer and Zuo shall keep secret the existence and contents of this Agreement, developments of negotiations about this Agreement (including due diligence) and other information of the other Party obtained related to execution of this Agreement whether before or after the execution and shall not disclose the same to any third party or use the same for any purpose other than this Agreement.  Provided, however, that either Party may disclose such information if such disclosure is made to its executives and employees, attorneys, certified accountants, tax accountants, financial advisors or other professionals or is required under the laws of US Federal and State or Japan or the regulations of security exchanges of Japan or US, on the condition that, in either case, the Party to disclose such information shall notify the other Party thereof before disclosure so that the other Party has a reasonable time to take appropriate measures against such a disclosure.

	
10.2

	
Notwithstanding the provisions of the preceding paragraph, the Seller, the Buyer and Zuo shall not assume confidentiality obligation if:

	 	
(i)

	
the information was already possessed by the receiving Party or publicly known at the time of disclosure or it becoming aware of such information;

	 	
(ii)

	
the information becomes publicly known after disclosure or the receiving Party becoming aware of such information through no willful conduct or negligence of the receiving Party;

  

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(iii)

	
the information is lawfully received from a third party duly authorized to disclose without assuming confidentiality obligation; or

	 	
(iv)

	
the information is independently developed by the receiving Party without referring to the information disclosed by the other Party.

Article 11   Public Announcement

	
11.1

	
If either Party makes a public announcement related to the Transaction, such announcement shall be made after consultations and as agreed by the both Parties on the contents, timing and manner of the announcement except where such an announcement is required under the laws of US Federal and State or Japan or the regulations of security exchanges of Japan or US; in such a case, the Party to make such announcement shall notify the other Party thereof before the announcement so that the other Party has a reasonable time to take appropriate measures against such an announcement.

Article 12   No Assignment

	
12.1

	
The Seller, the Buyer and Zuo may not, without the prior written approval of the other Party, assign, mortgage or otherwise dispose of its contractual status, rights or obligations under this Agreement to any third party nor cause any third party to assume the same. Nothing in this paragraph prohibits the Seller from sale, mortgage or otherwise dispose of the shares of the Company after the Closing Date.

Article 13   Taxes and Expenses

	
13.1

	
Unless otherwise provided for in this Agreement, the Seller, the Buyer and Zuo shall bear taxes imposed on itself in connection with this Agreement.  Stamp duties imposed in connection with performance of this Agreement shall be equally borne by both Parties.

	
13.2

	
Unless otherwise provided for in this Agreement, the Seller, the Buyer and Zuo shall bear its own costs and expenses, including fees and expenses for attorneys, certified accountants and other third parties, incurred in connection with the negotiation (including due diligence), preparation, execution and performance of this Agreement except for the expenses incurred in connection with the claim for damages or other remedies due to any default of the other Party.

  

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Article 14   Notice

	
14.1

	
Unless otherwise provided for in this Agreement or separately agreed in writing by both Parties and Zuo, all communications to be made under this Agreement, including, without limitation, notices and provision of information, shall be in writing and given by facsimile, e-mail, personal delivery or mail to the following contact persons.  Each Party and Zuo may change its contact information or contact person by notice given to the other Party in accordance with this Article.

The Seller:

 

	
Address:

	
Rm1103, 11/F, Tower Two, Lippo Centre, 89 Queensway, Admiralty,

	  	
Hong Kong

	
Facsimile:

	
+85-2-2840-0488

	
E-mail:

	
jzhzuo@yahoo.com

	
Contact Person: Zuo, JianZhong

The Buyer:

	
Address:

	
c/o  SJI Inc.

	 	
4-12-8 Higashi Shinagawa Shinagawa-ku, Tokyo, 140-0002 Japan

	
Facsimile:

	
+81-3-3472-6295

	
E-mail:

	
tano-daichi@sji-inc.jp

	
Contact Person: Daichi Tano 

Zuo

	
Address:

	
Rm1103, 11/F, Tower Two, Lippo Centre, 89 Queensway, Admiralty,

	  	
Hong Kong

	
Facsimile:

	
+85-2-2840-0488

	
E-mail:

	
jzhzuo@yahoo.com

	
Contact Person: Zuo, JianZhong

Article 15   Entire Agreement

	
15.1

	
This Agreement constitutes the entire agreement between the Parties regarding the Transaction.  Any prior contract, agreement, commitment or covenant regarding the Transaction, whether written or oral, shall be invalid to the extent inconsistent with this Agreement.

 

  

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Article 16   Amendment

	
16.1

	
This Agreement may not be amended or modified without the prior written consent of both Parties and Zuo.

Article 17   Governing Law and Language

	
17.1

	
This Agreement and any and all rights and obligations related to this Agreement shall be governed by and construed in accordance with the laws of Japan.

  

	
17.2

	
This Agreement shall be signed and executed in Japanese, Chinese and English. In case there is any discrepancy or conflict among the Japanese version, Chinese version and English version, the Japanese version shall prevail.

Article 18  Arbitration

	
18.1

	
Any disputes, controversies, or differences arising between or among the Seller, the Buyer and Zuo in connection with this Agreement shall be settled by arbitration in Tokyo, Japan in accordance with the rules and procedures of the Japan Commercial Arbitration Association.  The arbitral institution shall be the Tokyo office of the said Association.  The number of arbitrator shall be one (1) and arbitration shall be conducted in the Japanese language.

[Remainder of page intentionally left blank]

  

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IN WITNESS WHEREOF, the Parties have caused this Share Purchase Agreement to be executed in three (3) originals as of the date first written above by their respective officers thereunto duly authorized, each Party and Zuo retaining one (1) copy thereof respectively.

September 22 , 2011

	
The Seller:

	  
	  	  
	
China LianDi Energy Resources Engineering Technology Limited

	  	  
	
By:

	  
	
Name:

	  
	
Title:

	  
	  	  
	
The Buyer:

	  
	  	  
	
SJ Asia Pacific Limited

	  
	  	  
	
By:

	  
	
Name:

	  
	
Title:

	  
	  	  
	
Zuo:

	  
	  	  
	
Zuo Jianzhong

	  

 

  

14 / 14Unassociated Document

 

 

ISORAY, INC.

   

COMMON STOCK PURCHASE WARRANT No._____

 

 

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 $1.058 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 five (5) 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 issued as part of the offering contemplated by that certain Underwriting Agreement between the Company and certain "Underwriters" thereunder, dated as of October 13, 2011 (the "Agreement"), pursuant to which certain purchasers, including the Holder, purchased Common Stock and Warrants of the Company.

 

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 in whole or in part 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.

 

  

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Section 1.03                      Limitations on Exercises; Beneficial Ownership.  The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, the Holder (together with the Holder's affiliates) would beneficially own in excess of 9.99% (the "Maximum Percentage") of the shares of Common Stock outstanding immediately after giving effect to such exercise.  For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the Holder and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein.  Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act").  For purposes of this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding.  For any reason at any time, upon the written or oral request of the Holder, the Company shall within one business day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.

Section 1.04                      Reissuance of Warrants.

(a) Transfer of Warrant.     If this Warrant  is  to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 1.04(d)), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 1.04(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

  

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(b) Lost, Stolen or Mutilated Warrant. Upon  receipt  by  the  Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 1.04(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.

(c) Exchangeable for Multiple Warrants.  This   Warrant  is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with Section 1.04(d)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional shares of Common Stock shall be given.

(d) Issuance of New Warrants.  Whenever   the   Company is   required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 1.04(a) or Section 1.04(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the issuance date of this Warrant, and (iv) shall have the same rights and conditions as this Warrant.

Section 1.05                      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.

 

  

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(c) That the Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant.

 

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 Capital Event, unless prior to the consummation thereof the successor corporation (if other than the Company) resulting from such Capital Event, or the person or entity with which such Capital Event shall have been entered into, 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.

 

  

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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                      Adjustment of Exercise Price for Dilutive Issuances.  The Exercise Price shall also be subject to adjustment from time to time as follows:

 

(a) For purposes of this Section 2.04, the following definitions shall apply:

 

(i) "Convertible Securities" means securities by their terms convertible into or exchangeable for Common Stock (other than Excluded Stock) and options to purchase or rights to subscribe for such convertible or exchangeable securities.

 

(ii) "Dilutive Issuance" means an issuance of Purchase Rights or Common Stock without consideration or for a consideration per share less than the then applicable Exercise Price.  "Dilutive Issuance" excludes any stock dividend, subdivision or split-up, stock combination, dividend or transaction described in Sections 2.01, 2.02 and 2.03.

 

(iii) "Excluded Stock" means:

 

(1) all shares of Common Stock issued and outstanding on the date of this Warrant and all shares of Common Stock issued after the date of this Warrant pursuant to the Agreement and all shares of Common Stock issued or issuable upon the exercise or conversion of any Options or Convertible Securities outstanding on the date of this Warrant (provided that the terms of such Options and Convertible Securities are not modified or changed except as otherwise contemplated by the Agreement) and all shares of Common Stock issued or issuable upon the exercise of this Warrant and all other Warrants issued pursuant to the Agreement;

 

  

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(2) all shares of Common Stock or other securities hereafter issued or issuable to officers, directors, employees, scientific advisors or consultants of the Company pursuant to any employee or consultant option, stock offering, plan or arrangement approved by the majority of the members of the Board of Directors of the Company;

 

(3) all shares of Common Stock or other securities hereafter issued in connection with or as consideration for the acquisition or licensing of technology approved by the majority of the members of the Board of Directors of the Company; and

 

(4) all shares of Common Stock or other securities issued in connection with equipment leasing or equipment financing arrangements approved by the majority of members of the Board of Directors of the Company.

 

(iv) "Options" means warrants and options to purchase or rights to subscribe for Common Stock (other than Excluded Stock).

 

(v) "Purchase Rights" means Options and Convertible Securities.

 

(b) If the Company issues or is deemed to issue any Common Stock or Purchase Rights in a Dilutive Issuance, the applicable Exercise Price in effect after each such issuance shall be adjusted to a price equal to the following: the applicable Exercise Price in effect immediately prior to the Dilutive Issuance (the "Old Exercise Price") multiplied by the quotient obtained by dividing:

 

(i) an amount equal to the sum of (x) the total number of shares of Common Stock outstanding immediately prior to the Dilutive Issuance plus the total number of shares of Common Stock then issuable upon conversion of Convertible Securities and exercise of outstanding options and warrants, plus (y) the number of shares of Common Stock which the consideration received by the Company upon the Dilutive Issuance would purchase at such Old Exercise Price, by

 

(ii) the total number of shares of Common Stock outstanding immediately after the Dilutive Issuance plus the total number of shares of Common Stock issuable on conversion of Convertible Securities and exercise of outstanding options and warrants.

 

  

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(c) For purposes of any adjustment of the applicable Exercise Price pursuant to Section 2.04(b) above, the following provisions shall be applicable:

 

(i) In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor.

 

(ii) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith and in the exercise of reasonable judgment by the Board of Directors of the Company, in accordance with generally accepted accounting principles; provided, however, that if at the time of such determination, the Company's Common Stock is traded in the over-the-counter market or on a national or regional securities exchange, such fair market value as determined by the Board of Directors of the Company shall be equal to the "Current Market Price" (as defined below) of the shares of Common Stock being issued.

 

(iii) In the case of the issuance of Purchase Rights in a Dilutive Issuance:

 

(1) the aggregate maximum number of shares of Common Stock deliverable upon exercise of Options shall be deemed to have been issued at the time such Options were issued and for a consideration equal to the consideration (determined in the manner provided in Section 2.04(c)(i) and (ii) above), if any, received by the Company upon the issuance of such Options plus the minimum purchase price provided for in such Options;

 

(2) the aggregate maximum number of shares of Common Stock deliverable upon conversion or exercise of or exchange for any Convertible Securities shall be deemed to have been issued at the time such Convertible Securities were issued and for a consideration equal to the consideration received by the Company for any such Convertible Securities (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by the Company upon the conversion or exchange of such Convertible Securities (determined in the manner provided in Section 2.04(c)(i) and (ii) above);

 

(3) on any change in the number of shares of Common Stock deliverable upon exercise of any such Purchase Rights or on any change in the minimum purchase price of such Purchase Rights, other than a change resulting from the antidilution provisions of such Purchase Rights, the applicable Exercise Price shall forthwith be readjusted to such Exercise Price as would have been obtained had the adjustment made upon (x) the issuance of such Purchase Rights not exercised, converted or exchanged prior to such change, as the case may be, been made upon the basis of such change or (y) the issuance of options or rights related to such securities not converted or exchanged prior to such change, as the case may be, been made upon the basis of such change; and

 

(4) on the expiration of any Purchase Rights, the applicable Exercise Price shall forthwith be readjusted to such Exercise Price as would have obtained had the adjustment made upon the issuance of such Purchase Right been made upon the basis of the issuance of only the number of shares of Common Stock actually issued upon the exercise of such Purchase Rights.

 

(d) All calculations under this Section 2.04 shall be made to the nearest cent or to the nearest one hundredth (1/100) of a share, as the case may be.

 

  

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(e) For the purpose of any computation pursuant to this Section 2.04, the "Current Market Price" at any date of one share of Common Stock, shall be deemed to be the average of the highest reported bid and the lowest reported offer prices on the preceding business day as reported by the NYSE Amex (or other recognized source of quotations); provided, however, that if the Common Stock is not traded in such manner that the quotations referred to in this Section 2.04(e) are available for the period required hereunder, Current Market Price shall be determined in good faith and in the exercise of reasonable judgment by the Board of Directors of the Company.

 

Section 2.05                      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 2.06                      Minimum Adjustment.  Except as provided in Section 2.04, 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 2.07                      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, 2.03 and 2.04 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.

 

Section 2.08                      Record Date. In the event that the Company shall 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 2.09                      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.

 

  

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Section 2.10                      Notice of Adjustment. Upon any Dilutive Issuance and any adjustment of the number of shares that may be issued upon exercise of this Warrant or the Exercise Price, the Company shall give prompt notice thereof to the Holder, which notice shall state the nature of the Dilutive Issuance, and 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 2.11                      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.

 

MISCELLANEOUS

 

Section 3.01                      Transfer of Warrants. This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.

Section 3.02                      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 3.03                      No Shareholder Rights. This Warrant shall not entitle the Holder to any voting rights or other rights as a shareholder of the Company.

 

Section 3.04                      Governing Law. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of New York, without reference to the choice of law provisions thereof.  The Company and, by accepting this Warrant, the Holder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant.  The Company and, by accepting this Warrant, the Holder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  The Company and, by accepting this Warrant, the Holder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum..

 

  

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Section 3.05                      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."

 

Section 3.06                      Successors. The covenants, agreements and provisions of this Warrant shall bind the parties hereto and their respective successors and permitted assigns.

 

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be issued effective as of the _____ day of October, 2011.

 

 

	
IsoRay, Inc., a Minnesota corporation

 

	
 

 

By:__________________________________

     Dwight Babcock, CEO

  

 

  

 

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)

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