Execution Version
 
$4,000,000
 
IsoRay, Inc.
 
Common Stock
 
SALES AGREEMENT
 
April 22, 2010
 
C. K. COOPER & COMPANY, INC.,
18300 Von Karman Avenue, Suite 700
Irvine, California  92612
 
Ladies and Gentlemen:
 
IsoRay, Inc., a Minnesota corporation (the “Company”), and C. K. Cooper &
Company, Inc. (“CKCC”), hereby agree as follows:
 
1.           Issuance and Sale of Shares.  The Company agrees that, from time to
time during the term of this Sales Agreement (the “Agreement”), on the terms and
subject to the conditions set forth herein, it may issue and sell through CKCC,
acting as agent, shares (the “Shares”) of the Company’s common stock par value
$0.001 per share (the “Common Stock”) up to an aggregate offering price of
$4,000,000 (the “Maximum Amount”).  Notwithstanding anything to the contrary
contained herein, the parties hereto agree that compliance with the limitation
set forth in this Section 1 on the number of Shares issued and sold under this
Agreement shall be the sole responsibility of the Company, and CKCC shall have
no obligation in connection with such compliance, provided that CKCC strictly
follows the trading instructions provided pursuant to any Placement Notice.  The
issuance and sale of Shares through CKCC will be effected pursuant to the
Registration Statement (as defined below) filed by the Company and declared
effective by the Securities and Exchange Commission (the “Commission”).
 
The Company has filed, in accordance with the provisions of the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the “Securities Act”), with the Commission a Registration
Statement on Form S-3 (No. 333-162694), including a base prospectus, relating to
certain securities, including the Shares to be issued from time to time by the
Company, and which incorporates by reference documents that the Company has
filed or will file in accordance with the provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(collectively, the “Exchange Act”).  The Company has prepared a prospectus
supplement to the base prospectus included as part of such registration
statement specifically relating to the Shares (the “Prospectus
Supplement”).  The Company will furnish to CKCC, for use by CKCC, copies of the
prospectus included as part of such registration statement, as supplemented by
the Prospectus Supplement, relating to the Shares.  Except where the context
otherwise requires, such registration statement, as amended when it became
effective, including all documents filed as part thereof or incorporated by
reference therein, and including any information contained in a Prospectus (as
defined below) subsequently filed with the Commission pursuant to Rule
424(b) under the Securities Act or deemed to be a part of such registration
statement pursuant to Rule 430B or 462(b) of the Securities Act, as well as any
comparable successor registration statement filed by the Company for the sale of
shares of its Common Stock, including the Shares, collectively are herein called
the “Registration Statement.” The base prospectus, including all documents
incorporated therein by reference, included in the Registration Statement, as it
may be supplemented by the Prospectus Supplement, in the form in which such
prospectus and/or Prospectus Supplement have most recently been filed by the
Company with the Commission pursuant to Rule 424(b) under the Securities Act,
together with the then issued Issuer Free Writing Prospectus(es), is herein
called the “Prospectus.” Any reference herein to the Registration Statement, the
Prospectus or any amendment or supplement thereto shall be deemed to refer to
and include the documents incorporated by reference therein, and any reference
herein to the terms “amend,” “amendment” or “supplement” with respect to the
Registration Statement or the Prospectus shall be deemed to refer to and include
the filing after the execution hereof of any document with the Commission deemed
to be incorporated by reference therein (the “Incorporated Documents”).  For
purposes of this Agreement, all references to the Registration Statement, the
Prospectus or to any amendment or supplement thereto shall be deemed to include
any copy filed with the Commission pursuant to the Electronic Data Gathering
Analysis (“EDGAR”).

 

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2.           Placements.  Each time that the Company wishes to issue and sell
the Shares hereunder (each, a “Placement”), it will notify CKCC by email notice
(or other method mutually agreed to in writing by the parties) (a “Placement
Notice”) containing the parameters in accordance with which it desires the
Shares to be sold, which shall at a minimum include the number of Shares to be
issued, the time period during which sales are requested to be made, any
limitation on the number of Shares that may be sold in any one Trading Day (as
defined in Section 3) and any minimum price below which sales may not be made, a
form of which containing such minimum sales parameters necessary is attached
hereto as Schedule 1.  The Placement Notice shall originate from any of the
individuals from the Company set forth on Schedule 2 (with a copy to each of the
other individuals from the Company listed on such schedule), and shall be
addressed to each of the individuals from CKCC set forth on Schedule 2, as such
Schedule 2 may be amended from time to time.  The Placement Notice shall be
effective upon receipt by CKCC unless and until (i) in accordance with the
notice requirements set forth in Section 4, CKCC declines to accept the terms
contained therein for any reason, in its sole discretion, (ii) the entire amount
of the Shares, either under this Agreement or pursuant to a Placement Notice,
have been sold, (iii) in accordance with the notice requirements set forth in
Section 4, the Company suspends or terminates the Placement Notice, (iv) the
Company issues a subsequent Placement Notice with parameters superseding those
on the earlier dated Placement Notice, (v) CKCC declines to continue to make
sales under an existing Placement Notice, for any reason, in its sole
discretion, or (vi) the Agreement has been terminated under the provisions of
Section 11.  The amount of any discount, commission or other compensation to be
paid by the Company to CKCC in connection with the sale of the Shares shall be
calculated in accordance with the terms set forth in Schedule 3.  It is
expressly acknowledged and agreed that neither the Company nor CKCC will have
any obligation whatsoever with respect to a Placement Notice or any Shares
unless and until the Company delivers a Placement Notice to CKCC and CKCC does
not decline such Placement Notice pursuant to the terms set forth above, and
then only upon the terms specified therein and herein.
 
3.           Sale of Shares by CKCC.  Subject to the terms and conditions herein
set forth, upon the Company’s issuance of a Placement Notice, and unless the
sale of the Shares described therein has been declined, suspended, or otherwise
terminated in accordance with the terms of this Agreement, CKCC, for the period
specified in the Placement Notice, will use its commercially reasonable efforts
consistent with its customary trading and sales practices and applicable state
and federal laws, rules and regulations and the rules of the NYSE Amex (the
“Exchange”), to sell such Shares up to the amount specified, and otherwise in
accordance with the terms of such Placement Notice.  CKCC will provide written
confirmation to the Company (including by email correspondence) no later than
the opening of the Trading Day (as defined below) next following the Trading Day
on which it has made sales of Shares hereunder setting forth the number of
Shares sold on such day, the compensation payable by the Company to CKCC
pursuant to Section 2 with respect to such sales, and the Net Proceeds (as
defined below) payable to the Company, with an itemization of deductions made by
CKCC (as set forth in Section 5(a)) from gross proceeds for the Shares that it
receives from such sales.  CKCC may sell Shares by any method permitted by law
deemed to be an “at the market” offering as defined in Rule 415 of the
Securities Act, including without limitation sales made directly on the
Exchange, on any other existing trading market for the Common Stock or to or
through a market maker.  With the prior express written consent of the Company,
which may be provided in its Placement Notice, CKCC may also sell Shares in
privately negotiated transactions.  During the term of this Agreement and
notwithstanding anything to the contrary herein, CKCC agrees that in no event
will it engage in any market making, bidding, stabilization or other trading
activity with regard to the Common Stock if such activity would be prohibited
under Regulation M or other anti-manipulation rules under the Securities
Act.  For the purposes hereof, “Trading Day” means any day on which shares of
the Common Stock are purchased and sold on the principal market on which the
Common Stock is listed or quoted. The Company acknowledges and agrees that
(i) there can be no assurance that CKCC will be successful in selling Shares,
(ii) CKCC will incur no liability or obligation to the Company or any other
person or entity if it does not sell Shares for any reason other than a failure
by CKCC to use its commercially reasonable efforts consistent with its normal
trading and sales practices and applicable law and regulations to sell such
Shares as required under this Agreement and (iii) CKCC shall be under no
obligation to purchase Shares on a principal basis pursuant to this Agreement,
except as otherwise agreed by CKCC and the Company.

 
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4.           Suspension of Sales.  The Company or CKCC may, upon notice to the
other party in writing (including by email correspondence to each of the
individuals of the other party set forth on Schedule 2 , if receipt of such
correspondence is actually acknowledged by any of the individuals to whom the
notice is sent, other than via auto-reply) or by telephone (confirmed
immediately by verifiable facsimile transmission or email correspondence to each
of the individuals of the other party set forth on Schedule 2), suspend any sale
of Shares; provided, however, that such suspension shall not affect or impair
either party’s obligations with respect to any Shares sold hereunder prior to
the receipt of such notice.  Each of the parties agrees that no such notice
under this Section 4 shall be effective against the other unless it is made to
one of the individuals named on Schedule 2 hereto, as such schedule may be
amended from time to time.
 
5.           Representations and Warranties of the Company.  The Company
represents and warrants to, and agrees with, CKCC that as of each Applicable
Time (as defined in Section 20(a)):
 
(a)         The Registration Statement has been filed with the Commission under
the Securities Act and declared effective by the Commission under the Securities
Act.   No stop order suspending the effectiveness of the Registration Statement
is in effect and no proceedings for such purpose have been instituted or are
pending or, to the Company’s knowledge, are contemplated or threatened by the
Commission.  The Company satisfied all applicable requirements for the use of
Form S-3 under the Securities Act when the Registration Statement was
filed.  The Commission has not issued an order preventing or suspending the use
of the base prospectus, any Free Writing Prospectus (as defined below) or the
Prospectus relating to the proposed offering of the Shares and no proceedings
for such purpose have been instituted or are pending or, to the Company’s
knowledge, are contemplated or threatened by the Commission.  The Prospectus
delivered to CKCC for use in connection with the offering of Shares was, at the
time of such delivery, identical to the electronically transmitted copies
thereof filed with the Commission.  At the respective times each part of the
Registration Statement and each amendment thereto became effective or was deemed
effective, as the case may be, the Registration Statement complied and will
comply in all material respects with the Securities Act and did not and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.  The immediately preceding sentence does not apply to statements in
or omissions from the Registration Statement or any amendments or supplements
thereto based upon and in conformity with written information furnished to the
Company by CKCC specifically for use therein.
 
(b)         The Company has delivered to CKCC, or made available through EDGAR,
one complete copy of the Registration Statement and of each consent of experts
filed as a part thereof, and conformed copies of the Registration Statement
(without exhibits), and the Prospectus, as amended or supplemented, in such
quantities and at such places as CKCC has reasonably requested.
 
(c)         Neither the Prospectus nor any amendments or supplements thereto, at
the time the Prospectus or any such amendment or supplement was issued, as of
the date hereof and at each Applicable Time, as the case may be, included or
will include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.  The
foregoing sentence does not apply to statements in or omissions from the
Prospectus or any amendments or supplements thereto based upon and in conformity
with written information furnished to the Company by CKCC specifically for use
therein.
 
(d)         Each Incorporated Document, at the time it was or hereafter is filed
with the Commission, conformed and will conform when filed in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder; no Incorporated Document when it was filed (or, if an
amendment with respect to any Incorporated Document was filed, when such
amendment was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and no Incorporated
Document, when it is filed, will contain an untrue statement of a material fact
or will omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading.

 
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(e)         The Company is not an “ineligible issuer,” as defined in Rule 405
under the Securities Act.  The Company has not, directly or indirectly,
distributed and will not distribute any prospectus or other offering material in
connection with the offering and sale of the Shares other than the Prospectus
and other materials, if any, permitted under the Securities Act to be
distributed. Each "Issuer Free Writing Prospectus” (as defined below in
Section 20(c)) relating to the Shares that (i) was required to be filed with the
Commission by the Company or (ii) is exempt from filing pursuant to Rule
433(d)(5)(i), in each case in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g), as of its issue date and as of each
Applicable Time (as defined in Section 20 below), did not, does not and will not
include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement or the Prospectus, including
any incorporated document deemed to be a part thereof that has not been
superseded or modified. The foregoing sentence does not apply to statements in
or omissions from any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by CKCC
specifically for use therein.  The Company has satisfied or will satisfy the
conditions in Rule 433 so as not to be required to file with the Commission any
electronic road show.
 
(f)          The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Minnesota with the
corporate power and authority necessary to own, hold, lease and/or operate its
assets and properties and to conduct the business in which it is engaged as
described in the Registration Statement and Prospectus; and the Company is duly
qualified as a foreign entity to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure, individually or in the aggregate, to be so qualified and be in good
standing would not have a material adverse effect on (i) the consolidated
business, operations, assets, properties, financial condition, reputation,
prospects, or results of operations of the Company and any subsidiaries which
may be incorporated or formed from time to time (the “Subsidiaries”) taken as a
whole, (ii) the transactions contemplated hereby, or (iii) the ability of the
Company to perform its obligation under this Agreement (collectively, a
“Material Adverse Effect”).  The Company has full corporate power and authority
necessary to enter into and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.  Except as disclosed in the
Registration Statement and the Prospectus, the Company is in compliance with the
laws, orders, rules, regulations and directives applicable to it, except for any
noncompliance that, individually, or in the aggregate, could not have a Material
Adverse Effect.
 
(g)         Except as disclosed in the Registration Statement and the
Prospectus, neither the Company nor any of its Subsidiaries is (i) in violation
of any provision of its charter or bylaws or similar organizational documents,
(ii) in default in any respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant, or condition of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which it is a party
or by which it is bound or to which any of its property or assets is subject,
(iii) in violation in any respect of any statute, law, rule, regulation,
ordinance, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company, its Subsidiaries or any of its properties, as
applicable (including, without limitation, those administered by the Food and
Drug Administration of the U.S. Department of Health and Human Services (the
“FDA”) or by any foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA), or
(iv) in violation of any rule or regulation of any self-regulating organization
or other non-governmental regulatory authority (including, without limitation,
the rules and regulations of the Exchange) except, with respect to clauses (ii),
(iii), and (iv), any violations or defaults which, singularly or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.  The execution, delivery and performance of this Agreement, the issuance
and sale of the Shares and the consummation of the transactions contemplated
hereby will not conflict with, or result in any breach of or constitute a
default under (nor constitute any event which with notice, lapse of time or both
would result in any breach of, or constitute a default under), (i) any provision
of the charter, bylaws or organizational documents, as the case may be, of the
Company or any of its Subsidiaries, (ii) any provision of any contract, license,
repurchase agreement, management agreement, indenture, mortgage, deed of trust,
bank loan or credit agreement, note, lease or other evidence of indebtedness, or
any lease, contract or other agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries, or any of their respective assets or properties may be bound or
affected, (iii) any federal, state, local or foreign law, regulation or rule or
any decree, judgment or order applicable to the Company or any of its
Subsidiaries, or (iv) any rule or regulation of any self-regulating organization
or other non-governmental regulatory authority (including, without limitation,
the rules and regulations of the Exchange).

 
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(h)         All of the issued and outstanding shares of capital stock of the
Company, including the outstanding shares of Common Stock, are duly authorized
and validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities that have not been waived in writing, and the holders thereof are not
subject to personal liability solely by reason of being such holders; the Shares
which may be sold hereunder by the Company have been duly authorized and, when
issued, delivered and paid for in accordance with the terms of this Agreement,
will have been validly issued and will be fully paid and nonassessable, and the
holders thereof will not be subject to personal liability solely by reason of
being such holders; and the capital stock of the Company, including the Common
Stock, conforms to the description thereof in the Registration Statement and in
the Prospectus. Except as otherwise stated in the Registration Statement and in
the Prospectus, there are no preemptive rights or other rights to subscribe for
or to purchase, or any restriction upon the voting or transfer of, any shares of
Common Stock pursuant to the Company’s charter, by-laws or any agreement or
other instrument to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound. Neither the filing of
the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights for or relating to the
registration of any shares of Common Stock or other securities of the Company
(collectively “Registration Rights”). All of the issued and outstanding shares
of capital stock of each of the Company’s Subsidiaries have been duly and
validly authorized and issued and are fully paid and nonassessable, and, except
as otherwise described in the Registration Statement and in the Prospectus, the
Company owns of record and beneficially, free and clear of any security
interests, claims, liens, proxies, equities or other encumbrances, all of the
issued and outstanding shares of such stock. Except as described in the
Registration Statement and in the Prospectus, there are no options, warrants,
agreements, contracts or other rights in existence to purchase or acquire from
the Company or any Subsidiary of the Company any shares of the capital stock of
the Company or any subsidiary of the Company. The authorized capital stock of
the Company, as of March 19, 2010, consists of (i) 194 million shares of Common
Stock, of which 22,945,421 shares are issued and outstanding and (ii) 6 million
shares of Preferred Stock, par value $0.001 per share, of which 59,065 shares
are issued and outstanding. The description of the Company’s stock option, stock
bonus and other stock plans or arrangements, and the options or other rights
granted thereunder, set forth in the Registration Statement and in the
Prospectus accurately and fairly presents the information required to be shown
with respect to such plans, arrangements, options and rights.

(i)           (1) The Company and its Subsidiaries have made all filings,
applications and submissions required by, and possesses all approvals, licenses,
certificates, certifications, clearances, consents, exemptions, marks,
notifications, orders, permits and other authorizations issued by, the
appropriate federal, state or foreign regulatory authorities (including, without
limitation, the FDA, and any other foreign, federal, state or local government
or regulatory authorities performing functions similar to those performed by the
FDA) necessary for the ownership or lease of their respective properties or to
conduct its businesses as described in the Registration Statement and the
Prospectus (collectively, “Permits”), except for such filings, submissions or
Permits the failure of which to make, possess or obtain, as the case may be,
could not have a Material Adverse Effect; and neither the Company nor any of its
Subsidiaries has received any written notice of proceedings relating to the
limitation, revocation, cancellation, suspension, modification or non-renewal of
any such Permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect,
and has any reason to believe that any such license, certificate, permit or
authorization will not be renewed in the ordinary course; and (2) no approval,
authorization, consent or order of or filing with any national, state or local
governmental or regulatory commission, board, body, authority or agency is
required in connection with the issuance and sale of the Shares or the
consummation by the Company of the transactions contemplated hereby (including,
without limitation, the Exchange, or approval of the stockholders of the Company
(including as may be required by the Exchange)), other than (i) registration of
the Shares under the Securities Act, (ii) any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the Shares are
being offered by CKCC, (iii) filing of any reports under the Exchange Act,
(iv) such approvals as may be required by the Conduct Rules of the Financial
Industry Regulatory Authority, Inc. (“FINRA”), or (v) approval of the listing of
the shares by the Exchange.

 
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(j)          Except as set forth in the Registration Statement and the
Prospectus, (i) no person, as such term is defined in Rule 1-02 of Regulation
S-X promulgated under the Securities Act (each, a “Person”), has the right,
contractual or otherwise, to cause the Company to issue or sell to such Person
any shares of Common Stock or shares of any other capital stock or other
securities of the Company, (ii) no Person has any preemptive rights, resale
rights, rights of first refusal, or any other rights (whether pursuant to a
“poison pill” provision or otherwise) to purchase any shares of Common Stock or
shares of any other capital stock or other securities of the Company,
(iii) except as disclosed to CKCC or its agents in connection with the
transactions contemplated hereby, no Person has the right to act as an
underwriter or as a financial advisor to the Company in connection with the
offer and sale of the Shares, and (iv) except as otherwise previously disclosed
in a report or registration statement filed with the Commission, no Person has
the right, contractual or otherwise, to require the Company to register under
the Securities Act any shares of Common Stock or shares of any other capital
stock or other securities of the Company, or to include any such shares or other
securities in the Registration Statement or the offering contemplated thereby,
whether as a result of the filing or effectiveness of the Registration Statement
or the sale of the Shares as contemplated thereby or otherwise.
 
(k)         This Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except to the extent that
(i) enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally and by general
equitable principles and (ii) the indemnification and contribution provisions of
Section 9 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof.
 
(l)          The consolidated financial statements of the Company and its
Subsidiaries, together with the related notes, set forth or incorporated by
reference in the Registration Statement and the Prospectus comply in all
material respects with the requirements of the Securities Act and the Exchange
Act and fairly present the financial condition of the Company and its
Subsidiaries as of the dates indicated and the results of operations and changes
in cash flows for the periods therein specified in conformity with generally
accepted accounting principles in the United States consistently applied
throughout the periods involved; the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein; all non-GAAP financial information included in the Registration
Statement and the Prospectus complies with the requirements of Regulation G and
Item 10 of Regulation S-K under the Securities Act; and, there are no material
off-balance sheet arrangements (as defined in Regulation S-K under the
Securities Act, Item 303(a)(4)(ii)) or any other relationships with
unconsolidated entities or other persons, that may have a material current or,
to the Company’s knowledge, material future effect on the Company’s financial
condition, results of operations, liquidity, capital expenditures, capital
resources or significant components of revenue or expenses. No other financial
statements or schedules are required to be included in the Registration
Statement or the Prospectus.
 
(m)        DeCoria, Maichel & Teague P.S., whose report on the financial
statements of the Company is filed with the Commission as part of the
Registration Statement and the Prospectus, are and, during the periods covered
by their report, were (i) an independent public accounting firm within the
meaning of the Securities Act, (ii) a registered public accounting firm (as
defined in Section 2(a)(12) of the Sarbanes-Oxley Act), and (iii) not in
violation of the auditor independence requirements of the Sarbanes-Oxley Act.
 
(n)         All agreements between the Company and third parties that are filed
as exhibits to the Registration Statement are legal, valid and binding
obligations of the Company enforceable in accordance with their respective
terms, except to the extent that (i) enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable principles and (ii) the
indemnification provisions of certain agreements may be limited be federal or
state securities laws or public policy considerations in respect thereof and
except for any other potentially unenforceable term that, individually or in the
aggregate, could not have a Material Adverse Effect.
 
(o)         Except as disclosed in the Registration Statement and the
Prospectus, the Company has no “significant subsidiaries” (as such term is
defined in Rule 1-02 of Regulation S-X promulgated under the Securities
Act).  Except as disclosed in the Registration Statement and the Prospectus, the
Company does not own, directly or indirectly, any shares of stock or any other
equity interests or long-term debt securities of any corporation, firm,
partnership, joint venture, association or other entity.

 
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(p)         Except as disclosed in the Registration Statement and the
Prospectus, neither the Company nor any of its Subsidiaries has failed to file
with the applicable regulatory authorities (including, without limitation, the
FDA or any foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA) any required filing,
declaration, listing, registration, report or submission, except for such
failures that, individually or in the aggregate, could not have a Material
Adverse Effect; except as disclosed in the Registration Statement and the
Prospectus, all such filings, declarations, listings, registrations, reports or
submissions were in compliance with applicable laws when filed and no
deficiencies have been asserted by any applicable regulatory authority with
respect to any such filings, declarations, listings, registrations, reports or
submissions, except for any deficiencies that, individually or in the aggregate,
could not have a Material Adverse Effect.
 
(q)         Neither the Company nor any of its Subsidiaries or any related
entities (i) is required to register as a “broker” or “dealer” in accordance
with the provisions of the Exchange Act or (ii) directly or indirectly through
one or more intermediaries, controls or is a “person associated with a FINRA
member” or “associated person of a FINRA member” (within the meaning of
Article I of the Bylaws of the NASD).
 
(r)          Neither the Company nor, to the Company’s knowledge, any of its
Subsidiaries, nor, to the Company’s knowledge, any of their respective
directors, officers or controlling persons has taken, directly or indirectly,
any action designed, or that has constituted under the Exchange Act or
otherwise, the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
 
(s)         Except as disclosed in the Registration Statement, the Prospectus
and Exhibit 5(s), there are no actions, suits, claims, investigations, inquiries
or proceedings pending or, to the Company’s knowledge, threatened, to which
either the Company or, to the Company’s knowledge, its Subsidiaries, nor any of
their respective officers or directors, is a party or of which any of their
respective properties or other assets is subject at law or in equity, or before
or by any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, or before any self-regulating
organization or other non-governmental regulatory authority (including, without
limitation, the Exchange), which if resolved adversely to the Company or any
Subsidiary would, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
 
(t)          Except as disclosed in the Registration Statement and the
Prospectus, the Company and, to the Company’s knowledge, any of its Subsidiaries
has filed on a timely basis (taking into account all applicable extensions) all
necessary federal, state, local and foreign income and franchise tax returns, if
any such returns were required to be filed, through the date hereof and have
paid all taxes shown as due thereon except for any failure to file or pay which,
individually or in the aggregate, could not have a Material Adverse Effect.  No
tax deficiency has been asserted against the Company or, to the Company’s
knowledge, any of its Subsidiaries, nor does the Company know of any tax
deficiency that is likely to be asserted against any such entity that, if
determined adversely to any such entity, could reasonably be expected to have a
Material Adverse Effect.  All tax liabilities, if any, are adequately provided
for on the books of the Company and, to the Company’s knowledge, any of its
Subsidiaries, except for such tax liabilities that, individually or in the
aggregate, could not have a Material Adverse Effect.
 
(u)         Except as disclosed in the Registration Statement and the
Prospectus, the Company and its Subsidiaries own, possess, license or have other
rights to use all foreign and domestic patents, patent applications, trade and
service marks, trade and service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, Internet domain names, know-how
and other intellectual property (collectively, the “Intellectual Property”),
necessary for the conduct of their respective businesses as now conducted except
to the extent that the failure to own, possess, license or otherwise hold
adequate rights to use such Intellectual Property would not, individually or in
the aggregate, have a Material Adverse Effect.  Except as disclosed in the
Registration Statement and the Prospectus, (a) to the Company’s knowledge, there
is no infringement by third parties of any such Intellectual Property; (b) there
is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the Company’s and its Subsidiaries’
rights in or to any such Intellectual Property, and the Company is unaware of
any facts which could form a reasonable basis for any such action, suit,
proceeding or claim; (c) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging the validity
or scope of any such Intellectual Property; (d) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others that
the Company and its Subsidiaries infringe or otherwise violate any patent,
trademark, copyright, trade secret or other proprietary rights of others; (e) to
the Company’s knowledge, there is no third-party U.S. patent or published U.S.
patent application which contains claims for which an Interference Proceeding
(as defined in 35 U.S.C. § 135) has been commenced against any patent or patent
application described in the Prospectus as being owned by or licensed to the
Company; and (f) the Company and its Subsidiaries have complied with the terms
of each agreement pursuant to which Intellectual Property has been licensed to
the Company or such Subsidiary, and all such agreements are in full force and
effect.

 
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(v)         The studies, tests and preclinical and clinical trials conducted by
or on behalf of the Company and its Subsidiaries were and, if still pending,
are, in all material respects, being conducted in accordance with experimental
protocols, procedures and controls pursuant to accepted professional scientific
standards and all applicable laws, including, without limitation, the Federal
Food, Drug and Cosmetic Act and implementing regulations at 21 C.F.R. Parts 50,
54, 56, 58 and 812; the descriptions of the results of such studies, tests and
trials contained in the Registration Statement and the Prospectus are accurate
and complete in all material respects and fairly present the data derived from
such studies, tests and trials; except to the extent disclosed in the
Registration Statement and the Prospectus, the Company is not aware of any
studies, tests or trials the results of which the Company believes reasonably
call into question the study, test, or trial results described or referred to in
the Registration Statement and the Prospectus when viewed in the context in
which such results are described and the clinical state of development; and
neither the Company nor any of its Subsidiaries have received any notices or
correspondence from any governmental authority requiring the termination,
suspension or material modification of any studies, tests or preclinical or
clinical trials conducted by or on behalf of the Company or any of its
Subsidiaries.
 
(w)        Except as disclosed in the Registration Statement and the Prospectus,
the Company has established and administers a compliance program applicable to
the Company, to assist the Company and the directors, officers and employees of
the Company in complying with applicable regulatory guidelines (including,
without limitation, those administered by the FDA and any other foreign,
federal, state or local governmental or regulatory authority performing
functions similar to those performed by the FDA).
 
(x)         Except as disclosed in the Registration Statement and the
Prospectus, the Company and its Subsidiaries:  (i) are in compliance with any
and all applicable federal, state, local and foreign laws, rules, regulations,
decisions and orders relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, “Environmental Laws”); (ii) have received and are in
compliance with all permits, licenses and other approvals required of them under
applicable Environmental Laws to conduct their respective businesses as
described in the Registration Statement and the Prospectus; and (iii) have not
received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except, in the case of any of clauses (i),
(ii) or (iii) immediately above, for any such failure to comply or failure to
receive required permits, licenses, or other approvals or any such liability as
could not, individually or in the aggregate, have a Material Adverse Effect.
 
(y)         The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are executed
in accordance with management’s general or specific authorization;
(B) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles in the
United States and to maintain accountability for assets; (C) access to assets is
permitted only in accordance with management’s general or specific
authorization; and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed in Exhibit 5(y), the Company’s
internal control over financial reporting is effective and none of the Company,
its board of directors and audit committee is aware of any “significant
deficiencies” or “material weaknesses” (each as defined by the Public Company
Accounting Oversight Board (“PCAOB”)) in its internal control over financial
reporting, or any fraud, whether or not material, that involves management or
other employees of the Company who have a significant role in the Company’s
internal controls; and since the end of the latest audited fiscal year, there
has been no change in the Company’s internal control over financial reporting
(whether or not remediated) that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting. The Company’s board of directors has, subject to the exceptions, cure
periods and the phase in periods specified in the applicable stock exchange
rules, validly appointed an audit committee to oversee internal accounting
controls whose composition satisfies the applicable requirements of the Exchange
and the Company’s board of directors and/or the audit committee has adopted a
charter that satisfies the requirements of the Exchange.

 
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(z)         The Company has established and maintains disclosure controls and
procedures (as defined in Rules 13a-14 and 15d-14 under the Exchange Act) and
such controls and procedures are effective in ensuring that material information
relating to the Company, including its Subsidiaries, is made known to the
principal executive officer and the principal financial officer. The Company has
utilized such controls and procedures in preparing and evaluating the
disclosures in the Registration Statement and in the Prospectus.
 
(aa)       Except as disclosed in the Registration Statement and the Prospectus,
the Company is in compliance in all material respects with all applicable
effective provisions of the Sarbanes-Oxley Act and the rules and regulations of
the Commission and the Exchange promulgated thereunder.
 
(bb)       Neither the Company nor any of its Subsidiaries has incurred any
liability for any finder’s fees or similar payments in connection with the
transactions herein contemplated, except as may otherwise exist pursuant to this
Agreement.
 
(cc)       Except as disclosed in the Registration Statement and the Prospectus,
neither the Company nor any of its Subsidiaries is engaged in any unfair labor
practice; except for matters which could not, individually or in the aggregate,
have a Material Adverse Effect, (i) there is no (A) unfair labor practice
complaint pending or, to the Company’s knowledge, threatened against the Company
or its Subsidiaries before the National Labor Relations Board, and no grievance
or arbitration proceeding arising out of or under collective bargaining
agreements is pending or, to the Company’s knowledge, threatened, (B) strike,
labor dispute, slowdown or stoppage pending or, to the Company’s knowledge,
threatened against the Company or any of its Subsidiaries and (C) union
representation dispute currently existing concerning the employees of the
Company or any of its Subsidiaries, and (ii) to the Company’s knowledge, (A) no
union organizing activities are currently taking place concerning the employees
of the Company or any of its Subsidiaries, and (B) there has been no violation
of any federal, state, local, or foreign law relating to discrimination in the
hiring, promotion or pay of employees or any applicable wage or hour laws
concerning the employees of the Company.
 
(dd)       Except as disclosed in the Registration Statement and the Prospectus,
neither the Company nor any of its Subsidiaries, after giving effect to the
offering and sale of the Shares, will be (i) required to register as an
“investment company” or an entity “controlled” by an “investment company,” as
such terms are defined in the Investment Company Act of 1940, as amended (the
“Investment Company Act”), or (ii) a “business development company” (as defined
in Section 2(a)(48) of the Investment Company Act).
 
(ee)       Except as disclosed in the Registration Statement and the Prospectus,
neither the Company nor any of its Subsidiaries has sustained any loss or
interference with its respective business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, in each case that, individually
or in the aggregate, could have a Material Adverse Effect.
 
(ff)         Except as disclosed in the Registration Statement and the
Prospectus, the Company is not a party to any agreement with an agent or
underwriter for any other “at-the-market” or continuous equity transaction.
 
(gg)       The Company satisfies the eligibility requirements for use of
Form S-3, set forth in the General Instructions thereto.
 
(hh)       The Company and its Subsidiaries are in compliance with all presently
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
(“ERISA”), except for any noncompliance that, individually or in the aggregate,
could not have a Material Adverse Effect.  Except as disclosed in the
Registration Statement and the Prospectus, no “reportable event” (as defined in
section 4043 of ERISA) for which the Pension Benefit Guaranty Corporation has
not waived the notice requirement has occurred in the past three years with
respect to any “pension plan” (as defined in ERISA) for which the Company and
its Subsidiaries would reasonably expect to have any liability.  The Company and
its Subsidiaries have not incurred and do not reasonably expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any “pension plan” or (ii) Sections 412 or 4971 of the
Code.  Each “pension plan” for which the Company or its Subsidiaries would have
any liability that is intended to be qualified under Section 401(a) of the Code
has received a favorable determination or opinion letter to that effect and, to
the Company’s knowledge, no event has occurred since the date of such letter
that could reasonably be expected to result in the loss of such qualification.

 
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(ii)         The Company acknowledges and agrees that CKCC has informed the
Company that CKCC may, to the extent permitted under the Securities Act and the
Exchange Act, purchase and sell shares of Common Stock for its own account while
this Agreement is in effect, provided, that (i) no such purchase or sales shall
take place while a Placement Notice is in effect (except to the extent CKCC may
engage in sales of Shares purchased or deemed purchased from the Company as a
“riskless principal” or in a similar capacity) and (ii) the Company shall not be
deemed to have authorized or consented to any such purchases or sales by CKCC.
 
(jj)          (i) Neither the Company nor, to the Company’s knowledge, its
Subsidiaries, nor to the Company’s knowledge, any of their respective executive
officers has, in the past five years, made any unlawful contributions to any
candidate for any political office (or failed fully to disclose any contribution
in violation of law) or made any contribution or other payment to any official
of, or candidate for, any federal, state, municipal, or foreign office or other
person charged with similar public or quasi-public duty in violation of any law
or of the character required to be disclosed in the Prospectus; (ii) no
relationship, direct or indirect, exists between or among the Company or, to the
Company’s knowledge, any Subsidiary or any affiliate of any of them, on the one
hand, and the directors, officers and stockholders of the Company or, to the
Company’s knowledge, any Subsidiary, on the other hand, that is required by the
Securities Act to be described in the Registration Statement and the Prospectus
that is not so described; (iii) no relationship, direct or indirect, exists
between or among the Company or any Subsidiary or any affiliate of them, on the
one hand, and, to the Company's knowledge, the directors, officers, or
stockholders of the Company or, to the Company’s knowledge, any Subsidiary, on
the other hand, that is required by the rules of the FINRA to be described in
the Registration Statement and the Prospectus that is not so described;
(iv) except as described in the Prospectus, there are no material outstanding
loans or advances or material guarantees of indebtedness by the Company or, to
the Company’s knowledge, any Subsidiary to or for the benefit of any of their
respective officers or directors or any of the members of the families of any of
them; (v) the Company has not offered, or caused any placement agent to offer,
Common Stock to any person with the intent to influence unlawfully (A) a
customer or supplier of the Company or any Subsidiary to alter the customer’s or
supplier’s level or type of business with the Company or any Subsidiary or (B) a
trade journalist or publication to write or publish favorable information about
the Company or any Subsidiary or any of their respective products or services,
and, (vi) neither the Company nor any Subsidiary nor, to the Company’s
knowledge, any employee or agent of the Company or any Subsidiary has made any
payment of funds of the Company or any Subsidiary or received or retained any
funds in violation of any law, rule or regulation (including, without
limitation, the Foreign Corrupt Practices Act of 1977), which payment, receipt
or retention of funds is of a character required to be disclosed in the
Registration Statement or the Prospectus.
 
(kk)       Except as disclosed in the Registration Statement and the Prospectus,
the Company and its Subsidiaries have good and marketable title to all property
(real and personal) described in the Registration Statement and the Prospectus
as being owned by any of them, free and clear of all material liens, claims,
security interests or other encumbrances, except to the extent such material
liens, claims, security interests or other encumbrances are disclosed in the
Registration Statement and the Prospectus; all the property described in the
Registration Statement and the Prospectus as being held under lease by the
Company or any Subsidiary is held thereby under valid, subsisting and
enforceable leases.
 
(ll)         Except as disclosed in the Registration Statement and the
Prospectus, the Company and its Subsidiaries maintain insurance covering their
respective properties, operations, personnel and businesses as the Company
reasonably deems adequate; such insurance insures against such losses and risks
to an extent which the Company reasonably believes is adequate and in accordance
with customary industry practice to protect the Company and its Subsidiaries and
their respective businesses; all such insurance is fully in force on the date
hereof and will be fully in force at the time of purchase; neither the Company
nor its Subsidiaries has reason to believe that it will not be able to renew any
such insurance as and when such insurance expires.
 
(mm)     Neither the Company, nor any of its affiliates, nor any person acting
on its or their behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security, under circumstances
that would cause this offering of the Shares to be integrated with prior
offerings by the Company for purposes of any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
any exchange or automated quotation system on which any of the securities of the
Company are listed or designated, nor will the Company take any action or steps
that would cause the offering of the Shares to be integrated with other
offerings. The Company has not, in the twelve (12) months preceding the date
hereof, received notice from the Exchange to the effect that the Company is not
in compliance with the listing or maintenance requirements of the Exchange. The
Company is in compliance with all such listing and maintenance requirements. The
issuance and sale of the Shares hereunder does not contravene the rules and
regulations of the Exchange and no stockholder approval is required for the
Company to fulfill its obligations hereunder. The Common Stock has been
registered pursuant to Section 12(b) of the Exchange Act and is currently listed
on the Exchange.

 
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(nn)       To the Company’s knowledge, no transaction has occurred between or
among the Company and its Subsidiaries, on the one hand, and any of the
Company’s officers, directors or 5% stockholders or any affiliate or affiliates
of any such officer, director or 5% stockholders that is required to be
described that is not so described in the Registration Statement and the
Prospectus. The Company has not, directly or indirectly, extended or maintained
credit, or arranged for the extension of credit, or renewed an extension of
credit, in the form of a personal loan to or for any of its directors or
executive officers in violation of applicable laws, including Section 402 of the
Sarbanes-Oxley Act.
 
(oo)       The operations of the Company and its Subsidiaries are and have been
conducted at all times in material compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all applicable jurisdictions, the rules and regulations thereunder and any
related or similar applicable rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, “Money
Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its Subsidiaries with respect to the Money Laundering Laws is pending
or, to the knowledge of the Company, threatened.
 
Any certificate signed by an officer of the Company and delivered to CKCC or to
counsel for CKCC pursuant to or in connection with this Agreement shall be
deemed to be a representation and warranty by the Company, as applicable, to
CKCC as to the matters set forth therein.
 
6.           Sale and Delivery; Settlement.
 
(a)         Unless otherwise specified in the applicable Placement Notice,
settlement for sales of Shares will occur on the third Business Day (or such
earlier day as is industry practice for regular-way trading) following the date
on which such sales are made (each, a “Settlement Date” and the first such
settlement date, the “First Delivery Date”).  The amount of proceeds to be
delivered to the Company on a Settlement Date against receipt of the Shares sold
(the “Net Proceeds”) will be equal to the aggregate sales price received by CKCC
at which such Shares were sold, after deduction for (i) CKCC’s commission,
discount or other compensation for such sales payable by the Company pursuant to
Section 2  hereof, (ii) any other amounts due and payable by the Company to CKCC
hereunder pursuant to Section 7(g) hereof, and (iii) any transaction fees
imposed by any governmental or self-regulatory organization in respect of such
sales.
 
(b)         On or before each Settlement Date, the Company will, or will cause
its transfer agent to, electronically transfer the Shares being sold by
crediting CKCC’s or its designee’s account (provided CKCC shall have given the
Company written notice of such designee at least one Business Day prior to the
Settlement Date) at The Depository Trust Company through its Deposit and
Withdrawal at Custodian System or by such other means of delivery as may be
mutually agreed upon by the parties hereto which in all cases shall be freely
tradable, transferable, registered shares in good deliverable form.  On each
Settlement Date, CKCC will deliver the related Net Proceeds in same-day funds to
an account designated by the Company on, or prior to, the Settlement Date.  The
Company agrees that if the Company, or its transfer agent (if applicable),
defaults in its obligation to deliver Shares on a Settlement Date, the Company
will, in addition to and in no way limiting the rights and obligations set forth
in Section 9(a), (i) hold CKCC harmless against any loss, claim, damage, or
expense (including reasonable legal fees and expenses), as incurred, arising out
of or in connection with such default by the Company and (ii) pay to CKCC any
commission, discount, or other compensation to which it would otherwise have
been entitled absent such default; provided, however, that the Company shall not
be obligated to so indemnify and reimburse CKCC if the Shares are not timely
delivered due to (i) a suspension or material limitation in trading in
securities generally on the Exchange; (ii) a general moratorium on commercial
banking activities declared by either federal or New York State authorities or a
material disruption in commercial banking or securities settlement or clearance
services in the United States; (iii) an outbreak or escalation of hostilities or
acts of terrorism involving the United States or a declaration by the United
States of a national emergency or war; or (iv) any other calamity or crisis or
any change in financial, political or economic conditions in the United States
or elsewhere.

 
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(c)          Certificates for the Shares, if any, shall be in such denominations
and registered in such names as CKCC may request in writing at least one full
business day before the Settlement Date.  The certificates for the Shares, if
any, will be made available for examination and packaging by CKCC in The City of
New York not later than noon (New York time) on the business day prior to the
Settlement Date.
 
(d)         Under no circumstances shall the Company cause or request the offer
or sale of any Shares if, after giving effect to the sale of such Shares, the
aggregate gross sales proceeds sold pursuant to this Agreement would exceed the
lesser of (A) together with all sales of Shares under this Agreement, the
Maximum Amount, (B) the amount available for offer and sale under the currently
effective Registration Statement and (C) the amount authorized from time to time
to be issued and sold under this Agreement by the Company’s board of directors,
a duly authorized committee thereof or a duly authorized executive committee,
and notified to CKCC in writing.  Under no circumstances shall the Company cause
or request the offer or sale of any Shares at a price lower than the minimum
price authorized from time to time by the Company’s board of directors, duly
authorized committee thereof or a duly authorized executive committee, and
notified to CKCC in writing.  Further, under no circumstances shall the
aggregate offering amount of Shares sold pursuant to this Agreement, including
any separate underwriting or similar agreement covering principal transactions,
exceed the Maximum Amount.
 
(e)          The Company agrees that any offer to sell, any solicitation of an
offer to buy, or any sales of Shares shall only be effected by or through CKCC
on any single given day; provided, however, that (1) the foregoing limitation
shall not apply to (i) the exercise of any option, warrant, right or any
conversion privilege set forth in the instrument governing such security or
(ii) sales solely to employees or security holders of the Company or its
Subsidiaries, or to a trustee or other person acquiring such securities for the
accounts of such persons, and (2) such limitation shall not apply on any day
during which no sales are made pursuant to this Agreement.
 
7.           Covenants of the Company.  The Company covenants and agrees with
CKCC that:
 
(a)         After the date of this Agreement and during any period in which a
Prospectus relating to any Shares is required to be delivered by CKCC under the
Securities Act with respect to a pending sale of the Shares (including in
circumstances where such requirement may be satisfied pursuant to Rule 172 under
the Securities Act), the Company will notify CKCC promptly of the time when any
subsequent amendment to the Registration Statement, other than documents
incorporated by reference, has been filed with the Commission and/or has become
effective or any subsequent supplement to the Prospectus has been filed and any
request by the Commission for any amendment or supplement to the Registration
Statement or Prospectus or for additional information.
 
(b)         During any period in which a Prospectus relating to any Shares is
required to be delivered by CKCC under the Securities Act with respect to a
pending sale of Shares, the Company will advise CKCC, promptly after it receives
notice or obtains knowledge thereof, of the issuance or threatened issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any other order preventing or suspending the use of
the Prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceeding for any such purpose or any examination pursuant to Section 8(e) of
the Securities Act, or if the Company becomes the subject of a proceeding under
Section 8A of the Securities Act in connection with the offering of the Shares;
and the Company will promptly use its commercially reasonable efforts to prevent
the issuance of any stop or other order or to obtain its withdrawal if such a
stop or other order should be issued.
 
(c)         During any period in which a Prospectus relating to the Shares is
required to be delivered by CKCC under the Securities Act with respect to a
pending sale of the Shares (including in circumstances where such requirement
may be satisfied pursuant to Rule 172 under the Securities Act), the Company
will comply with all requirements imposed upon it by the Securities Act, as from
time to time in force, and to file on or before their respective due dates all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission pursuant to Sections 13(a), 13(c), 14,
15(d) or any other provision of or under the Exchange Act.  If during such
period any event occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if during such period it is
necessary to amend or supplement the Registration Statement or Prospectus to
comply with the Securities Act, the Company will promptly notify CKCC to suspend
the offering of Shares during such period and the Company will promptly amend or
supplement the Registration Statement or Prospectus (at the expense of the
Company) so as to correct such statement or omission or effect such compliance.

 
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 (d)         During any period in which the Prospectus relating to the Shares is
required to be delivered by CKCC under the Securities Act with respect to a
pending sale of the Shares (including in circumstances where such requirement
may be satisfied pursuant to Rule 172 under the Securities Act), the Company
will use its commercially reasonable efforts to cause the Shares to be listed on
the Exchange.
 
(e)          The Company will furnish to CKCC and its counsel (at the expense of
the Company) copies of the Registration Statement, the Prospectus (including all
documents incorporated by reference therein) and all amendments and supplements
to the Registration Statement or Prospectus that are filed with the Commission
during any period in which a Prospectus relating to the Shares is required to be
delivered under the Securities Act.  The copies of the Registration Statement
and the Prospectus and any supplements or amendments thereto furnished to CKCC
will be identical to the electronically transmitted copies thereof filed with
the Commission.  Notwithstanding the foregoing, the Company will not be required
to furnish any document (other than the Prospectus) to CKCC to the extent such
document is available on EDGAR.
 
(f)           The Company will make generally available to its security holders
as soon as practicable an earnings statement covering a 12-month period that
satisfies the provisions of Section 11(a) and Rule 158 of the Securities
Act.  “Earnings statement” and “make generally available” will have the meanings
contained in Rule 158 under the Securities Act.
 
(g)          The Company, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, in accordance with the
provisions of Section 11 hereunder, will pay all expenses incident to the
performance of the Company’s obligations hereunder, which the parties
acknowledge include expenses relating to:  (i) the preparation, printing and
filing of the Registration Statement and each amendment and supplement thereto,
of each Prospectus and of each amendment and supplement thereto, and of this
Agreement, (ii) the preparation, issuance and delivery of the Shares, (iii) the
printing and delivery to CKCC of copies of the Prospectus and any amendments and
supplements thereto, (iv) the fees and expenses incurred in connection with the
listing or qualification of the Shares for trading on the Exchange, and (v) the
filing fees and expenses, if any, of the Commission and FINRA.  The Company will
pay, within 30 days of the delivery of an invoice in reasonable detail, all
reasonable and customary expenses incident to the performance of its obligations
hereunder, including attorney’s fees, consultant fees, travel and lodging
expenses and any other incidental fees and expenses incurred by CKCC, not to
exceed $29,000 in the aggregate.
 
(h)          The Company will use the Net Proceeds as described in the
Prospectus in the section entitled “Use of Proceeds.”
 
(i)           During either the pendency of any Placement Notice given
hereunder, or any period in which the Prospectus relating to the Shares is
required to be delivered by CKCC, the Company shall provide CKCC notice as
promptly as reasonably possible before it offers to sell, contracts to sell,
sells, grants any option to sell or otherwise disposes of any shares of Common
Stock (other than Shares offered pursuant to the provisions of this Agreement)
or securities convertible into or exchangeable for Common Stock, warrants or any
rights to purchase or acquire Common Stock; provided, that such notice shall not
be required in connection with the (i) issuance, grant or sale of Common Stock,
options to purchase shares of Common Stock or Common Stock issuable upon the
exercise of options or other equity awards pursuant to any employee or director
stock option or benefits plan or stock ownership plan or issuances (ii) the
issuance or sale of Common Stock pursuant to any dividend reinvestment plan that
the Company may adopt from time to time or (iii) the issuance of Common Stock
upon the exercise of any currently outstanding warrants, options or other rights
in effect or outstanding and disclosed in filings by the Company available on
EDGAR.
 
(j)           The Company will, at any time during the pendency of a Placement
Notice, advise CKCC promptly after it shall have received notice or obtained
knowledge thereof, of any information or fact that would alter or affect in any
material respect any opinion, certificate, letter or other document required to
be provided to CKCC pursuant to this Agreement.

 
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(k)           The Company will cooperate with any reasonable due diligence
review conducted by CKCC or its agents in connection with the transactions
contemplated hereby, including, without limitation, providing information and
making available documents and senior corporate officers, during regular
business hours and at the Company’s principal offices, as CKCC may reasonably
request.
 
(l)           The Company agrees that on such dates as the Securities Act shall
require, the Company will (i) file a prospectus supplement with the Commission
under the applicable paragraph of Rule 424(b) under the Securities Act (each and
every filing date under Rule 424(b), a “Filing Date”), which prospectus
supplement will set forth, within the relevant period, the amount of Shares sold
through CKCC, the Net Proceeds to the Company and the compensation payable by
the Company to CKCC with respect to such Shares, and (ii) deliver such number of
copies of each such prospectus supplement to each exchange or market on which
such sales were effected as may be required by the rules or regulations of such
exchange or market.
 
(m)         Three Trading Days prior to the First Delivery Date and each time
the Company:
 
(i)           files the Prospectus relating to the Shares or amends or
supplements (other than a prospectus supplement relating solely to an offering
of securities other than the Shares) the Registration Statement or the
Prospectus relating to the Shares by means of a post-effective amendment,
sticker, or supplement but not by means of incorporation of documents by
reference into the Registration Statement or the Prospectus relating to the
Shares;
 
(ii)          files an annual report on Form 10-K under the Exchange Act
(including any Form 10-K/A containing amended financial information or a
material amendment to the previously filed Form 10-K);
 
(iii)         files its quarterly reports on Form 10-Q under the Exchange Act;
or
 
(iv)         files a current report on Form 8-K containing amended financial
information (other than information “furnished” pursuant to Items 2.02 or 7.01
of Form 8-K) under the Exchange Act,
 
Each date of filing of one or more of the documents referred to in clauses
(i) through (iv) shall be a “Representation Date.”
 
the Company shall furnish CKCC with a certificate, in the form attached hereto
as Exhibit 7(m) within three (3) Trading Days of any Representation Date.  The
requirement to provide a certificate under this Section 7(m) shall be waived for
any Representation Date occurring at a time at which no Placement Notice is
pending, which waiver shall continue until the earlier to occur of the date the
Company delivers a Placement Notice hereunder (which for such calendar quarter
shall be considered a Representation Date) and the next occurring Representation
Date; provided, however, that such waiver shall not apply for any Representation
Date on which the Company files its annual report on Form 10-K.  Notwithstanding
the foregoing, if the Company subsequently decides to sell Shares following a
Representation Date when the Company relied on such waiver and did not provide
CKCC with a certificate under this Section 7(m), then before the Company
delivers the Placement Notice or CKCC sells any Shares, the Company shall
provide CKCC with a certificate, in the form attached hereto as Exhibit 7(m),
dated the date of the Placement Notice.
 
(n)           On the date the first Placement Notice is given hereunder, the
Company shall cause to be furnished to CKCC a written opinion dated as of the
date of such Placement Notice of Keller Rohrback, PLC (the “Company Counsel”),
in a form reasonably acceptable to CKCC and its counsel.  Within three
(3) Trading Days of each subsequent Representation Date with respect to which
the Company is obligated to deliver a certificate in the form attached hereto as
Exhibit 7(m) for which no waiver is applicable, the Company shall cause to be
furnished to CKCC a written opinion of Company Counsel in a form reasonably
acceptable to CKCC and its counsel.

 
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(o)          Three Trading Days prior to the First Delivery Date and three
(3) Trading Days prior to each Representation Date with respect to which the
Company is obligated to deliver a certificate in the form attached hereto as
Exhibit 7(m) for which no waiver is applicable, the Company shall cause its
independent accountants (and any other independent accountants whose report is
included in the Registration Statement or the Prospectus), to furnish CKCC
letters (the “Comfort Letters”) in form and substance satisfactory to CKCC,
(i) confirming that they are an independent registered public accounting firm
within the meaning of the Securities Act, the Exchange Act, and the PCAOB,
(ii) stating, as of such date, the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily covered by
accountants’ “comfort letters” to underwriters in connection with registered
public offerings (the first such letter, the “Initial Comfort Letter”) and
(iii) updating the Initial Comfort Letter with any information that would have
been included in the Initial Comfort Letter had it been given on such date and
modified as necessary to relate to the Registration Statement and the
Prospectus, as amended and supplemented to the date of such letter.
 
(p)          The Company will not, directly or indirectly take any action
designed to cause or result in, or that constitutes or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares or
(ii) sell, bid for, or purchase the Shares to be issued and sold pursuant to
this Agreement, or pay anyone any compensation for soliciting purchases of the
Shares to be issued and sold pursuant to this Agreement other than CKCC.
 
(q)          The Company will timely file with the Exchange all material
documents and notices required by the Exchange for the Company.
 
(r)           The Company will use its commercially reasonable efforts to comply
with all requirements imposed upon it by the Securities Act and the Exchange Act
as from time to time in force, so far as necessary to permit the continuance of
sales of, or dealings in, the Shares as contemplated by the provisions hereof
and the Prospectus.
 
(s)          Other than a free writing prospectus (as defined in Rule 405 under
the Securities Act) approved in advance in writing by the Company and CKCC in
its capacity as agent hereunder, neither CKCC nor the Company (including its
agents and representatives, other than CKCC in its capacity as such) will,
directly or indirectly, make, use, prepare, authorize, approve or refer to any
free writing prospectus relating to the Shares to be sold by CKCC as agent
hereunder.
 
(t)           If the Company has reason to believe that the exemptive provisions
set forth in Rule 101(c)(1) of Regulation M under the Exchange Act are not
satisfied with respect to the Company or the Common Stock, it shall promptly
notify CKCC and sales of the Shares under this Agreement shall be suspended
until that or other exemptive provisions have been satisfied in the judgment of
each party.
 
(u)          The Company shall maintain, at its expense, a registrar and
transfer agent for the Common Stock.
 
(v)          The Company will disclose in its quarterly reports on Form 10-Q and
in its annual report on Form 10-K the number of Shares sold through CKCC during
the relevant quarter.
 
(w)         The Company will not, and will use its commercially reasonable
efforts to cause its officers, trustees and affiliates not to, (i) take,
directly or indirectly, any action designed to stabilize or manipulate the price
of any security of the Company, or which may cause or result in, or which might
in the future reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Shares, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of the Shares during the pendency of any
Placement Notice or (iii) pay or agree to pay to any person any compensation for
soliciting any order to purchase any other securities of the Company during the
pendency of any Placement Notice; provided, however, that upon consent of CKCC
the Company may bid for and purchase Common Stock in accordance with Rule 10b-18
under the Exchange Act.
 
(x)          During any period in which the Prospectus relating to the Shares is
required to be delivered by CKCC under the Securities Act with respect to a
pending sale of the Shares (including in circumstances where such requirement
may be satisfied pursuant to Rule 172 under the Securities Act), the Company
will use its commercially reasonable efforts to cause the Shares to be listed on
the Exchange.

 
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(y)          The Company will ensure that there are at all times sufficient
shares of Common Stock to provide for the issuance, free of any preemptive
rights, out of its authorized but unissued shares of Common Stock, of the
Maximum Amount.
 
8.           Conditions to CKCC’s Obligations.  The obligations of CKCC
hereunder with respect to a Placement Notice will be subject to the continuing
accuracy and completeness of the representations and warranties made by the
Company herein, to the due performance by the Company of its obligations
hereunder, to the completion by CKCC of a due diligence review satisfactory to
CKCC in its reasonable judgment, and to the continuing satisfaction (or waiver
by CKCC in its sole discretion) of the following additional conditions:
 
(a)          The Registration Statement shall have become effective and shall be
available for the sale of all Shares contemplated to be issued by any Placement
Notice.
 
(b)          None of the following events shall have occurred and be
continuing:  (i) receipt by the Company of any request for additional
information from the Commission or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement, the
response to which would require any post-effective amendments or supplements to
the Registration Statement or the Prospectus; (ii) the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose; (iv) the
occurrence of any event that makes any material statement made in the
Registration Statement or the Prospectus untrue in any material respect or that
requires the making of any changes in the Registration Statement, related
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any materially untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and, that in the case of the Prospectus, it
will not contain any materially untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
 
(c)          Except as contemplated in the Prospectus, or disclosed in the
Company’s reports filed with the Commission, there shall not have been any
material adverse change, on a consolidated basis, in the authorized capital
stock of the Company or any Material Adverse Effect, or any development that
could reasonably be expected to cause a Material Adverse Effect, the effect of
which, in the reasonable judgment of CKCC (without relieving the Company of any
obligation or liability it may otherwise have), is so material as to make it
impracticable or inadvisable to proceed with the offering of the Shares on the
terms and in the manner contemplated in the Prospectus.
 
(d)          CKCC shall have received the opinion of Company Counsel required to
be delivered pursuant to Section 7(n) on or before the date on which such
delivery of such opinion is required pursuant to Section 7(n).
 
(e)          Comfort Letter.  CKCC shall have received the Comfort Letter
required to be delivered pursuant to Section 7(o) on or before the date on which
such delivery of such opinion is required pursuant to Section 7(o).
 
(f)           CKCC shall have received the certificate required to be delivered
pursuant to Section 7(m) on or before the date on which delivery of such
certificate is required pursuant to Section 7(m).
 
(g)          Trading in the Common Stock shall not have been suspended on the
Exchange.  FINRA shall not have objected to the fairness or reasonableness of
the terms or arrangements under this Agreement.
 
(h)          On each date on which the Company is required to deliver a
certificate pursuant to Section 7(m), the Company shall use its commercially
reasonable efforts to furnish to CKCC such appropriate further information,
certificates and documents as CKCC may reasonably request.  All such opinions,
certificates, letters and other documents will be in compliance with the
provisions hereof.  The Company will furnish CKCC with such conformed copies of
such opinions, certificates, letters and other documents as CKCC shall
reasonably request.
 

 
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(i)           All filings with the Commission required by Rule 424 under the
Securities Act to have been filed prior to the issuance of any Placement Notice
hereunder shall have been made within the applicable time period prescribed for
such filing by Rule 424.
 
(j)           The Shares shall have been listed and authorized for trading on
the Exchange, and satisfactory evidence of such actions shall have been provided
to CKCC and its counsel, which may include oral confirmations from a
representative of the Exchange.
 
(k)          If any condition specified in this Section 8 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by CKCC by notice to the Company.  Notice of such cancellation shall be given in
writing and addressed to each of the individuals of the Company set forth on
Schedule 2.
 
(l)           There shall not have occurred any event or condition that would
permit CKCC to terminate this Agreement pursuant to Section 11(a).
 
9.           Indemnification and Contribution.
 
(a)          The Company agrees to indemnify and hold harmless CKCC, the
directors, officers, partners, employees and agents of CKCC and each person, if
any, who (i) controls CKCC within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, or (ii) is controlled by or is under
common control with CKCC (a “CKCC Affiliate”) from and against any and all
losses, claims, liabilities, expenses and damages (including, but not limited
to, any and all reasonable investigative, legal and other expenses incurred in
connection with, and any and all amounts paid in settlement (in accordance with
Section 9(c)) of, any action, suit or proceeding between any of the indemnified
parties and any indemnifying parties or between any indemnified party and any
third party, or otherwise, or any claim asserted), as and when incurred, to
which CKCC, or any such person, may become subject under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based, directly or indirectly, on any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or any amendments thereto (including
the information deemed to be a part of the Registration Statement at the time of
effectiveness and at any subsequent time pursuant to Rules 430A and 430B, if
applicable) or the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this indemnity agreement shall not apply to
the extent that such loss, claim, liability, expense or damage arises from or is
caused directly or indirectly by an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information furnished in writing to the Company by or on behalf of CKCC
expressly for inclusion in the Registration Statement or Prospectus.  This
indemnity agreement will be in addition to any liability that the Company might
otherwise have.
 
(b)          CKCC agrees to indemnify and hold harmless the Company and its
directors and each officer of the Company who signed the Registration Statement,
and each person, if any, who (i) controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act or (ii) is
controlled by or is under common control with the Company (a “Company
Affiliate”) against any and all losses, liabilities, claims, damages and
expenses to which the Company, or any such person, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, as and when incurred, but only insofar
as such loss, liability, claim, damage or expense arises from or is caused
directly or indirectly by an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
furnished in writing to the Company by or on behalf of CKCC expressly for
inclusion in the Registration Statement or Prospectus.

 
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(c)          Any party that proposes to assert the right to be indemnified under
this Section 9 will, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 9, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve the indemnifying party from (i) any liability that it might have to any
indemnified party otherwise than under this Section 9 and (ii) any liability
that it may have to any indemnified party under the foregoing provision of this
Section 9 unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party.  If any
such action is brought against any indemnified party and it notifies the
indemnifying party of its commencement, the indemnifying party will be entitled
to participate in and, to the extent that it elects by delivering written notice
to the indemnified party promptly after receiving notice of the commencement of
the action from the indemnified party, jointly with any other indemnifying party
similarly notified, to assume the defense of the action, with counsel reasonably
satisfactory to the indemnified party, and after notice from the indemnifying
party to the indemnified party of its election to assume the defense, the
indemnifying party will not be liable to the indemnified party for any legal or
other expenses except as provided below.  The indemnified party will have the
right to employ its own counsel in any such action, but the fees, expenses and
other charges of such counsel will be at the expense of such indemnified party
unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party has
reasonably concluded (based on the written advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (3) a conflict
or potential conflict exists (based on the written advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties.  It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties.  All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not, in any event, be liable for any settlement of any
action or claim effected without its written consent.  No indemnifying party
shall, without the prior written consent of each indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding relating to the matters contemplated by this
Section 9 (whether or not any indemnified party is a party thereto), unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising or that may arise out of such
claim, action or proceeding.
 
(d)          In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 9 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or CKCC, the Company and
CKCC will contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than CKCC, if any), to which the
Company and CKCC may be subject in such proportion as shall be appropriate to
reflect the relative benefits received by the Company, on the one hand, and
CKCC, on the other.  The relative benefits received by the Company on the one
hand and CKCC on the other hand shall be deemed to be in the same proportion as
the total net proceeds from the sale of the Shares (before deducting expenses)
received by the Company bear to the total compensation received by CKCC from the
sale of Shares on behalf of the Company.  If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault of the Company, on the one hand, and CKCC, on the other,
with respect to the statements or omission that resulted in such loss, claim,
liability, expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such offering.  Such relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, on the one hand, or CKCC, on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission.  The Company and CKCC agree that it would
not be just and equitable if contributions pursuant to this Section 9(d) were to
be determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to herein.  The
amount paid or payable by an indemnified party as a result of the loss, claim,
liability, expense, or damage, or action in respect thereof, referred to above
in this Section 9(d) shall be deemed to include, for the purpose of this
Section 9(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim to the extent consistent with Section 9(c) hereof.  Notwithstanding the
foregoing provisions of this Section 9(d), CKCC shall not be required to
contribute any amount in excess of the commissions received by it under this
Agreement and no person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.  For
purposes of this Section 9(d), any person who controls a party to this Agreement
within the meaning of the Securities Act, and any officers, directors, partners,
employees or agents of CKCC, will have the same rights to contribution as that
party, and each trustee of the Company and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof.  Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 9(d), will notify any such party or parties from whom
contribution may be sought, but the omission to so notify will not relieve that
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 9(d) except to the extent that the
failure to so notify such other party materially prejudiced the substantive
rights or defenses of the party from whom contribution is sought.  Except for a
settlement entered into pursuant to the last sentence of Section 9(c) hereof, no
party will be liable for contribution with respect to any action or claim
settled without its written consent if such consent is required pursuant to
Section 9(c) hereof.

 
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10.         Representations and Agreements to Survive Delivery.  All
representations and warranties of the Company herein or in certificates
delivered pursuant hereto shall survive, as of their respective dates,
regardless of (i) any investigation made by or on behalf of CKCC, any
controlling persons, or the Company (or any of their respective officers,
directors or controlling persons), (ii) delivery and acceptance of the Shares
and payment therefor or (iii) any termination of this Agreement.
 
11.         Termination.
 
(a)          CKCC may terminate this Agreement, by notice to the Company, as
hereinafter specified at any time (1) if there has been, since the time of
execution of this Agreement or since the date as of which information is given
in the Prospectus, any change, or any development or event involving a
prospective change, which individually or in the aggregate, in the sole judgment
of CKCC has or could have a Material Adverse Effect and makes it impractical or
inadvisable to market the Shares or to enforce contracts for the sale of the
Shares, (2) if there has occurred any material adverse change in the financial
markets in the United States or the international financial markets, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of CKCC, impracticable or
inadvisable to market the Shares or to enforce contracts for the sale of the
Shares, (3) if trading in the Shares has been suspended or limited by the
Commission or the Exchange, or if trading generally on the Exchange has been
suspended or limited, or minimum prices for trading have been fixed on the
Exchange, (4) if any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market shall have occurred and be
continuing, (5) if a major disruption of securities settlements or clearance
services in the United States shall have occurred and be continuing, or (6) if a
banking moratorium has been declared by either U.S. Federal or New York
authorities.
 
(b)          The Company shall have the right to terminate this Agreement in its
sole discretion at any time after the date of this Agreement.
 
(c)          CKCC shall have the right, by giving ten (10) days notice as
hereinafter specified to terminate this Agreement in its sole discretion at any
time after the date of this Agreement.
 
(d)          Unless earlier terminated pursuant to this Section 11, this
Agreement shall automatically terminate upon the first to occur of (i) June 30,
2010, as such date may be extended by mutual consent of the Company and CKCC by
up to an additional thirty days; and (ii) the issuance and sale of the Maximum
Amount of Shares through CKCC pursuant to this Agreement.
 
(e)          This Agreement shall remain in full force and effect unless
terminated pursuant to Sections 9(k), 11(a), (b), (c), or (d) above or otherwise
by mutual agreement of the parties.

 
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(f)           Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided, however, that such
termination shall not be effective until the close of business on the date
specified in such notice by CKCC or the Company, as the case may be.  If such
termination shall occur prior to the Settlement Date for any sale of Shares,
such Shares shall settle in accordance with the provisions of this Agreement.
 
(g)          If this Agreement is terminated pursuant to Section 8(k) or this
Section 11, such termination shall be without liability of any party to any
other party except as provided in Section 7(g) hereof, and except that, in the
case of any termination of this Agreement, Section 9, Section 16 and Section 17
hereof, and the obligation herein to pay any discount, commission or other
compensation accrued but unpaid, shall survive such termination and remain in
full force and effect.
 
12.         Notices.  All statements, requests, notices and agreements hereunder
shall be in writing, and:
 
(a)          if to CKCC, shall be delivered or sent by mail or facsimile
transmission to C.K. Cooper & Company, Inc., 18300 Von Karman Avenue, Suite 700,
Irvine, California 92612, Attention:  Managing Director (Fax: 949-477-9211),
with a copy to K&L Gates LLP, 1900 Main Street, Suite 600, Irvine, California
92614, Attention: Michael A. Hedge; and
 
(b)          if to the Company, shall be delivered or sent by mail or facsimile
transmission to the address of the Company set forth in the Registration
Statement, Attention: Dwight Babcock, (Fax: 509-375-3473), with a copy to Keller
Rohrback PLC, 3101 North Central Avenue, Suite 1400, Phoenix, Arizona 85012,
Attention:  Stephen Boatwright.
 
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
 
13.         Successors and Assigns.  This Agreement shall inure to the benefit
of and be binding upon the Company and CKCC and their respective successors and
the affiliates, controlling persons, officers and directors referred to in
Section 9 hereof.  References to any of the parties contained in this Agreement
shall be deemed to include the successors and permitted assigns of such
party.  Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided in this
Agreement.  Neither party may assign its rights or obligations under this
Agreement without the prior written consent of the other party.
 
14.         Adjustments for Stock Splits.  The parties acknowledge and agree
that all share-related numbers contained in this Agreement shall be adjusted to
take into account any stock split, stock dividend or similar event effected with
respect to the Shares.
 
15.         Entire Agreement; Amendment; Severability.  This Agreement
(including all schedules and exhibits attached hereto and placement notices
issued pursuant hereto) constitutes the entire agreement and supersedes all
other prior and contemporaneous agreements and undertakings, both written and
oral, among the parties hereto with regard to the subject matter
hereof.  Neither this Agreement nor any term hereof may be amended except
pursuant to a written instrument executed by the Company and CKCC. In the event
that any one or more of the provisions contained herein, or the application
thereof in any circumstance, is held invalid, illegal or unenforceable as
written by a court of competent jurisdiction, then such provision shall be given
full force and effect to the fullest possible extent that it is valid, legal and
enforceable, and the remainder of the terms and provisions herein shall be
construed as if such invalid, illegal or unenforceable term or provision was not
contained herein, but only to the extent that giving effect to such provision
and the remainder of the terms and provisions hereof shall be in accordance with
the intent of the parties as reflected in this Agreement.
 
16.         Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York .

 
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17.          Waiver of Jury Trial.  Each of the Company and CKCC hereby waives
any right it may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby.
 
18.          Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  Delivery of an executed
Agreement by one party to the other may be made by facsimile transmission.
 
19.          Definitions.  As used in this Agreement, the following terms have
the respective meanings set forth below:
 
(a)          “Applicable Time” means the date of this Agreement, the date on
which a Placement Notice is given, or such other time as agreed to by the
Company and CKCC.
 
(b)          “Issuer Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433, relating to the Shares that (1) is required
to be filed with the Commission by the Company, (2) is a “road show” that is a
“written communication” within the meaning of Rule 433(d)(8)(i) whether or not
required to be filed with the Commission, or (3) is exempt from filing pursuant
to Rule 433(d)(5)(i) because it contains a description of the Shares or of the
offering that does not reflect the final terms, and all free writing
prospectuses that are listed in Exhibit G hereto, in each case in the form filed
or required to be filed with the Commission or, if not required to be filed, in
the form retained in the Company’s records pursuant to Rule 433(g) under the
Securities Act.
 
(c)          “Rule 433” means Rule 433 of the Securities Act.
 
All references in this Agreement to financial statements and schedules and other
information that is “contained,” “included” or “stated” in the Registration
Statement or the Prospectus (and all other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information that is incorporated by reference in the Registration Statement or
the Prospectus, as the case may be.
 
All references in this Agreement to the Registration Statement, the Prospectus
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to EDGAR; all references in
this Agreement to any Issuer Free Writing Prospectus (other than any Issuer Free
Writing Prospectuses that, pursuant to Rule 433, are not required to be filed
with the Commission) shall be deemed to include the copy thereof filed with the
Commission pursuant to EDGAR; and all references in this Agreement to
“supplements” to the Prospectus shall include, without limitation, any
supplements, “wrappers” or similar materials prepared in connection with any
offering, sale or private placement of any Shares by CKCC outside of the United
States.
 
20.          Permitted Free Writing Prospectuses.  The Company represents,
warrants and agrees that, unless it obtains the prior consent of CKCC, and CKCC
represents, warrants and agrees that, unless it obtains the prior consent of the
Company, it has not made and will not make any offer relating to the Shares that
would constitute an Issuer Free Writing Prospectus, or that would otherwise
constitute a “free writing prospectus,” as defined in Rule 405, required to be
filed with the Commission.  Any such free writing prospectus consented to by
CKCC or by the Company, as the case may be, is hereinafter referred to as a
“Permitted Free Writing Prospectus.”  The Company represents and warrants that
it has treated and agrees that it will treat each Permitted Free Writing
Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and
has complied and will comply with the requirements of Rule 433 applicable to any
Permitted Free Writing Prospectus, including timely filing with the Commission
where required, legending and record keeping.

 
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21.          Absence of Fiduciary Relationship.  The Company acknowledges and
agrees that (i) CKCC has been retained solely to act as underwriter in
connection with the sale of the Shares and that no fiduciary, advisory or agency
relationship between the Company and CKCC has been created in respect of any of
the transactions contemplated by this Agreement, irrespective of whether CKCC
has advised or is advising the Company on other matters; (ii) the Company is
capable of evaluating and understanding and understands and accepts the terms,
risks and conditions of the transactions contemplated by this Agreement; (iii)
the Company has been advised that CKCC and its affiliates are engaged in a broad
range of transactions which may involve interests that differ from those of the
Company and that CKCC has no obligation to disclose such interests and
transactions to the Company by virtue of any fiduciary, advisory or agency
relationship; (iv) CKCC has not provided any legal, accounting, regulatory or
tax advice with respect to the transactions contemplated by this Agreement and
it has consulted its own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate; and (v) it waives, to the fullest extent
permitted by law, any claims it may have against CKCC, for breach of fiduciary
duty or alleged breach of fiduciary duty and agrees that CKCC shall have no
liability (whether direct or indirect) to the Company in respect to such
fiduciary claim or to any person asserting a fiduciary duty claim on behalf of
or in right of the Company, including shareholders, partners, employees or
creditors of the Company.
 
[Remainder of Page Intentionally Blank]

 
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If the foregoing correctly sets forth the agreement between the Company and
CKCC, please indicate your acceptance in the space provided for that purpose
below.

 
Very truly yours,
     
ISORAY, INC.
     
By:
/s/ Dwight Babcock
 
Name:  Dwight Babcock
 
Title:  President and Chief Executive Officer

 
ACCEPTED as of the date first-above written:
     
C. K. COOPER & COMPANY, INC.
     
By:
/s/ Alexander Montano
 
Name:
Alexander Montano
 
Title:
Managing Director
 

 
[Signature page to Sales Agreement]

 
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SCHEDULE 1
 
FORM OF PLACEMENT NOTICE*
 
From
[          ]

 
To:
[          ]

 
Gentlemen:
 
Pursuant to the terms and subject to the conditions contained in the Sales
Agreement between IsoRay, Inc. (the “Company”) and C. K. Cooper & Company, Inc.
(“CKCC”) dated April __, 2010 (the “Agreement”), I hereby request on behalf of
the Company that CKCC sell up to [ ] shares of the Company’s Common Stock, par
value $0.001 per share, at a minimum market price of $         per share on or
before ____________, 201_ (but not more than ___________ shares on any single
Trading Day).
 
[The Company may include such other sales parameters at it deems appropriate.]

 
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SCHEDULE 2
 
C. K. Cooper & Company, Inc.

Chris Turoci
Kevin Wagner
Adam Montano
Will Porter
 
Cc:
Alex Montano

Dd:
Bilal Basrai

 
IsoRay, Inc.

Dwight Babcock

Cc:
Brien Ragle

 
Steve Boatwright

 
Scott Sylvester

 
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SCHEDULE 3
 
COMPENSATION
 
CKCC shall be paid a fee equal to 2% of the gross proceeds from the sales of the
Shares.

 
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Exhibit 5(s)
 
By letter dated March 13, 2010, the Pocatello Development Authority notified
IsoRay Medical, Inc. that it believes the PDA has fully performed under the
agreement between the PDA and IsoRay Medical, Inc. dated December 14, 2005, and
thus is demanding that IsoRay Medical, Inc. either perform under the Agreement
by using the reactor at the Idaho National Laboratory or repay the $200,000 paid
by the PDA to IsoRay Medical, Inc. on December 15, 2005.

 
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Exhibit 5(y)
 
In the course of conducting the audit for IsoRay, Inc.'s fiscal year ended June
30, 2009, IsoRay's independent auditors identified two "significant
deficiencies" in IsoRay's internal control over financial reporting –

(1) Lack of segregation of duties – There is lack of segregation of duties in
the preparation of the financial statements and other key financial
transitions.  The CFO is responsible almost every key financial duty and has
access to all the Company's financial information.  Such a lack of segregation
of duties is typical in a Company with limited resources.  Although the
Company's President and Board of Directors review financial statements and would
most likely discover any misappropriation of funds, this cannot be assured by
the existing system; and

(2) Disclosure control – Management improperly classified the impairment loss on
the IBt license with cost of product sales in the statement of
operations.  Appropriate GAAP specifies such loss is to be presented in other
operating expenses, unless the impaired asset had been used in the production of
revenue during the period.

However, there were no "material weaknesses" identified for this audit period,
and thus management concluded that IsoRay's internal control over financial
reporting was effective for this audit period.

 
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Exhibit 7(m)
 
OFFICER CERTIFICATE
 
The undersigned, the duly qualified and elected ______________ of IsoRay, Inc.
(“Company”), a Minnesota corporation, does hereby certify in such capacity and
on behalf of the Company, pursuant to Section 7(m) of the Sales Agreement dated
April __, 2010 (the “Sales Agreement”) between the Company and C. K. Cooper &
Company, Inc., that to the best of the knowledge of the undersigned:
 
(i)           The representations and warranties of the Company in Section 5 of
the Sales Agreement (A) to the extent such representations and warranties are
subject to qualifications and exceptions contained therein relating to
knowledge, materiality or Material Adverse Effect, are true and correct on and
as of the date hereof, except for those representations and warranties that
speak solely as of a specific date and which were true and correct as of such
date, with the same force and effect as if expressly made on and as of the date
hereof and (B) to the extent such representations and warranties are not subject
to any qualifications or exceptions, are true and correct in all material
respects as of the date hereof as if made on and as of the date hereof except
for those representations and warranties that speak solely as of a specific date
and which were true and correct as of such date, with the same force and effect
as if expressly made on and as of the date hereof; and
 
(ii)          The Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied pursuant to the Sales
Agreement at or prior to the date hereof.
 
By:
   
Name:
 
Title:

 
Date: ___________
 
 
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