ENERGY
        

      NORTHWEST

      People
        ∙Vision
        ∙Solutions

        
          

        

      

      P.O.
        Box
        968 ∙ Richland,
        WA ∙ 99352-0968

      


      CONTRACT
        MODIFICATION

      


      QUALITY
        CLASS G

      


      
        	
                Issued
                  by:

              	
                J.G.
                  Paetel

              
	 	 
	
                CONTRACTOR

              	
                ISORAY,
                  INC.

              
	 	
                350
                  Hills Street

              
	 	
                Richland,
                  WA 99354

              
	 	 
	
                Contract
                  Number:

              	
                X40224

              
	
                Modification
                  Number:

              	
                12

              
	
                Modification
                  Date:

              	
                October
                  25, 2005

              


      

      


      CONTRACT
        PERIOD OF PERFORMANCE

      


      
        	
                State
                  Date:

              	
                January
                  1, 2003

              
	
                Estimated
                  Completion Date:

              	
                December
                  31, 2006

              


      

      


      The
        completion date, Contract price and all other terms, covenants and conditions
        of
        the above-referenced Contract, except as duly modified by this and previous
        amendments, if any, remain in full force and effect.

         

        
          

        

      

      


      1. DESCRIPTION
        OF MODIFICATION

      


      The
        subject Contract is herein amended to incorporate the following:

      


      Effective
        January 1, 2006 extend lease through December 31, 2006. Increase rent and
        janitorial rates by 3.3% according to the Consumer Price Index for CY
        2004.

      


      Janitorial
        rates are $.083 per sf/mo.

      


      Effective
        01/01/06 Appendix D entitled, APEL Graduation Policy, 10.0 is hereby
        incorporated.

      


      
        	
                cc:

              	
                AR
                  (PE60)

              
	 	
                APEL
                  (350)

              


      

       

      
        
           

        

        
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        ENERGY
          NORTHWEST
CONTRACT MODIFICATION
        (CONTINUED)

      
        
          

        

      

      


      
        	 	
                Contract
                  Number:

              	
                X40224

              
	 	
                Modification
                  Number:

              	
                12

              


      

       

       

      
        
          	Effective
                  January 1, 2006	 	 	 	 	 	 	 
	
                  Rented
                    Space Type

                	 	
                  Sq
                    Ft

                	
                   

                	
                  Rate,
                    $/SF/MO

                	
                   

                	
                  Monthly
                    Charge

                	 
	
                  Entrepreneur
                    Lab 221

                	 	 	
                  524

                	 	
                  $

                	
                  1.138

                	 	
                  $

                	
                  596.31

                	 
	
                  Entrepreneur
                    Lab 253

                	 	 	
                  624

                	 	
                  $

                	
                  1.138

                	 	
                  $

                	
                  710.11

                	 
	
                  Entrepreneur
                    Lab 236

                	 	 	
                  760

                	 	
                  $

                	
                  1.138

                	 	
                  $

                	
                  864.88

                	 
	
                  Entrepreneur
                    Lab 255 (N. Half)

                	 	 	
                  296

                	 	
                  $

                	
                  1.138

                	 	
                  $

                	
                  336.85

                	 
	
                  *Entrepreneur
                    Lab 255 (S. Half)

                	 	 	
                  296

                	 	
                  $

                	
                  1.138

                	 	
                  $

                	
                  336.84

                	 
	
                  *High
                    Bay -
                    General

                	 	 	
                  208

                	 	
                  $

                	
                  1.436

                	 	
                  $

                	
                  298.69

                	 
	
                  Total
                    for Labs

                	 	 	 	 	 	 	 	
                  $

                	
                  3,143.68

                	 
	
                  *Office
                    252-2

                	 	 	
                  133

                	 	
                  $

                	
                  1.722

                	 	
                  $

                	
                  229.03

                	 
	
                  *Office
                    252-3

                	 	 	
                  133

                	 	
                  $

                	
                  2.292

                	 	
                  $

                	
                  304.84

                	 
	
                  *Office
                    252-4

                	 	 	
                  158

                	 	
                  $

                	
                  2.292

                	 	
                  $

                	
                  362.14

                	 
	
                  Total
                    for Offices

                	 	 	 	 	 	 	 	
                  $

                	
                  896.00

                	 
	
                  Janitorial
                    Lab 253

                	 	 	
                  624

                	 	
                  $

                	
                  0.083

                	 	
                  $

                	
                  51.79

                	 
	
                  Janitorial
                    Lab 221

                	 	 	
                  524

                	 	
                  $

                	
                  0.083

                	 	
                  $

                	
                  43.49

                	 
	
                  Janitorial
                    Lab 236

                	 	 	
                  760

                	 	
                  $

                	
                  0.083

                	 	
                  $

                	
                  63.08

                	 
	
                  Janitorial
                    Lab 255 (N. Half)

                	 	 	
                  296

                	 	
                  $

                	
                  0.083

                	 	
                  $

                	
                  24.57

                	 
	
                  *Janitorial
                    Lab 255 (S. Half)

                	 	 	
                  296

                	 	
                  $

                	
                  0.083

                	 	
                  $

                	
                  24.56

                	 
	
                  *Janitorial
                    Lab 2-252-2

                	 	 	
                  133

                	 	
                  $

                	
                  0.083

                	 	
                  $

                	
                  11.04

                	 
	
                  *Janitorial
                    Lab 2-252-3

                	 	 	
                  133

                	 	
                  $

                	
                  0.083

                	 	
                  $

                	
                  11.04

                	 
	
                  *Janitorial
                    Lab 2-25-24

                	 	 	
                  158

                	 	
                  $

                	
                  0.083

                	 	
                  $

                	
                  13.11

                	 
	
                  Total
                    for Janitorial

                	 	 	
                   

                	 	 	 	 	
                  $

                	
                  262.68

                	 
	
                  Grand
                    Total

                	 	 	 	 	 	 	 	
                  $

                	
                  4,282.36

                	 
	
                  *Previously
                    at 2005 Rate

                	 	 	 	 	 	 	 	 	 	 


        

      

      
 


      
        
           

        

        
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      ENERGY
        NORTHWEST

      CONTRACT
        MODIFICATION (CONTINUED)

      
        
          

        

      

      


      
        	 	
                Contract
                  Number:

              	
                X40224

              
	 	
                Modification
                  Number:

              	
                12

              


      

       

      2.
        EXECUTION

       

      
        	 	 	 
	 	ISORAY,
                INC.
	 
 	 
 	 
 
	Date: 10/27/05	By:  	/s/ Michael
                Dunlop
	 	
                
Michael
                Dunlop
	 	CFO



        	 	 	 
	 	ENERGY
                NORTHWEST
	 
 	 
 	 
 
	Date: 10/27/05	By:  	/s/ Jerry
                G. Paetel
	 	
                
J.
                G. Paetel
	 	Principal
                Contracting Officer


      

       

      



      
        
           

        

        
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      EXHIBIT
        D

      


      


      


      


      


      


      APEL
        Graduation Policy 10.0

      


      


      


      


      


      


      



      
        
           

        

        
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            4 of
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      10.0
        GRADUATION POLICY

      


      APEL
        has
        received subsidies in the form of a federal grant and gratis services and
        equipment from other public institutions such as the City of Richland, the
        Port
        of Benton, and TRIDEC. The contributions were provided to enable APEL
        flexibility in pricing its space below commercial rates. New startup ventures
        will benefit from the lower rental rates for an “incubation”
        period
        of from one to five years, after which they are expected to “graduate”
        from
        APEL, relocate, and continue to grow and prosper in the private business
        world.

      


      Tenants
        shall sign a contract agreeing to provide a “graduation”
        plan
        with timetables and measurable goals by the completion of the second year
        of
        occupancy. This plan shall provide the detailed progress schedule(s) showing
        the
        resources available and required, firm commitments, and pro-forma financial
        statements for anticipatory costs and revenues, which convincingly demonstrate
        an achievable Business Plan leading to “graduation”
        from
        APEL. Progress on this plan shall be reviewed semiannually with the APEL
        Director and/or selected APEL professional staff. Normally, it is expected
        that
        tenants will make positive measurable progress on their business goals
        associated with graduation within the planned timeframe.

      


      Under
        special circumstances, the APEL Director may approve contract extensions
        for
        periods up to six months. Extensions greater that 6 months shall require
        APEL
        Advisory Board approval. If approved, the contract extension(s) shall be
        issued
        with limited contract terms and, in most cases, escalating rents. Potential
        reasons for the extensions include:

      


      
        	 	
                ·

              	
                The
                  business typically requires more than 5 years to incubate (e.g.,
                  biotech)

              


      

      
        	 	
                ·

              	
                The
                  tenant has a newly developed product line and requires additional
                  time to
                  develop and market.

              


      

      
        	 	
                ·

              	
                The
                  maturity of manufacture/marketing requires more time due to unpredictable
                  circumstances.

              


      

      


      Extensions
        beyond 5.5 years will require APEL Board approval (informal polling by executive
        secretary). Extensions are solely at the discretion of APEL and after the
        first
        6-month extension, the contract will normally only be issued on a month-to-month
        basis. Notable progress toward graduation readiness shall be
        required.

      


      10.1
        Graduation plan

      


      
        	 	
                ·

              	
                Goals
                  shall be established in the initial
                  lease

              


      

      
        	 	
                ·

              	
                Detailed
                  plan shall be provided within the first 2 years of the lease term
                  and
                  updated semi annually thereafter

              


      

      
        	 	
                ·

              	
                Graduation
                  progress reports shall be provided every 6 months after the 2nd
                  year of initial lease

              


      

      


      
        	
                10.2

              	
                Terms
                  and criteria

              


      

      


      
        	 	
                ·

              	
                Maximum
                  term to be determined and inserted in initial lease (normal maximum
                  lease
                  shall be 5 years).

              


      

      


      
        	 	
                ·

              	
                Graduation
                  criteria:

              


      

       

      
        
           

        

        
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                ·

              	
                2
                  years profitability

              


      

      
        	 	
                ·

              	
                Sufficient
                  FTEs and/or contracted work force to sustain
                  operations

              


      

      
        	 	
                ·

              	
                Sufficient
                  sales to sustain operations

              


      

      
        	 	
                ·

              	
                Business
                  requires more than 9,500 square feet of
                  space

              


      

      
        	 	
                ·

              	
                Business
                  sold or ownership has transferred or
                  changed

              


      

      
        	 	
                ·

              	
                Reduced
                  need for incubator features and
                  services

              


      

      


      Rate
        increases may be imposed (up to 20% per 6 month period) if the incubation
        lease
        term is exceeded and the Lessee has not relocated or been provided an extension
        to remain at APEL. Other circumstances which may be considered by APEL for
        approval or denial of contract extensions:

      


      
        	 	
                ·

              	
                Failure
                  to pay rent/debts

              


      

      
        	 	
                ·

              	
                Reduced
                  need for incubator features

              


      

      
        	 	
                ·

              	
                Failure
                  to participate in annual reviews and/or failure to provide graduation
                  status information

              


      

      
        	 	
                ·

              	
                >40%
                  revenue from consulting

              


      

      
        	 	
                ·

              	
                Not
                  meeting growth objectives

              


      

      
        	 	
                ·

              	
                Waiting
                  list of potential occupants

              


      

      
        	 	
                ·

              	
                Available
                  vacant space with no waiting list

              


      

      


      
        	
                10.3

              	
                Original
                  Tenants

              


      

      


      Original
        tenants in APEL and those signing prior leases without graduation
        provisions

      shall
        be
        provided special consideration such as:

      


      
        	 	
                ·

              	
                Contract
                  lease term may be extended fro one to three years, reflecting that
                  graduation was not addressed during the first years of their
                  tenure

              


      

      
        	 	
                ·

              	
                Contract
                  renewals are to reflect current graduation
                  policy

              


      

      


      
        	
                10.4

              	
                Appeals

              


      

      


      APEL
        tenants may appeal to the APEL Advisory Board if they feel that their
        staying

      longer
        is
        justified. Board opinions shall be carefully considered. Final decisions
        for
        lease extensions shall reside with the APEL Director and Energy-Northwest
        cognizant manager.

      


      
        	
                10.5

              	
                Anchor
                  Tenants

              


      

      


      Without
        the anchor tenant, the APEL project would never have been built. The long-term
        

      lease
        and
        large rent volume from the anchor tenant were the basis for financial
        institutions approval of bonds for financing APEL. The long-term lease also
        provides financial stability that is not possible with only an entrepreneurial
        base. Anchor tenants will be required to sign longer term leases and they
        are
        not subject to the graduation provisions of this policy. However, they are
        subject to provisions in their lease which provide for termination and
        closure.

       

      
        
           

        

        
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