Document:

Unassociated Document

    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”).

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    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.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (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.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (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.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (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.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (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.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (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.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

     (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 .

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    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.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    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]

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    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]

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    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.]

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

     

    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

            

    

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    SCHEDULE
3

     

    COMPENSATION

     

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

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    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.

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    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.

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    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: ___________

     

    
      
         

      

      
        29EXHIBIT
10.1

    

    SUBSCRIPTION
AGREEMENT

    

    

    La Cortez
Energy, Inc.

    Calle 67
#7-35, Oficina 409

    Bogota,
Colombia

    

    This
Subscription Agreement (this “Agreement”)
has been executed by the subscriber set forth in the signature page attached
hereto (the “Subscriber”)
in connection with the private placement offering (the “Offering”)
of a minimum of $2,500,000 and a maximum of $15,000,000 of units of securities
(the “PPO
Units”), plus up to an additional $5,000,000 of PPO Units to cover
over-allotments, issued by La Cortez Energy, Inc. (formerly known as La Cortez
Enterprises, Inc.), a Nevada Corporation (the “Company”),
at a purchase price of $1.75 per PPO Unit.  Each PPO Unit consists of
(i) one share of the Company’s common stock, par value $0.001 per share (“Common
Stock”), and (ii) a warrant, substantially in the form of Exhibit A hereto (the
“Warrant”),
representing the right to purchase one-half of one share of Common Stock,
exercisable from issuance until three years after the final Closing of the
Offering at an exercise price of $3.00 per share.  This subscription
is being submitted to you in accordance with and subject to the terms and
conditions described in this Agreement and that certain Private Placement
Memorandum of the Company, dated January 25, 2010, as amended and supplemented
by Supplement No. 1 dated April 13, 2010 and as it may be further amended and
supplemented from time to time, including all attachments, schedules and
exhibits thereto, if any (the “Memorandum”),
relating to the Offering.

     

    The PPO
Units being subscribed for pursuant to this Agreement have not been registered
under the Securities Act of 1933, as amended (the “Securities
Act”).  The Offering is being made on a “best efforts” basis to
“accredited investors,” as defined in Regulation D under the Securities Act, and
non-”U.S. persons,” as defined in Regulation S under the Securities
Act.  The Company reserves the right, in its sole discretion and for
any reason, to reject any Subscriber’s subscription in whole or in part, or to
allot less than the number of PPO Units subscribed for.

     

    The
undersigned acknowledges receipt of a copy of the Registration Rights Agreement,
substantially in the form of Exhibit B hereto (the
“Registration
Rights Agreement”).

     

    The
closing of the Offering (the “Closing;”
and the date on which such Closing occurs hereinafter referred to as the “Closing
Date”) shall be at the offices of Gottbetter & Partners, LLP, at 488
Madison Avenue, New York, New York 10022 (or such other place as is mutually
agreed to by the Company).  The Company held the initial Closing of
the Offering on December 29, 2009 and may conduct multiple additional closings
for the sale of the PPO Units until the termination of the
Offering.  The Offering shall continue until April 30, 2010, which
date may be extended until May 31, 2010 by the Company.

     

    1.      Subscription.  The
undersigned Subscriber hereby subscribes to purchase the number of PPO Units set
forth on the signature page attached hereto, at an aggregate price as set forth
on such signature page (the “Purchase Price”), subject to the terms and
conditions of this Agreement and on the basis of the representations,
warranties, covenants and agreements contained herein.

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    2.      Subscription
Procedure.  To complete a subscription for the PPO Units, the
Subscriber must fully comply with the subscription procedure provided in this
Section on or before the Closing Date.

    

    a.          Transaction
Documents.  On or before the Closing Date, the Subscriber shall
review, complete and execute the Omnibus Signature Page to this Agreement, the
Anti-Money Laundering Form following the Omnibus Signature Page and the Investor
Certification, attached hereto as Appendix A (collectively, the “Transaction
Documents”), and deliver the Transaction Documents to the Company’s attorneys,
Gottbetter & Partners, LLP (“G&P”), at the address listed on the
instruction sheet below.  Executed documents may be delivered to
G&P by facsimile or electronic mail (e-mail), if the Subscriber delivers the
original copies of the documents to G&P as soon as practicable
thereafter.

    

    b.          Purchase Price.  Simultaneously
with the delivery of the Transaction Documents to G&P as provided herein,
and in any event on or prior to the Closing Date, the Subscriber shall deliver
to Signature Bank, in its capacity as escrow agent (the “Escrow
Agent”), the full Purchase Price by check or by wire transfer of
immediately available funds pursuant to the instructions set forth under the
caption “How to subscribe for PPO Units in the private offering of La Cortez
Energy, Inc.:” below.

    

    c.           Company
Discretion.  The Subscriber understands and agrees that the
Company in its sole discretion reserves the right to accept or reject this or
any other subscription for PPO Units, in whole or in part, notwithstanding prior
receipt by the Subscriber of notice of acceptance of this
subscription.  The Company shall have no obligation hereunder until
the Company shall execute and deliver to the Subscriber an executed copy of this
Agreement.  If this subscription is rejected in whole, or the offering
of PPO Units is terminated, all funds received from the Subscriber will be
returned without interest or offset, and this Agreement shall thereafter be of
no further force or effect.  If this subscription is rejected in part,
the funds for the rejected portion of this subscription will be returned without
interest or offset, and this Agreement will continue in full force and effect to
the extent this subscription was accepted.

    

    3.      Representations and Warranties of the
Company.  The Company hereby represents and warrants to the
Subscriber the following:

    

    a.          Organization and
Qualification.  The Company is a corporation duly organized and
validly existing under the laws of the State of Nevada.  The Company
has all requisite power and authority to carry on its business as currently
conducted, other than such failures that would not reasonably be expected to
have a material adverse effect on the Company’s business, properties or
financial condition (a “Material
Adverse Effect”).  The Company is duly qualified to transact
business in each jurisdiction in which the failure to be so qualified would
reasonably be expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    
 

    b.          Authorization.  As
of the Closing, all action on the part of the Company, its board of directors,
officers and existing stockholders necessary for the authorization, execution
and delivery of this Agreement, the Registration Rights Agreement, the Warrant
and the performance of all obligations of the Company hereunder and thereunder
shall have been taken, and this Agreement, the Registration Rights Agreement and
the Warrant, assuming due execution by the parties hereto and thereto, will
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, subject to: (i) judicial principles
limiting the availability of specific performance, injunctive relief, and other
equitable remedies and (ii) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect generally relating to or
affecting creditors’ rights.

    

    c.          Valid Issuance of the Common
Stock and the Warrant.  The shares of Common Stock and the
Warrant, when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, and the shares of Common Stock
underlying the Warrant, when issued and delivered in accordance with the terms
of the Warrant, shall be duly and validly issued and will be free of
restrictions on transfer directly or indirectly created by the Company other
than restrictions on transfer under this Agreement, the Registration Rights
Agreement and the terms of the Warrant and under applicable federal and state
securities laws.

    

    d.          Governmental
Consents.  No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the offer, sale or issuance of the PPO Units, except
for the following: (i) the filing of such notices as may be required under the
Securities Act and (ii) the compliance with any applicable state securities
laws, which compliance will have occurred within the appropriate time periods
therefor.

    

    e.          Litigation.  There
are no actions, suits, proceedings or investigations pending or, to the best of
the Company’s knowledge, threatened before any court, administrative agency or
other governmental body against the Company which question the validity of this
Agreement, the Registration Rights Agreement or the Warrant, or the right of the
Company to enter into any of them, or to consummate the transactions
contemplated hereby or thereby, or which would reasonably be expected to have a
Material Adverse Effect.  The Company is not a party or subject to,
and none of its assets is bound by, the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality which would reasonably be expected to have a Material Adverse
Effect.

    

    f.           Compliance with Other
Instruments.  The Company is not in violation or default of any
provision of its Articles of Incorporation, each as in effect immediately prior
to the Closing, except for such failures as would not reasonably be expected to
have a Material Adverse Effect. The Company is not in violation or default of
any provision of any material instrument, mortgage, deed of trust, loan,
contract, commitment, judgment, decree, order or obligation to which it is a
party or by which it or any of its properties or assets are bound which would
reasonably be expected to have a Material Adverse Effect.  To the best
of its knowledge, the Company is not in violation or default of any provision of
any federal, state or local statute, rule or governmental regulation which would
reasonably be expected to have a Material Adverse Effect.  The
execution, delivery and performance of and compliance with this Agreement, the
Registration Rights Agreement and the issuance and sale of the PPO Units, will
not result in any such violation, be in conflict with or constitute, with or
without the passage of time or giving of notice, a default under any such
provision, require any consent or waiver under any such provision (other than
any consents or waivers that have been obtained), or result in the creation of
any mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company pursuant to any such provision.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

    g.          Certain Registration
Matters.  Assuming the accuracy of the Subscriber’s
representations and warranties set forth in this Agreement and the Transaction
Documents, and the representations and warranties made by all other purchasers
of PPO Units in the Offering, no registration under the Securities Act is
required for the offer and sale of the PPO Units by the Company to the
Subscriber hereunder.

    

    h.          No General
Solicitation.  Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the PPO Units by any form of
general solicitation or general advertising (within the meaning of Regulation
D).

    

    4.      Representations and Warranties of the
Subscriber.  The Subscriber represents and warrants to the
Company the following:

    

    a.           The
Subscriber, its advisers, if any, and designated representatives, if any, have
the knowledge and experience in financial and business matters necessary to
evaluate the merits and risks of its prospective investment in the Company, and
have carefully reviewed and understand the risks of, and other considerations
relating to, the purchase of PPO Units and the tax consequences of the
investment, and have the ability to bear the economic risks of the
investment.

    

    b.           The
Subscriber is acquiring the PPO Units for investment for its own account and not
with the view to, or for resale in connection with, any distribution
thereof.  The Subscriber understands and acknowledges that the PPO
Units, the shares of Common Stock and the Warrant have not been registered under
the Securities Act or any state securities laws, by reason of a specific
exemption from the registration provisions of the Securities Act and applicable
state securities laws, which depends upon, among other things, the bona fide
nature of the investment intent as expressed herein.  The Subscriber
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to any
third person with respect to any of the PPO Units, the shares of Common Stock
and the Warrant.  The Subscriber understands and acknowledges that the
offering of the PPO Units pursuant to this Agreement will not be registered
under the Securities Act nor under the state securities laws on the ground that
the sale provided for in this Agreement and the issuance of securities hereunder
is exempt from the registration requirements of the Securities Act and any
applicable state securities laws.

    

    c.           The
Subscriber understands that no public market now exists, and there never will be
a public market for, the PPO Units, that an active public market for the
Company’s Common Stock does not now exist and that there may never be an active
public market for the shares of Common Stock sold in the Offering.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    d.           The
Subscriber, its advisers, if any, and designated representatives, if any, have
received and reviewed information about the Company, including the Memorandum,
and have had an opportunity to discuss the Company’s business, management and
financial affairs with its management.  The Subscriber understands
that such discussions, as well as any written information provided by the
Company, were intended to describe the aspects of the Company’s business and
prospects which the Company believes to be material, but were not necessarily a
thorough or exhaustive description, and except as expressly set forth in this
Agreement, the Company makes no representation or warranty with respect to the
completeness of such information and makes no representation or warranty of any
kind with respect to any information provided by any entity other than the
Company.  Some of such information may include projections as to the
future performance of the Company, which projections may not be realized, may be
based on assumptions which may not be correct and may be subject to numerous
factors beyond the Company’s control.  Additionally, the Subscriber
understands and represents that he is purchasing the PPO Units notwithstanding
the fact that the Company may disclose in the future certain material
information the Subscriber has not received, including financial statements of
the Company for the 12 month period ended December 31, 2009, which statements
are currently being prepared and are expected to be filed with the Securities
and Exchange Commission on or prior to March 31, 2010 and incorporated by
reference into the Memorandum, and any subsequent period financial statements
that will be filed with the Securities and Exchange Commission and incorporated
by reference into the Memorandum, that he is not relying on any such information
in connection with his purchase of the PPO Units and that he waives any right of
action with respect to the nondisclosure to him prior to his purchase of the PPO
Units of any such information.

    

    e.           As
of the Closing, all action on the part of Subscriber, and its officers,
directors and partners, if applicable, necessary for the authorization,
execution and delivery of this Agreement and the Registration Rights Agreement
and the performance of all obligations of the Subscriber hereunder and
thereunder shall have been taken, and this Agreement and the Registration Rights
Agreement, assuming due execution by the parties hereto and thereto, constitute
valid and legally binding obligations of the Subscriber, enforceable in
accordance with their respective terms, subject to: (i) judicial principles
limiting the availability of specific performance, injunctive relief, and other
equitable remedies and (ii) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect generally relating to or
affecting creditors’ rights.

    

    f.           The
Subscriber either (i) is an “accredited investor” as defined in Rule 501 of
Regulation D as promulgated by the Securities and Exchange Commission under the
Securities Act or (ii) is not a “U.S. Person” as defined in Regulation S as
promulgated by the Securities and Exchange Commission under the Securities Act,
and, in each case, shall submit to the Company such further assurances of such
status as may be reasonably requested by the Company.

    
 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    g.           The
Subscriber, if a non-U.S. Person, agrees that it is acquiring the Shares in an
offshore transaction pursuant to Regulation S and hereby represents to the
Company as follows:

    

    (i)           Subscriber
is outside the United States when receiving and executing this Subscription
Agreement;

     

    (ii)          Subscriber
has not acquired the Shares as a result of, and will not itself engage in, any
“directed selling efforts” (as defined in Regulation S) in the United States in
respect of the Shares which would include any activities undertaken for the
purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for the resale of the Shares;
provided, however, that the Subscriber may sell or otherwise dispose of the
Shares pursuant to registration of the Shares under the Securities Act and any
applicable state and provincial securities laws or under an exemption from such
registration requirements and as otherwise provided herein;

    

    (iii)         The
Subscriber understands and agrees that offers and sales of any of the Shares
prior to the expiration of a period of one year after the date of transfer of
the Shares under this Subscription Agreement (the “Distribution Compliance
Period”), shall only be made in compliance with the safe harbor provisions set
forth in Regulation S, pursuant to the registration provisions of the Securities
Act or an exemption therefrom, and that all offers and sales after the
Distribution Compliance Period shall be made only in compliance with the
registration provisions of the Securities Act or an exemption therefrom, and in
each case only in accordance with all applicable securities laws;

    

    (iv)        The
Subscriber understands and agrees not to engage in any hedging transactions
involving the Shares prior to the end of the Distribution Compliance Period
unless such transactions are in compliance with the Securities Act;
and

    

    (v)         The
Subscriber hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Shares or any use of this Subscription Agreement, including:
(a) the legal requirements within its jurisdiction for the purchase of the
Shares; (b) any foreign exchange restrictions applicable to such purchase; (c)
any governmental or other consents that may need to be obtained; and (d) the
income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale or transfer of the Shares. Such Subscriber’s
subscription and payment for, and its continued beneficial ownership of the
Shares, will not violate any applicable securities or other laws of the
Subscriber’s jurisdiction.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
 

    h.           Subscriber
represents that neither it nor, to its knowledge, any person or entity
controlling, controlled by or under common control with it, nor any person
having a beneficial interest in it, nor any person on whose behalf the
Subscriber is acting: (i) is a person listed in the Annex to Executive Order No.
13224 (2001) issued by the President of the United States (Executive Order
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism); (ii) is named on the List of Specially
Designated Nationals and Blocked Persons maintained by the U.S. Office of
Foreign Assets Control; (iii) is a non-U.S. shell bank or is providing banking
services indirectly to a non-U.S. shell bank; (iv) is a senior non-U.S.
political figure or an immediate family member or close associate of such
figure; or (v) is otherwise prohibited from investing in the Company pursuant to
applicable U.S. anti-money laundering, anti-terrorist and asset control laws,
regulations, rules or orders (categories (i) through (v), each a “Prohibited Subscriber”). The
Subscriber agrees to provide the Company, promptly upon request, all information
that the Company reasonably deems necessary or appropriate to comply with
applicable U.S. anti-money laundering, anti-terrorist and asset control laws,
regulations, rules and orders. The Subscriber consents to the disclosure to U.S.
regulators and law enforcement authorities by the Company and its affiliates and
agents of such information about the Subscriber as the Company reasonably deems
necessary or appropriate to comply with applicable U.S. antimony laundering,
anti-terrorist and asset control laws, regulations, rules and orders. If the
Subscriber is a financial institution that is subject to the USA Patriot Act,
the Subscriber represents that it has met all of its obligations under the USA
Patriot Act. The Subscriber acknowledges that if, following its investment in
the Company, the Company reasonably believes that the Subscriber is a Prohibited
Subscriber or is otherwise engaged in suspicious activity or refuses to promptly
provide information that the Company requests, the Company has the right or may
be obligated to prohibit additional investments, segregate the assets
constituting the investment in accordance with applicable regulations or
immediately require the Subscriber to transfer the shares of Common
Stock.  The Subscriber further acknowledges that the Subscriber will
have no claim against the Company or any of its affiliates or agents for any
form of damages as a result of any of the foregoing actions.

    

    i.           The
Subscriber or its duly authorized representative realizes that because of the
inherently speculative nature of businesses of the kind conducted and
contemplated by the Company, the Company’s financial results may be expected to
fluctuate from month to month and from period to period and will, generally,
involve a high degree of financial and market risk that could result in
substantial or, at times, even total losses for investors in securities of the
Company.

    

    j.           The
Subscriber has adequate means of providing for its current and anticipated
financial needs and contingencies, is able to bear the economic risk for an
indefinite period of time and has no need for liquidity of the investment in the
PPO Units and could afford complete loss of such investment.

    

    k.          The
Subscriber is not subscribing for PPO Units as a result of or subsequent to any
advertisement, article, notice or other communication, published in any
newspaper, magazine or similar media or broadcast over television, radio, or the
internet, or presented at any seminar or meeting, or any solicitation of a
subscription by a person not previously known to the Subscriber in connection
with investments in securities generally.

    

    l.           The
Subscriber agrees to be bound by all of the terms and conditions of the
Registration Rights Agreement and to perform all obligations thereby imposed
upon it.

    

    m.         All
of the information that the Subscriber has heretofore furnished or which is set
forth herein is correct and complete as of the date of this Agreement, and, if
there should be any material change in such information prior to the admission
of the undersigned to the Company, the Subscriber will immediately furnish
revised or corrected information to the Company.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
 

    
      	
               
      

            	
              5.

            	
              Transfer
      Restrictions.  The Subscriber acknowledges and agrees as
      follows:

            

    

    

    a.           The
PPO Units, the shares of Common Stock and the Warrant have not been registered
for sale under the Securities Act, in reliance on the private offering exemption
in Section 4(2) thereof; the Company does not intend to register the PPO Units
and the Warrant under the Securities Act at any time in the future; and the
undersigned will not immediately be entitled to the benefits of Rule 144 with
respect to the PPO Units, the shares of Common Stock and the
Warrant.

    

    b.           The
Subscriber understands that the certificates representing the Shares shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such certificates or other
instruments):

    

    For U.S.
Persons:

    

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS,
AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS.

    

    
      	
               
      

            	
              For
      Non-U.S. Persons:

            

    

     

    THESE
SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S.
PERSONS (AS DEFINED IN REGULATION S) PURSUANT TO REGULATION S UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED UNDER THE
1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY
BE OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S.
PERSONS EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT, AND IN EACH CASE ONLY IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING
THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933
ACT.

     

    The
legend(s) set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if (a) such Shares are sold pursuant to a registration statement
under the Securities Act, or (b) such holder delivers to the Company an
opinion of counsel, reasonably acceptable to the Company, that a disposition of
the Securities is being made pursuant to an exemption from such registration and
that the Securities, after such transfer, shall no longer be “restricted
securities” within the meaning of Rule 144.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
 

    c.           No
governmental agency has passed upon the PPO Units, the shares of Common Stock
and the Warrant or made any finding or determination as to the wisdom of any
investments therein.

    

    d.           There
are substantial restrictions on the transferability of the shares of Common
Stock, and if the Company decides to issue certificates representing the shares
of Common Stock, restrictive legends will be placed on any such
certificates.

    

    6.      Indemnification.  The
Subscriber agrees to indemnify and hold harmless the Company and any placement
agents or finders in the Offering, and their respective officers, directors,
employees, agents, control persons and affiliates from and against all losses,
liabilities, claims, damages, costs, fees and expenses whatsoever (including,
but not limited to, any and all expenses incurred in investigating, preparing or
defending against any litigation commenced or threatened) based upon or arising
out of any actual or alleged false acknowledgment, representation or warranty,
or misrepresentation or omission to state a material fact, or breach by the
Subscriber of any covenant or agreement made by the Subscriber herein or in any
other document delivered in connection with this Agreement.

     

    7.      Irrevocability; Binding
Effect.  The Subscriber hereby acknowledges and agrees that the
subscription hereunder is irrevocable by the Subscriber, except as required by
applicable law, and that this Agreement shall survive the death or disability of
the Subscriber and shall be binding upon and inure to the benefit of the parties
and their heirs, executors, administrators, successors, legal representatives
and permitted assigns.  If the Subscriber is more than one person, the
obligations of the Subscriber hereunder shall be joint and several and the
agreements, representations, warranties and acknowledgments herein shall be
deemed to be made by and be binding upon each such person and such person’s
heirs, executors, administrators, successors, legal representatives and
permitted assigns.

     

    8.      Modification.  This
Agreement shall not be modified or waived except by an instrument in writing
signed by the party against whom any such modification or waiver is
sought.

     

    9.      Immaterial Modifications to the
Registration Rights Agreement.  The Company may, at any time
prior to the initial Closing, amend the Registration Rights Agreement if
necessary to clarify any provision therein, without first providing notice or
obtaining prior consent of the Subscriber.

     

    10.    Notices.  Any notice
or other communication required or permitted to be given hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested, or
delivered against receipt to the party to whom it is to be given (a) if to the
Company, at the address set forth above, or (b) if to the Subscriber, at the
address set forth on the signature page hereof (or, in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 10).  Any notice or other communication
given by certified mail shall be deemed given at the time of certification
thereof, except for a notice changing a party’s address which shall be deemed
given at the time of receipt thereof.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    11. 
 Assignability.  This
Agreement and the rights, interests and obligations hereunder are not
transferable or assignable by the Subscriber and the transfer or assignment of
the PPO Units, the shares of Common Stock, the Warrant or the shares of Common
Stock underlying the Warrants shall be made only in accordance with all
applicable laws.

     

    12.   Applicable
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to the
principles thereof relating to the conflict of laws.

     

    13.   Arbitration.  The
parties agree to submit all controversies to arbitration in accordance with the
provisions set forth below and understand that:

    

    (a)         Arbitration
is final and binding on the parties.

    

    (b)         The
parties are waiving their right to seek remedies in court, including the right
to a jury trial.

    

    (c)          Pre-arbitration
discovery is generally more limited and different from court
proceedings.

    

    (d)         The
arbitrator’s award is not required to include factual findings or legal
reasoning and any party’s right to appeal or to seek modification of rulings by
arbitrators is strictly limited.

    

    (e)         The
panel of arbitrators will typically include a minority of arbitrators who were
or are affiliated with the securities industry.

    

    (f)          All
controversies which may arise between the parties concerning this Agreement
shall be determined by arbitration pursuant to the rules then pertaining to the
Financial Industry Regulatory Authority in New York City, New
York.  Judgment on any award of any such arbitration may be entered in
the Supreme Court of the State of New York or in any other court having
jurisdiction of the person or persons against whom such award is
rendered.  Any notice of such arbitration or for the confirmation of
any award in any arbitration shall be sufficient if given in accordance with the
provisions of this Agreement.  The parties agree that the
determination of the arbitrators shall be binding and conclusive upon
them.

    

    14.   Blue Sky
Qualification.  The purchase of PPO Units under this Agreement
is expressly conditioned upon the exemption from qualification of the offer and
sale of the PPO Units from applicable federal and state securities
laws.  The Company shall not be required to qualify this transaction
under the securities laws of any jurisdiction and, should qualification be
necessary, the Company shall be released from any and all obligations to
maintain its offer, and may rescind any sale contracted, in the
jurisdiction.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    15.   Use of
Pronouns.  All pronouns and any variations thereof used herein
shall be deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the person or persons referred to may require.

    

    16.   Confidentiality.  The
Subscriber acknowledges and agrees that any information or data the Subscriber
has acquired from or about the Company or may acquire in the future, not
otherwise properly in the public domain, including, without limitation, the
Memorandum, was received in confidence.  The Subscriber agrees not to
divulge, communicate or disclose, except as may be required by law or for the
performance of this Agreement, or use to the detriment of the Company or for the
benefit of any other person, or misuse in any way, any confidential information
of the Company, including any scientific, technical, trade or business secrets
of the Company and any scientific, technical, trade or business materials that
are treated by the Company as confidential or proprietary, including, but not
limited to, internal personnel and financial information of the Company or its
affiliates, information regarding oil and gas properties, the manner and methods
of conducting the business of the Company or its affiliates and confidential
information obtained by or given to the Company about or belonging to third
parties.  The Subscriber understands that the Company may rely on his
agreement of confidentiality to comply with the exemptive provisions of
Regulation FD under the Securities Act of 1933 as set forth in Rule
100(a)(b)(2)(ii) of Regulation FD.  In addition, the Subscriber
acknowledges that he is aware that the United States securities laws generally
prohibit any person who is in possession of material nonpublic information about
a public company such as the Company from purchasing or selling securities of
such company.

    

    17.  
 Miscellaneous.

    

    (a)           This
Agreement, together with the Registration Rights Agreement, constitute the
entire agreement between the Subscriber and the Company with respect to the
Offering and supersede all prior oral or written agreements and understandings,
if any, relating to the subject matter hereof.  The terms and
provisions of this Agreement may be waived, or consent for the departure
therefrom granted, only by a written document executed by the party entitled to
the benefits of such terms or provisions.

    

    (b)           The
representations and warranties of the Company and the Subscriber made in this
Agreement shall survive the execution and delivery hereof and delivery of the
Common Stock and the Warrants contained in the PPO Units.

    

    (c)           Each
of the parties hereto shall pay its own fees and expenses (including the fees of
any attorneys, accountants, appraisers or others engaged by such party) in
connection with this Agreement and the transactions contemplated hereby, whether
or not the transactions contemplated hereby are consummated.

    

    (d)           This
Agreement may be executed in one or more original or facsimile counterparts,
each of which shall be deemed an original, but all of which shall together
constitute one and the same instrument.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (e)           Each
provision of this Agreement shall be considered separable and, if for any reason
any provision or provisions hereof are determined to be invalid or contrary to
applicable law, such invalidity or illegality shall not impair the operation of
or affect the remaining portions of this Agreement.

    

    (f)        
   Paragraph titles are for descriptive purposes only and shall
not control or alter the meaning of this Agreement as set forth in the
text.

    

    (g)           The
Subscriber understands and acknowledges that there may be multiple Closings for
the Offering.

    

    (h)           The
Subscriber hereby agrees to furnish the Company such other information as the
Company may request prior to the Closing with respect to its subscription
hereunder.

    

    18.    Omnibus Signature
Page.  This Agreement is intended to be read and construed in
conjunction with the Registration Rights Agreement pertaining to the issuance by
the Company of the PPO Units, the shares of Common Stock, the Warrant and the
shares of Common Stock underlying the Warrant to subscribers in the
Offering.  Accordingly, pursuant to the terms and conditions of this
Agreement and such related agreements, it is hereby agreed that the execution by
the Subscriber of this Agreement, in the place set forth herein, shall
constitute agreement to be bound by the terms and conditions hereof and the
terms and conditions of the Registration Rights Agreement, with the same effect
as if each of such separate but related agreement were separately
signed.

    

    19. 
 Public
Disclosure.  Neither the Subscriber nor any officer, manager,
director, member, partner, stockholder, employee, affiliate, affiliated person
or entity of the Subscriber shall make or issue any press releases or otherwise
make any public statements or make any disclosures to any third person or entity
with respect to the transactions contemplated herein and will not make or issue
any press releases or otherwise make any public statements of any nature
whatsoever with respect to the Company without the Company’s express prior
approval.  The Company has the right to withhold such approval in its
sole discretion.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    How
to subscribe for PPO Units in the private offering of

    La
Cortez Energy, Inc.:

    

    
      	
              1.

            	
              Date and Fill in the
      number of PPO Units being purchased and Complete and Sign the
      Omnibus Signature Page.

            

    

    

    
      	
              2.

            	
              Initial the Investor
      Certification
      page.

            

    

    

    
      	
              3.

            	
              Fax or email all forms and
      then
      send all signed original documents
to:

            

    

    

    Gottbetter
& Partners, LLP

    488
Madison Avenue, 12th Floor

    New York,
NY  10022

    Facsimile
Number:  (212) 400-6901

    Telephone
Number:  (212) 400-6900

    Attn:  Rachel
L. DeGenaro

    E-mail
Address:  rlg@gottbetter.com

    

    
      	
              4.

            	
              If
      you are paying the Purchase Price by check, a check for the
      exact dollar amount of the Purchase Price for the number of PPO Units you are
      purchasing should be made payable to the order of “Signature Bank, as Escrow
      Agent for LA CORTEZ ENERGY, INC.” and should be sent to Signature
      Bank, 300 Park Avenue, New York, New York
  10022.

            

    

    

    
      	
              5.

            	
              If
      you are paying the Purchase Price by wire transfer, you should
      send a wire transfer for the exact dollar amount of the Purchase Price for
      the number of PPO Units you are purchasing according to the following
      instructions:

            

    

    

    
      	
              Bank:

               

            	
              Signature
      Bank

              300
      Park Avenue

              New
      York, NY  10022

            
	 	 
	
              ABA
      Routing #:

            	
              026013576

            
	 	 
	
              SWIFT
      CODE:

            	
              SIGNUS33

            
	 	 
	
              Account
      Name:

            	
              “Signature
      Bank, as Escrow Agent for La Cortez Energy, Inc.”

            
	 	 
	
              Account
      #:

            	
              150123301

            
	 	 
	
              Reference:

            	
              “La
      Cortez Energy, Inc. Escrow Account – [insert Subscriber’s
      name]”

            
	 	 
	
              Signature
      Bank Contact:

            	
              Norman
      Lowe; telephone: 646-822-1602;

              e-mail:
      nlowe@signatureny.com

            

    

    

    Thank you
for your interest,

    

    La Cortez
Energy, Inc.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    LA
CORTEZ ENERGY, INC.

    OMNIBUS
SIGNATURE PAGE TO

    SUBSCRIPTION
AGREEMENT AND

    REGISTRATION
RIGHTS AGREEMENT

     

    IN
WITNESS WHEREOF, the Subscriber hereby executes this Subscription Agreement and
the Registration Rights Agreement.

     

    Dated:                                                      ,
2010

    

    
      	
               

            	 	 
      
	
              SUBSCRIBER (individual)

            	 	
              SUBSCRIBER (entity)

            
	 
      	 	 
      
	 
      	 	 
      
	
              Signature

            	 	
              Name
      of Entity

            
	 
      	 	 
      
	 
      	 	 
      
	
              Print
      Name

            	 	
              Signature

            
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	

              Print
      Name:

            	
               

            
	
              Signature
      (if Joint Tenants or Tenants in Common)

            	 	 
      
	 
      	 	

              Title:

            	 	
               

            
	 
      	 	 
      
	
              Address
      of Principal Residence:

            	 	
              Address
      of Executive Offices:

            
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	 
      
	 
      	 	 
      
	
              Social
      Security Number(s):

            	 	
              IRS
      Tax Identification Number:

            
	 
      	 	 
      
	 
      	 	 
      
	
              Telephone
      Number:

            	 	
              Telephone
      Number:

            
	 
      	 	 
      
	 
      	 	 
      
	
              Facsimile
      Number:

            	 	
              Facsimile
      Number:

            
	 
      	 	 
      
	 
      	 	 
      
	
              E-mail
      Address:

            	 	
              E-mail
      Address:

            
	 
      	 	 
      

    

    
 

    
      	                                      
      	
              X

            	
              $1.75                       
      

            	
              =

            	
              $____________

            
	
              Number of PPO Units

            	 
      	
              Price per PPO Unit

            	 
      	
              Purchase
Price

            

    

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    

    LA
CORTEZ ENERGY, INC.

     

    IN
WITNESS WHEREOF, the Company has duly executed this Subscription
Agreement.

     

    
      	 
      	
              LA
      CORTEZ ENERGY, INC.

            	 
	 	 	 	 
	 	 	 	 
	 
      	
              By:

            	  
      	 
	 
      	
              Name:

            	
              Andres
      Gutierrez Rivera

            	 
	 
      	
              Title:

            	
              Chief
      Executive Officer

            	 

    

    

     

    

     

    

     

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    La Cortez Energy,
Inc.

    

    ANTI-MONEY
LAUNDERING INFORMATION FORM

    (Please
fill out and return with requested documentation.)

    

    The following is required in
accordance with the AML provision of the USA PATRIOT ACT.

    

    

    
      	
               

              INVESTOR
      NAME:

            	 
      	 
	
               

              LEGAL
      ADDRESS:

            	 
      	 
	 
      	 
      	 
	 
      	 
      	 
	
              SS#
      or TAX ID#

            	 
	
              of
      INVESTOR:

            	 
      	 

    

    

    

    IDENTIFICATION,
DOCUMENTATION AND SOURCE OF FUNDS:

    

    
      	
              1.

            	
              Please
      submit a copy of a non-expired identification for the authorized
      signatory(ies) on the investment documents, showing name, date of birth
      and signature:

            

    

    

    
      	
              Current
      Driver’s License

            	
              or

            	
              Valid
      Passport

            	
              or

            	
              Identity
      Card

            

    

    
      	
               
      

            	
              (Circle
      one or more)

            

    

    

    

    
      	
              2.

            	
              If
      the Investor is a corporation, please submit the following corporate
      documents:

            

    

    (i)
Articles of Incorporation (or similar); (ii) Corporate Resolution granting
authority to signatory(ies) and designating that they are permitted to make the
proposed investment.

    

    

    
      	
              3.

            	
              Please
      advise where the funds were derived from to make the proposed
      investment:

            

    

    

    
      	
              Investments

            	
              Savings

            	
              Proceeds
      of Sale

            	
              Other
      ____________

            

    

    (Circle
one or more)

    

    
      	
               

              Signature:

            	 
      	 
      
	
               

              Print
      Name:

            	 
      	 
      
	
               

              Title
      (if applicable):

            	 
      	 
      
	
               

              Date:

            	 
      	 
      

    

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    LA
CORTEZ ENERGY, INC.

    INVESTOR
CERTIFICATION

    

    For
Individual Accredited Investors Only

    (all Individual Accredited Investors
must INITIAL where
appropriate):

    

    
      	
              Initial
      _______

            	
              I
      have a net worth (including home, furnishings and automobiles) in excess
      of $1,000,000 either individually or through aggregating my individual
      holdings and those in which I have a joint, community property or other
      similar shared ownership interest with my
  spouse.

            

    

    
      	
              Initial
      _______

            	
              I
      have had an annual gross income for the past two years of at least
      $200,000 (or $300,000 jointly with my spouse) and expect my income (or
      joint income, as appropriate) to reach the same level in the current
      year.

            

    

    

    
      	
              For Non-Individual
      Accredited Investors

            

    

    
      	
              (all Non-Individual
      Accredited Investors must INITIAL where
      appropriate):

            

    

    

    
      	
              Initial
      _______

            	
              The
      investor certifies that it is a partnership, corporation, limited
      liability company or business trust that is 100% owned by persons who meet
      at least one of the criteria for Individual Investors set forth
      above.

            

    

    
      	
              Initial
      _______

            	
              The
      investor certifies that it is a partnership, corporation, limited
      liability company or business trust that has total assets of at least $5
      million and was not formed for the purpose of investing in the
      Company.

            

    

    
      	
              Initial
      _______

            	
              The
      investor certifies that it is an employee benefit plan whose investment
      decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is
      a bank, savings and loan association, insurance company or registered
      investment adviser.

            

    

    
      	
              Initial
      _______

            	
              The
      investor certifies that it is an employee benefit plan whose total assets
      exceed $5,000,000 as of the date of this
  Agreement.

            

    

    
      	
              Initial
      _______

            	
              The
      undersigned certifies that it is a self-directed employee benefit plan
      whose investment decisions are made solely by persons who meet either of
      the criteria for Individual
Investors.

            

    

    
      	
              Initial
      _______

            	
              The
      investor certifies that it is a U.S. bank, U.S. savings and loan
      association or other similar U.S. institution acting in its individual or
      fiduciary capacity.

            

    

    
      	
              Initial
      _______

            	
              The
      undersigned certifies that it is a broker-dealer registered pursuant to
      §15 of the Securities Exchange Act of
1934.

            

    

    
      	
              Initial
      _______

            	
              The
      investor certifies that it is an organization described in §501(c)(3) of
      the Internal Revenue Code with total assets exceeding $5,000,000 and not
      formed for the specific purpose of investing in the
    Company.

            

    

    
      	
              Initial
      _______

            	
              The
      investor certifies that it is a trust with total assets of at least
      $5,000,000, not formed for the specific purpose of investing in the
      Company, and whose purchase is directed by a person with such knowledge
      and experience in financial and business matters that he is capable of
      evaluating the merits and risks of the prospective
    investment.

            

    

    
      	
              Initial
      _______

            	
              The
      investor certifies that it is a plan established and maintained by a state
      or its political subdivisions, or any agency or instrumentality thereof,
      for the benefit of its employees, and which has total assets in excess of
      $5,000,000.

            

    

    
      	
              Initial
      _______

            	
              The
      investor certifies that it is an insurance company as defined in §2(13) of
      the Securities Act, or a registered investment
  company.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              For
      Non-U.S. Person Investors

            

    

    (all Investors who are not a U.S.
Person must INITIAL this section):

    

    
      	
              Initial
      _______

            	
              The
      Investor is not a “U.S. Person” as defined in Regulation S; and
      specifically the Purchaser is not:

            

    

    

    
      	
               
      

            	
              A.

            	
              a
      natural person resident in the United States of America, including its
      territories and possessions (“United
States”);

            

    

    
      	
               
      

            	
              B.

            	
              a
      partnership or corporation organized or incorporated under the laws of the
      United States;

            

    

    
      	
               
      

            	
              C.

            	
              an
      estate of which any executor or administrator is a U.S.
      Person;

            

    

    
      	
               
      

            	
              D.

            	
              a
      trust of which any trustee is a U.S.
Person;

            

    

    
      	
               
      

            	
              E.

            	
              an
      agency or branch of a foreign entity located in the United
      States;

            

    

    
      	
               
      

            	
              F.

            	
              a
      non-discretionary account or similar account (other than an estate or
      trust) held by a dealer or other fiduciary for the benefit or account of a
      U.S. Person;

            

    

    
      	
               
      

            	
              G.

            	
              a
      discretionary account or similar account (other than an estate or trust)
      held by a dealer or other fiduciary organized, incorporated, or (if an
      individual) resident in the United States;
or

            

    

    
      	
               
      

            	
              H.

            	
              a
      partnership or corporation: (i) organized or incorporated under the laws
      of any foreign jurisdiction; and (ii) formed by a U.S. Person principally
      for the purpose of investing in securities not registered under the
      Securities Act, unless it is organized or incorporated, and owned, by
      accredited investors (as defined in Rule 501(a) under the Act) who are not
      natural persons, estates or trusts.

            

    

    

    
      	
              And,
      in addition:

            

    

    

    
      	
               
      

            	
              I.

            	
              the
      Purchaser was not offered the Units in the United
  States;

            

    

    
      	
               
      

            	
              J.

            	
              at
      the time the buy-order for the Units was originated, the Purchaser was
      outside the United States; and

            

    

    
      	
               
      

            	
              K.

            	
              the
      Purchaser is purchasing the Units for its own account and not on behalf of
      any U.S. Person (as defined in Regulation S) and a sale of the Units has
      not been pre-arranged with a purchaser in the United
    States.

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