Document:

REGISTRATION
      RIGHTS AGREEMENT

     

    This
      Registration Rights Agreement (the
      "Agreement") is entered into as of the 17th
      day of
      October, 2005, by and among IsoRay,
      Inc.,
      a
      Minnesota corporation (the "Corporation"), Meyers
      Associates, L.P.,
      a New
      York limited partnership (the
      "Placement Agent"), and each of the Corporation's shareholders (collectively,
      the "Signing Shareholders") who is a signatory hereto.

     

    Recitals

     

    Whereas,
      the
      Corporation desires to raise between $2,000,000 and $3,000,000 of equity to
      fund
      its working capital requirements.

     

    Whereas,
      the
      Corporation has agreed to provide certain demand and piggyback registration
      rights to the investors who purchase the shares of Common Stock placed by the
      Placement Agent or sold by officers of the Corporation.

     

    Now,
      Therefore, in
      consideration of the foregoing and the mutual promises contained herein, and
      for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties hereto agree as follows:

     

    SECTION
      1. GENERAL.

     

    1.1    Definitions.
      As
      used
      in this Agreement, the following terms shall have the following respective
      meanings:

     

    "Board"
      shall mean the board of directors of the Corporation.

     

    "Common
      Stock" or "Shares" shall mean the Corporation's Common Stock, or any other
      class
      of stock exchanged for Common Stock of the Corporation.

     

    “Conversion
      Shares” shall mean those certain shares of Common Stock issued upon exercise of
      the common stock purchase warrants placed by Placement Agent, sold by officers
      of the Corporation, or issued to the Placement Agent pursuant to the
      Memorandum.

     

    "Exchange
      Act" means the Securities Exchange Act of 1934, as amended. 

     

    "GAAP"
      shall mean those generally accepted accounting principles and practices which
      are recognized by the American Institute of Certified Public Accountants and
      which are consistently applied for all periods so as to properly reflect the
      financial condition, and the results of operations and changes in financial
      position, of the Company.

     

    "Holder"
      means any person or entity owning of record Registrable Securities that have
      not
      been sold to the public or any assignee of record of such Registrable Securities
      in accordance with Section 2.7 hereof.

     

    “Memorandum”
      shall mean the Corporation’s Confidential Private Placement Memorandum dated
      October 17, 2005, and all supplements and amendments thereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    "Register,"
      "registered," and "registration" refer to a registration effected by preparing
      and filing a registration statement in compliance with the Securities Act,
      and
      the declaration or ordering of effectiveness of such registration statement
      or
      document.

     

    "Registrable
      Securities" means (a) the Common Stock of the Corporation placed by Placement
      Agent or sold by officers of the Corporation; (b) the Conversion Shares, and
      (c)
      any Common Stock of the Corporation issued as (or issuable upon the conversion
      or exercise of any warrant, right or other security which is issued as) a
      dividend or other distribution with respect to, or in exchange for or in
      replacement of, such above-described securities. Notwithstanding the foregoing,
      Registrable Securities shall not include any securities sold by a person or
      entity to the public either pursuant to a registration statement or
      Rule 144 or sold in a private transaction in which the transferor's rights
      under Section 2 of this Agreement are not assigned.

     

    "Registrable
      Securities then outstanding" shall be the number of shares determined by
      calculating the total number of shares of the Corporation's Common Stock that
      are Registrable Securities and either (a) are then issued and outstanding
      or (b) are issuable pursuant to then exercisable or convertible
      securities.

     

    "Registration
      Expenses" shall mean all expenses incurred by the Corporation in complying
      with
      Sections 2.1 and 2.2 hereof, including, without limitation, all registration
      and
      filing fees, printing expenses, fees and disbursements of counsel for the
      Corporation, reasonable fees and disbursements of special counsel for the
      Holders, blue sky fees and expenses and the expense of any special audits
      incident to or required by any such registration (but excluding the compensation
      of regular employees of the Corporation which shall be paid in any event by
      the
      Corporation).

     

    "SEC"
      or
      "Commission" means the Securities and Exchange Commission.

     

    "Securities
      Act" shall mean the Securities Act of 1933, as amended.

     

    "Selling
      Expenses" shall mean all underwriting discounts and selling commissions
      applicable to the sale of the Corporation's capital stock.

     

    "Shareholders"
      shall mean all of the holders of the Corporation's capital stock.

     

    "Special
      Registration Statement" shall mean a registration statement relating to any
      employee benefit plan or with respect to any corporate reorganization or other
      transaction under Rule 145 of the Securities Act.

     

    "Termination
      Date" shall mean twenty-four (24) months after the final conclusion of the
      “Offering Period,” as such term is defined in the Memorandum. 

     

    SECTION
      2. PIGGYBACK
      AND DEMAND REGISTRATION.
      

     

    2.1    Piggyback
      Registration.  The
      Corporation shall promptly notify all Holders of Registrable Securities in
      writing of any proposed filing of any registration statement under the
      Securities Act for purposes of a public offering of securities of the
      Corporation (including, but not limited to, registration statements relating
      to
      secondary offerings of securities of the Corporation, but excluding Special
      Registration Statements and excluding any registration statement initially
      filed
      by the Corporation prior to November 15, 2005), which notice shall be made
      at
      least forty-five (45) days prior to such filing, and will afford each such
      Holder an opportunity to include in such registration statement all or part
      of
      such Registrable Securities held by such Holder. Each Holder desiring to include
      in any such registration statement all or any part of the Registrable Securities
      held by it shall, within twenty (20) days after receipt of the above-described
      notice from the Corporation, so notify the Corporation in writing. Such notice
      shall state the intended method of disposition of the Registrable Securities
      by
      such Holder. If a Holder decides not to include all of its Registrable
      Securities in any registration statement thereafter filed by the Corporation,
      such Holder shall forfeit all future right to include any Registrable Securities
      in any subsequent registration statement or registration statements as may
      be
      filed by the Corporation with respect to offerings of its
      securities.

     

    
      
         

      

      
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    (a)    Underwriting.
      If
      the
      registration statement under which the Corporation gives notice under this
      Section 2.1 is for an underwritten offering, the Corporation shall so
      advise the Holders of Registrable Securities. In such event, the right of any
      such Holder to be included in a registration pursuant to this Section 2.1
      shall be conditioned upon such Holder's participation in such underwriting
      and
      the inclusion of such Holder's Registrable Securities in the underwriting to
      the
      extent provided herein. All Holders proposing to distribute their Registrable
      Securities through such underwriting shall enter into an underwriting agreement
      in customary form with the underwriter or underwriters selected for such
      underwriting by the Corporation. Notwithstanding any other provision of this
      Agreement, if the underwriter determines in good faith that marketing factors
      require a limitation of the number of shares to be underwritten, the number
      of
      shares that may be included in the underwriting shall be allocated, first,
      to
      the Corporation; and second, to the Holders; and thereafter to any other
      Shareholders of the Corporation holding registration rights. If any Holder
      disapproves of the terms of any such underwriting, such Holder may elect to
      withdraw therefrom by written notice to the Corporation and the underwriter,
      delivered on or before the later of (i) five (5) business days after the
      receipt by all Holders and the Placement Agent of the underwriting agreement
      containing the terms thereof and (ii) ten (10) business days prior to the
      effective date of the registration statement. Any Registrable Securities
      excluded or withdrawn from such underwriting shall be excluded and withdrawn
      from the registration. For any Holder which is a partnership or corporation,
      the
      partners, retired partners and shareholders of such Holder, or the estates
      and
      family members of any such partners and retired partners and any trusts for
      the
      benefit of any of the foregoing shall be deemed to be a single "Holder," and
      any
pro
      rata
      reduction with respect to such "Holder" shall be based upon the aggregate amount
      of shares of Corporation capital stock carrying registration rights owned by
      all
      entities and individuals included in such “Holder,” as defined in this
      sentence.

     

    (b)    Right
      to Terminate Registration. The
      Corporation shall have the right to terminate or withdraw any registration
      initiated by it under this Section 2.1 prior to the effectiveness of such
      registration whether or not any Holder has elected to include securities in
      such
      registration. The Registration Expenses of such withdrawn registration shall
      be
      borne by the Corporation in accordance with Section 2.3 hereof.

     

    2.2    Demand
      Registration. At
      any
      time on or after October 1, 2006, Holders
      shall have a "onetime" demand right to make a written request ("Demand Request")
      that the Company register the Registrable Securities. Within thirty (30) days
      after receipt of Demand Requests from Holders of at least a majority of the
      Registrable Securities, the Company shall prepare and file under the Act, one
      registration statement to permit a public offering of all of the Registrable
      Securities ("Demand Registration"). 

     

    
      
         

      

      
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    2.3    Expenses
      of Registration. Except
      as
      specifically provided herein, all Registration Expenses incurred in connection
      with any registration pursuant to Sections 2.1 and 2.2 herein shall be borne
      by
      the Corporation. All Selling Expenses incurred in connection with any
      registrations hereunder shall be borne by the holders of the securities so
      registered pro
      rata
      on the
      basis of the number of Shares so registered. 

     

    2.4    Obligations
      of the Corporation.  Whenever
      required to effect the registration of any Registrable Securities, the
      Corporation shall, as expeditiously as reasonably possible (and, with respect
      to
      any registration statement required to be filed pursuant to Section 2.2, in
      any
      event within thirty (30) days): 

     

    (a)    With
      respect to any registration statement required to be filed under
      Section 2.2, prepare and file with the SEC a registration statement with
      respect to such Registrable Securities and use all reasonable efforts to cause
      such registration statement to become effective, and, upon the request of the
      Holders of a majority of the Registrable Securities registered thereunder,
      keep
      such registration statement effective for up to two (2) years or, if earlier,
      until the Holders have completed the distribution related thereto.

     

    (b)    Prepare
      and file with the SEC such amendments and supplements to such registration
      statement and the prospectus used in connection with such registration statement
      as may be necessary to comply with the provisions of the Securities Act with
      respect to the disposition of all securities covered by such registration
      statement for the period set forth in paragraph (a) above.

     

    (c)    Furnish
      to the Holders such number of copies of a prospectus, including a preliminary
      prospectus, in conformity with the requirements of the Securities Act, and
      such
      other documents as they may reasonably request in order to facilitate the
      disposition of Registrable Securities owned by them.

     

    (d)    Use
      its
      reasonable efforts to register and qualify the securities covered by such
      registration statement under such other securities or Blue Sky laws of such
      jurisdictions as shall be reasonably requested by the Holders; provided
      that
      the
      Company shall not be required in connection therewith or as a condition thereto
      to qualify to do business or to file a general consent to service of process
      in
      any such states or jurisdictions.

     

    (e)    In
      the
      event of any underwritten public offering, enter into and perform its
      obligations under an underwriting agreement, in usual and customary form, with
      the managing underwriter(s) of such offering. Each Holder participating in
      such
      underwriting shall also enter into and perform its obligations under such an
      agreement.

     

    (f)    Notify
      each Holder of Registrable Securities covered by such registration statement
      at
      any time when a prospectus relating thereto is required to be delivered under
      the Securities Act of the happening of any event as a result of which the
      prospectus included in such registration statement, as then in effect, includes
      an untrue statement of a material fact or omits to state a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading in the light of the circumstances then existing. The Company will
      use
      reasonable efforts to amend or supplement such prospectus in order to cause
      such
      prospectus not to include any 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 in the light of the circumstances then
      existing.

     

    
      
         

      

      
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    (g)    Use
      its
      reasonable efforts to furnish, on the date that such Registrable Securities
      are
      delivered to the underwriters for sale, if such securities are being sold
      through underwriters, (i) an opinion, dated as of such date, of the counsel
      representing the Company for the purposes of such registration, in form and
      substance as is customarily given to underwriters in an underwritten public
      offering, addressed to the underwriters, if any, and (ii) a letter dated as
      of such date, from the independent certified public accountants of the Company,
      in form and substance as is customarily given by independent certified public
      accountants to underwriters in an underwritten public offering addressed to
      the
      underwriters. 

     

    2.5    Furnishing
      Information. It
      shall
      be a condition precedent to the obligations of the Corporation to take any
      action pursuant to Sections 2.1 and 2.2 that the selling Holders shall furnish
      to the Corporation such information regarding themselves and warrant the
      accuracy thereof, the Registrable Securities held by them and the intended
      method of disposition of such securities as shall be required to effect the
      registration of their Registrable Securities.

     

    2.6    Indemnification.
      In
      the
      event any Registrable Securities are included in a registration statement under
      Sections 2.1 and 2.2:

     

    (a)    To
      the
      extent permitted by law, the Corporation will indemnify and hold harmless each
      Holder, the partners, officers and directors of each Holder, any underwriter
      (as
      defined in the Securities Act) for such Holder and each person, if any, who
      controls such Holder or underwriter within the meaning of the Securities Act
      or
      the Exchange Act, against any losses, claims, damages, or liabilities (joint
      or
      several) to which they may become subject under the Securities Act, the Exchange
      Act or other federal or state law, insofar as such losses, claims, damages
      or
      liabilities (or actions in respect thereof) arise out of or are based upon
      any
      of the following statements, omissions or violations (collectively a
      "Violation") by the Corporation: (i) any untrue statement or alleged untrue
      statement of a material fact contained in such registration statement, including
      any preliminary prospectus or final prospectus contained therein or any
      amendments or supplements thereto, (ii) the omission or alleged omission to
      state therein a material fact required to be stated therein, or necessary to
      make the statements therein not misleading, or (iii) any violation or
      alleged violation by the Corporation of the Securities Act, the Exchange Act,
      any state securities law or any rule or regulation promulgated under the
      Securities Act, the Exchange Act or any state securities law in connection
      with
      the offering covered by such registration statement; and the Corporation will
      pay as incurred to each such Holder, partner, officer, director, underwriter
      or
      controlling person for any legal or other expenses reasonably incurred by them
      in connection with investigating or defending any such loss, claim, damage,
      liability or action; provided
      however,
      that
      the indemnity agreement contained in this Section 2.6(a) shall not apply to
      amounts paid in settlement of any such loss, claim, damage, liability or action
      if such settlement is effected without the consent of the Corporation, which
      consent shall not be unreasonably withheld, nor shall the Corporation be liable
      in any such case for any such loss, claim, damage, liability or action to the
      extent that it arises out of or is based upon a Violation which occurs in
      reliance upon and in conformity with written information furnished expressly
      for
      use in connection with such registration by such Holder, partner, officer,
      director, underwriter or controlling person of such Holder.

     

    
      
         

      

      
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    (b)    To
      the
      extent permitted by law, each Holder will, if Registrable Securities held by
      such Holder are included in the securities as to which such registration
      qualifications or compliance is being effected, indemnify and hold harmless
      the
      Corporation, each of its directors, its officers and each person, if any, who
      controls the Corporation within the meaning of the Securities Act, any
      underwriter and any other Holder selling securities under such registration
      statement or any of such other Holder's partners, directors or officers or
      any
      person who controls such Holder, against any losses, claims, damages or
      liabilities (joint or several) to which the Corporation or any such director,
      officer, controlling person, underwriter or other such Holder, or partner,
      director, officer or controlling person of such other Holder may become subject
      under the Securities Act, the Exchange Act or other federal or state law,
      insofar as such losses, claims, damages or liabilities (or actions in respect
      thereto) arise out of or are based upon any Violation, in each case to the
      extent (and only to the extent) that such Violation occurs in reliance upon
      and
      in conformity with written information furnished by such Holder under an
      instrument duly executed by such Holder and stated to be specifically for use
      in
      connection with such registration; and each such Holder will pay as incurred
      any
      legal or other expenses reasonably incurred by the Corporation or any such
      director, officer, controlling person, underwriter or other Holder, or partner,
      officer, director or controlling person of such other Holder in connection
      with
      investigating or defending any such loss, claim, damage, liability or action
      if
      it is judicially determined that there was such a Violation; provided,
      however,
      that the
      indemnity agreement contained in this Section 2.6(b) shall not apply to
      amounts paid in settlement of any such loss, claim, damage, liability or action
      if such settlement is effected without the consent of the Holder, which consent
      shall not be unreasonably withheld; provided
      further,
      that in
      no event shall any indemnity under this Section 2.6 exceed the net proceeds
      from the offering received by such Holder.

     

    (c)    Promptly
      after receipt by an indemnified party under this Section 2.6 of notice of
      the commencement of any action (including any governmental action), such
      indemnified party will, if a claim in respect thereof is to be made against
      any
      indemnifying party under this Section 2.6, deliver to the indemnifying
      party a written notice of the commencement thereof and the indemnifying party
      shall have the right to participate in, and, to the extent the indemnifying
      party so desires, jointly with any other indemnifying party similarly noticed,
      to assume the defense thereof with counsel mutually satisfactory to the parties;
      provided,
      however,
      that an
      indemnified party shall have the right to retain its own counsel, with the
      fees
      and expenses to be paid by the indemnifying party, if representation of such
      indemnified party by the counsel retained by the indemnifying party would be
      inappropriate due to actual or potential differing interests between such
      indemnified party and any other party represented by such counsel in such
      proceeding. The failure to deliver written notice to the indemnifying party
      within a reasonable time of the commencement of any such action, if materially
      prejudicial to its ability to defend such action, shall relieve such
      indemnifying party of any liability to the indemnified party under this
      Section 2.6, but the omission so to deliver written notice to the
      indemnifying party will not relieve it of any liability that it may have to
      any
      indemnified party otherwise than under this Section 2.6.

     

    
      
         

      

      
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    (d)    If
      the
      indemnification provided for in this Section 2.6 is held by a court of
      competent jurisdiction to be unavailable to an indemnified party with respect
      to
      any losses, claims, damages or liabilities referred to herein, the indemnifying
      party, in lieu of indemnifying such indemnified party thereunder, shall to
      the
      extent permitted by applicable law contribute to the amount paid or payable
      by
      such indemnified party as a result of such loss, claim, damage or liability
      in
      such proportion as is appropriate to reflect the relative fault of the
      indemnifying party on the one hand and of the indemnified party on the other
      in
      connection with the Violation(s) that resulted in such loss, claim, damage
      or
      liability, as well as any other relevant equitable considerations. The relative
      fault of the indemnifying party and of the indemnified party shall be determined
      by a court of law by reference to, among other things, whether the untrue or
      alleged untrue statement of a material fact or the omission to state a material
      fact relates to information supplied by the indemnifying party or by the
      indemnified party and the parties' relative intent, knowledge, access to
      information and opportunity to correct or prevent such statement or omission;
      provided,
      that in
      no event shall any contribution by a Holder hereunder exceed the net proceeds
      from the offering received by such Holder.

     

    (e)    The
      obligations of the Corporation and Holders under this Section 2.6 shall
      survive completion of any offering of Registrable Securities in a registration
      statement and the termination of this agreement. No Indemnifying Party, in
      the
      defense of any such claim or litigation, shall, except with the consent of
      each
      Indemnified Party, consent to entry of any judgment or enter into any settlement
      which does not include as an unconditional term thereof the giving by the
      claimant or plaintiff to such Indemnified Party of a release from all liability
      in respect to such claim or litigation.

     

    2.7    Assignment
      of Registration Rights.  The
      registration rights of the Holders under this Agreement may be transferred
      to
      any transferee if the Corporation is given written notice by the Holder at
      the
      time of such transfer stating the name and address of the transferee and
      identifying the securities with respect to which the rights under this Agreement
      are being assigned.

     

    2.8    Amendment
      of Registration Rights.  Any
      provision of this Section 2 may be amended and the observance thereof may
      be waived (either generally or in a particular instance and either retroactively
      or prospectively), only with the written consent of the Corporation and the
      holders of at least a majority of the Registrable Securities then outstanding.
      Any amendment or waiver effected in accordance with this Section 2.8 shall
      be binding upon each Holder and the Corporation. By acceptance of any benefits
      under this Section 2, Holders of Registrable Securities hereby agree to be
      bound by the provisions hereunder.

     

    2.9    Rule
      144 Reporting.  With
      a
      view to making available to the Holders the benefits of certain rules and
      regulations of the SEC which may permit the sale of the Registrable Securities
      to the public without registration, the Corporation agrees to use its best
      efforts to:

        

    (a)    Make
      and
      keep public information available, as those terms are understood and defined
      in
      SEC Rule 144 or any similar or analogous rule promulgated under the
      Securities Act, at all times after the effective date of the first registration
      filed by the Corporation for an offering of its securities to the general
      public;

     

    
      
         

      

      
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    (b)    File
      with
      the SEC, in a timely manner, all reports and other documents required of the
      Corporation under the Exchange Act; and

     

     

    (c)    So
      long
      as a Holder owns any Registrable Securities, furnish to such Holder forthwith
      upon request: a written statement by the Corporation as to its compliance with
      the reporting requirements of said Rule 144 of the Securities Act, and of the
      Exchange Act (at any time after it has become subject to such reporting
      requirements); a copy of the most recent annual or quarterly report of the
      Corporation; and such other reports and documents as a Holder may reasonably
      request in availing itself of any rule or regulation of the SEC allowing it
      to
      sell any such securities without registration.

     

    SECTION
      3. MISCELLANEOUS.

     

    3.1    Governing
      Law.  This
      Agreement and
      the
      rights and obligations of the parties hereto, shall be governed, construed
      and
      interpreted according to the laws of the State of Washington. The parties agree
      that any final judgment after exhaustion of all appeals or the expiration of
      time to appeal in any such action or proceeding shall be conclusive and binding,
      and may be enforced in any federal or state court in the United States by suit
      on the judgment or in any other manner provided by law. Nothing contained in
      this Agreement shall affect or limit the right of a party to serve any process
      or notice or motion or other application in any other manner permitted by law,
      or limit or affect the right of a party to bring any action or proceeding
      against the other parties or any of their respective property in the courts
      of
      any other jurisdiction. All parties hereby consent to the jurisdiction of the
      federal courts whose districts encompass any part of the City of Phoenix or
      the
      state courts of the State of Arizona sitting in the City of Phoenix in
      connection with any dispute arising under this Agreement, and hereby waives,
      to
      the maximum extent permitted by law, any objection, including any objections
      based on forum non
      conveniens, to
      the
      bringing of any such proceeding in such jurisdictions.

     

    3.2    Successors
      and Assigns.  Except
      as
      otherwise expressly provided herein, the provisions hereof shall inure to the
      benefit of, and be binding upon, the successors, assigns, heirs, executors,
      and
      administrators of the parties hereto and shall inure to the benefit of and
      be
      enforceable by each person who shall be a holder of Registrable Securities
      or
      any successor to any of the Placement Agent's respective rights hereunder,
      from
      time to time; provided,
      however,
      that
      prior to the receipt by the Corporation of adequate written notice of the
      transfer of any Registrable Securities or any rights hereunder specifying the
      full name and address of the transferee, the Corporation may deem and treat
      the
      person listed as the holder of such shares in its records as the absolute owner
      and holder of such shares for all purposes, including the payment of dividends
      or any redemption price.

     

    3.3    Severability.  In
      the
      event one or more of the provisions of this Agreement should, for any reason,
      be
      held to be invalid, illegal or unenforceable in any respect, such invalidity,
      illegality, or unenforceability shall not affect any other provisions of this
      Agreement, and this Agreement shall be construed as if such invalid, illegal
      or
      unenforceable provision had never been contained herein.

     

    
      
         

      

      
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    3.4    Amendment
      and Waiver.

     

    (a)    Except
      as
      otherwise expressly provided, this Agreement may be amended or modified only
      upon the written consent of the Corporation and the holders of at least a
      majority of the Registrable Securities.

     

    (b)    Except
      as
      otherwise expressly provided herein, the obligations of the Corporation and
      the
      rights of the Holders under this Agreement may be waived only with the written
      consent of the Holders of at least a majority of the Registrable
      Securities.

     

    3.5    Delays
      or Omissions.  It
      is
      agreed that no delay or omission to exercise any right, power, or remedy
      accruing to any Holder, upon any breach, default or noncompliance of the
      Corporation under this Agreement shall impair any such right, power, or remedy,
      nor shall it be construed to be a waiver of any such breach, default or
      noncompliance, or any acquiescence therein, or of any similar breach, default
      or
      noncompliance thereafter occurring. It is further agreed that any waiver,
      permit, consent, or approval of any kind or character on any Holder's part
      of
      any breach, default or noncompliance under the Agreement or any waiver on such
      Holder's part of any provisions or conditions of this Agreement must be in
      writing and shall be effective only to the extent specifically set forth in
      such
      writing. All remedies, either under this Agreement, by law, or otherwise
      afforded to Holders, shall be cumulative and not alternative. 

        

    3.6    Notices.
      All
      notices required or permitted hereunder shall be in writing and shall be deemed
      effectively given: (a) upon personal delivery to the party to be notified,
      (b) three (3) days after having been sent by registered or certified mail,
      return receipt requested, postage prepaid, or (c) one (1) day after deposit
      with a nationally recognized overnight courier, specifying next day delivery,
      with written verification of receipt. All communications shall be sent to the
      party to be notified at the address as set forth on either the signature pages
      hereof or at such other address as such party may designate by ten (10) days
      advance written notice to the other parties hereto. 

     

    3.7    Attorneys'
      Fees.  In
      the
      event that any suit or action is instituted to enforce any provision in this
      Agreement, the prevailing party in such dispute shall be entitled to recover
      from the losing party all fees, costs and expenses of enforcing any right of
      such prevailing party under or with respect to this Agreement, including without
      limitation, such reasonable fees and expenses of attorneys and accountants,
      which shall include, without limitation, all fees, costs and expenses of
      appeals.

     

    3.8    Construction.
      The
      terms of this Agreement constitute the written expression of the mutual
      agreement of the parties and shall be construed neutrally and not for or against
      either party. Whenever a noun or pronoun is used in this Agreement in the
      singular and when required by the context, the same shall include the plural,
      and the masculine gender shall include the feminine and neuter genders and
      vice
      versa. As used in this Agreement, the term "party" or "parties" shall mean
      the
      parties to this Agreement. The term "person" shall include any individual,
      entity, trust or association. The headings in this Agreement are inserted for
      convenience; the provisions of this Agreement shall control in determining
      the
      intent hereof.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    3.9    Enforcement;
      Specific Performance; Remedies Cumulative.
      

     

    (a)    In
      case
      any one or more defaults shall occur and be continuing, a party may proceed
      to
      protect and enforce its rights by an action at law, suit in equity or other
      appropriate proceeding, whether for the specific performance of any agreement
      contained herein or for an injunction against a violation of any of the terms
      hereof or thereof, or in aid of the exercise of any power granted hereby or
      thereby or by law.

     

    (b)    The
      parties expressly agree that each party may not have adequate remedies at law
      if
      the other parties do not perform its obligations under this Agreement. Upon
      a
      party's breach of the terms or covenants of this Agreement, the other parties
      shall, each in addition to all other remedies, be entitled to obtain injunctive
      relief, and an order for specific performance of the breaching party's
      obligations hereunder. 

     

    3.10    Other
      Registration Rights.
      Each
      signing Security Holder understands and acknowledges that certain shareholders
      of the Corporation who purchased debentures convertible into common stock at
      $4.15 per share as part of the Corporation’s subsidiary’s private offering in
      the Spring of 2005 have piggyback registration rights that may be triggered
      by
      the Holders’ exercise of their demand right pursuant to this Agreement.

     

    3.11    Counterparts.  This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      an original, but all of which together shall constitute one
      instrument.

     

    In
      Witness Whereof, the
      parties hereto have executed this Registration
      Rights Agreement as
      of the
      date set forth in the first paragraph hereof.

     

    
      	
              Meyers
                Associates, L.P.

               

               

              By:                                                                             
                    

              Name:                                                                            

              Title:                                                                              
                

            	
              IsoRay,
                Inc.

               

               

              
                By:                                                                             
                      

                Name:                                                                            

                Title:                                                                              
                  

              

            
	 	 
	
              Address:  
                45
                Broadway Avenue, 2nd
                Floor

              New
                York, NY 10006

            	
              Address:   350
                Hills Street, Suite 106

              Richland,
                WA 99354

            
	 	 
	
              Shareholders

               

               

              By:                                                                   
                             
                

              Name:                                                                
                   

              Address:                                                            
                   

               

            	
              Shareholders

               

               

              
                By:                                                                   
                               
                  

                Name:                                                                
                     

                Address:                                                            
                     

              

               

            

    

     

    
      
         

      

      
        10EXHIBIT 10.15

                                  MINNETRONIX
                                  Incorporated

                                   MINNETRONIX
                           DEVELOPMENT AND PRODUCTION
                                    AGREEMENT

                                                          1635 ENERGY PARK DRIVE
                                                              ST. PAUL, MN 55108
                                                                PH: 651.917.4060
                                                               FAX: 651.917.4066

                                                             WWW.MINNETRONIX.COM

                                       47
<PAGE>

                      DEVELOPMENT AND PRODUCTION AGREEMENT

DEVELOPMENT AND PRODUCTION AGREEMENT ("Agreement") is made as of this 7th day of
March, 2006 by and between Possis Medical, Inc. a Minnesota corporation
("Buyer"), and MINNETRONIX INC., 1635 Energy Park Drive St. Paul, MN 55108, a
Minnesota Corporation ("Seller").

WHEREAS, Seller has special knowledge and expertise relating to the design and
development of medical products; and is in the business of contract design and
manufacturing of electronic, software, and mechanical assemblies and has the
capability to manufacture the Buyer's product(s) described in exhibits
("Exhibits") attached hereto ("Product" or "Products") as well as to provide
design, engineering, sustaining, manufacturing, test, and support services
related to such Products ("Services"); and

WHEREAS, Buyer is in the business of manufacturing, distributing and selling
medical devices and wishes to enter into a relationship during which Seller will
provide Products and Services to Buyer; and

WHEREAS, Buyer wishes to retain Seller to perform certain services relating to
the design, development and manufacture of one or more of Buyer's proprietary
medical products which relate to mechanical thrombectomy, a means for the rapid,
safe and effective removal of blood clots from native arteries and veins, as
well as from synthetic and saphenous vein grafts.

WHEREAS, Buyer also wishes to obtain exclusive rights to all technology,
know-how and inventions developed by Seller in connection with the services
rendered pursuant to the Agreement and as it relates to each specific Product
that should hereafter become the subject matter of this Agreement.

WHEREAS, Possis Medical, Inc., as Buyer and Minnetronix, Inc., as Seller desire
to establish the terms of sale for all Products and Services now or hereafter
purchased by Buyer from Seller during the term of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants set forth below, the
parties mutually agree as follows:

1.0  AGREEMENT SCOPE

1.1  Application of Agreement. Buyer and Seller agree that all sales of Products
and Services from Seller to Buyer made during the term of this Agreement shall
be subject to the terms of this Agreement. This Agreement constitutes the entire
agreement of the Parties with respect to the subject matter of this Agreement,
and supersedes all previous proposals, negotiations, conversations or
discussions, oral or written, between the parties related to this Agreement. If
an amendment to this Agreement is contemplated, see Section 12.1. For individual
service and production agreements made pursuant to this Agreement, see Section
1.2.

1.2  Products and Services. All separate sales of Products and Services from
Seller to Buyer made during the term of this Agreement shall be defined by and
referenced as addendum and affixed to this Agreement as exhibits. Such addenda
shall contain a description of certain Product (or Products) and/or Service (or
Services) (i.e. design services or sustaining engineering) being ordered,
additional terms of pricing, purchase and sale that shall apply to the Services
and/or Products specified in the exhibits. The parties may, from time to time,
add additional services or new products by executing supplementary addenda.
Services included in the Price for a given Product shall be individually
specified in the Product Addendum.

1.3  Inconsistencies in Documents. In the event of any inconsistency or conflict
between any of the documents described above and/or Purchase Orders (as defined
below in Section 2.1). issued pursuant to this Agreement, the following order of
priority, listed here from the highest priority (a) to the lowest priority (f),
in interpretation shall apply:

     (a)  Amendments or other modifications made to this Agreement.
     (b)  Exhibits of this Agreement.
     (c)  Product Specifications agreed to via Seller's ECO process.
     (d)  Product Specifications provided to and agreed upon by Seller with the
          Purchase Order.
     (e)  Purchase Order (exclusive of any terms and conditions).
     (f)  This Agreement.

1.4  Product Development. Upon the request of Buyer, Seller shall assist Buyer
with the development of the Products (the "Development Services"). The
Development Services shall be specified by Buyer with respect to each Product

                                       48
<PAGE>

and may include, but will not be limited to, assisting the Buyer with the
design, development, quality and regulatory testing, clinical builds, equipment
fabrication and manufacturing ramp-up plan regarding a Product, in each case as
specified by Buyer with respect to such Product. Seller and Buyer shall conduct
telephone calls or site visits as needed to review Seller's progress with
respect to the Development Services pertaining to the assigned Products. Each
telephone call or site visit shall review the current status of the design and
development with respect to such Product, estimated progress to be made over a
defined interval, problems encountered, proposed solutions to identified
problems and the effect, if any, on the agreed upon timeline for such Product.
Seller and Buyer will agree upon a design freeze prior to proceeding with
manufacturing.

1.5  Manufacturing of Products. Seller hereby agrees to manufacture and sell to
Buyer, and Buyer will purchase from Seller, such quantities of the Products for
which Buyer may issue purchase orders under this Agreement, in accordance with
all of the terms of this Agreement. Buyer will not be restricted from purchasing
the Products from any other third party suppliers. Seller will manufacture the
Products in accordance with the process and material specifications provided by
Buyer with respect to each Product, as such specifications may be modified in
writing by Buyer from time to time (the "Specifications").

     1.5.1 Specifications. Complete specifications required to inspect,
     manufacture, test, and ship the Products and the Components (as defined in
     Section 5.1) in a manner acceptable to the Buyer, including part numbers,
     revisions, bills of material and any other specifications applicable to
     Products ordered pursuant to this Agreement ("Specifications") will be
     supplied by Buyer or Buyer's agent and agreed upon in writing by Seller, or
     will be otherwise established and accepted by the Buyer and Seller via
     Seller's Engineering Change Order ("ECO") process. Neither the Seller nor
     the Product shall be expected or required to perform outside of the
     Specifications.

2.0  ORDER, DELIVERY, AND ACCEPTANCE

2.1  Purchase Orders. Buyer will order Products by issuing Seller properly
authorized written, emailed, or facsimile documents specifying, and/or attaching
items including: Products, Components, description, applicable part numbers,
quantity, revision, delivery schedule, destination, shipping method,
Specifications, special acceptance criteria (if any), unit price, and total
authorized cost of the order ("Purchase Order"). The parties shall agree in
writing on the Purchase Order, and the Specifications contained thereon, in
accordance with Section 1.5.1 above, prior to the commencement of any work
related to such Purchase Orders. Provided that such Purchase Order and
Specifications are acceptable to Seller, Seller shall manufacture for Buyer,
assemblies and subassemblies, as identified in Purchase Orders.

2.2  Commencement. Commencement of work related to this Agreement or related to
Purchase Orders is done so under the terms of this Agreement. Any additional or
different terms from Buyer sent together with Purchase Orders or otherwise sent
to Seller or from Seller to Buyer shall be excluded unless signed by both
parties as an Amendment or an Exhibit to this Agreement. 2.3 Packaging. Seller
shall prepare and pack Products in accordance with Buyer's Specifications. Costs
for Product preparation, and packaging are not included in the Price unless
specified as part of the Product part number ordered by Buyer. Costs for
crating, palletizing, and/or bulk packaging are not included in the Price for
Product unless otherwise specified in the relevant Product addendum (or
specified a "Development Services Addendum" if a pre-production unit(s) is to be
shipped). 2.4 Shipping. Shipping terms are FOB Seller's facility. Seller shall
select freight carrier of its choosing unless otherwise specified by Buyer.
Seller will ship the products in a manner that will protect such products during
shipping and handling. Each shipment will include the information specified by
an addendum or engineering change order. 2.5 Delivery. The Purchase Order shall
specify requested delivery dates. Seller shall ship products with appropriate
lead-time such that Products arrive at the Buyer's dock on or reasonably around
the requested dates. Any extension in time of delivery date at the request of a
Party to whom the delay is not attributable shall be reasonably honored by the
other Party.

3.0  QUALITY SYSTEMS, REGULATORY, AND AGENCIES

3.1  Quality Systems Requirements. Seller will establish and maintain formal
quality systems and processes that are compliant with the FDA's Quality System
Regulation ("QSR") and ISO 13485. Such systems and processes will be provided
and maintained by Seller. Any and all special quality system requirements for
the Products shall be provided by or agreed to by Buyer via Specifications for
the Product or as subsequently changed via Seller's Engineering Change Order
process, in writing, at the time of Purchase Order. Seller will inform Buyer and
obtain prior approval for any changes to be made that can affect the quality of
the Products (hereafter referenced as "major revision; for "major revision"
defined see Section 5.2 below").

3.2  Buyer Audit Rights. Seller agrees that Buyer or any of its duly authorized
representatives shall have access to and the right to reasonably perform routine
audits on any pertinent design, manufacturing, or quality systems or processes,

                                       49
<PAGE>

and associated documentation provided that Buyer shall provide Seller with 5
working days prior notification. Buyer and Seller shall incur all of its' own
costs in connection with routine audits.

3.3  Quality System Records. Seller shall keep all records pertaining to its
obligations set forth hereunder including, but not limited to, Device Master
Records and Device History Records on the Products in accordance with the
Seller's Quality System, the QSR and ISO 13485 standards for the period
specified in the Exhibits. Seller shall notify Buyer in writing of its intention
to destroy such documents and must receive written permission the Buyer prior to
destruction of records. Each party shall make available such records to the
other party.

3.4 Traceability. Seller will provide serial traceability to the Product and lot
or serial traceability to selected Components for Product as agreed to by Buyer
and Seller in accordance with Section 5.1.

3.5 Corrective and Preventive Action. A corrective and preventive action system
will be managed and maintained by Seller as necessary to meet the requirements
of the QSR and ISO 13485 or otherwise as a Seller of Products to Buyer in
accordance with Section 3.3.

3.6 Disposition of Non-Conforming Material. Seller shall request in writing
Buyer's approval for any "Use-as-is" dispositions. Seller shall make available
for review all non-conforming material reports and rework activities for the
Product to the Buyer.

3.7 Regulatory Responsibility. Buyer shall be responsible for all FDA and other
applicable international (e.g., MDD, CMDCAS, etc.) regulatory reporting and
registration, regulatory submissions, Product performance monitoring, complaint
handling, and field service. Buyer shall notify Seller of customer complaints
related to the work performed by the Seller, and any Medical Device Reports or
vigilance reports that are submitted to the FDA or other international
regulatory agencies regarding the Products within 10 business days of their
notification or submission. Seller agrees to cooperate, support and investigate
such matters as requested by Buyer. Seller shall be responsible for maintaining
FDA registration for the facility that manufactures the Products.

3.8 Agencies. If Buyer seeks regulatory or safety agency approval for its
Product, into which Seller's Product is incorporated, Seller agrees to cooperate
and fully support Buyer as requested. Seller will cooperate with agency
inspections (e.g., UL, CSA, etc.) relating specifically to the Products. The
costs of Seller in cooperating and supporting Buyer's requests and agency
inspections as well as any agency fees are borne in full by the Buyer.

3.9 Inquiries. If any governmental agency contacts Buyer or Seller to inquire
about or investigate any Product manufactured by Seller, Buyer or Seller shall
use its best efforts to give notice thereof to the other party within 24 hours
of receipt of such contact.

4.0  DESIGN, PROCUREMENT, ASSEMBLY, AND TEST RESPONSIBILITY

4.1 Design Responsibility. Buyer shall be solely responsible for the design of
the Products and for their safety and efficacy for the indications and intended
uses. Buyer shall bear any financial or other responsibility for Product
deficiencies discovered by Buyer or Seller. It is Buyer's sole responsibility to
review, validate, and approve the Product design, any prototype or
pre-production unit that Seller provides, and to ensure that any resulting
product is tested, manufactured, packaged, labeled (including adequate
warnings), sold and/or used in a safe, careful, and effective manner. Buyer is
also responsible for obtaining and maintaining FDA, UL, CE, CSA, FCC or any
other necessary approvals. (See Section 7.5 below.)

4.2 Procurement, Assembly and Test Responsibility. Seller's procurement,
assembly and test responsibility is limited to providing a Product that is
"built to print" according to written Specifications provided to Seller by Buyer
(and agreed upon by Seller) or as otherwise agreed to by Buyer via Seller's
Engineering Change Order process. Seller agrees to perform additional Services
as may be needed from time to time as requested by Buyer.

4.3 Product Changes, Support and Sustaining Engineering. As requested by Buyer,
Seller agrees to provide technical support and sustaining engineering services
required to develop, design, engineer, test, support, and implement Product or
process changes.

4.4 Engineering Changes. Buyer may from time to time direct that modifications
be made to the design of the Products. Such modifications may originate with
Buyer or may be recommended by Seller. Seller will make such modifications as
soon as practicable upon receipt of such notice from Buyer and such
modifications will be the property of Buyer in accordance with Section 9.2.1.
Seller will inform Buyer and obtain prior approval for any changes to be made
that can affect the quality of the Products.

         4.4.1 Engineering Change Orders (ECOs). Seller shall make no changes to
         the Device Master Record that is under the control of the Seller, as
         indicated in Section 3.3, where the change results in a "major
         revision," as specified by Section 5.2, of an assembly without prior
         approval of the Buyer. This approval will be indicated by the signature
         of the Buyer's authorized representative on the Seller's ECO. Seller
         shall provide copies of all ECOs related to the Product.
         4.4.2 Content of ECOs. The ECO submitted to POSSIS must minimally
         contain the following information: (1) List of items affected and their
         revision levels, (2) Description of change thorough enough to allow
         Possis to evaluate the proposed change, (3) Reason for change, (4)
         Description of solution and supporting test results for design changes,
         (5) Dispositioning and effectivity information, (6) Risk assessment
         including affects on risk documents and validations.

                                       50
<PAGE>

4.5 Engineering Documents. Device Master Records (the "DMR") and Risk Management
documents will be controlled by the POSSIS or MINNETRONIX quality systems.

     POSSIS will control the following documents and provide latest released
     revisions as specified herein:

          Project Control Specifications - Customer, Product, and Engineering
          Specifications;

          Top-level Risk Management Documents - Clinical Effects Analysis (CEA),
          Design Failure Mode and Effects Analysis (dFMECA)

          Product Labeling Documents - Package Labeling Documents, Instructions
          for Use

          Finished Goods Device Specification and Receiving Inspection Procedure

     MINNETRONIX will control the following documents and make latest revisions
     accessible to Possis at any time, unless such processes or specifications
     are specifically MINNETRONIX protected and previously expressed as such in
     written documentation:

          Subassembly and component specifications. (Possis to be included in
          determining critical product or component characteristics)

          Procedures such as manufacturing procedures, test procedures, and
          receiving inspection procedures (that shall include verification of
          critical characteristics).

          Process risk documents - Process Failure Mode and Effect Analysis
          (pFMEAs)

5.0  COMPONENTS AND CONFIGURATION MANAGEMENT

5.1 Configuration Control. Seller will maintain source control on all parts,
materials, subassemblies, and components used in connection with the manufacture
of Products ("Components"), unless otherwise specified. Buyer will have access
to bill of material ("BOM") data, inventory status, and production status as
reasonably requested.

5.2 Product Revisions. Seller uses a product revision format that indicates
different levels of product release. All revisions have a format of [major
revision]-[minor revision]. Major revisions are indicated by decimals less than
"1" (e.g., .01, .02, .5, etc.) prior to production release and are "001" or
greater (e.g., 001, 002, etc.) after production release. Minor revisions start
with alpha characters beginning at "a" after each major revision change and are
incremented for each minor revision change (e.g., a, b, c, etc.). All Products
provided at a revision less than 001-a (e.g., .01-a, .01-b, .5-a, etc.) shall be
considered prototypes (or "Pre-Production Units"). All Products provided at a
revision level of 001-a or higher (e.g., 001-a, 001-b, 002-a, etc.) shall be
considered production units ("Production Units").

5.3 Component Scheduling. Seller shall maintain scheduling control over
Components ordering and their delivery scheduling according to Seller's
production scheduling processes. Seller will issue purchase orders, or otherwise
place orders, for all Components to support Buyer's Purchase Orders throughout
the term of the Agreement. Seller will commit to longer-term buys on an
exception basis as reasonably requested by Buyer provided that all such requests
are issued in writing to Seller by Buyer.

5.4 Components and other Parts Purchases. Seller agrees to sell sub-assemblies,
Components, and other parts, from its inventory to Buyer, upon Buyer's
reasonable request. Seller will quote a price, including any minimum quantity,
to Buyer for such Components upon request by Buyer. All such sales are subject
to the terms of this Agreement.5.5 Product Orders, Forecasts and Schedule
Changes. Buyer will provide Purchase Order(s) representing a firm commitment for
Products to be delivered as specified on the Purchase Order. In addition, Buyer
shall provide forecasts to Seller, which reflect Buyer's Product(s) volume
requirements over a 12-month period. Seller will make reasonable efforts to
accommodate schedule change requests subject to Component availability and
capacity at Seller's sole discretion. Aggressive schedule increases will be
accommodated to the best of Seller's ability according to the terms of this
Agreement. Seller may use forecasts to purchase long lead-time items and to
achieve price breaks due to order size. Forecasts and Purchase Orders may be
combined to make best effort purchasing decisions. Excess or scrap Components
that occur as a result of Seller's best effort purchasing decisions are Buyer's
responsibility in the event of an order cancellation, Product change, or
production delay.

6.0  PRICES AND PAYMENT

6.1 Prices. The Price to be paid by Buyer for the Products and Services pursuant
to this Agreement will be as mutually agreed by the Parties and as set forth in
each addendum or amendment to an addendum.

6.2 Price Adjustments. The Price agreed to by the parties pursuant to Section
6.1 as it pertains to the manufacture of Products is in accordance with the
applicable and stated Specifications of the Buyer for Products. In the event of
an "engineering change" pursuant to Section 4.4 above, after the parties have
agreed to the Price for a particular purchase order, Buyer shall be responsible
in full for the expense thereof to be incurred by authorizing the engineering
change and corresponding Price adjustment.

                                       51
<PAGE>

6.3 Invoices and Payment. Seller will invoice Buyer upon shipment of the
Products hereunder for the amount payable by Buyer for such Products, or as
otherwise agreed for development services and engineering changes. All such
invoices will be due and payable in full within thirty (30) days from the date
of invoice. Seller shall issue invoices to Buyer as Products are shipped from
Seller's plant for the Price of shipped units and shipping costs, with a credit
of any prepayment, downpayment, deposit, or allowance for Buyer-supplied
products. For Services performed, Seller shall issue invoices to Buyer once per
month, and with a credit of any prepayment, downpayment, or deposit.

6.4  Fee Definitions and Fees; Costs.

         6.4.1 Late Payment Fees. A late fee will be assessed to any overdue
         invoices. Such late fee shall be the lesser of a) 1.5%/month, or
         portion thereof, or b) the maximum amount permitted by law. In the
         event that payment is not made within 60 days after invoice date,
         Seller may cease all efforts on the Products and refer the account to a
         collection agency at its sole discretion. Buyer shall be responsible
         for any and all collections and attorneys' fees incurred relating to
         Seller's collection of funds owed by Buyer to Seller.

         6.4.2 Out-of-pocket Expenses. Buyer shall pay Seller for all reasonable
         out-of-pocket expenses, that Seller incurs in relation to the Services
         provided hereunder. Reasonable out-of-pocket expenses, shall include,
         but not be limited to, out-of-town air and ground travel, food, and
         lodging where applicable, and videoconference, internet meetings,
         hosted conference calls, supplier non-recurring charges, fees or
         surcharges, or other miscellaneous third party costs resulting from
         Seller's performance under this Agreement. Mileage reimbursement for
         personal vehicle use shall be at the current IRS rate per mile where
         Seller travels out-of-town by personal or company vehicle in relation
         to the Services provided hereunder.

         6.4.3 Expedite Costs. Seller shall be responsible for Seller's or
         Seller's suppliers' expedite costs incurred in order to meet the
         standard delivery schedule unless such expedite costs become necessary
         due to or are requested by Buyer. Any reasonable expedite costs
         incurred by Seller due to or requested by Buyer shall be recharged to
         Buyer.

         6.4.4 Overtime Costs. Seller shall be responsible for Seller's overtime
         costs incurred in order to meet the standard delivery schedule unless
         such overtime costs become necessary due to or are requested by Buyer.
         Any reasonable overtime costs incurred by Seller due to or requested by
         Buyer shall be recharged to Buyer.

         6.4.5 G&A Fee. This fee covers Seller's costs for general and
         administrative efforts associated with various business issues
         including, but not limited to, purchasing, inspecting, providing
         warranty, inventorying, invoicing, storing, receiving, space,
         capitalizing, managing, and other overhead issues associated with the
         business relating to the items or issues to which the fee is
         applicable. This fee shall only be applied to costs incurred by Seller
         that are not included in the Price, but are otherwise covered by this
         Agreement and are being recharged to Buyer including, but not limited
         to, costs associated with Sections 3.8, 6.4.2, 6.4.3, and 6.4.4. The
         standard G&A fee shall be 25% of the amount to which to fee is applied.

         6.4.6 Storage Fee. In the event of a delay per Section 6.4.8, this fee
         covers the Seller's costs for the storage, maintenance, warranty,
         material handling, shrinkage, cycle counting, storage space, floor
         space and other overhead associated with the inventory as well as
         supplier management, discrepant material handling, purchasing efforts,
         reporting, tracking, and rescheduling associated with storing and
         managing inventory during a delay in production. The storage fee shall
         be 1.25% per month of actual costs associated with the Committed
         Inventory ("Storage Fee"). In the event that the Seller is holding
         Buyer-supplied or Buyer-owned inventory during the delay period, Buyer
         shall pay a 1.25%/month Storage Fee for those materials. "Committed
         inventory" means all purchases on hand for order fulfillment on a given
         purchase order whether purchased before or after receipt of a signed
         purchase order so long as the inventory was not available for any other
         use than performance on the Seller's obligations or pending obligations
         to the Buyer.

                                       52
<PAGE>

          6.4.7 Maintenance Fee. In the event of a production delay per Section
          6.4.8, this fee covers the Seller's costs for the storage,
          maintenance, warranty extension, material handling, cost of capital,
          shrinkage, cycle counting, floor space, storage space and other
          overhead associated with the inventory as well as the supplier
          management, discrepant material handling, purchasing efforts,
          reporting, tracking and rescheduling associated with storing, owning,
          and managing inventory during a delay in production. The maintenance
          fee shall be 2.5%/month of actual costs associated with the Committed
          Inventory ("Maintenance Fee").
          6.4.8 Production Delays.
          In the event of production delays requested or caused by Buyer in
          excess of 30 days, Buyer shall, at Seller's sole discretion, pay to
          Seller during the delay period either (a) a standard inventory deposit
          and a 1.25%/month Storage Fee (as defined in Section 6.4.6), or (b) a
          2.5%/month Maintenance Fee (as defined in Section 6.4.7).
               (1) Unless otherwise specified in an applicable Exhibit, the
               standard inventory deposit shall be in the amount of the value of
               the Component inventory, Component purchase orders, or other
               written commitments from Seller to Seller's suppliers purchased
               by or otherwise committed to by Seller as a result of Purchase
               Orders or product forecasts ("Committed Inventory") including
               Components received, or on non-cancelable, non-returnable or
               limited change purchase orders from Seller to Seller's suppliers
               for Components that will be received by Seller during the delay
               period.
               (2) The fee calculation shall be made using the applicable
               percentage from either (a) or (b) above multiplied by the average
               monthly value of the Committed Inventory held by Seller during
               the period to which the fee applies. This fee will be charged
               each month, or portion thereof, during the delay.
          In the event of production delays requested or caused by Buyer in
          excess of 90 days, Buyer shall purchase from Seller all Committed
          Inventory held at Seller during the period and pay a 1.25%/month
          Storage Fee until delivery of all Products or Committed Inventory from
          Seller to Buyer is made.

6.5 Other Costs. Other costs may be incurred for Products or additional Services
provided by Seller in support of Buyer's Products as requested by Buyer. Costs
shall be charged to Buyer based on materials costs, third party costs, or at the
then-current rates of Seller's personnel. Such costs may include, but are not
limited to, Services requested by Buyer as per the following Sections: 3.7
Regulatory Responsibilities; 3.8 Agencies; 4.2 Procurement, Assembly and Test
Responsibility; 4.3 Product Changes, Support and Sustaining Engineering; 5.5
Product Orders, Forecasts, and Schedule Changes; 7.6 Recalls; 7.7.2
Decontamination; 7.7.3 Repairs; and 9.2 Technical Data and Intellectual Property
Ownership.

6.6 Cancellation of Purchase Orders in Whole or in Part. In the event that Buyer
wishes to cancel a Purchase Order or terminates the Agreement as per Section 11
et seq., the following terms shall apply to Committed Inventory purchased or
committed to as a result of the Purchase Order or product forecasts (as
described above in Sections 5.5) from Buyer.

         6.6.1 Expense recovery. Seller will make reasonable good faith efforts
         to return unneeded Components to its suppliers; and Buyer will be
         responsible for the following costs arising from Buyer's Purchase Order
         and subsequent cancellation: Seller's actual costs associated with
         non-returnable or non-cancelable Committed Inventory including
         Committed Inventory that has been rendered non-returnable due to work
         performed in accordance with this Agreement and associated Purchase
         Orders; Seller's actual costs associated with returnable or cancelable
         Committed Inventory; and Seller's cancellation fee of twenty (20)
         percent of the remaining Purchase Order value at the time of
         cancellation at Seller's sole discretion. See Section 6.4.6 above for
         the definition of "committed inventory."

         6.6.2 Seller's Actual Costs. Seller's actual costs typically include
         labor, overhead and other out-of-pocket expenses incurred in the
         purchasing, receiving, inspecting, testing, assembling, storing,
         counting, shipping, handling, canceling, returning, or otherwise
         managing or processing the Components and their suppliers.

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6.7 Cost Reduction. Buyer and Seller agree that the parties will share the
benefits of any and all cost reduction efforts on a 70/30 split. The split will
be allocated 70% to the originator of the cost reduction effort and 30% to the
other party, via unit cost reduction, after Seller's implementation costs are
recovered.

7.0  ACCEPTANCE, WARRANTY, RECALL, REPAIR AND REPLACEMENT

7.1 Acceptance of the Products. Buyer will have the right to reject any Product
that does not conform to the Specifications on the Purchase Order. Within the
ten (10) days after arrival of a shipment of the Products, Buyer (or its agent)
will notify Seller in writing of its rejection of the unit(s) and state with
specificity its reasons for rejection of said unit(s). Upon receipt of such
notice from Buyer, Seller will promptly address the issue of non-conforming
goods and remediate all issues of unmet specifications. The acceptance criteria
for the Product shall be "conformance to the Specifications at the time of
delivery." Any Products not rejected by Buyer pursuant to this Section 7.1 will
be deemed accepted. In the event that there are additional acceptance criteria
by Buyer, they must be specified on the Purchase Order at the time of the
initial order in accordance with Sections 1.5.1 and 2.1.

7.2 Disclaimers of Warranty for Design and Engineering Services. All design
services and any and all prototypes and pre-production units that Seller
delivers are provided "as is" at the time of delivery. Every design necessarily
involves individualized professional judgments, the results of which cannot be
guaranteed. They do not meet regulatory standards for medical equipment or
software and are not intended for human use unless specifically manufactured for
that purpose and expressly indicated as such by Minnetronix to Client.
Minnetronix disclaims all WARRANTIES EXPRESS OR IMPLIED, INCLUDING, BUT NOT
LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE for its design services or engineering services deliverables
(including but not limited to prototypes or pre-production units).

7.3 Third Party Warranties. In no event does the Manufacturer's Warranty for
Product apply to any third party software or any other third party Components
that are embedded or incorporated into the Products, provided that Seller shall
assign to Buyer any warranties received from such third parties to the extent
that Seller is permitted to make such assignments.

7.4 Exclusive and Limited Warranty for Production Units. Seller warrants to
Buyer that Product, for a period to be specified in the Product Addendum, shall:
(a) conform in all respects to all of the Product Specifications; and (b) be
free from all defects in materials and workmanship. THIS LIMITED WARRANTY IS
EXCLUSIVE AND MINNETRONIX MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE. In the event of a breach of this warranty,
MINNETRONIX will, at no charge to the Buyer, reprocess or repair any defective
Products that reasonably can be reprocessed or repaired; or, in the event that
the defective Products cannot reasonably be reprocessed or repaired, will
replace such defective Products. All costs of shipment of the defective Products
to Seller shall be borne by the Buyer. The costs of domestic ground shipment to
the Buyer's facility for return of replacement or repaired devices to the Buyer
will be borne by the Seller.

7.5 Buyer's Warrants Its Responsibilities. Unless otherwise specified herein,
Buyer warrants it is Buyer's sole responsibility to test, qualify, verify, and
validate the Product designs of any prototypes, or pre-production units
Minnetronix provides and to ensure that Product is tested, manufactured,
packaged, labeled (including adequate warnings), sold and/or used in a safe,
careful, and efficacious manner. Buyer is also responsible for obtaining and
maintaining UL, CSA, FCC or any other necessary approvals. Buyer is obligated to
train and instruct its employees and any potential users of the Production units
with regard to their safe and proper use. Buyer assumes all risks, both known
and unknown, associated with the use, misuse, or loss of use of Products. Buyer
warrants that Seller shall have no liability for any injury to the operator or
subject of application of the Product regardless of the reason for the injury
(including, but not limited to, inappropriate therapy, use, or Product
malfunction).

7.6 Recalls. Each party will notify the other immediately and confirm such
notice in writing if it obtains information indicating that any of the Products
may have to be recalled, either by virtue of applicable law or good business
judgment. The parties will assist each other in evaluating such information and
will mutually agree with respect to the initiation of any recall, except that
the parties will be obligated to initiate such recall if required by any
governmental authority having jurisdiction in the matter (unless any such order
is stayed upon appeal by the Buyer).

7.7 Repair and Replacement Service. All Products that the Buyer deems to be
non-conforming shall be returned to Seller after acquiring and including a
Seller's Return Material Authorization (RMA) number and paperwork indicating the
details of the unit being returned with a serial or lot number and a description
of the problem. An RMA number is available on request from the Minnetronix
Quality Department.

         7.7.1 Shipping. Buyer shall pay for freight for Product return to
         Seller and Seller shall pay for freight for Product shipment back to
         Buyer if a warranty repair ensued. Seller shall use a shipping method
         of the same or better expediency to that which Buyer returned Product
         to Seller.

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         7.7.2 Decontamination. Buyer agrees to supply Seller with a Certificate
         of Decontamination along with all returned Product certifying that it
         is free of all toxic and biohazard materials. In the event, a third
         party vendor of decontamination services is to provide the Buyer's
         Certificate of Decontamination, Seller and Buyer are to provide joint
         authorization for such service.

         7.7.3 Repairs. In-warranty repairs shall be performed in accordance
         with Section 7.4. Seller agrees to perform out-of warranty depot
         repair, upgrade, and troubleshooting services as requested by Buyer.
         All repairs, troubleshooting, field upgrades, and field service work
         performed by Buyer will be at Buyer's sole expense.

8.0      Indemnity

8.1 Buyer's Indemnification. Buyer shall indemnify, defend, and hold harmless
Seller and its officers, directors, employees, agents, successors and assigns
from and against any and all losses, claims, actions, costs, liabilities,
expenses, fines, damages, and other relief or penalties it or they may suffer
(including, but not limited to, reasonable attorneys' fees and expenses) arising
out of, relating to, or resulting from, directly or indirectly,

          (a)  any breach or default in the performance by Buyer of any covenant
               or agreement of Buyer contained in this Agreement or any Exhibit
               hereto,

          (b)  any act or omission of Buyer or its employees or agents that
               constitutes gross negligence, willful misconduct or actual fraud,

          (c)  illness, injury or death to any person relating to or arising out
               of Buyer's performance of this Agreement,

          (d)  damage to any real or tangible personal property relating to or
               arising out of Buyer's performance of this Agreement,

          (e)  the provision, sale, use or other exploitation of the Products or
               any part thereof, or any products that incorporate the Products,
               which infringes or violates any patent, copyright, trademark,
               tradename, trade secret or any other proprietary right of any
               third party,

          (f)  the testing, possession, provision, sale, use, operation or other
               exploitation of a Product or the testing, possession, provision,
               sale, use, operation or other exploitation of any of Buyer's
               products using or containing a Product or any other claims
               whatsoever by whomsoever relating to or arising out of the
               Product or Buyer's products that incorporate any aspect of the
               Services provided or Products sold hereunder, and

          (g)  any and all actions, suits, proceedings, claims, demands,
               judgments, costs and expenses (including reasonable legal and
               accounting fees) incident to any of the foregoing,
provided that, Buyer's obligation to indemnify Seller hereunder shall apply only
if:

          (a)  Seller gives Buyer prompt notice after learning of any such
               claims or actions,

          (b)  Buyer shall have exclusive control over the defense and
               settlement of any such claim or actions,

          (c)  Seller shall not settle or compromise any such claims or actions
               without Buyer's prior written approval, and

          (d)  Seller shall cooperate with Buyer in a defense and settlement of
               any claim, at Buyer's expense, provided that Buyer shall not be
               liable hereunder for any settlement or compromise negotiated by
               Seller unless Buyer agrees in writing to be so bound. If Seller
               provides notice of a claim in accordance with (a) above and is
               not notified within ten (10) days thereafter that Buyer intends
               to defend the claim, Seller shall be entitled to defend such
               claim, and settle or compromise such claim, subject to the
               indemnification provided for herein.
The foregoing indemnity shall not apply to the extent that such claims or
actions for damages or other relief arise from the gross negligent acts or
omissions, willful misconduct, breach of any terms or provisions of this
Agreement by, or other unlawful conduct of, Seller or any of Seller's employees
or agents.

8.2 Seller's Indemnification. Seller shall indemnify, defend, and hold harmless
Buyer and its officers, directors, employees, agents, successors and assigns
from and against any and all losses, claims, actions, costs, liabilities,
expenses, fines, damages, and other relief or penalties it or they may suffer
(including, but not limited to, reasonable attorneys' fees and expenses) arising
out of, relating to, or resulting from, directly or indirectly,

          (a)  any breach or default in the performance by Seller of any
               covenant or agreement of Seller contained in this Agreement or
               any Exhibit hereto,

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          (b)  any act or omission of Seller or its employees or agents that
               constitutes gross negligence, willful misconduct or actual fraud,

          (c)  illness, injury or death to any person relating to or arising out
               of Seller's performance of this Agreement except as to any such
               illness, injury or death arising out of or relating to Buyer's
               testing, possession, provision, sale, use, operation or other
               exploitation of the Products,

          (d)  damage to any real or tangible personal property relating to or
               arising out of Seller's performance of this Agreement except as
               to any such damage arising out of or relating to Buyer's testing,
               possession, provision, sale, use, operation or other exploitation
               of the Products, and

          (e)  any and all actions, suits, proceedings, claims, demands,
               judgments, costs and expenses (including reasonable legal and
               accounting fees) incident to any of the foregoing,
provided that, Seller's obligation to indemnify Buyer hereunder shall apply only
if:

          (a)  Buyer gives Seller prompt notice after learning of any such
               claims or actions,

          (b)  Seller shall have exclusive control over the defense and
               settlement of any such claim or actions,

          (c)  Buyer shall not settle or compromise any such claims or actions
               without Seller's prior written approval, and

          (d)  Buyer shall cooperate with Seller in a defense and settlement of
               any claim, at the Seller's expense, provided that the Seller
               shall not be liable hereunder for any settlement or compromise
               negotiated by the Buyer unless the Seller agrees in writing to be
               so bound. If the Buyer provides notice of a claim in accordance
               with (a) above and is not notified within ten (10) days
               thereafter that the Seller intends to defend the claim, Buyer
               shall be entitled to defend such claim, and settle or compromise
               such claim, subject to the indemnification provided for herein.
The foregoing indemnity shall not apply to the extent that such claims or
actions for damages or other relief arise from the gross negligent acts or
omissions, willful misconduct, breach of any terms or provisions of this
Agreement by, or other unlawful conduct of, Buyer or any of Buyer's employees or
agents.

9.0      INTELLECTUAL PROPERTY RIGHTS AND OBLIGATIONS

9.1 Confidential Information. Confidential Information ("Confidential
Information") includes all information furnished to the receiving party relating
to the business conducted or to be conducted by the disclosing party, including,
but not limited to, information on markets, customers, products, software,
source code, inventions, procedures, designs, financial status, plans,
organization and general business strategy. Confidential Information includes
information furnished in written or electronic format as well as any information
that may be derived from review of Product samples, software or other assets.
Confidential Information includes information disclosed before, on or after the
date of this Agreement.

          (a)  All Confidential Information shall remain the property of the
               disclosing party;

          (b)  Each party shall keep Confidential Information received from the
               other party in confidence and trust and shall not use it for any
               purpose other than for the purposes of this Agreement; and

          (c)  Neither party shall disclose Confidential Information of the
               other party to any third party without the prior express written
               consent of the other party regarding such intended disclosure.

          (d)  Upon termination of this Agreement, either party may request the
               other party to return the Confidential Information that the other
               party has in its possession or control provided, however, that
               neither party will be obligated to deliver or destroy any
               Confidential Information that is in electronic format; rather,
               the parties will be permitted to retain such Confidential
               Information subject to the ongoing confidentiality terms and
               conditions of this Agreement.

         9.1.1 Exclusions from Confidential Information. Notwithstanding any
         other provision of this Agreement, information shall not be deemed
         Confidential Information hereunder if it:

          (a)  is or becomes publicly known through no act or omission of the
               party receiving the information;

          (b)  is information that the receiving party can demonstrate was in
               the receiving party's possession before disclosure by the
               disclosing party and was not acquired, directly or indirectly,
               from the disclosing party;

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          (c)  is obtained from a third party without obligation to the
               disclosing party and with a legal right to transmit the
               information; or

          (d)  is required to be disclosed pursuant to law; provided, that the
               receiving party shall give prompt and prior written notice
               thereof to the disclosing party, and, that the receiving party
               shall give reasonable cooperation to the disclosing party to
               limit any public release of such information to the extent
               provided by law.

9.2 Technical Data and Intellectual Property Ownership. Buyer and Seller
acknowledge that certain algorithms, know-how, ideas, designs, techniques,
processes, concepts and the like (collectively, "Materials") may be used in the
design, development, and manufacture of the Products.
         9.2.1 Ownership of Developed Materials. For all Materials developed by
         Seller for Buyer and for the Products as a result of this Agreement for
         which full consideration has been made ("Developed Materials"), and to
         the extent that Seller can transfer such ownership, Buyer shall own all
         rights (including all intellectual property rights) in and to the
         Developed Materials that Buyer reasonably considers to be a trade
         secret of, or otherwise patentable by, Buyer (the "Buyer Materials").
         Buyer must notify Seller in writing of all Developed Materials that it
         reasonably considers to be Buyer Materials within 60 days after Buyer
         first receives delivery or notice of the same hereunder, and any such
         notice received by Seller after the applicable 60 day time period shall
         be void. The parties shall co-own (i.e., be free to use as if the sole
         owner without notice, accounting or payment of any kind to the other
         party) all rights in and to all Developed Materials that are not Buyer
         Materials. Buyer and Seller further acknowledge that certain Materials
                  (a) created by or for Seller prior to its beginning work for
                  Buyer pursuant to this Agreement ("Preexisting Materials"),
                  (b) created by or for Seller in separate efforts at its own
                  expense, even to the extent that such work is delivered or
                  used in the performance of this Agreement,
                  (c) generally known or available to those skilled in the art,
                  or (d) owned by third parties and licensed to Seller,
         collectively, shall be excluded from Developed Materials.

         9.2.2 Pre-Existing Materials. To the extent that Seller is legally able
         to do so and insofar as Buyer has made full consideration for work
         performed under this Agreement to Seller, Seller hereby grants to Buyer
         a non-exclusive, perpetual, irrevocable, worldwide, royalty-free
         license to all Pre-existing Materials that may be included in the
         Products, in order for Buyer to use, import, sell and have sold the
         Products. Subject to the foregoing, Buyer shall own all rights
         (including all intellectual property rights) in and to the Products,
         and all related design information and documentation.

         9.2.3 Seller's Intellectual Property Duties. During the term of this
         Agreement it is contemplated that Seller may generate ideas,
         inventions, improvements or suggestions whether or not patentable
         ("Ideas") derived directly from Seller's performance hereunder.
         Provided that Buyer has made full consideration for work performed
         under this Agreement and is not otherwise in breach of this Agreement,
         Seller agrees to assign to Buyer in a form reasonably satisfactory to
         Buyer's counsel any Ideas whether made alone or in conjunction with
         others. Seller agrees to render assistance as Buyer may require to
         perfect such assignments and to publish, patent or protect such Ideas
         in any Patent Office or in litigation for the duration of this
         Agreement. In no way does the Seller warrant that developed materials
         or pre-existing materials are free from third party claims of
         infringement of intellectual property rights.

         9.2.4 Buyer's Copyright. Copyrightable materials that Seller develops
         in connection with this Agreement for which full consideration has
         been made shall be the property of Buyer. Seller assigns to and agrees
         to assign such copyrightable materials to Buyer and to sign any
         documents required by the copyright statutes of this or any other
         country. These copyrightable materials to be assigned to Buyer shall
         be deemed as works made for hire, unless applicable law requires
         otherwise.

         9.2.5 Security Interest. In the event that full consideration is not
         made under this Agreement, Buyer grants to Seller a security interest
         in Developed Materials to secure Buyer's commitments made in this
         Agreement. In such event, Buyer grants approval for Seller to take any
         and all necessary actions to fully secure that interest.

         9.2.6 Buyer's Inability to Make Payment in Full. In the event that full
         consideration is not made under this Agreement and Buyer ceases to
         conduct its operations in the normal course of business (including an
         inability to meet its obligations as they mature), or if any proceeding
         under the bankruptcy or insolvency laws are brought by or against Buyer
         or if a receiver is appointed to or applied for by Buyer, then Buyer
         shall be deemed to have granted to Seller a non-exclusive, perpetual,
         irrevocable, worldwide, royalty-free license rights to any Developed
         Materials in order for Seller to use, sell, or transfer in any manner
         whatsoever.

         9.2.7 Seller's Inability to Deliver. In the event that Seller can no
         longer provide the Products to Buyer due to Seller's bankruptcy,
         insolvency, or Seller otherwise ceasing to conduct its operations,
         Seller shall provide Buyer with non-exclusive, perpetual, irrevocable,
         worldwide, royalty-free license rights to any intellectual property
         owned by Seller necessary for the production of the Products. Seller
         shall provide to Buyer all information, designs, and documentation
         required to produce the Products, including, but not limited to,

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         design, assembly, test, and manufacturing documentation, test
         equipment, electronic files, software source code and executables,
         programming equipment, and any other Components required to produce
         the Products. These Components shall be provided by Seller to Buyer in
         a timely manner and at a reasonable cost.

         9.2.8 Buyer's License for Improvements. Except as otherwise provided in
         Sections 9.2.1 and 9.2.4, Seller hereby grants to Buyer, and Buyer
         hereby accepts, a non-exclusive world-wide, fully-paid, unrestricted
         right and license to make, have made, use and/or sell any product
         incorporating any modifications, enhancements or changes to the
         Product, or the process by which it is manufactured and assembled,
         developed by the Seller during the term of this Agreement. This license
         will include the right of the Buyer to grant sub-licenses to third
         parties.

         9.2.9 Employee Agreements. Seller represents and warrants to the Buyer
         that all of Seller's employees or consultants performing services
         relating to this Agreement have executed agreements with the Seller
         pursuant to which such employees or consultants have agreed to assign
         to Minnetronix, Inc., any inventions of such employees or consultants
         without being paid any additional consideration.

10.0     TRADEMARKS

10.1 Use of Trademarks. Buyer hereby grants to Seller a nonexclusive,
nontransferable and royalty-free right and license to use any Buyer trademarks
designated by Buyer in connection with the packaging of the Products for
shipment to Buyer for so long as such trademarks are used by Seller in
accordance with the Buyer's standards, specifications and instructions, but in
no event beyond the term of this Agreement. Seller will acquire no right, title
or interest in such Buyer trademarks other than the foregoing limited license,
and Seller will not use any Buyer trademarks as part of Seller's corporate or
trade name or permit any third party to do so.

10.2 Markings. Seller will at all times appropriately mark the Products with
Buyer's trademarks in accordance with instructions from Buyer. 10.3 Termination
of Use. Seller acknowledges Buyer's proprietary rights in and to Buyer's
trademarks and any trade names applied by Buyer to the Products, and Seller
hereby waives in favor of Buyer all rights to any trademarks, trade names and
logotypes now or hereafter originated by Buyer. Seller will not adopt, use or
register any words, phrases or symbols that are identical to or confusingly
similar to any of Buyer's trademarks. Upon termination of this Agreement, Seller
will cease and desist from use of Buyer's trademarks in any manner.

11.0     TERMS AND TERMINATION.

11.1 Term. This Agreement shall commence upon its execution and shall continue
for a period of three years and shall automatically renew for additional periods
of one year unless it is terminated as provided herein.

11.2 Termination for Cause. In the event of a breach of a material term of this
Agreement by either party, the other party may, upon not less than (90) days
prior written notice to the party in breach, terminate this Agreement unless the
breach is cured prior to the end of the notice period. A breach of a material
term shall include, without limitation, the following:

          a)   Components and/or Products delivered to Buyer by Seller do not
               conform to the applicable Specification at the time of such
               delivery, and Seller does not operate in good faith to reasonably
               cure such non-conformance;

          b)   Buyer fails to make payment to Seller for Products on a timely
               basis;

          c)   Buyer fails to accept delivery of Products according to the
               agreed upon delivery schedule; or

          d)   Seller fails to make deliveries of Products within 30 days of
               delivery date due to reasons within Seller's sole control.

11.3 Termination of Right. Notwithstanding the foregoing, if Seller or Buyer
ceases to conduct its operations in the normal course of business (including an
inability to meet its obligations as they mature), or if any proceeding under
the bankruptcy or insolvency laws are brought by or against Seller or Buyer or
if a receiver is appointed to or applied for by Seller or Buyer, the other party
may terminate this Agreement and/or any Purchase Orders upon such event without
liability, except for deliveries previously made or for Products ordered and
covered by this Agreement which are completed or in process at the time of
termination and subsequently delivered in accordance with the terms of this
Agreement.

11.4 Termination for Convenience.

         11.4.1 Buyer's Termination for Convenience. Buyer may upon twelve (12)
         months written notice to Seller terminate this Agreement for Buyer's
         convenience; provided that such termination shall not affect any
         outstanding Purchase Orders. The Agreement shall be non-cancelable for
         convenience for a period of 24 months after the Effective Date.
         11.4.2 Seller's Termination for Convenience. Seller may discontinue
         supply of any Product under this Agreement by giving Buyer twelve (12)
         months prior written notice provided that Buyer shall have the option
         to purchase up to a "lifetime" supply of the Product at the
         then-current Product revision level for delivery within such twelve
         (12) month period.

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11.5 Effect of Termination. All provisions of this Agreement which, by their
terms or intent, are designed to survive the expiration or termination of this
Agreement, shall so survive the expiration and/or termination of this Agreement,
including, without limitation, the entirety of Sections 8.0, 9.0, 10.0 and 11.0.
A party's right to terminate this Agreement shall be without prejudice to any
other remedies available to such party at law or in equity. In the event of
notification of termination of the Agreement, Buyer's and Seller's obligations
under this Agreement shall continue without interruption through the date of
termination.

12.0 MISCELLANEOUS

12.1 Amendment. No amendment or modification of this Agreement shall be binding
upon Buyer or Seller unless set forth in a written instrument signed by Buyer
and Seller.

12.2 Governing Law; Litigation Costs. This Agreement will be governed by,
interpreted and construed in accordance with the laws of Minnesota, without
giving effect to the principles of conflicts of laws.

12.3 Assignment. Neither party will have the right to assign, subcontract or
otherwise transfer its rights and obligations under this Agreement without the
prior written consent of the other party; provided that either party may assign
any or all of its rights and obligations under this Agreement to any successor
in interest of all or substantially all of the business of such party by merger,
operation of law, assignment, purchase or otherwise. Any prohibited assignment
will be null and void. All terms and conditions of this Agreement will be
binding on and inure to the benefit of the successors and permitted assigns of
the parties.

12.4 Relationship. This Agreement does not make either party the employee, agent
or legal representative of the other for any purpose whatsoever. Neither party
is granted any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party. In fulfilling its obligations pursuant to this Agreement, each party will
be acting as an independent contractor.

12.5 Waiver. No party will be deemed to have waived the right to take any action
or assert any claim under this Agreement by failing to take the action or assert
the claim, even though the circumstances giving rise to the action or claim have
been continuing or repeating. The failure of any party hereto to enforce at any
time any of the provisions of this Agreement shall in no way be construed to
affect the validity of this Agreement or any part thereof or the right of the
party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to be a waiver of any other or subsequent
breach.

12.6 Severability. In the event that any of the terms of this Agreement are in
conflict with any rule of law or statutory provision or otherwise unenforceable
under the laws or regulations of any government or its subdivision, the terms
will be deemed to be stricken from this Agreement. The invalidity or
unenforceability of these terms will not invalidate any of the other terms of
this Agreement. Should such provision be considered by either party to be an
essential element of this Agreement, the parties hereto agree to negotiate a
new, applicable provision in good faith.

12.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which will be deemed to be an original. The first counterpart shall be
the general terms and conditions governing the relationship of the Parties
including but not limited to Projects, Products, Payment, Confidences, and
Ownership and Use Rights; the second counterpart being individually agreed upon
Product or Service addendum. Addenda to which the Parties agree shall be affixed
to this first counterpart as exhibits. The addendum for any given Product or
Service shall specifically govern the relationship of the Parties as it pertains
to its subject matter, an agreement for Product or Service.

12.8 Notices. Any notice, request, instruction or other document permitted or
required to be given under this Agreement will be deemed sufficient if given in
writing by facsimile, courier or by registered or certified mail, postage
prepaid, return receipt requested, addressed to the respective addresses of the
parties set forth below or at such other address as the respective parties may
designate by like notice from time to time. Notices so given will be effective
upon receipt by the party to which notice is given (which, in the instance of a
facsimile, shall be deemed to have occurred at the time that the machine
transmitting the facsimile verifies a successful transmission of the facsimile).
All notices shall not be effective unless first received by the noticed Party at
the following addresses:

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If to Seller to:                    MINNETRONIX, INC

                                    Attn: Jonathan D. Pierce

                                    1635 ENERGY PARK DRIVE

                                    ST PAUL, MN 55108

If to Buyer to:                     POSSIS MEDICAL, INC.

                                    Attn:  Robert J. Scott

                                    9055 EVERGREEN BOULEVARD NW

                                    MINNEAPOLIS, MN 55433

12.9     Insurance.
     12.9.1 Seller agrees to obtain and maintain the following minimum insurance
     coverages and limits:

  (a)  Worker's Compensation: Statutory limits in each state in which Seller is
                              required to provide Worker's Compensation
                              coverage.

  (b)  Employer's Liability:  $100,000.

  (c)  Comprehensive General
       Liability:             $2,000,000 per occurrence excluding completed
                              products and completed operations.

     12.9.2 Buyer agrees to obtain and maintain the following minimum insurance
     coverages and limits:

  (a)  Worker's Compensation: Statutory limits in each state in which Buyer is
                              required to provide Worker's Compensation
                              coverage.

  (b)  Employer's Liability:  $100,000.

  (c)  Comprehensive General
       Liability:             $2,000,000 per occurrence including completed
                              products and completed operations.

  (d)  Product Liability
       Insurance:             Appropriate and adequate for Products naming
                              Seller as Additional Insured on a primary basis.

(c) Seller is responsible for any theft, loss, or damage to Buyer-owned property
for which Seller is legally liable.

(d) Buyer shall provide Seller with a copy of Buyer's certificate of insurance
indicating that Seller is named as an Additional Insured on a primary basis.
Buyer assumes responsibility, except as specified above, for any theft, loss, or
damage, including ordinary wear and tear, to Buyer-owned property regardless of
location, upon its delivery to Seller or its manufacture or acquisition by
Seller on Buyer's behalf. This includes, but is not limited to, equipment,
materials, parts, assemblies, work in process, finished goods, returned goods,
data, documentation, tooling, and any other property of Buyer.

12.10 Subcontract Management. Seller is responsible for the management of its
subcontractors, suppliers, and/or vendors at its sole discretion.

12.11 Personnel Assignment. Seller reserves the right to assign, or reassign
personnel at its sole discretion.

12.12 Location of Work. All work will principally be performed at Seller's
facility.

12.13 Public Announcement. Seller shall hereby be granted permission to make
public announcement concerning the execution or performance of this Agreement
provided that the announcement is limited to the existence of a formal
relationship between the parties and the general nature of that relationship.
Additionally, Seller may publicly disclose that Buyer is a customer of Seller.
After public announcement of the existence of the Products, Seller may publicize
its involvement with the Products. This includes adding Buyer to its customer
list as well as publishing or otherwise disclosing pictures, likenesses, and/or
information about the Products via electronic, printed, or other media.

12.14 Force Majeure. If performance of this Agreement, or of any obligation
hereunder, is prevented, restricted or interfered with by any act or condition
beyond the reasonable control of the party affected thereby, including without
limitation, fire or other casualty or accident; strikes or labor disputes; war,

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<PAGE>

terrorist attacks or other violence; any law, order, proclamation, regulation,
ordinance, demand or requirement of any governmental or intergovernmental agency
or body, the party so affected shall be excused from such performance to the
extent of such prevention, restriction or interference. If such force majeure
prevents or delays the performance of Seller hereunder, Buyer and Seller shall
extend the Agreement for a period of time equal to the period of force majeure
suffered by Seller.

12.15 Arbitration and Dispute Resolution. The parties shall use all reasonable
efforts and negotiate in good faith to resolve any dispute, controversy, or
claim arising out of or in connection with this Agreement. If the parties are
unable, notwithstanding such good faith negotiation, to settle the matter in
controversy, the parties shall submit such unresolved disputes to binding
arbitration in accordance with the then current commercial arbitration rules of
the International Institute For Conflict Prevention and Resolution (CPR). The
parties agree that any arbitration will take place in St. Paul, Minnesota. The
prevailing party in any such arbitration or in any judicial enforcement thereof
shall be entitled to its reasonable attorneys' fees and arbitration costs in
addition to any other amount of recovery ordered by such arbitrator or court.

12.16 Taxes. Pricing stated in Exhibits shall be exclusive of any federal,
state, or local excise, sales, use or other applicable taxes. Any such costs and
taxes shall be the responsibility of Buyer.

12.17 Benefit. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties to this Agreement or their
respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement. 12.18 Injunctive Relief;
Attorneys' Fees; Quantum Meruit. Each party shall be entitled to seek injunctive
relief in any court of competent jurisdiction in addition to any other remedy at
law or in equity in the event of a breach of this Agreement without the
necessity of proving actual damages or posting any bond. In the event of any
legal action or proceeding arising out of or resulting from this Agreement, the
prevailing party shall also be entitled to recover its reasonable attorneys'
fees and litigation costs thereby incurred. Nothing in these terms and
conditions is intended to prejudice the right of a Party to recovery in Quantum
Meruit for the value of services rendered to the Other Party.

12.19 Document Requests. Each party shall make available such records to the
other party for such lawful purpose as such other party may reasonably request
in writing and shall notify such other party in writing of its intention to
destroy any such documents.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
on the date first written above.

POSSIS MEDICAL, INC.                         MINNETRONIX, INC.

By:                                          By:
         ----------------------------            -----------------------------
Name:                                        Name:
      -------------------------------              ---------------------------
Title:                                       Title:
         ----------------------------              ---------------------------
Date Signed:                                 Date Signed:
             ------------------------                     --------------------

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