SICAV ONE SECURITIES PURCHASE AGREEMENT
 
THIS STOCK PURCHASE AND SUBSCRIPTION AGREEMENT (this “Agreement”) is made and
entered into as of December 7, 2005, between  IsoRay, Inc, a corporation
organized and existing under the laws of the State of Minnesota (the “Company”),
and Mercatus & Partners, LP (the “Purchaser”).
 
WHEREAS, PURCHASER desires to subscribe for and purchase Shares of the Company;
and 
 
WHEREAS, Company desires for Purchaser to subscribe for and to purchase Shares
of the Company.
 
NOW, THEREFORE, subject to the terms and conditions set forth in this Agreement,
for good, valuable and binding consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, now agree as follows:

ARTICLE I
 
INTRODUCTION AND DEFINITIONS
 
This Agreement is entered into by the parties for purchase of equity shares of
the Company by the Purchaser for placement into a European bank SICAV fund. This
is not an immediate funding, and the Company recognizes the Purchaser shall have
up to thirty (30) days, as set forth in this Agreement to tender the Purchase
Price to the company through the intermediary Custodial Bank and intermediary
Purchaser, once the valuation and repurchase of the shares is made in accordance
with the terms of this Agreement. The Company shall have the right to contact
the Custodial Bank administrator for Purchaser account verification and for
confirmation of the share status, location and control at each step of the
process. Purchaser shall have up to thirty (30) days from the date of delivery
of the Shares to the Custodial Bank to pay the Purchase Price. In the event the
Purchase Price is not paid within thirty (30) days from the date of delivery of
the Shares to the Custodial Bank, the Shares shall be returned to the Company as
provided in the Joint Written Direction attached as Schedule B to this
Agreement. The particular expected time line and transaction sequence is set
forth in Schedule A to this Agreement.

Certain Definitions. As used in this Agreement, and unless the context requires
a different meaning, the following terms have the meanings indicated:
 
“Affiliate” means, with respect to any Person, any Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”)
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
 
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“Agreement” shall have the meaning set forth in the introductory paragraph of
this Agreement.

“Attorney-in-fact” means the agent of the bank account holder, Banca MB, Dwight
Parscale, Esquire. The attorney-in-fact, Dwight Parscale, has full oversight
authority of the Purchaser and the receiving bank to verify share deposit,
valuation process and share transaction status.
 
“Business Day” means any day except Saturday, Sunday, any day which shall be a
legal holiday or a day on which banking institutions in the State of New York
are authorized or required by law or other government actions to close.
 
“Change of Control” means the acquisition, directly or indirectly, by any Person
of ownership of, or the power to direct the exercise of voting power with
respect to, a majority of the issued and outstanding voting shares of the
Company.
 
“Closing” shall have the meaning set forth in this document.

“Closing Date” shall be the date this Agreement is executed by both parties.

“Common Stock” shall have the meaning in the recital.

“Company” shall have the meaning set forth in the introductory paragraph.

“Custodial Bank” means the bank that will receive and retain the Shares of the
Company on behalf of the parties, until payment is received the purchase is
complete in accordance with Schedules A and B. In this case, the Custodial Bank
is Brown Brothers Herriman, (BBH), New York City, New York. The account holder
is Banca MB as the intermediary fund receiving bank.

“Default” means any event or condition which constitutes an Event of Default or
which with the giving of notice or lapse of time or both would, unless cured or
waived, become an Event of Default.

“Disclosure Documents” means the Company’s reports filed under the Exchange Act
with the SEC.

“Event of Default” shall have the meaning set forth in the document.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Execution Date” means the date of this Agreement first written above.

“Indemnified Party” shall have the meaning set forth in the document.

“Indemnifying Party” shall have the meaning set forth in the document.

“NASD” means the National Association of Securities Dealers, Inc.

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“Nasdaq” shall mean the Nasdaq Stock Market, Inc.®
 
“OTCBB” shall mean the NASD over-the counter Bulletin Board®.

“Per Share Market Value” of the Common Stock means on any particular date
(a) the last sale price of shares of Common Stock on such date or, if no such
sale takes place on such date, the last sale price on the most recent prior
date, in each case as officially reported on the principal national securities
exchange on which the Common Stock is then listed or admitted to trading.

“Person” means an individual or a corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

"Placement Agent" shall have the meaning set forth in Section 3.1(k).

“Purchase Price” shall have the meaning set forth in this document.

“Purchaser” shall have the meaning set forth in the introductory paragraph.

“Reporting Issuer” means a company that is subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act.

“Required Approvals” shall have the meaning set forth in Section 3.1(f).

“Securities” means the Common Stock and stock of any other class into which such
shares may hereafter have been reclassified or changed.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Shares” shall have the meaning set forth herein.

“Subsidiaries” shall have the meaning set forth herein.

“Trading Day” means (a) a day on which the Common Stock is quoted on Nasdaq, the
OTCBB or the principal stock exchange on which the Common Stock has been listed,
or (b) if the Common Stock is not quoted on Nasdaq, the OTCBB or any stock
exchange.

“Transaction Documents” means this Agreement and all exhibits and schedules
hereto and all other documents, instruments and writings required pursuant to
this Agreement.

“U.S.” means the United States of America.

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ARTICLE II
 
The PURCHASER hereby irrevocably subscribes for and agrees to purchase 889,073
shares of the Common Stock of the COMPANY (the “Shares”). The purchase price to
be paid by the Purchaser shall be $3.502 per share for the purchase of the
Shares.
 
This agreement is binding under the conditions and timing set forth herein.

 
ARTICLE III
 
REPRESENTATIONS AND WARRANTIES
 
3.1   Representations, Warranties and Agreements of the Company. The Company
hereby makes the following representations and warranties to the Purchaser, all
of which shall survive the Closing:
 
(a)   Organization and Qualification. The Company is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of Minnesota, with the requisite corporate power and authority to own and use
its properties and assets and to carry on its business as currently conducted.
The Company has no subsidiaries other than as set forth on Schedule 3.1(a)
attached hereto (collectively, the “Subsidiaries”). Each of the Subsidiaries is
a corporation, duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with the full corporate power
and authority to own and use its properties and assets and to carry on its
business as currently conducted. Each of the Company and the Subsidiaries is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would not, individually or
in the aggregate, have a material adverse effect on the results of operations,
assets, prospects, or financial condition of the Company and the Subsidiaries,
taken as a whole (a “Material Adverse Effect”).
 
(b)   Authorization, Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated
hereby and by each other Transaction Document and to otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and each of the other Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby has been
duly authorized by all necessary action on the part of the Company. Each of this
Agreement and each of the other Transaction Documents has been or will be duly
executed by the Company and when delivered in accordance with the terms hereof
or thereof will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.
 
 
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(c)   Capitalization. The authorized, issued and outstanding capital stock of
the Company is set forth on Schedule 3.1(c). No shares of Common Stock are
entitled to preemptive or similar rights, nor is any holder of the Common Stock
entitled to preemptive or similar rights arising out of any agreement or
understanding with the Company by virtue of this Agreement. Except as disclosed
in Schedule 3.1(c), there are no outstanding options, warrants, script, rights
to subscribe to, registration rights, calls or commitments of any character
whatsoever relating to securities, rights or obligations convertible into or
exchangeable for, or giving any person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings, or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. Neither the Company nor any Subsidiary
is in violation of any of the provisions of its Certificate of Incorporation,
bylaws or other charter documents.
 
(d)   Issuance of Securities. The Shares have been duly and validly authorized
for issuance, offer and sale pursuant to this Agreement and, when issued and
delivered as provided hereunder against payment in accordance with the terms
hereof, shall be valid and binding obligations of the Company enforceable in
accordance with their respective terms.
 
(e)   No Conflicts. The execution, delivery and performance of this Agreement
and the other Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby do not and will not
(i) conflict with or violate any provision of its Certificate of Incorporation
or bylaws (each as amended through the date hereof) or (ii) be subject to
obtaining any consents except those referred to in Section 3.1(f), conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or its
Subsidiaries is subject (including, but not limited to, those of other countries
and the federal and state securities laws and regulations), or by which any
property or asset of the Company or its Subsidiaries is bound or affected,
except in the case of clause (ii), such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The business
of the Company and its Subsidiaries is not being conducted in violation of any
law, ordinance or regulation of any governmental authority.
 
(f)   Consents and Approvals. Except as specifically set forth in
Schedule 3.1(f), neither the Company nor any Subsidiary is required to obtain
any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Agreement and each of the other
Transaction Documents (together with the consents, waivers, authorizations,
orders, notices and filings referred to in Schedule 3.1(f), the “Required
Approvals”).
 
 
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(g)   Litigation; Proceedings. Except as specifically disclosed in
Schedule 3.1(g), there is no action, suit, notice of violation, proceeding or
investigation pending or, to the best knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries or any of their
respective properties before or by any court, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign) which
(i) relates to or challenges the legality, validity or enforceability of any of
the Transaction Documents, the Shares or the Underlying Shares, (ii) could,
individually or in the aggregate, have a Material Adverse Effect or (iii) could,
individually or in the aggregate, materially impair the ability of the Company
to perform fully on a timely basis its obligations under the Transaction
Documents.
 
(h)   No Default or Violation. Except as set forth in Schedule 3.1(h) hereto,
neither the Company nor any Subsidiary (i) is in default under or in vio-lation
of any indenture, loan or credit agreement or any other agreement or instrument
to which it is a party or by which it or any of its properties is bound, except
such conflicts or defaults as do not have a Material Adverse Effect, (ii) is in
violation of any order of any court, arbitrator or governmental body, except for
such violations as do not have a Material Adverse Effect, or (iii) is in
violation of any statute, rule or regu-lation of any governmental authority
which could (individually or in the aggregate) (iv) adversely affect the
legality, validity or enforceability of this Agree-ment, (v have a Material
Adverse Effect or (vi) adversely impair the Company’s ability or obligation to
perform fully on a timely basis its obligations under this Agreement.
 
(i)   Disclosure Documents. The Disclosure Documents are accurate in all
material respects and do not contain any untrue statement of material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
 
(j)   Non-Registered Offering. Neither the Company nor any Person acting on its
behalf has taken or will take any action (including, without limitation, any
offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of the Securities
under the Securities Act) which might subject the offering, issuance or sale of
the Securities to the registration requirements of Section 5 of the Securities
Act.
 
(k)   Placement Agent. The Company accepts and agrees that Artemis Capital
(“Artemis”) is acting for the Purchaser and does not regard any person other
than the Purchaser as its customer in relation to this Agreement, and that it
has not made any recommendation to the Company, in relation to this Agreement
and is not advising the Company with regard to the suitability or merits of the
transaction. The Placement Agent shall be the Company contact for all
information relating to the status of funding, location of Shares, settlement of
the payment of the Purchase Price and any other information requests of the
Company. Notwithstanding the above, in the event the Purchase Price is not paid
as required herein, Company may directly contact the Custodial Bank and provide
Company notice of demand for the return of the Shares as provided in Schedule B.
 
 
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The Purchaser acknowledges and agrees that the Company makes no representation
or warranty with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3.1 hereof.
 
3.2   Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company as follows:
 
(a)   Organization; Authority. The Purchaser is a corporation, duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation with the requisite power and authority to enter into and to consummate
the transactions contemplated hereby and by the other Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The acquisition
of the Shares to be purchased by the Purchaser hereunder has been duly
authorized by all necessary action on the part of the Purchaser. This Agreement
has been duly executed and delivered by the Purchaser and constitutes the valid
and legally binding obligation of the Purchaser, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to, or affecting generally the enforcement of, creditors rights and
remedies or by other general principles of equity.
 
(b)   Investment Intent. The Purchaser is acquiring the Shares to be purchased
by it hereunder, for its own account for investment purposes only and not with a
view to or for distributing or reselling such Shares, or any part thereof or
interest therein, without prejudice, however, to such Purchaser’s right, subject
to the provisions of this Agreement, at all times to sell or otherwise dispose
of all or any part of such Shares in compliance with applicable federal and
state securities laws.
 
(c)   Experience of Purchaser. The Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
an investment in the Shares to be acquired by it hereunder, and has so evaluated
the merits and risks of such investment.
 
(e)   Ability of Purchaser to Bear Risk of Investment. The Purchaser is able to
bear the economic risk of an investment in the Securities to be acquired by it
hereunder and, at the pre-sent time, is able to afford a complete loss of such
investment.
 
(f)   Access to Information. The Purchaser acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the Securities offered hereunder and the merits and
risks of investing in such securities; (ii) access to information about the
Company and the Company’s financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment in the Securities; and (iii) the opportunity to obtain such
additional information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment and to verify the accuracy and
completeness of the information that it has received about the Company.
 
 
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(g)   Reliance. The Purchaser understands and acknowledges that (i) the Shares
being offered and sold to it hereunder are being offered and sold without
registration under the Securities Act in a private placement that is exempt from
the registration provisions of the Securities Act under Section 4(2) of the
Securities Act and (ii) the availability of such exemption depends in part on,
and that the Company will rely upon the accuracy and truthfulness of, the
foregoing representations and such Purchaser hereby consents to such reliance.
 
(h)   No Short Position. The Purchaser, or any subsequent purchaser, shall not
take or cause any short position to be taken in the security or Shares for a
period of one year from the date of issuance to the Purchaser.
 
The Company acknowledges and agrees that the Purchaser makes no representations
or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in this Section 3.2.
 
ARTICLE IV
 
OTHER AGREEMENTS OF THE PARTIES

4.1   Manner of Offering. The Securities are being issued pursuant to section
4(2) of the Securities Act, and Rule 506 thereunder.
 
4.2   Notice of Certain Events. The Company shall, on a continuing basis,
(i) advise the Purchaser promptly after obtaining knowledge of, and, if
requested by the Purchaser, confirm such advice in writing, of (A) the issuance
by any state securities commission of any stop order suspending the
qualification or exemption from qualification of the Shares, for offering or
sale in any jurisdiction, or the initiation of any proceeding for such purpose
by any state securities commission or other regulatory authority, or (B) any
event that makes any statement of a material fact made by the Company in Section
3.1 or in the Disclosure Documents untrue or that requires the making of any
additions to or changes in Section 3.1 or in the Disclosure Documents in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading, (ii) use its best efforts to prevent the issuance
of any stop order or order suspending the qualification or exemption from
qualification of the Securities under any state securities or Blue Sky laws, and
(iii) if at any time any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Securities under any such laws, and use its best efforts to
obtain the withdrawal or lifting of such order at the earliest possible time.
 
4.3   Blue Sky Laws. The Company shall cooperate with the Purchaser in
connection with the exemption from registration of the Shares under the
securities or Blue Sky laws of such jurisdictions as the Purchasers may request;
provided, however, that neither the Company nor its Subsidiaries shall be
required in connection therewith to qualify as a foreign corporation where they
are not now so qualified. The Company agrees that it will execute all necessary
documents and pay all necessary state filing or notice fees to enable the
Company to sell the Shares to the Purchaser.
 
 
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4.4   Integration. The Company shall not and shall use its best efforts to
ensure that no Affiliate shall sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Shares to the Purchaser.
 
4.5   Furnishing of Rule 144(c) Materials. The Company shall, for so long as any
of the Shares remain outstanding and during any period in which the Company is
not subject to Section 13 or 15(d) of the Exchange Act, make available to any
registered holder of the Shares (“Holder” or “Holders”) in connection with any
sale thereof and any prospective purchaser of such Shares from such Person, such
information in accordance with Rule 144(c) promulgated under the Securities Act
as is required to sell the Shares under Rule 144 promulgated under the
Securities Act.
 
4.6   Solicitation Materials. The Company shall not (i) distribute any offering
materials in connection with the offering and sale of the Shares other than the
Disclosure Documents and any amendments and supplements thereto prepared in
compliance herewith or (ii) solicit any offer to buy or sell the Shares by means
of any form of general solicitation or advertising.
 
4.7   Listing of Common Stock. If the Common Stock is or shall become listed on
the OTCBB or on another exchange, the Company shall (a) use its best efforts to
maintain the listing of its Common Stock on the OTCBB or such other exchange on
which the Common Stock is then listed until two years from the date hereof, and
(b) shall provide to the Purchaser evidence of such listing.
 
4.8   Indemnification.
 
(a)   Indemnification
 
(i)   The Company shall, notwithstanding termination of this Agreement and
without limitation as to time, indemnify and hold harmless the Purchaser and its
officers, directors, agents, employees and affiliates, each Person who controls
the Purchaser (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) (each such Person, a “Control Person”) and the officers,
directors, agents, employees and affiliates of each such Control Person, to the
fullest extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, costs of
preparation and attorneys’ fees) and expenses (collectively, “Losses”), as
incurred, arising out of, or relating to, a breach or breaches of any
representation, warranty, covenant or agreement by the Company under this
Agreement or any other Transaction Document.
 
(ii)   The Purchaser shall, notwithstanding termination of this Agreement and
without limitation as to time, indemnify and hold harmless the Company, its
officers, directors, agents and employees, each Control Person and the officers,
directors, agents and employees of each Control Person, to the fullest extent
permitted by application law, from and against any and all Losses, as incurred,
arising out of, or relating to, a breach or breaches of any representation,
warranty, covenant or agreement by the Purchaser under this Agreement or the
other Transaction Documents.
 
 
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(b)   Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party promptly shall notify the Person from whom
indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all fees and
expenses incurred in connection with defense thereof; provided, that the failure
of any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except (and
only) to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
 
An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed to pay such fees and expenses; or
(2) the Indemnifying Party shall have failed promptly to assume the defense of
such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense of the
claim against the Indemnified Party but will retain the right to control the
overall Proceedings out of which the claim arose and such counsel employed by
the Indemnified Party shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
 
All fees and expenses of the Indemnified Party to which the Indemnified Party is
entitled hereunder (including reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such Proceeding
in a manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten (10) Business Days of written notice thereof to
the Indemnifying Party.
 
No right of indemnification under this Section shall be available as to a
particular Indemnified Party if there is a non-appealable final judicial
determination that such Losses arise solely out of the negligence or bad faith
of such Indemnified Party in performing the obligations of such Indemnified
Party under this Agreement or a breach by such Indemnified Party of its
obligations under this Agreement.
 
 
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(c)   Contribution. If a claim for indemnification under this Section is
unavailable to an Indemnified Party or is insufficient to hold such Indemnified
Party harmless for any Losses in respect of which this Section would apply by
its terms (other than by reason of exceptions provided in this Section), then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses in such proportion as is appropriate to reflect the relative
benefits received by the Indemnifying Party on the one hand and the Indemnified
Party on the other and the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether there was a judicial determination
that such Losses arise in part out of the negligence or bad faith of the
Indemnified Party in performing the obligations of such Indemnified Party under
this Agreement or the Indemnified Party’s breach of its obligations under this
Agreement. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any attorneys’ or other fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party.
 
(d)   Non-Exclusivity. The indemnity and contribution agreements contained in
this Section are in addition to any obligation or liability that the
Indemnifying Parties may have to the Indemnified Parties. 

 
ARTICLE V
 
MISCELLANEOUS
 
5.1   Fees and Expenses. Except as set forth in this Agreement, each party shall
pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Shares pursuant hereto. The Purchaser shall pay the
Placement Agent pursuant to the terms and conditions contained in Schedule 5.1.
The Purchaser shall be responsible for any taxes payable by the Purchaser that
may arise as a result of the investment hereunder or the transactions
contemplated by this Agreement or any other Transaction Document. The Company
shall pay all costs, expenses, fees and all taxes incident to and in connection
with: (A) the issuance and delivery of the Shares, (B) the exemption from
registration of the Securities for offer and sale to the Purchaser under the
securities or Blue Sky laws of the applicable jurisdictions, and (C) the
preparation of certificates for the Shares (including, without limitation,
printing and engraving thereof), and (D) all fees and expenses of counsel and
accountants of the Company.

5.2   Entire Agreement. This Agreement, together with all of the Exhibits and
Schedules annexed hereto, and any other Transaction Document contains the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters. This Agreement shall be deemed to have been drafted and
negotiated by both parties hereto and no presumptions as to interpretation,
construction or enforceability shall be made by or against either party in such
regard.
 
 
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5.3   Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given
upon facsimile transmission (with written transmission confirmation report) at
the number designated below (if delivered on a Business Day during normal
business hours where such notice is to be received), or the first Business Day
following such delivery (if delivered other than on a Business Day during normal
business hours where such notice is to be received) whichever shall first occur.
The addresses for such communications shall be:

  If to the Company: IsoRay, Inc.

    OTCBB: ISRY 

    350 Hills Street

    Suite 106

    Richland, WA 99354

    Phone: (509) 375-1202

     

 
With copies to:
 

 
If to the Purchaser:
Mercatus & Partners, Limited

   
4100 NINE MCFARLANE DRIVE

   
ALPHARETTA, GEORGIA 30004

   
Attn: Cary Masi, Director

   
Phone: (770) 475-2266

 
With copies to:
 

 

 
5.4   Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
both the Company and the Purchaser, or, in the case of a waiver, by the party
against whom enforce-ment of any such waiver is sought. No waiver of any default
with respect to any provision, condition or require-ment of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
 
5.5   Headings. The headings herein are for convenience only, do not constitute
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
 
5.6   Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and permitted
assigns. The assignment by a party of this Agreement or any rights hereunder
shall not affect the obligations of such party under this Agreement.
 
 
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5.7   No Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
 
5.8   Governing Law; Venue; Service of Process. The parties hereto acknowledge
that the transactions contemplated by this Agreement and the exhibits hereto
bear a reasonable relation to the State of New York. The parties hereto agree
that the internal laws of the State of New York shall govern this Agreement and
the exhibits hereto, including, but not limited to, all issues related to usury.
Any action to enforce the terms of this Agreement or any of its exhibits, or any
other Transaction Document shall be brought exclusively in the state and/or
federal courts situate in the County and State of New York. Service of process
in any action by the Purchaser to enforce the terms of this Agreement may be
made by serving a copy of the summons and complaint, in addition to any other
relevant documents, by commercial overnight courier to the Company at its
principal address set forth in this Agreement.
 
5.9   Survival. The representa-tions and warranties of the Company and the
Purchaser contained in this agreement shall survive the Closing.
 
5.10   Counterpart Signatures. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
 
5.11   Publicity. The Company and the Purchaser shall consult with each other in
issuing any press releases or otherwise making public statements with respect to
the transactions contemplated hereby and neither party shall issue any such
press release or otherwise make any such public statement without the prior
written consent of the other, which consent shall not be unreasonably withheld
or delayed, unless counsel for the disclosing party deems such public statement
to be required by applicable federal and/or state securities laws. Except as
otherwise required by applicable law or regulation, the Company will not
disclose to any third party (excluding its legal counsel, accountants and
representatives) the names of the Purchaser.
 
5.12   Severability. In case any one or more of the provisions of this Agreement
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefore, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
 
5.13   Limitation of Remedies. With respect to claims by the Company or any
person acting by or through the Company, or by the Purchaser or any person
acting through the Purchaser, for remedies at law or at equity relating to or
arising out of a breach of this Agreement, liability, if any, shall, in no
event, include loss of profits or incidental, indirect, exemplary, punitive,
special or consequential damages of any kind.
 
 
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5.14   Delivery of Shares. The Company shall deliver the Shares directly to the
Custodial Bank, for deposit into the Banca MB account in accordance with the
directions provided in Schedule A, within five business days following delivery
of the Joint Written Direction, in the form attached hereto as Schedule B,
signed by both the Company and the Purchaser, to the Custodial Bank and SICAV.
The Shares may not sold or a short position taken on the Securities by the
Purchaser on or before January 1, 2007 and the Shares’ Certificates shall bear a
restrictive legend prohibiting transfer until that date.

5.15   Delivery of Payment. The Purchaser shall, within thirty (30) days of the
delivery of the Shares to the Custodial Bank issue the Payment to the Company
via wire transfer to the directed wire transfer bank and account as specified
below:
 
Beneficiary Account Name: Holland & Knight LLP 
 
Beneficiary Account No.: ________________
 
ABA/Transit No.: ______________
 
Beneficiary Bank:  Chase Manhattan Bank

If the Purchase Price is not paid within thirty (30) days of the delivery of the
Shares to the Custodial Bank, the Company has the right to demand recall of the
shares after that time, and such Shares shall be transmitted back to the Company
within ten (10) business days from the date of the demand, as provided in the
Joint Written Direction attached hereto as Schedule B. The timeline from deposit
to payment shall be as provided in Schedule A attached hereto.

5.16   Registration of Shares. As part of this Agreement the Company has agreed
to file a registration statement pursuant to Form SB-2 or amend a previously
filed Form SB-2 Registration Statement registering the Shares on or before sixty
(60) days after execution of this Agreement.

[Signatures on Following Page]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first indicated above.

        Company:       IsoRay, Inc.  
   
   
    By:   /s/ Roger E. Girard  

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Name: Roger E. Girard   Title: Chairman/CEO

        Purchaser:       Cari Masi on behalf of Purchaser  
   
   
    By:   /s/ Cari Masi  

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Name: Cari Masi   Title: Director

 
 
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