AMENDMENT NO. 1 TO SERVICE AGREEMENT
 
This AMENDMENT NO. 1 TO SERVICE AGREEMENT (hereinafter "Amendment"), effective
on this 18th day of February, 2009 (hereinafter "Effective Date"), is made by
and among ISORAY MEDICAL, INC. (hereinafter "Manufacturer" or "IsoRay"), a
Minnesota corporation having offices at 350 Hill Street, Suite 106, Richland, WA
99354, and BIOCOMPATIBLES, INC., a Delaware corporation having a principal
business office at 115 Hurley Road, Building 3, Oxford CT 06478 and successor in
interest to, and assignee of, ADVANCED CARE MEDICAL, INC. (hereinafter
"Biocompatibles").  (Manufacturer and Biocompatibles are referred to herein as
the "Parties").
 
WHEREAS the Manufacturer and Advanced Care Medical, Inc. ("ACM") entered into
the Service Agreement dated March 1, 2006 whereby ACM (and Biocompatibles as
successor thereof) provided certain loading, stranding, and other services to
Manufacturer as specified therein (hereinafter "Service Agreement");
 
WHEREAS the term of the Service Agreement which ended dated February 29, 2008
has been extended month to month by Manufacturer and Biocompatibles;
 
WHEREAS Manufacturer desires to obtain the right to purchase additional
brachytherapy services and related products from Biocompatibles in addition to
those already included in the Service Agreement as more fully described below;
 
WHEREAS as a condition of the renewal, extension, and added products and
services by Biocompatibles, the Parties have agreed to execute the Distribution
Agreement for Biocompatibles to distribute Manufacturer's Cesium-131 seeds on a
co-exclusive basis concurrently with this Amendment;
 
WHEREAS the Parties wish to amend the Service Agreement as provided herein;
 
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties agree as follows:
 
1. Amendment; Reaffirmation; Conflicts.   Except as expressly set forth herein,
the Service Agreement remains unmodified and in full force and effect and the
Service Agreement, as amended, is hereby ratified and confirmed.  In the event
of any conflict or inconsistency between the provisions of the Service Agreement
and the provisions of this Amendment, the provisions of this Amendment shall
govern.  Capitalized terms not defined in this Amendment shall have the meaning
ascribed to such terms in the Service Agreement.
 
2. Product Definition.  The initial recital in the Service Agreement is hereby
deleted in its entirety and the following substituted therefor:  "Whereas,
Manufacturer sells to the medical community devices known as "Brachytherapy
Seeds" (specifically all brachytherapy seeds regardless of the radioactive
isotope contained in such seeds, which may consist of Cs-131, I-125,  and any
other isotopes developed for brachytherapy)." For purposes of the Service
Agreement as amended by this Amendment, the term "Product" shall hereinafter
mean only those Brachytherapy Seeds containing Cs-131."
 
 
 

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3. Paragraph 1.1 of the Service Agreement is hereby deleted in its entirety and
the following substituted therefor:
 
"On the terms and subject to the conditions set forth in this Agreement,
Biocompatibles shall provide to IsoRay, when and as requested by IsoRay, the
Services in accordance with Revised Exhibit A hereto and made a part hereof,
including the relevant Biocompatibles Products.  Biocompatibles agrees to
provide the Services irrespective of the source of the Products delivered to it
for processing.
 
Except as otherwise agreed by IsoRay in writing, throughout the Term of this
Agreement, Biocompatibles (or its affiliates) shall be responsible for the
supply of all of IsoRay's requirements for the Services as indicated on orders
submitted by IsoRay pursuant to this Agreement and in accordance with Revised
Exhibit A.  Biocompatibles shall notify IsoRay immediately upon becoming aware
that Biocompatibles is unable to supply the quantity of Services ordered by
IsoRay, and in such event, Biocompatibles shall implement all commercially
reasonable efforts to remedy the shortage.  In the event a  shortage cannot be
remedied within [**] days from its commencement, such shortage shall be deemed a
material breach of this Agreement and IsoRay shall have the right to [**].
 
Term. The term of this Service Agreement as amended by this Amendment shall end
December 31, 2011 ("Expiration Date").
 
Renewal.  The term shall be automatically renewed for periods of one (1) year
unless canceled ninety (90) days prior to the end of the initial term or any
renewal term thereafter."
 
4. The following provisions are hereby added to the Service Agreement as new
Sections 1.3, 1.4 and 1.5:
 
"1.3         AnchorSeedTM With Mick Applicators.  AnchorSeedTM shall only be
used with IsoRay accounts that are using properly serviced Mick Applicators,
serviced by Mick Radio-Nuclear Instruments in accordance with its normally
suggested maintenance schedule (annual service) within manufacturer's
specifications (the "Required Maintenance").  (Mick Radio-Nuclear Instruments
will not perform any unique services specific for use with AnchorSeed, but will
perform its standard evaluation and servicing of Mick Applicators).  Applicators
must be submitted to Mick Radio-Nuclear Instruments in accordance with its
return policies, including return authorization and certificates of
decontamination.  Biocompatibles will not reimburse the cost of Applicator
maintenance.  However, Biocompatibles personnel will facilitate the servicing
process between the end user and Mick Radio-Nuclear Instruments upon request by
IsoRay or an end user.
 
1.4           Mick Applicator Servicing. IsoRay shall have sole responsibility
for providing notice to IsoRay's customers regarding the Mick Applicator
servicing requirements described in Section 1.3 above and verification that
Required Maintenance has been performed, as evidenced by documentation from Mick
Radio-Nuclear Instruments.  Failure of the AnchorSeedTM in Mick Applicators used
by IsoRay's customers that have not received the Required Maintenance shall be
the [**]. Notwithstanding the foregoing, in the event of a failure of the
AnchorSeedTM when used with a Mick Applicator for which IsoRay or the customer
can document that the Required Maintenance was performed, and to the extent that
it can be proven that the products delivered by Biocompatibles were not as
warranted, then Biocompatibles shall [**], however in no event shall [**].
 

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[**]Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
 
 
 

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1.5          Cancellations and Unused Seeds.
 
(a)  Due to the proprietary nature of Biocompatibles' product technology, any
cancelled cases or unused seeds contained in Biocompatibles Services products
(strands, loose-loaded needles, AnchorSeedTM, etc.) must be returned directly to
Biocompatibles from the clinical location.  It is the responsibility of the
clinical location to ensure that all returned materials are free from any and
all contamination, both radiological and biological.  Such products must be
returned in compliance with proper shipping regulations for radioactive
material.  Either the clinical location or IsoRay should contact Biocompatibles
to notify Biocompatibles of an impending return.  Biocompatibles will in turn
provide the clinical location with the necessary documentation and guidance for
shipping.
 
(b)  For all strands and loose-loaded products (excluding AnchorSeedTM),
Biocompatibles will deconstruct the kit and return the extracted seeds to IsoRay
within [**] business days following receipt of the kit from the clinical
location, at [**].  However, for all seeds that are either AnchorSeedTM or
AnchorLoadTM, the seeds must be held for decay at Biocompatibles. Such seeds
will not be returned to IsoRay at any point.  If any AnchorSeedTM or
AnchorLoadTM seeds are returned to Biocompatibles due to a defect in the
Services provided by Biocompatibles, Biocompatibles agrees to [**] of the
included seeds so returned."
 
5. The following provisions are hereby added to the Service Agreement as new
Sections 3.1.c. and d.:
 
"c.            Biocompatibles shall throughout the Term of this Agreement have
full responsibility for, and shall control the preparation and prosecution of,
all patent applications and the maintenance of all patents relating thereto and
shall maintain in full force and effect all issued patents relating to its
Services. IsoRay shall not have any responsibility for any action, costs,
liabilities or expenses related to the preparation, filing, maintaining and
prosecuting of such patents or patent applications.
 
d.           Biocompatibles agrees to immediately notify IsoRay if it is
notified by any regulatory authority that a Service does not comply with
applicable rules and regulations.  It further agrees to immediately investigate
the matter and determine what steps are needed to resolve the issue(s)
identified by the regulatory authority, which shall be resolved by
Biocompatibles as soon as commercially practicable at Biocompatibles' sole cost
and expense.  Biocompatibles further agrees to cooperate with IsoRay in the
event a recall is required as a result of any failure of the Services to comply
with all applicable rules and regulations, at Biocompatibles' sole cost and
expense."
 

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[**]Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
 
 
 

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6. The following provision is hereby added to the Service Agreement as new
Section 7.6:
 
"All rights and licenses granted under or pursuant to any section of this
Agreement are and shall otherwise be deemed to be for purposes of Section 365(n)
of Title 11, United States Code (the "Bankruptcy Code") licenses of rights to
"intellectual property" as defined in Section 101(56) of the Bankruptcy Code.
The Parties shall retain and may fully exercise all of their respective rights
and elections under the Bankruptcy Code. Upon the bankruptcy of any Party, the
non-bankrupt Party shall further be entitled to a complete duplicate of, or
complete access to, any such intellectual property, and such, if not already in
its possession, shall be promptly delivered to the non-bankrupt Party, unless
the bankrupt Party elects to continue, and continues, to perform all of its
obligations under this Agreement. Biocompatibles' address for purpose of notice
pursuant to Section 11.1 of the Service Agreement shall be - 115 Hurley Road,
Building 3B, Oxford, Connecticut 06478, Attention:  President."

7. Section 12.1 of the Service Agreement is hereby deleted in its entirety and
the following substituted therefor:
 
"12.1       A Party shall not be in default if failure to perform any obligation
hereunder is caused solely by supervening conditions beyond the Party's control,
including without limitation, acts of God, civil commotion, strikes, labor
disputes, and governmental demands or requirements, provided, however, any delay
in performance exceeding 30 days shall be grounds for terminating this Agreement
by the non-defaulting Parties.
 
If either Party is affected by Force Majeure, it shall promptly notify the other
Party of the nature and extent of the circumstances in question."
 
8. Exhibits.   "Exhibit A" and "Exhibit B" to the Service Agreement are deleted
in their entirety and the attached "Revised Exhibit A" and "Revised Exhibit B"
are substituted therefor.  New "Exhibit C" attached hereto is hereby added to
the Service Agreement.
 
9. Counterparts.   This Amendment may be executed in counterparts.
 
[Signature Page Follows]
 
 
 

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IN WITNESS WHEREOF, ISORAY MEDICAL, INC., BIOCOMPATIBLES, INC. have caused this
AMENDMENT NO. 1 TO SERVICE AGREEMENT to be signed and delivered by their duly
authorized representatives.
 
ACKNOWLEDGED and AGREED this 18th day of February 2009:
 
ISORAY MEDICAL, INC.
 
BIOCOMPATIBLES, INC.
         
By:
/s/ Lori Woods
 
By:
/s/ James Matons
 
Lori Woods
   
James Matons
 
Chief Operating Officer
   
President

 
 

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