LICENSE AGREEMENT

THIS AGREEMENT (hereinafter referred to as this Agreement) is made as of this
1st day of the month of June, 2011 (Effective Date) by and between

DR. REDDY'S LABORATORIES (EU) LTD., having a place of business at Riverview
Road, Beverley, East Yorkshire, HU17 0LD, UK (hereinafter referred to as
"LICENSOR" or "Dr. Reddy's" which expression shall unless contrary to the
meaning and context thereof mean and include its successors, representatives and
permitted assigns) of the One Part.
And

ISORAY MEDICAL INC., having its registered office at 350 Hills St, Suit106,
Richland WA 99354, USA, (hereinafter referred to as "LICENSEE" or "IsoRay" which
expression shall unless contrary to the meaning and context thereof mean and
include its successors, representatives and permitted assigns) of Other Part;
 
Within this Agreement the LICENSOR and the LICENSEE shall be collectively
referred to as the Parties and the term Party shall refer to either of them as
the context permits.
 
 
Recitals

WHEREAS

A) Dr. Reddy's is a pharmaceutical company engaged in the business of
manufacture, distribution and sale of pharmaceutical products and has obtained
from The Dow Chemical Company by virtue of the acquisition, certain research and
development projects involving certain radiopharmaceutical chelating agents and
organic compounds for various pharmaceutical applications, including application
for use of agents as in vivo therapeutic and/or diagnostic agents; and

 
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B) Dr. Reddy's has obtained proprietary rights in technology relating to said
agents, including: patent rights, know-how, health registration files and
registration applications and drug master files, and other industrial property
rights from DOW Chemical Company by a deed of Assignment dated May 1, 2008.

C) IsoRay desires to undertake the further development and commercial
exploitation of said agents;
 
D) IsoRay desires to obtain an exclusive license in the Licensed Field (defined
below) from Dr. Reddy's Technology relating to said agents; and

E)  Dr. Reddy's is willing to grant an exclusive license to IsoRay of the
Technology in relation to the Licensed Field.
 
 
NOW, THEREFORE, Dr. Reddy's and IsoRay in consideration of the mutual covenants
contained herein, agree as follows:
 
ARTICLE 1 -DEFINITIONS

When used in this Agreement, the following terms shall have the meanings set out
below. The singular shall be interpreted as including the plural and vice versa,
unless the context clearly indicates otherwise.

1.1 "Affiliate" means a corporation or any other entity that at any time during
the term of this Agreement directly or indirectly through one or more
intermediaries is Controlled by the designated Party, but only for so long as
the relationship exists. A corporation or other entity shall no longer be an
Affiliate when through loss, divestment, dilution or other reduction of a
Party's ownership, the Party loses Control of such corporation or other entity.
 
1.2 "Approval" means final clearance by the FDA of a Premarket Notification,
[510(k)] in the United States, for commercial marketing of Licensed Product
including approval of final labeling.
 
1.3 "Calendar Year" means each twelve consecutive month period within the
Royalty Term.
 
1.4 "Confidential Information" means any information of either Party regarding
Technology, Patents, any samples  or  financial terms of this Agreement, and
business development plans and does not include information excluded under
Article 6.3.

 
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1.5 "Control" or "Controlled" shall mean in the case of a corporation, ownership
or control directly or indirectly, of more than fifty percent (50%) of the
shares of stock entitled to vote for the election of directors and, in the case
of an entity other than a corporation, ownership or control, directly or
indirectly, of more than 50% of the assets or the ability to direct the
management and affairs of such entity.

1.6 "Effective Date" shall mean the date set forth above in the preamble of this
Agreement.

1.7 "FDA" means the United States Food and Drug Administration or any successor
U.S. governmental agency performing similar functions.

1.8 "Licensed Field" means in the field of any and all forms of brain cancer.
 
1.9 "Net Sales" shall mean the amount invoiced on sales of Licensed Product in
the Licensed Field by IsoRay and its Affiliates and sublicensees to a Third
Party, less the following deductions to the extent included in the amounts
invoiced:
(i) trade, cash or quantity discounts actually allowed, granted from the
invoiced amount and taken; and
(ii) amounts repaid or credited by reason of rejections, defects or returns or
because of retroactive price reductions; and
(iii) insurance, shipping and handling; and
(iv) rebates paid pursuant to government regulations; and
(v) taxes or governmental charges for export/import feed in the Territory on
sales of Licensed Product to a Third Party, whether denominated as value added
taxes, sales taxes, or excise taxes, to the extent included in said invoiced
amount.

1.10 "Patents" means all patent applications and patents, together with any
continuations, continuations-in-part, divisions, reissues, extensions, and
reexamination applications of the foregoing which cover the process or
manufacture, use or sale of Licensed Product in the Licensed Field in the
Territory which are owned, licensed or controlled by Dr. Reddy's or which become
owned, licensed or controlled by Dr. Reddy's during the life of this Agreement.
 
1.11 "Licensed Product" means a radiotherapy solution, source, composition or
formulation, the manufacture, use or offer for sale of which, but for the
license granted herein, would in whole or part infringe a Valid Claim
.

 
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1.12 "Patent Rights means": (i) U.S. Patents No. US 6,315,979, US 6,506,363, and
US 6,861,044; (ii) any patents issuing from divisional, continuations, or
continuations-in-part of any patents from which any of the foregoing patent
applications claims priority, throughout the world; and (iii) patents that are
foreign counter parts, reissues, reexaminations or extensions of the foregoing
(i) and (ii).

1.13 "Royalty Term" means from the date of the first sale of the Product to a
Third Party till the expiration of the last Patent.

1.14 "Technology" means all intellectual property which is not a Patent, but is
utilized for the manufacture of the Licensed Product.

1.15 "Territory" means worldwide.

1.16 "Third Party" means anyone, other than a Party and its Affiliates,
contractors and sublicensees. Thus Third Party includes, without limitation,
physicians, hospitals, clinics, hospice facilities, patients, distributors,
formularies, and radiopharmacies.

1.17 “Valid Claim” means any claim set forth  in a pending patent application or
issued patent included in the Patent Rights which: (i) has not expired, been
revoked or cancelled, been declared invalid, unpatentable or unenforceable by a
final decision of a court or other government agency of competent jurisdiction,
from which decision no further appeal or other legal course is possible, and
(ii) has not been withdrawn, disclaimed, denied, admitted by the owner or its
successors or assigns to be invalid or unenforceable through reissue,
re-examination, disclaimer or otherwise.

1.18 “Intellectual Property Rights” means the Patents and the Technology.

 
ARTICLE 2 - GRANT OF LICENSE

2.1           Grant of License - Dr. Reddy's hereby grants to IsoRay and IsoRay
hereby accepts:
(a) An exclusive, non-transferable but sub-licensable, limited license to use
the Patents and Technology to make, have made, use, sell and have sold in the
Territory the Licensed Product in the Licensed Field. The license shall be fully
exclusive, to the exclusion of Dr. Reddy's and its Affiliates.
 
2.2 Sublicensing -The exclusive license under Article 2.1(a) to Licensee
includes the right to sublicense to Third Parties, as well as Affiliates of
Licensee, under the terms and conditions of this Agreement.  Licensee shall
notify Licensor of each sublicense in writing at least five days prior to
commencing the sublicense. Licensee will make and be responsible for all
payments to Dr. Reddy's for all sales of Licensed Product in the Territory
including sales made pursuant to the sublicenses.  Licensee hereby irrevocably
agrees that it shall be solely and primarily responsible for payment of all
royalties payable under this agreement irrespective of whether Licensee receives
the consideration from the sub-licensee or not. Licensee will also be
responsible for the observance of all covenants and conditions contained herein
by all sublicensees of the Technology and Patents, and will use its best efforts
to cause all sublicensees to observe the covenants in this Agreement regarding
confidentiality, maintenance of records, and exchanges of information. All such
sublicenses shall be in writing,

 
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Any sublicense granted by Licensee shall provide that the sublicensee shall not
assign or transfer the sublicense nor any of its rights or obligations
thereunder, in any manner (including by operation of law) without the prior
written consent of Licensor, which Licensor may withhold in its sole discretion;
provided however, that such sublicensee may assign or transfer such sublicense
as part of a sale or merger of such sublicensee or a sale by such sublicensee of
all or substantially all of the assets to which the sublicense relates if, and
only if, prior thereto, the assignee delivers to Licensee and Licensor (i) a
written agreement of such assignee to assume all of the assigning sublicensee’s
obligations under such sublicense and (ii) evidence reasonably satisfactory to
Licensor of such assignee’s ability to perform such obligations (which evidence
shall be deemed satisfactory unless Licensee or Licensor delivers reasonable and
reasonably detailed written objection to such assignment within thirty (30) days
following receipt of such evidence).

Licensee’s sublicensee shall only have the right to grant further sublicenses
upon the approval of Licensor (which approval shall not be unreasonably withheld
or delayed) and only in the event that such sub sublicense both (i) covers all
the rights of the sublicensee to the Licensed Product that is the subject of
such sublicense, and (ii) includes the grant to the sub sublicensee of
substantial intellectual property rights owned or controlled by such
sublicensee.

2.3 Other Licenses - Dr. Reddy's reserves the right to proceed, solely at its
option and expense, to research, develop, make, have made, use, sell, have sold
and license, the Patents and Technology in the Territory solely outside the
Licensed Field.
 
2.4 Ownership of Inventions - The Parties agree that any invention or
intellectual property derived by the Licensee from the exercise of its rights
hereunder shall be the sole property of the Licensee. However, the Parties agree
to negotiate in good faith for the terms, including payment of royalties by
Licensor, of the grant of a license to the Licensor by the Licensee for any such
invention upon request by Licensor.
 
 
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2.5. As between Licensee and Licensor all the Intellectual Property Rights in
and over the Licensed Product and the derivatives of the Patents that hereafter
may be conceived or made by Licensor shall vest solely with Licensor. Except as
expressly provided in this Agreement, Licensor shall have unrestricted,
exclusive rights to exploit the same in perpetuity throughout the world.
Further, Licensor shall at its own costs have the worldwide right to register
and control the drafting, filing, prosecution and maintenance of any patents for
inventions which Licensor owns, including decisions about the countries in which
to file patent applications and the costs associated with the patent activities.

2.6. Except to the extent of the rights granted under this Agreement, Licensee
hereby represents that it has no right, interest or otherwise in the
Intellectual Property Rights owned by the Licensor and it will not, during the
term of this Agreement or at any time thereafter, either directly or indirectly
assert or claim any right, interest or make any claim against the Licensor's
Intellectual Property Rights nor will do any acts or omissions nor make any
statements that would negatively affect the Intellectual Property Rights owned
by the Licensor.

ARTICLE 3 - PAYMENTS & ROYALTY
3.1 Initial Consideration- As initial consideration, Licensee shall pay to Dr.
Reddy's an upfront payment of [**] in cash within thirty (30) days of the
execution of this Agreement and this payment shall not be credited against
future royalty payments or any other payments made under this Agreement and 
shall be nonrefundable.

3.2 Royalties - The royalty payable to Dr. Reddy's shall be [**] of the [**] in
each Calendar Year. Further, if in any case the annual payment of royalties
falls below the amounts specified below, then the Licensee shall make a payment
to reach the amounts in the time period specified below. Royalty payments shall
be paid quarterly, however if in the fourth quarter the minimum amount payable
is not reached for the Calendar Year then the amount necessary to reach the
payment specified below shall be made within 60 days after the end of the fourth
quarter.
 

1st Calendar Year minimum [**] 2nd Calendar Year minimum [**] 3rd Calendar Year
minimum [**] 4th Calendar Year minimum  [**] 5th Calendar Year and beyond
minimum  [**]

 
 

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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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3.3 Taxes - If any taxes, withholding or otherwise, are levied by any taxing
authority in connection with the receipt by Dr. Reddy's of any royalties payable
under this Agreement, IsoRay shall have the right to pay such taxes to the local
tax authorities on behalf of Dr. Reddy's and the payment to Dr. Reddy's of the
net amount due after reduction by the amount of such taxes, together with
evidence of payment of such taxes, shall comply with IsoRay's royalty reporting
obligations under this Agreement.

3.4 Quarterly Royalty Reports and Payments - Within sixty (60) days after the
close of each quarter of a Calendar Year as defined in Article 1, IsoRay shall
submit a report on the Net Sales in the Licensed Field for the Territory in
sufficient detail to enable a calculation of the royalty due in accord with
Article 3 and payment of the royalty (if any) due.

3.5 Books of Account - IsoRay shall maintain true and complete books of account
containing an accurate record of all data necessary for the proper computation
of royalty payments due from it or on behalf of any Affiliate or sublicensee.

3.6 Audit Right- Throughout the term of this Agreement, Dr. Reddy's shall have
the right, either through a certified public accountant employed by Dr. Reddy's
or through a firm of independent public accountants to whom IsoRay has no
reasonable objection, to examine the books of account of IsoRay at reasonable
times but not more than once in each Calendar Year for the purpose of verifying
the correctness of any report concerning diligence or payment of royalties under
this Article 3. Such examination shall be made during normal business hours at
the place of business of IsoRay. The information furnished as a result of any
such examination shall be maintained in confidence on the terms specified in
Article 6. The fees and expenses of such an audit shall be borne by Dr. Reddy's.
If any such audit shows any underpayment or overcharge, a correcting payment or
refund shall be made within thirty (30) days of IsoRay's receipt of the
auditors' statement. If such error is greater than a ten percent (10%)
underpayment by IsoRay, IsoRay shall be subject to a penalty as if the payment
were deemed late in accord with Article 3.8. Should IsoRay fail to make any
correcting payment within sixty (60) days from receipt of the auditors'
statement, then Dr. Reddy's shall have the right to terminate this Agreement
under Article 12.4.

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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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3.7 Arms Length Sale: IsoRay and its Affiliates should not sell the Licensed
Product on a non-arms length basis. IsoRay and its Affiliates agree (i) that in
calculating Net Sales it shall not include in the deductions from Net Sales any
special discounts, rebates, volume reimbursements or other incentives for the
Licensed Product that are given as an inducement for the purchase of other
IsoRay products; (ii) that any discounts, rebates or volume reimbursements
offered by IsoRay and its Affiliates on the basis of multiple product purchases
which include Licensed Product shall be allocated to the Licensed Product on a
no greater than proportionally equal basis on the respective average invoiced
price of each such product; (iii) that IsoRay shall not sell the Licensed
Product as a loss or otherwise cause its sales of some other product to benefit
at the expense of the  Licensed Product.

3.8 Late Payments - If royalties are not remitted to Dr. Reddy's by the due date
then IsoRay shall be liable for the interest at the current prime rate plus 2%
established by a leading New York bank, such as CitiBank.  Should IsoRay fail to
make the payment within sixty (60) days from its due date, then Dr. Reddy's
shall have the right to terminate this Agreement under Article 12.4.

ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
 
4.1 Organization; Good Standing -  Each Party hereby represents to the other
Party on the Effective Date that it (i) is a corporation duly organized, validly
existing, (ii) is in good standing under the laws of the jurisdiction of its
incorporation, (iii) is qualified to do business and in good standing in each
jurisdiction in which the performance of its obligations hereunder requires such
qualification, and (iv) has all requisite power and authority, corporate or
otherwise, and the legal right to conduct its business as now being conducted,
to own, lease and operate its properties and to execute, deliver and perform
under this Agreement.
 
4.2 Binding Obligation; Due Authorization; No Conflict - Each Party hereby
represents to the other Party on the Effective Date that this Agreement is a
legal and valid obligation binding upon its execution and enforceable in
accordance with its terms and conditions. The execution, delivery and
performance of this Agreement by each Party have been duly authorized by all
necessary corporate action, and the person executing this Agreement on behalf of
each Party has been duly authorized to do so by all requisite corporate actions
and does not and will not (a) require any consent or approval of its
stockholders or any Third Party or (b) conflict with, or constitute a material
breach or violation of, any agreement, instrument, understanding, oral or
written, to which it is a party or by which it may be bound, and any judgment of
any court or governmental body applicable to such a Party or (c) violate any
law, decree, order, rule or regulation of any court, governmental body or
administrative or other agency having authority over it.
 
 
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4.3 No Suit-  Each Party hereby represents to the other Party on the Effective
Date that it is aware of no action, suit or inquiry or investigation
contemplated or instituted by any Third Party that questions or threatens the
validity of this Agreement or asserts that the use of the subject matter of the
licenses granted to IsoRay and/or actually or potentially granted to Dr. Reddy's
under this Agreement (as applicable) or the manufacture, use, sale, offer for
sale or import of embodiments thereof infringes upon or misappropriates the
intellectual property of any Third Party.
 
4.4 Title to Intellectual Property Rights - Each Party hereby represents to the
other Party that it has sufficient legal and beneficial title to its
intellectual property rights necessary for the purposes contemplated under this
Agreement and to grant the licenses contained in this Agreement.
 
4.5 No Violations of Third Party Intellectual Property Rights - Each Party
hereby represents to the other Party as of the Effective Date, to the best of
its knowledge, IsoRay's commercialization of the Licensed Product in the
Licensed Field will not violate any of the intellectual property rights of any
Third Party or Affiliate of a Party.
 
4.6 Licensor Limitations on Representations - Except as set forth in Sections
4.3, 4.4 and 4.5, Licensor makes no representation or warranty with respect to
the Licensed Products or the infringement by the same of any proprietary rights,
or any representation or warranty with respect to the absence of any defect in
the Licensed Products or Patent Rights.
 
4.7 Licensee Review - Licensee has had the opportunity to review or has reviewed
the Patent Rights to verify the sustainability of the Patent Rights for
Licensee’s intended purpose and is not relying on any statements of Licensor
with respect to such verification, except for representations and warranties set
forth in Sections 4.3, 4.4, or 4.5.
 
4.8. Registration & Approvals: Licensee will at its own cost register/obtain and
maintain all the necessary approvals (including renewals) that may be required
under any law or regulatory authority to permit Licensee's activities hereunder,
from time to time, and at all times keep such approvals in full force in the
respective portions of the Territory in which the Licensee manufactures,
produces, distributes, sells and markets the Licensed Product and shall fully
adhere to the applicable laws, rules and statutory orders of such authorities
that may be required to permit Licensee's activities hereunder. Further Licensee
hereby agrees and undertakes that it shall be solely responsible for all the
costs  that may arise from registration or default in adhering to the said laws,
rules and statutory guidelines,
 
 
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4.9. No Conflict: Each Party hereby represents to the other Party that it will
not do any act, omission or enter into any agreement that would adversely affect
or be detrimental to the business interest proposed under this Agreement.
 
 
ARTICLE 5 - INDEMNIFICATION

 
5.1 By IsoRay - IsoRay shall indemnify, defend, and hold harmless Dr. Reddy's
and its Affiliates and their directors, officers, employees and agents and their
respective successors, heirs and assigns (collectively, "Dr. Reddy's Indemnified
Parties"), against any liability, damage, loss or expense incurred by or imposed
upon such persons or any one of them in connection with any claims, settlements,
suits, actions, or demands by any Third Party, whether under any theory of
product liability, or actions in the form of tort, warranty, strict liability,
or otherwise, arising out of or relating to (1) the performance by IsoRay or the
sub licensees of its activities hereunder, (2) IsoRay's or the sub licensees
negligence, reckless misconduct or intentional misconduct in the manufacture,
and use of the Licensed Product by IsoRay or offer for sale, sale, or import of
any pharmaceutical product incorporating a pharmaceutical intermediate made
through use of the Licensed Patents that is developed, made, used, or sold by
IsoRay,its Affiliates or the sub licensees hereunder or pursuant to any right or
license granted under this Agreement, and/or (3) the breach by IsoRay of its
obligations, representations or warranties hereunder; provided, however, that
such indemnification right shall not apply to any liability, damage, loss or
expense to the extent directly attributable to the breach of any obligations,
representations or warranties in this Agreement, or negligence, reckless
misconduct or intentional misconduct of any Dr. Reddy’s Indemnified Party.  No
Dr. Reddy’s Indemnified Party shall be entitled to indemnification for the
settlement of any claim pursuant to this Agreement unless it obtains the prior
written consent of IsoRay to such settlement.  Dr. Reddy's shall not be entitled
to settle any such claim unless it obtains the prior written consent of IsoRay
provided, however, that such consent shall not be required where IsoRay is fully
released from any liability for such claim and where no restrictions are
otherwise imposed on IsoRay by such settlement.
 
 
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5.2 By Dr. Reddy's - Dr. Reddy's shall indemnify, defend, and hold harmless
IsoRay and its Affiliates and their directors, officers, employees, and agents
and their respective successors, heirs and assigns (collectively, "IsoRay's
Indemnified Parties"), against any liability, damage, loss, or expense incurred
by or imposed upon such persons or any one of them in connection with any
claims, settlements, suits, actions, or demands, by any Third Party, whether
under any theory of product liability, or actions in the form of tort, warranty,
or strict liability, or otherwise, arising out of or relating to the performance
by Dr. Reddy's of its activities hereunder and/or the breach by Dr. Reddy's of
its obligations, representations or warranties hereunder; provided, however,
that such indemnification right shall not apply to any liability, damage, loss,
or expense to the extent directly attributable to the breach of any obligations,
representations or warranties in this Agreement, or negligence, reckless
misconduct or intentional misconduct of an IsoRay Indemnified Party. No IsoRay
Indemnified Party shall be entitled to indemnification for the settlement of any
claim pursuant to this Agreement unless it obtains the prior written consent of
IsoRay to such settlement.  IsoRay shall not be entitled to settle any such
claim under this Section 5.2 unless it obtains the prior written consent of Dr.
Reddy's; provided, however, that such consent shall not be required where Dr.
Reddy's is fully released from any liability for such claim and where no
restrictions are otherwise imposed on Dr. Reddy's by such settlement.

 
ARTICLE 6 - CONFIDENTIAL INFORMATION
 
6.1 Definition of Confidential Information - "Confidential Information" shall
mean any scientific, technical, or business information furnished by the
disclosing Party to the receiving Party in connection with this Agreement,
whether orally, in writing or in electronic form, and whether exchanged before
the Effective Date of thereafter.  Such Confidential Information shall include,
without limitation, the existence and terms of this Agreement, information
disclosed by one Party to the other Party relating to the structure of a
license, the use and manufacture of the Licensed Product, Dr. Reddy's
Technology, royalty reports, trade secrets, know-how, inventions, technical data
or specifications, testing methods, business or financial information, research
and development activities, product and marketing plans, and customer and
supplier information, including, but not limited to, such information that
becomes or became known to a Party during visits to the facilities of the other
Party.
 
6.2 Obligations- The Receiving Party agrees that from the Effective Date, during
the Royalty Term and for a period of ten (10) years thereafter, it shall:
 
Maintain all Confidential Information in strict confidence, except that the
receiving Party may disclose or permit the disclosure of any Confidential
Information to its, and its Affiliates' and sublicensees' directors, officers,
employees, consultants and advisors who are obligated to maintain the
confidential nature of such Confidential Information and who need to know such
Confidential Information for the purposes of performing their obligations under
this Agreement;
 
Use all Confidential Information solely for the purposes set forth in, or as
permitted by, and otherwise as necessary in connection with, this Agreement.
 
 
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Allow its Affiliates, sublicensees, directors, officers, employees, consultants
and advisors to reproduce the Confidential Information only to the extent
necessary to effect the purposes set forth in this Agreement, with all such
reproductions being considered Confidential Information; and
 
6.3 Exceptions - The obligations of the receiving Party under Section 6.2 above
shall not apply to any specific Confidential Information to the extent that the
receiving Party can demonstrate by competent written proof that such
Confidential Information:
 
Was generally known to the public or otherwise part of the public domain prior
to the time of its disclosure under this Agreement;
 
Entered the public domain after the time of its disclosure under this Agreement
through means other than an unauthorized disclosure resulting from an act or
omission by the receiving Party's or its Affiliates' directors, officers,
employees, consultants, advisors or agents;
 
Was already known to the receiving Party, other than under an obligation of
confidentiality, at the time of disclosure by the disclosing Party; or
 
Is or was disclosed to the Receiving Party at any time, whether prior to or
after the time of its disclosure under this Agreement, by a Third Party having
no fiduciary relationship with the disclosing Party and having no obligation of
confidentiality to the disclosing Party with respect to such Confidential
Information or was independently developed.
 
6.4 Permitted Disclosure - Each Party shall be permitted to disclose
Confidential Information in the event that, and only to the extent that, such
information is required to be disclosed to comply with applicable laws or
regulations (such as disclosure to the FDA, United States Securities and
Exchange Commission, the United States Environmental Protection Agency, the
United States Department of Energy, or the United States Patent and Trademark
Office, or to their foreign equivalents), or to comply with a court or
administrative order, provided that the disclosing Party receives reasonable
prior written notice of such disclosure and that the receiving Party takes all
reasonable and lawful actions to obtain confidential treatment for such
disclosure and, if possible, to minimize the extent of such disclosure.  In
addition, each Party may disclose the terms of this Agreement to lenders,
investment bankers, and similar financial institutions solely for purposes of
financing the business operations of such Party either upon the written consent
of the other Party or if the disclosing Party obtains a signed confidentiality
agreement with such financial institution with respect to such information, upon
terms substantially similar to those contained in this Article 6.
 
 
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ARTICLE 7 - FORCE MAJEURE

7.1 Event of Force Majeure - In the event that performance under this Agreement,
or any obligation hereunder, is hindered, delayed or prevented by reason of act
of God, strikes, lockouts, labor troubles, intervention of any governmental
authority, fire, riots, insurrections, invasions, war or other reasons of
similar nature beyond the reasonable control of the Party and are not due to
such Party's fault or negligence, then performance of that act shall be excused
for the period of the delay and the period for the performance of that act shall
be extended for an equivalent period, provided that if any payment of royalties
is delayed by such force majeure event, such overdue amount shall be subject to
payment of interest at the prime rate as established by a  leading bank at New
York such as CitiBank during such period of delay.

7.2 Notification- Upon occurrence of an event of force majeure, the affected
Party shall promptly notify the other Party in writing, setting forth the nature
of the occurrence, its expected duration and how that Party's performance is
affected. The affected Party shall resume the performance of its obligations as
soon as practicable after the force majeure event ceases.
 
ARTICLE 8 - THIRD PARTY INFRINGEMENT CLAIMS

8.1 Defense of Third Party Patent Claims - If a claim is brought by a third
party that manufacture, use or the sale of Licensed Product in all or in any
portion of the Territory infringes a patent of such Third Party, IsoRay will
give prompt written notice to Dr. Reddy's of such claim when IsoRay becomes
aware of it. Dr. Reddy's shall have the sole discretion and right to seek to
dispose of said claim or to conduct the defense of any suit resulting from such
claim if it concerns a Patent or Technology. IsoRay at its option and expense
may participate with Dr. Reddy’s  in any suit resulting from such claim that
directly affects its market in the Territory, and shall be entitled to retain
its pro rata share of any recovery obtained from such litigation, settlement or
compromise thereof, in the proportion that of its expense spent on such
litigation, settlement or compromise thereof bears to the overall expense spent
by IsoRay and Dr. Reddy's on such litigation, settlement or compromise thereof.
IsoRay's cost of such litigation (as approved by Dr. Reddy’s) in any quarter
after the said decree may be credited against one hundred percent (100%) of the
royalties due to Dr. Reddy's under Article 3 in the following quarter until such
time as all costs have been credited for the defense of the alleged infringement
in the Territory. At IsoRay's request and expense, Dr. Reddy's shall cooperate
with IsoRay in such litigation, including joining in said litigation.  Dr.
Reddy's shall also cooperate, at IsoRay's expense, by way of providing access to
evidence and witnesses available to Dr. Reddy's. However, the expenses incurred
by IsoRay that solely relate to Dr. Reddy’s cooperation shall not be allowed to
set off from the royalties payable to Dr. Reddy’s Dr. Reddy's shall advise
IsoRay in writing, within ninety (90) days after IsoRay's notice, whether it
intends to defend such suit or claim at Dr. Reddy's expense. During said ninety
(90) day period, IsoRay may, in consultation with Dr. Reddy's take such action
as it deems necessary to defend against such suit or claim.
 
 
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ARTICLE 9 - PATENT ENFORCEMENT LITIGATION

9.1 Prosecution by Dr. Reddy's - Dr. Reddy's at its sole discretion, may take
action on its own behalf and expense to institute any action or proceeding by
reason of infringement of any of the Patents. If either Party learns of any
infringement of a Patent or misappropriation of trade secrets by a third party,
it shall promptly notify the other Party. Dr. Reddy's shall have the first
right, at its own expense, to prosecute all litigation against a third party
infringer who may be infringing a Patent. IsoRay shall provide all reasonable
cooperation at Dr. Reddy's expense, including any necessary use of its name,
required to prosecute such litigation. IsoRay shall be consulted concerning the
litigation. Dr. Reddy's will bear the costs and shall be entitled to any
recovery obtained from such litigation, settlement or compromise thereof.
 
9.2 Prosecution by IsoRay, Royalty Offset - If  Dr. Reddy's does not prosecute
such infringer or otherwise abate such infringement (which must be of commercial
significance to IsoRay under this Agreement in Dr. Reddy's reasonable business
opinion) within ninety (90) days after giving or receiving notification of such
infringement in the Territory, unless an extension of the term is mutually
agreed upon in writing by the Parties, then, if said Patent infringement relates
solely to the  Licensed Field  under this Agreement, IsoRay shall have the right
to prosecute such infringer, at its own expense, and shall be entitled to retain
any recovery obtained from such litigation, settlement or compromise thereof.
IsoRay's cost of such litigation in any quarter may be credited against one
hundred percent (100%) of the royalties due to Dr. Reddy's under Article 3 in
the following quarter until such time as all costs have been credited for the
infringement in the Territory.  At IsoRay's request and expense, Dr. Reddy's
shall cooperate with IsoRay in such litigation, including joining in said
litigation. Dr. Reddy's shall also cooperate, at IsoRay's expense, by way of
providing access to evidence and witnesses available to Dr. Reddy's.  If any
such Patent covers subject matter outside the Licensed Field outside this
Agreement and the infringing acts include acts outside the Licensed Field or
outside this Agreement, then IsoRay must have Dr. Reddy's prior written consent
to enforce said Patent, which consent will not be unreasonably withheld.
However, IsoRay is aware that other licensees for other end uses of Patents are
likely to exist such that consent may not be possible and that the risks
presented to such other Dr. Reddy's licensees shall be deemed by IsoRay as a
reasonable basis by Dr. Reddy's to withhold its consent.
 
 
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9.3 Invalidity - In the event that, whether by virtue of a third party
infringement claim under Article 8 or patent enforcement litigation under
Article 9, or by any other means, a Patent in all or any portion of the
Territory is finally declared invalid or unenforceable in a judicial or
administrative proceeding from which no appeal is or can be taken, Dr. Reddy's
shall have three (3) months in which to obtain a license or other rights for
IsoRay to the intellectual property underlying the invalid or unenforceable
Patent to the extent necessary to permit IsoRay to fully exercise the license
granted by Section 2.1, and until such rights are successfully obtained, no
royalties shall be paid by IsoRay on the basis of that Patent , provided,
however, that royalties due for other Patents not so held invalid or
unenforceable or royalties for use of Technology shall not be affected. If Dr.
Reddy's is unsuccessful in obtaining such rights for IsoRay within the three (3)
month period, IsoRay may, in its sole discretion, immediately terminate this
Agreement without providing a cure period.

9.4 Settlement - Any settlement of an infringement suit whether brought by Dr.
Reddy's or by IsoRay, shall be subject to the consent of both Parties, which
consent shall not be unreasonably withheld.
 
ARTICLE 10 - COOPERATION IN PATENT LITIGATION

10.1 Cooperation - Each Party shall cooperate with the other Party to the extent
reasonably requested in any legal action brought by a third party against one
Party or against both of them or taken against a third party by either Party
regarding Patents in the Licensed Field in all or any portion of the Territory,
and each Party shall have the right to participate in any defense, compromise or
settlement to the extent that, in its judgment, it may be prejudiced thereby. In
addition IsoRay shall not settle any claim or suit in any manner that shall
adversely affect any Patents, require any payment by Dr. Reddy's or reduce the
royalty due to Dr. Reddy's hereunder, without the prior written consent of Dr.
Reddy's.
 
 
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ARTICLE 11 - WARRANTY, DISCLAIMER, INSURANCE

11.1 Belief of Accuracy - Dr. Reddy's represents that the licensed Patents and
other Confidential Information transferred or provided to IsoRay hereunder are
believed to be accurate and complete as of their transfer to IsoRay and that Dr.
Reddy's interpretations and conclusions drawn there from were made in good faith
and in the exercise of Dr. Reddy's' scientific judgment as of the dates of the
documents contained therein, and that to the best of Dr. Reddy's' knowledge,
data subject to regulations regarding Good Laboratory Practices, Good Clinical
Practices, Good Manufacturing Practices, and other FDA regulations, as well as
the corresponding foreign regulations, is in compliance with such regulations.
However, Dr. Reddy's does not warrant or represent that such information is or
will be sufficient to obtain Approval to market a Licensed Product or to
commercially produce or to commercialize a Licensed Product. IsoRay represents
that it is solely relying on its own evaluation of the licensed Patents and the
other Confidential Information transferred or provided to it hereunder and on
its own medical and scientific expertise in using the same in its development
and commercialization of Licensed Product.

11.2 Limitation of Liability - In no event shall Licensor be liable for any
incidental, consequential or punitive damages, including, but not limited to,
any lost profits or opportunities, arising out of, relating to, or in connection
with the subject matter of this Agreement, even if Licensor has been advised of
the possibility of such damages.

11.3 Insurance - IsoRay agrees to carry such liability insurance as would
reasonably be expected of a company of IsoRay's net worth operating in the
pharmaceutical.
ARTICLE 12 -TERM AND TERMINATION

12.1 Term - This Agreement shall commence on the Effective Date and, unless
terminated pursuant to this Article 12, this License shall continue in effect
until the expiration of the last of the Patents listed in Annexure-A.
 
12.2 Mutual Consent - This Agreement may be terminated early or extended at any
time by mutual written agreement of the Parties with ninety (90) days written
notice in advance.
 
12.3 Default - Notice of Default - In the event any material representation or
warranty made hereunder by either Party shall be untrue ("Representation
Default") or upon any breach or default of a material obligation of this
Agreement by a Party ("Performance Default"), the Party not in default
("Non-Defaulting Party") must first give the other Party ("Defaulting Party")
written notice thereof ("Notice of Default"), which notice must state the nature
of the untruthfulness, breach or default in reasonable detail and request the
Defaulting Party cure such default within thirty (30) days.
 
 
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12.4 Termination for Default - The Non-Defaulting Party may, in addition to any
other remedies which may be available to such non-defaulting Party at law or
equity, terminate this Agreement in the event of a Representation Default or
Performance Default by the Defaulting Party that has not been cured within
thirty (30) days after receipt of a Notice of Default or is not curable;
provided, however, in the case of a Performance Default that is curable but
cannot be cured within such 30-day period, the Non-Defaulting Party may
terminate this Agreement following such 30-day period only if the Defaulting
Party shall have failed to do any of the following – (i) commence substantial
remedial actions within such 30-day period, (ii) diligently pursue the same
thereafter and (iii) cure such default within sixty (60) days after receipt of
Notice of Default.
 
12.5 Bankruptcy - All rights and licenses granted under or pursuant to this
Agreement are, and shall otherwise be deemed to be, for purposes of Section
365(n) of the U.S. Bankruptcy Code, licenses of rights to "intellectual
property" as defined under Section 101 of the U.S. Bankruptcy Code.  The Parties
agree that each Party that is a licensee of such rights under this Agreement
shall retain and may fully exercise its rights and elections under the U.S.
Bankruptcy Code.  The Parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against either Party under the
U.S. Bankruptcy Code, the Party hereto which is not a Party to such proceeding
shall be entitled to a complete duplicate of (or complete access to, as
appropriate, to make complete duplicates of) any such intellectual property and
all embodiments of such intellectual property, and same, if not already in their
possession, shall be, within ten (10) days of the commencement of such
proceeding, delivered to them (v) upon any such commencement of a bankruptcy
proceeding upon their written request therefore, unless the Party subject to
such proceeding (or a trustee on behalf of the subject Party) elects to continue
to perform all of their obligations under this Agreement or (vi) if not
delivered under (a) above, upon the rejection of this Agreement by or on behalf
of the Party subject to such proceeding upon written request therefore by the
non-subject Party.
 
12.6 Disposition of Confidential Information - Except as provided under any
future agreement(s) between the Parties, in the event of termination or
expiration of this Agreement, each of the Parties shall return or destroy all
forms of Confidential Information for which it is a Receiving Party under this
Agreement, within sixty (60) days after such termination or expiration,
provided, however, that each Party may retain one copy of such Confidential
Information for the sole purpose of use in any litigation resulting from this
Agreement or the activities undertaken pursuant to this Agreement.
 
 
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12.7 Effect of Termination or Expiration- Termination or expiration of this
Agreement shall not relieve the Parties of any obligation accruing prior to such
termination or expiration. In addition, the obligations of confidentiality set
forth in Article 6 shall survive for the time stated therein and the
indemnification obligations set forth in Article 5 shall also survive as to all
claims or actions arising from events which occurred before termination and
shall not limit any other available rights and remedies of the Parties. Upon
termination of this Agreement, Licensee and any sublicensees shall immediately
cease to import, make, offer to sell, sell or use Licensed Products. Within
thirty (30) days after termination, Licensee shall pay to Licensor all royalties
due under this Agreement that accrued prior to termination.

ARTICLE 13 - CONSENTS

13.1 Commitments - Dr. Reddy's agrees to take reasonable efforts to maintain in
full force and effect the agreements or written commitments which Dr. Reddy's
has made prior to the Effective Date in the Licensed Field.

13.2 Agreements - Dr. Reddy's expects to enter into other agreements for
licensees outside the Licensed Field. After the Effective Date, IsoRay consents
to let Dr. Reddy's disclose to such Dr. Reddy's licensees that IsoRay is Dr.
Reddy's licensee for the Territory in the Licensed Field.

ARTICLE 14 -NOTICES

14.1 Official - Any notice, request or communication specifically provided for
or permitted to be given under this Agreement must be in writing and may be
delivered by hand delivery, mail, courier service, or electronic transmission
such as telex, facsimile, telegram or electronic mail, and shall be deemed
effective as of the time of actual delivery thereof to the addressee. For
purposes of notice the addresses of the Parties shall be as follows:

a)  
 If to Dr. Reddy's
 
Name: Mark Pearson
 
Title: Director Business Development
 
Address:                Unit 162 Cambridge Science Park
                               Milton Road, Cambridge
                               CB4 0GH, UK
 
Mail: mpearson2@drreddys.com
 
Fax: +44 (0)1223 506701
   

b)  
If to IsoRay
  Name: Dwight Babcock   Title: CEO  
Address:                350 Hills Street
                               Richland, WA 99354-5411
 
Mail: dbabcock@isoray.com
 
Fax: 509-375-3473

Each Party may change its address and its representative for notice by the
giving of notice thereof in the manner hereinabove provided.
 
 
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ARTICLE 15 - DISPUTE RESOLUTION

15.1 The Parties agree to attempt initially to seek to resolve any dispute,
claim or controversy arising under, out of, or in connection with this Agreement
(a "Dispute") by conducting good faith negotiations between the parties. Any
Dispute which cannot be resolved by good faith negotiation within twenty (20)
days, shall be referred, by written notice from either Party to the other, to
the Chief Executive Officer, or authorized representative designated by the
Chief Executive Officer, of each Party.  Such Chief Executive Officers (or their
respective designees) shall negotiate in good faith to resolve such Dispute
through discussions promptly following such written notice, and in any event
within fifteen (15) days thereafter. If the Chief Executive Officers of the
Parties (or their respective designees) are unable to resolve the Dispute within
thirty (30) days after the date of the notice referring such Dispute to the
Chief Executive Officers for resolution, either Party may, by written notice to
the other Party, invoke the provisions of Section 15.2.

15.2 All Disputes, that cannot be settled amicably in accord with Section 15.1,
shall be referred to arbitration, which shall be governed by the rules of London
Court of International Arbitration. The place of arbitration shall be London.

15.3 Pending the selection of the arbitrator or pending the arbitrator's
determination of the merits of any Dispute, either Party may seek appropriate
interim or provisional relief from any court of competent jurisdiction as
necessary to protect the rights or property of that Party.

15.4 This Agreement shall be governed by and construed in accordance with the
Laws of England.
 
 
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ARTICLE 16 - ASSIGNMENT

16.1 Assignment - Neither Party to this Agreement shall assign any rights
hereunder without the prior written consent of the other Party, such consent not
to be unreasonably withheld.

16.2 Effect on Successors and Assignees - This Agreement shall inure to the
benefit of and be binding upon each Party's successors and permitted assignees.

ARTICLE 17 - MISCELLANEOUS PROVISIONS

17.1 Amendments - This Agreement may be amended only in writing executed by both
Parties.

17.2 Entirety of Agreement - This Agreement sets forth the entire Agreement and
understanding between the Parties hereto with respect to license of the Patents
for their commercialization in the Territory and the Licensed Field. The
Confidentiality Agreement dated October 1, 2010 (a copy of the agreement is
provided in Annexure B) shall remain in effect only with respect to provisions
not herein contained. If there is any conflict between the terms and conditions
of this Confidentiality Agreement and this Agreement, the terms and conditions
of this Agreement will control.

17.3 Severability - If any term or provision under this Agreement is deemed
invalid under the laws of a particular state, country or jurisdiction, the
invalidity shall not invalidate the whole Agreement but it shall be construed as
if not containing that particular term or provision and the rights and
obligations of the Parties shall be construed and enforced accordingly. The
Parties shall negotiate in good faith a substitute provision in compliance with
the law to as nearly as possible retain the Parties' intent in legally valid
language.
 
 
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17.4 Waivers; Cumulative Remedies - A waiver by either Party of any term or
condition of this Agreement in any one instance shall not be deemed construed to
be a waiver of such term or condition for any similar instance in the future or
of any subsequent breach hereof. All rights, remedies, undertakings, obligations
and agreements contained in this Agreement shall be cumulative and none of them
shall be a limitation of any other remedy, right, undertaking, obligation or
agreement of either Party.

17.5 Advertising and Publicity - Except as required by law, neither Party shall
make any public announcement concerning this Agreement or the subject matter
hereof without the prior written consent of the other Party and not until on or
after the Effective Date. In the event of a legally required public
announcement, the Party making such announcement shall provide the other Party
with a copy of the proposed text, subject to such other Party's reasonable
comments, prior to such announcement. Neither Party may use the name, logos,
trademarks or service marks of the other Party in any manner whatsoever without
the prior written consent of the other Party.

17.6 Relationship of the Parties - The Parties hereto are independent
contractors with respect to one another and not at any time agents of one
another.

17.7 Headings - Headings in this Agreement are included herein for ease of
reference and shall not affect the meaning of the provisions of this Agreement,
nor shall they have any other legal effect.

17.8 Other Documents - Each Party agrees to execute such additional papers or
documents in customary legal form and to make such governmental filings or
applications as may be necessary or desirable to affect the purposes of this
Agreement and carry out its provisions.

IN WITNESS WHEREOF, each Party has caused this Agreement to be signed by its
duly authorized representatives and made effective as of the Effective Date.

For DR.REDDY'S (EU) LIMITED      For IsoRay, Inc.            
/s/ J. P. Kilham
   
/s/ Dwight Babcock
 
Name:  J. P. Kilham 
   
Name:  Dwight Babcock
           
Title:  Country Manager 
   
Title:  CEO
            Date  16 May 2011      Date:  6/1/2011  

 
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