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."

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      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 [**].

       

        
          

        

      

      
        [**]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.

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      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."

      
         

          
            

          

        

        
          [**]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.

        

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        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]

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      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