LEASE
      AGREEMENT

    


    THIS
      LEASE AGREEMENT is
      made
      and entered into this 1st
      day of
      September, 2007 (hereinafter “EFFECTIVE DATE”), by and between Perma-Fix
      Northwest Richland, Inc. (hereinafter “LESSOR”), a Washington corporation with
      its offices located at 2025 Battelle Boulevard, Richland, Washington 99354,
      and
      IsoRay, Inc. (hereinafter “LESSEE”), a Delaware corporation with its corporate
      offices located at 350 Hills Street, Suite 106, Richland, Washington 99354,
      (collectively, the "Parties" and each a "Party").

    


    WHEREAS,
      On June
      14, 2007, LESSOR purchased and now owns the premises known as 2025 Battelle
      Boulevard, Richland, Washington; and

    


    WHEREAS,
      LESSEE
      has leased a portion of said premises from the former owner, Nuvotec
USA,
      pursuant to a written lease agreement (hereinafter “PRIOR LEASE”);
      and

    


    WHEREAS,
      both
      Parties have an interest in amending the terms of the prior lease for these
      premises;

    


    NOW,
      THEREFORE,
      in
      consideration of the mutual promises hereinafter contained, the parties hereto
      agree to terminate the PRIOR LEASE and enter into this new lease agreement
      (hereinafter “AGREEMENT”) as follows:

    


    SECTION
      1 - PREMISES.
      LESSOR
      does hereby lease to LESSEE the Waste Storage Bay 3 of the Mixed Waste Building
      on the premises commonly known as 2025 Battelle Boulevard, Richland, Washington
      99354. Further, LESSEE shall have access to the rest room facilities and
      lunchroom located near the Premises, as well as other common areas as
      appropriate and necessary.

    


    SECTION
      2- TERM.
      The term
      of this AGREEMENT shall be from the EFFECTIVE DATE through January 31, 2008
      (hereinafter, “TERMINATION DATE”), subject to the terms for occupying the
      premises beyond the TERMINATION DATE set forth in Section 5.

    


    SECTION
      3 - EARLY TERMINATION. LESSOR
      acknowledges LESSEE’s desire to vacate the leased premises before the end of the
      term. 
      LESSOR
      agrees to allow early termination of this lease provided that LESSEE gives
      LESSOR written notice at least forty-five (45) days prior to the date LESSEE
      intends to vacate the premises. Forty-five (45) days notice is necessary to
      ensure LESSOR adequate time to confirm that the premises have been restored
      to
      conditions specified in Sections 12, 16, and/or 23 of this
      AGREEMENT.

    


    If
      LESSEE
      makes notification of its intent to terminate the lease early, LESSEE shall
      pay
      LESSOR the full rent due at the beginning of each month subsequent to said
      notification until LESSEE has demonstrated to LESSOR’s satisfaction that the
      premises have been restored to conditions specified in Sections 12, 16, and
      23
      of this AGREEMENT; and LESSOR, in its sole discretion, releases (in writing)
      LESSEE from LESSEE’s obligations set forth in these Sections. LESSOR’s written
      release shall not be unreasonably withheld. During the month in which LESSOR’s
      release is granted, LESSOR will only be required to pay a prorated share of
      that
      month’s rent. The prorated share of rent due shall be calculated by dividing the
      number of calendar days (including the release date) that have passed in the
      subject month by that month’s total calendar days; and multiplying the resulting
      fraction by the affected month’s rent. 

     

    
      
        
          	
                  Lease
                    Agreement IsoRay - September 1, 2007

                	
                  Page 1
                    of
                    8 

                


        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      4 - RENT.
      LESSEE
      covenants and agrees to pay LESSOR five thousand dollars ($5,000) per month
      during the term of this AGREEMENT. If the rent is not paid by the 10th day
      of
      each month, then LESSOR shall be entitled to collect and LESSEE shall pay a
      late
      charge of ten percent (10%) of the five thousand dollar ($5,000) monthly rent.
      LESSEE shall pay the first month’s rent due under this AGREEMENT on or before
      September 10, 2007. Payments are to be made to the LESSOR at its offices located
      at 2025 Battelle Boulevard, Richland, Washington 99354, Attention: Accounts
      Receivable.

    


    SECTION
      5 - OCCUPANCY OF PREMISES BEYOND THE TERMINATION DATE. Should
      the LESSEE continue to occupy the premises after the Termination Date (which
      is
      January 31, 2008), such tenancy shall be from month to month, and the LESSEE
      covenants and agrees to pay LESSOR fifty thousand dollars ($50,000) per month
      until LESSEE has vacated the premises and
      obtained
      LESSOR’S written release from LESSEE’s obligations set forth in Sections 12, 16,
      and 23 of this AGREEMENT. If the rent is not paid by the 10th day of each month
      following the TERMINATION DATE, then LESSOR shall be entitled to collect and
      LESSEE shall pay a late charge of ten percent (10%) of the fifty thousand dollar
      ($50,000) monthly rent. Payments are to be made to the LESSOR at its offices
      located at 2025 Battelle Boulevard, Richland, Washington 99354, Attention:
      Accounts Receivable. The provisions of this section shall not apply if the
      holdover by LESSEE is caused by acts of God or unforeseen delays or acts by
      a
      third party over which the LESSEE has no control.

    


    SECTION
      6 - OCCUPANCY OF PREMISES BEYOND FEBRUARY 1, 2008.
      If
      LESSEE has not vacated the premises and
      obtained
      LESSOR’s written release from LESSEE’s obligations set forth in Sections 12, 16,
      and 23 of this AGREEMENT by February 1, 2008, then LESSEE covenants and agrees
      to pay LESSOR one-hundred thousand dollars ($100,000) to continue the AGREEMENT
      on a month to month basis under the terms set forth in Section 5. The Payments
      are to be made to the LESSOR at its offices located at 2025 Battelle Boulevard,
      Richland, Washington 99354, Attention: Accounts Receivable. The provisions
      of
      this section shall not apply if the holdover by LESSEE is caused by acts of
      God
      or unforeseen delays or acts by a third party over which the LESSEE has no
      control.

    


    SECTION
      7 - TERMINATION & VACATION REQUIRMENTS.
      This
      Agreement may be terminated:

    


    (1)
      At
      any time upon written agreement of both parties; or 

    (2)
      Upon
      expiration of the AGREEMENT’s term and LESSOR’s written release of LESSEE from
      LESSEE’s obligations set forth in Sections 12, 16, and 23. 

    


    Upon
      termination of the AGREEMENT, LESSEE shall surrender to LESSOR all keys fitting
      all locks located on the Premises that are in the possession of
      LESSEE.

    


    
      
        
          	
                  Lease
                    Agreement IsoRay - September 1, 2007

                	
                  Page 2
                    of
                    8 

                


        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      8 - ACCEPTANCE OF PREMISES.LESSEE
      accepts the Premises “as-is”. There are no expectations for facility
      modifications necessary to accommodate LESSEE but if the situation arises,
      LESSEE must obtain LESSOR’s written approval for such modifications and the
      responsibility for the cost shall be borne by LESSEE. 

    


    SECTION
      9 - PERMITTING.
      LESSEE
      shall be responsible for obtaining and maintaining any and all permits, which
      are specific to LESSEE’s operations on the leased premises. 

    


    SECTION
      10 - RELATIONSHIP OF THE PARTIES.
      Nothing
      contained in this AGREEMENT shall, by express grant, implication, estoppel,
      or
      otherwise, create in either party any right, title, interest, or license in
      or
      to the inventions, patents, technical data, computer software, or software
      documentation of the other party. This Agreement is not intended by the parties
      to constitute or create a joint venture, pooling arrangement, partnership,
      or
      formal business organization of any kind, other than a landlord-tenant
      relationship, and the rights and obligations of the parties shall be only those
      expressly set forth herein. Neither party shall have authority to bind the
      other
      except to the extent authorized herein. Nothing in this Agreement shall be
      construed as providing for the sharing of profits or losses arising out of
      the
      efforts of either or both parties

    


    SECTION
      11 - OPERATING COSTS AND EXPENSES. LESSOR
      is
      responsible for real estate taxes, building insurance, and building maintenance,
      without any additional charge to the LESSEE. LESSEE is responsible for providing
      their own office and operating equipment and administrative
      personnel.

    


    SECTION
      12 - CONTAMINATION.
      Notwithstanding any other provision of this AGREEMENT, in the event that the
      activities of LESSEE contaminate the leased premises and/or any of the premises
      commonly known as 2025 Battelle Boulevard, Richland, Washington, LESSEE shall
      be
      solely responsible for the cost of restoring the contaminated areas to the
      same
      condition as existed at the inception of the PRIOR LEASE with Nuvotec
USA
      (hereinafter “BASELINE CONDITION”). LESSEE agrees to clean up any known
      contaminates at the time the contamination occurs and to immediately notify
      LESSOR of the situation. The BASELINE CONDITION of the premises was established
      by Nuvotec USA
      at
      inception of the PRIOR LEASE (see attached baseline survey). The sufficiency
      of
      restoration work conducted by or on behalf of LESSEE in order to return the
      premises to the BASELINE CONDITION shall be determined solely by LESSOR’s
      evaluation and approval of restoration work. LESSOR’s approval of restoration
      work shall not be unreasonably withheld.

    


    
      
        
          	
                  Lease
                    Agreement IsoRay - September 1, 2007

                	
                  Page 3
                    of
                    8 

                


        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      13 - TECHNICAL SUPPORT. Under
      this AGREEMEMT LESSOR may, from time to time, provide certain technical support
      staff to the LESSEE. Time for said staff will be billed in accordance with
      the
      rates set forth in Exhibit A.

    


    SECTION
      14 - UTILITIES. 
      LESSOR
      shall pay all charges for water, sewage disposal, and gas or other fuel utilized
      in connection with normal and customary general occupancy of the premises
      without any additional charge to LESSEE. LESSEE shall pay all charges for
      telephone, internet, LAN, and other charges specific to the use of the premises
      by LESSEE. Additionally, LESSEE shall be responsible for establishing their
      own
      mail service - both pick-up and drop-off - as this function will not be provided
      by the LESSOR. Further, LESSEE shall be responsible for all electricity charges
      consumed by the LESSEE’s operations. 

    


    SECTION
      15 - JANITORIAL SERVICES. LESSEE
      shall be responsible for and provide janitorial services and supplies to support
      its occupancy.

    


    SECTION
      16 - MAINTENANCE.
      The
      LESSEE will at all times keep the premises neat, clean, and sanitary. LESSEE
      shall take all reasonable measures to maintain the premises in a condition
      that
      is at least as well maintained as it was at the time of initial occupancy under
      the PRIOR LEASE, accounting for normal wear and tear. 

    


    SECTION
      17 - TAXES. The
      Parties acknowledge that LESSOR shall pay and hold LESSEE harmless for all
      state, federal, and local taxes and assessments against the Premises or
      leasehold improvements thereto.

    


    SECTION
      18 - INSURANCE.LESSEE
      shall, at its cost and expense, procure and maintain during the term of this
      AGREEMENT the following insurance coverage:

    


    
      	(1)  	
              Comprehensive
                general public liability insurance insuring against the risks of
                bodily
                injury, property damage, and personal injury liability occurring
                on the
                Premises or arising out of LESSEE's negligent use or occupancy of
                the
                Premises, with a combined single limit of liability of at least
                $1,000,000.

            


    

    


    
      	(2)  	
              Fire
                and extended coverage insurance, insuring LESSEE's personal property
                in or
                on the Premises for one hundred percent (100%) of its full insurable
                and
                replacement cost, without deduction for
                depreciation.

            


    

    


    
      	(a)  	
              LESSEE's
                policy of liability insurance shall list LESSOR as additional insured
                and
                shall also contain an endorsement that although LESSOR is listed
                as
                additional insured, LESSOR shall not be entitled to recover under
                the
                policy for any loss or damage occasioned to it or its agents or employees
                except by reason of LESSEE's negligence. Any insurance policy LESSEE
                is
                required to procure and maintain under this AGREEMENT shall be issued
                by a
                responsible insurance company or companies licensed to do business
                in the
                State of Washington. Further, each such policy shall provide that
                it may
                not be canceled, terminated, or changed except after thirty (30)
                days
                prior written notice to LESSOR.

            


    

     

    
      
        
          	
                  Lease
                    Agreement IsoRay - September 1, 2007

                	
                  Page 4
                    of
                    8 

                


        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	(b)  	
              LESSOR
                and LESSEE each waives any claim it might have against the other
                for
                personal injury or death or for damage to or theft, destruction,
                loss, or
                loss of use of any property, to the extent the same is insured against
                under any insurance policy that covers the Building, LESSOR’s or LESSEE’s
                fixtures, personal property, leasehold improvements, or business,
                or is
                required to be insured against under the terms hereof, and each party
                shall cause its insurance carrier to endorse all applicable policies
                waiving the carrier's rights of recovery under subrogation or otherwise
                against the other party.

            


    

    


    
      	 
              (3) 	
              In
                the event that it is determined that to be in compliance with state
                regulatory requirements additional insurance coverage is necessary,
                the
                parties agree to work together to obtain
                such.

            


    

    


    SECTION
      19 - SUCCESSORS IN INTEREST. This
      AGREEMENT shall be binding upon and inure to the benefit of the heirs,
      successors, assigns, and transferees of the parties hereto. This AGREEMENT
      shall
      not be assignable in whole or in part without the prior written approval of
      the
      LESSOR. 

    


    SECTION
      20 - ACCESS TO PREMISES.
      LESSEE
      shall allow LESSOR access at all reasonable times to the leased premises for
      the
      purpose of inspection and repairs.

    


    SECTION
      21 - DEFAULT BY LESSOR.
      Should
      LESSOR fail to perform any of the terms and conditions required herein, LESSEE
      may declare LESSOR to be in default upon thirty (30) days written notice. Upon
      default, LESSEE may terminate this AGREEMENT (without liability to pay any
      amount for such termination) and/or pursue any and all remedies available to
      it
      under Washington law. Provided, however, that if such failure to observe or
      perform is remediable but is of such nature that it cannot be remedied within
      such thirty (30) day period, then for such longer period as may be reasonably
      required, so long as LESSOR promptly commences and diligently pursues such
      remedy to completion.

    


    SECTION
      22 - DEFAULT BY LESSEE. Should
      LESSEE fail to perform any of the terms and conditions required herein, LESSOR
      may declare LESSEE to be in default upon thirty (30) days written notice. Upon
      default, LESSOR may terminate this AGREEMENT (without liability to pay any
      amount for such termination) and/or pursue any and all remedies available to
      it
      under Washington law. Provided, however, that if such failure to observe or
      perform is remediable but is of such nature that it cannot be remedied within
      such thirty (30) day period, then for such longer period as may be reasonably
      required, so long as LESSEE promptly commences and diligently pursues such
      remedy to completion. 

    


    
      
        
          	
                  Lease
                    Agreement IsoRay - September 1, 2007

                	
                  Page 5
                    of
                    8 

                


        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      occurrence of any one or more of the following events shall constitute a
      material default in breach of this AGREEMENT by LESSEE: 1) failure by LESSEE
      to
      make any payment of rent or other sum required herein as and when due; 2)
      failure by LESSEE to sign this AGREEMENT; and/or, 3) failure by LESSEE to
      materially observe or perform any of the covenants, conditions, or provisions
      of
      this AGREEMENT. In such event, the LESSEE will be liable to LESSOR for the
      balance of unpaid rent and all costs incurred by LESSOR to restore the leased
      premises to the BASELINE CONDITION.

    


    SECTION
      23 - ALTERATIONS/IMPROVEMENTS. LESSEE
      shall not make any alterations or improvements in, on, or about the premises
      without the prior written consent of LESSOR, which shall not be unreasonably
      withheld. Upon the expiration or termination of this AGREEMENT, the LESSEE
      acknowledges that any alterations and/or improvements to the property which
      have
      been installed by the LESSEE and approved by the LESSOR may or may not be left
      with the Premises. LESSOR may require the LESSEE to remove any alterations
      and/or improvements which were made with or without the LESSOR’S approval (or
      LESSOR’S approval under the PRIOR LEASE) and restore the premises to their
      original condition as of the beginning date of the PRIOR LEASE as determined
      solely by LESSOR’s independent engineer.

    


    The
      LESSEE process and process support equipment shall not be considered Alterations
      or Improvements and shall be removed by the LESSEE upon termination of this
      AGREEMENT. This equipment includes, but is not limited to:

    


    
      	·  	
              Hot
                cells;

            


    

    
      	·  	
              Glove
                boxes;

            


    

    
      	·  	
              Analytical
                equipment;

            


    

    
      	·  	
              Radiation
                monitoring equipment;

            


    

    
      	·  	
              Computers
                and peripheral equipment; and,

            


    

    
      	·  	
              Ancillary
                and support equipment related to the
                above.

            


    

    


    The
      following Alterations and Improvements shall be removed as directed by LESSOR
      upon or prior to termination of this AGREEMENT: HVAC, electrical modifications
      (including lighting), walls, cabinetry, exterior concrete pad, fencing/gates,
      and signage. 

    


    SECTION
      24 - SIGNAGE. LESSOR
      hereby consents to LESSEE posting one sign on the exterior of the main entrance
      to the building (fenceline) and one sign at or near the roadway at the main
      road
      entrance as approved per the City of Richland. All signs shall be subject to
      the
      prior review and approval of the LESSOR.

    


    SECTION
      25 - PARKING. LESSOR
      shall provide spaces for automobile parking. 

    


    SECTION
      26 - COMMON AREAS. Common
      areas are defined to include the following interior and exterior areas:
      hallways, restrooms, emergency exits, parking areas and the entrances and exits
      thereof, driveways, sidewalks, lunch rooms, rest rooms/locker rooms on the
      east
      side of main building (Building 17), and other areas and facilities provided
      for
      general use.

    


    
      
        
          	
                  Lease
                    Agreement IsoRay - September 1, 2007

                	
                  Page 6
                    of
                    8 

                


        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    LESSOR
      shall arrange for all required maintenance of both interior and exterior common
      areas including gardening and landscaping, janitorial, repair of common area
      facilities, line painting, lighting lamp replacement, sanitary control, removal
      of snow, trash rubbish and other refuse, policing, traffic and other
      regulations.

    


    SECTION
      27 - HAZARDOUS MATERIALS.
      LESSEE
      shall not take or store upon the premises any pollutants, contaminants,
      hazardous, or toxic materials as defined by the law of the State of Washington
      or by federal law, except in strict compliance with all applicable local, state
      or federal rules, regulations, ordinances, and statutes.

    


    SECTION
      28 - NOTICES.
      All
      notices, certificates, acknowledgments, and other reports hereunder shall be
      in
      writing and shall be deemed properly delivered when duly mailed by registered
      letter to the other party at its address as follows, or to such other address
      as
      either party may, by written notice, designate to the other.

     

    
      
        	 	
                Perma-Fix
                  Northwest Richland, Inc.

              	 	
                IsoRay,
                  Inc.

              
	 	
                2025
                  Battelle Boulevard

              	 	
                350
                  Hills Street, Suite 106

              
	 	
                Richland,
                  Washington 99354

              	 	
                Richland,
                  WA 99354

              
	 	
                Attn:
                  Richard Grondin

              	 	
                Attn:
                  David J. Swanberg

              
	 	
                Phone:
                  (509) 528-0492

              	 	
                Phone:
                  (509) 375-1202

              
	 	
                Fax:

              	 	
                Fax:
                  (509) 375-3473

              


      

       

    

    SECTION
      29 - CHANGES TO TERMS.
      This
      AGREEMENT shall not be amended, modified, or extended, nor shall any waiver
      of
      any right hereunder be effective unless set forth in a document executed by
      duly
      authorized representatives of both the parties. The waiver of any breach of
      any
      term, covenant, or condition herein contained shall not be deemed to be a waiver
      of such term, covenant, or condition for any subsequent breach of the
      same.

    


    SECTION
      30 - NON-WAIVER.
      The
      failure of the LESSOR to insist, in any one or more instances, upon strict
      performance of any of the covenants, agreements, or obligations of the Lessee
      hereunder, or to exercise any option herein contained, shall not be construed
      as
      a waiver, or a relinquishment for the future of such covenant of option, but
      the
      same shall continue and remain in full force and effect. The receipt by the
      LESSOR of rent, with knowledge of the breach of any covenant, agreement or
      obligation hereof shall be not deemed to be a waiver of any such breach to
      have
      been made unless expressed in writing and signed by the LESSOR

    


    SECTION
      31 - TIME OF ESSENCE.
      In all
      instances where LESSOR or LESSEE is required hereunder to pay any sum or do
      any
      act at a particular indicated time or within an indicated period, it is
      understood and stipulated that time is of the essence.

    


    
      
        
          	
                  Lease
                    Agreement IsoRay - September 1, 2007

                	
                  Page 7
                    of
                    8 

                


        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      32 - INTEGRATON.
      This
      AGREEMENT contains all of the agreements, representations, and understandings
      of
      the parties hereto and supersedes and replaces any and all previous
      understandings, commitments, or agreements, oral or written, related to this
      AGREEMENT set forth herein.

    


    SECTION
      33 - SEVERABILITY.
      If any
      part, term, or provision of this AGREEMENT shall be held void, illegal,
      unenforceable, or in conflict with any law of a federal, state, or local
      government having jurisdiction over this AGREEMENT, the validity of the
      remaining portions of provisions shall not be affected thereby.

    


    SECTION
      34 - JURISDICTION.
      This
      AGREEMENT shall be enforced and interpreted under the laws of the State of
      Washington.

    


    SECTION
      35 - PREVAILING PARTY. In
      the
      event that either party hereto brings an action at law or in equity for the
      enforcement of any provision of this AGREEMENT, the prevailing party shall
      be
      entitled to recover all costs and expenses including reasonable attorney's
      fees
      incurred both at trial and on appeal.

    


    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this AGREEMENT on the date first stated
      above.

     

    
      
        	PERMA-FIX
                 NORTHWEST,
                INC.    	 	ISORAY,
                INC.               
                
	 	 	 	 	 
	
                By: 
                  

              	/s/ Richard
                Grondin for	 	
                By: 
                  

              	/s/ Jonathan
                R. Hunt
	 	
                
                  

                

                Name: 
                  Jim Morrison, CPA
Title: Business
                  Manager

              	 	 	
                
                  

                

                
                  Name: 
                    Jonathan R. Hunt
Title: Chief Financial Officer 

                

              
	 	Date:
 
                10/10/2007	 	 	Date:
 
                10/10/2007


      

       

    

    
      
        
          
            	
                    Lease
                      Agreement IsoRay - September 1, 2007

                  	
                    Page
                      8 of
                      8