ENGAGEMENT LETTER AGREEMENT

The purpose of this letter agreement (“Agreement”) is to confirm the engagement of Maxim Group LLC (“Maxim”) by IsoRay, Inc. (“Company”) to act as one of the two exclusive co-placement agents in connection with the “best-efforts” proposed offering (“Offering”) of equity or equity-linked securities (“Securities”) of the Company. The gross proceeds from the Offering will be up to $20,000,000 and the terms of the Securities and the gross proceeds of such Offering will be set forth in a purchase agreement (“Purchase Agreement”) with investors (as defined below). It is understood that Maxim and Punk, Ziegel & Company, L.P. will be the exclusive co-placement agents (the “Placement Agents”) of the Offering.

1. Appointment.

(a) Subject to the terms and conditions of this Agreement, the Company hereby retains Maxim, and Maxim hereby agrees to act, as one of the Company’s two exclusive co-placement agents in connection with the Offering. As placement agent for the Offering, Maxim will advise and assist the Company in identifying, and assisting the Company in issuing the Securities to, one or more Investors (“Investors”) in the Offering. The Company acknowledges and agrees that Maxim’s is only required to use its “commercially reasonable efforts” in connection with the Offering and that this Agreement does not constitute a commitment by Maxim to purchase the Securities. The Company retains the right to determine all of the terms and conditions of the Offering and to accept or reject and proposals submitted to it by Maxim in its sole and absolute discretion.

(b) During the Term of this Agreement (as such term is hereinafter defined), neither the Company nor any of its subsidiaries will, directly or indirectly, solicit or otherwise encourage the submission of any proposal or offer (“Investment Proposal”), from any person or entity relating to any issuance of the Company’s or any of its subsidiaries’ equity securities (including debt securities with any equity feature) or participate in any discussions regarding an Investment Proposal. The term “Investment Proposal” shall not include (i) any investment in the equity securities of any other entity, (ii) any commercial loans to the Company, and (iii) any transaction or agreement with one or more persons, firms or entities designated as a “strategic partner” of the Company, as determined in good faith by the Board of Directors of the Company, provided that each such person, firm or entity is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities. The Company will immediately cease all contracts, discussions and negotiations with third parties regarding any Investment Proposal.

2. Compensation and Expenses.

(a) In consideration of the services rendered by Maxim in connection with the Offering, the Company agrees to pay Maxim a cash fee (the “Placement Fee”) payable upon the closing of the transactions contemplated by this Agreement (“Closing”) equal to three point fifteen percent (3.15%, or 45% of the 7.0% total cash fee payable to the Placement Agents) of the gross proceeds received by the Company from Investors at the Closing. Upon the execution of this engagement letter, the Company shall deliver to Maxim $25,000 (by check or wire transfer of immediately available funds) as a non-refundable cash retainer fee, which shall be creditable against the payment of any Placement Fee. The Company will reimburse Maxim in a timely manner for its out-of-pocket expenses relating to the Offering, including but not limited to legal fees, printing expenses, travel and other related expenses, provided that Maxim shall obtain the Company’s prior approval if and when such expenses should cumulatively reach $35,000.

(b) The Company shall deliver a warrant, or, if so requested, warrants, to Maxim and/or its designees (the “Agent Warrant”), which Agent’s Warrant shall be exercisable to purchase additional Securities equal to two and three quarters percent (2.75%, or 55% of the 5% total warrants payable to the Placement Agents) of the total number of shares sold pursuant to the Offering. The Agent’s Warrant will be exercisable at any time and from time to time, in whole or in part, during the four-year period commencing one year from the Offering, at a price per share equal to 110% of the per share offering price of the Securities in the Offering. The Agent’s Warrant will provide for registration rights (including a one time demand registration right and unlimited piggyback rights), cashless exercise and customary anti-dilution provisions (for stock dividends and splits and recapitalizations) consistent with the National Association of Securities Dealers, Inc. (“NASD”) Rules of Fair Practice and satisfactory to Maxim and its counsel.

3. Term of Engagement.

(a) This Agreement will remain in effect until one year after the date hereof, after which either party shall have the right to terminate it on thirty (30) days prior written notice to the other. The date of termination of this Agreement is referred to herein from time to time as the “Termination Date”. The period of time during which this Agreement remains in effect is referred to herein from time to time as the “Term”. If, within one year after the Termination Date, the Company completes any private financing of equity or debt or other capital raising activity of the Company (other than the exercise by any person or entity of any options, warrants or other convertible securities other than the warrants issued pursuant to this Agreement) with any of the Investors who were first introduced to the Company in connection with the financing contemplated hereby by Maxim (i.e., an “Introduced Party”), the Company will pay to Maxim upon the closing of such financing the compensation set forth in Section 2 as a “Source Fee”. In the event that any merger, acquisition, change of control transaction or sale of all or substantially all of the assets of the Company shall be consummated with any Investor contacted by Maxim during the term of this Agreement, the Company shall pay to Maxim a mutually agreed upon fee reflecting industry standards for such transactions of such type. For purposes of this Section 3(a), “Introduced Party” shall mean a person with whom Maxim has had at least one face-to-face or telephone conversation in connection with Maxim’s provision of services to the Company hereunder and who is included in a list of Introduced Parties, which shall be maintained by Maxim and a true and correct copy of which shall be furnished to the Company upon closing and/or termination of the engagement contract. Such a list is deemed confidential and is not to be disseminated to anyone other than IsoRay employees and members of the Board of Directors of IsoRay.

(b) Notwithstanding anything herein to the contrary, subject to the one year limitation described in Section 3(a) above, the obligation to pay the compensation and expenses described in Section 2, and the provisions of Sections 6, 7, 9-18 and all of Exhibit A attached hereto (the terms of which are incorporated by reference hereto), will survive any termination or expiration of this Agreement.

4. Right of First Refusal.

If the Company executes definitive transaction documents with an Investor relating to the Offering, Maxim will have the right of first refusal to act as a managing underwriter of any public offering of the Company’s equity or debt securities, and will have the right of first refusal to act as a co-placement agent on any private placement of any of the Company’s equity or debt securities (excluding (i) sales to employees under any compensation or stock option plan approved by the stockholders of the Company, (ii) shares issued in payment of the consideration for an acquisition and (iii) conventional banking arrangements and commercial debt financing) of the Company or any subsidiary or successor of the Company during the one-year period following the completion of the Offering. If Maxim fails to accept in writing any such proposal for such public or private sale within 30 days after receipt of a written notice from the Company containing such proposal, then Maxim will have no claim or right with respect to any such sale contained in any such notice. If, thereafter, such proposal is modified in any material respect, the Company will adopt the same procedure as with respect to the original proposed public or private sale.

5. Information.

(a) The Company recognizes that, in completing its engagement hereunder, Maxim will be using and relying on publicly available information and on data, material and other information furnished to Maxim by the Company or the Company’s affiliates and agents. The Company will cooperate with Maxim and furnish, and cause to be furnished, to Maxim, any and all information and data concerning the Company, its subsidiaries and the Offering that Maxim deems appropriate, including, without limitation, the Company’s acquisition plans and plans for raising capital or additional financing (to the extent available to the Company in the case of parties other than the Company) that is reasonably requested by Maxim. The Company represents and warrants to Maxim that all such information: (1) made available by the Company to Maxim or its agents, representatives and any potential participant in the Offering, (2) contained in any preliminary or final Private Placement Materials prepared by the Company in connection with the Offering, and (3) contained in any filing by the Company with any court or governmental regulatory agency, commission or instrumentality, will be complete and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading in the light of the circumstances under which statements are made. The Company further represents and warrants to Maxim that all such Information will have been prepared by the Company in good faith and will be based upon assumptions which, in light of the circumstances under which they were made, are reasonable. It is understood and agreed that in performing under this engagement, Maxim will be