BENTON-FRANKLIN ECONOMIC DEVELOPMENT DISTRICT REGIONAL REVOLVING LOAN FUND DEVELOPMENT LOAN AGREEMENT
XXXXXX-XXXXXXXX
ECONOMIC DEVELOPMENT DISTRICT
REGIONAL
REVOLVING LOAN FUND
THIS
AGREEMENT made and entered into this 15th
day of
September, 2004, by and between XXXXXX-XXXXXXXX ECONOMIC DEVELOPMENT DISTRICT,
Richland, Washington, a component of the XXXXXX-XXXXXXXX COUNCIL OF GOVERNMENTS
(BFEDD), and IsoRay Medical, Inc.(BORROWER).
W
I T N E
S S E T H:
Throughout
the term of this Agreement and related documents, the following terms are
defined and hereinafter referred to as follows:
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LENDER:
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Xxxxxx-Xxxxxxxx
Economic Development District
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BORROWER:
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IsoRay
Medical, Inc.
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PROJECT:
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Business
start-up Medical isotope production
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GUARANTORS:
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Xxxx
Xxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxx, Xxx Xxxxxxxx, Xxx Xxxxx,
Xxxxx
Xxxxx, Xxxx Xxxxxxxx, Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxx Xxxxxx, Xxxxxxx
Xxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxx and Xxxx
Xxxxxx.
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PROJECT
AREA:
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Xxxxxx
County
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PROGRAM
AUTHORITY:
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This
loan is authorized pursuant to the provisions of Title IX of the
Economic
Development Act of 1965, as amended.
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WHEREAS,
Borrower has filed with the BFEDD its formal application for a loan to be
issued
in
accordance with the provisions of the Program Authority; and
WHEREAS,
the purpose of the loan is set forth in the Project application;
and
WHEREAS,
BFEDD, in reliance on information submitted by Borrower in its
application,
financial records, and supporting documentation has determined to loan
funds
to
Borrower in accordance with the terms of this Agreement and supporting
documents,
which application and documents specifically disclose the only existing
creditors
(other than those acquired in the regular course of business);
NOW,
THEREFORE, the parties agree as follows:
I.
TERM
OF AGREEMENT
The
term
of this Agreement shall be for a period of approximately Sixty
(60)
months and shall commence on the 15th
day of
September,
2004,
and
terminate, unless otherwise extended in writing by mutual agreement of the
parties, on the 1st
day of
October,
2009;
provided, however, that in no event shall this Agreement terminate until
all
sums loaned to Borrower by BFEDD, and other sums due under this Agreement
and
the Promissory Note (Exhibit “A”)
have
been paid to BFEDD.
II.
FUNDING
PROVISIONS
1. BFEDD
will loan to Borrower the maximum sum of Two
Hundred Thirty Thousand Dollars ($230,000),
which
will be paid to Borrower in accordance with the terms of this Agreement and
as
follows:
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(a)
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Each
disbursement of loan funds by BFEDD, whether in installments or
in a lump
sum, shall first be requested by Borrower, in writing, and shall
be in
such amount as is supported by invoices or other documents acceptable
to
BFEDD.
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(b)
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The
total cumulative amount of such disbursements shall not exceed
the maximum
amount of the loan as set forth above.
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(c)
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No
more than (1) disbursement of loan funds will be made each week,
and all
disbursement of funds will be accomplished by January
30th, 2005.
BFEDD is under no obligation to disburse funds to Borrower after
that
date. Additionally, if at any time during that six-month period
there
remain funds un-disbursed and, in the sole opinion of BFEDD, the
Borrower
is failing to meet any terms of this loan agreement and its exhibits,
including the promissory note, BFEDD has the option of refusing
to
disburse the balance of the funds and the Borrower will be obligated
only
for the funds drawn to date plus interest and fees on that
amount.
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(d)
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The
loan of funds shall be evidenced by a Promissory Note; a copy of
which is
attached hereto, marked Exhibit “A”,
and by this reference incorporated herein.
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(e)
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The
loan shall be repaid in accordance with the terms of the Promissory
Note.
BFEDD will provide an amortization schedule when final disbursement
of
loan funds is made.
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2.A
loan organization fee of one and one-half percent (1-1/2%) of each disbursement
will be charged and shall be deducted from the proceeds of such disbursement
of
loan funds to borrower.
3. There
shall be due on each required payment a loan maintenance fee of one-half
of
one
percent (1/2%) per annum of the diminishing principal balance and said fee
shall
be deducted before any payment is credited to principal and
interest.
4. BFEDD
loan funds must be used by the Borrower for eligible Project costs consistent
with those costs identified in the loan application and as set forth
below:
5. Borrower
may, at its option, at any time and without penalty, make advance payments
on
all or any part of the principal of the loan then remaining unpaid.
6.
Payments
shall be made payable to the order of and sent to:
XXXXXX-XXXXXXXX
ECONOMIC DEVELOPMENT DISTRICT
X.X.
Xxx
000
Xxxxxxxx,
Xxxxxxxxxx 00000
or
to
such other address as BFEDD may direct in writing.
7. Any
payment to be made by the Borrower on the Promissory Note that has not been
received by BFEDD within fifteen (15) days of the payment due date, shall
be
deemed late and a penalty of five percent (5%) of the current payment due
will
be assessed as a late charge and shall be deducted from such payment before
any
amount is credited to interest or principal.
III.
SECURITY
1. As
security for the repayment of the loan, Borrower shall provide, or cause
to be
provided prior to disbursement of any funds hereunder, the
following
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(a)
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A
Promissory Note (Exhibit “A”)
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(b)
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A
security position in all equipment, materials and inventory as
evidenced
by a Security Agreement, which is attached hereto as Exhibit “B”,
and by this reference incorporated herein.
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(c)
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The
personal guarantee of Xxxx
Xxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxx, Xxx Xxxxx, Xxxxx Xxxxx, Xxxx
Xxxxxxxx, Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxx Xxxxxx, Xxxxxxx Xxxxxx,
Xxx
Xxxxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxx, and Xxxx Xxxxxx,
said guarantee being attached hereto as Exhibit “C” -
C-10 and incorporated herein by
reference.
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2.
Borrower
agrees to timely execute all documents necessary to perfect said
security interest.
3.
This
Agreement shall not become operative and no disbursements of any funds
hereunder shall be made unless and until Borrower has fully
executed and delivered to BFEDD Exhibits “A,” “B,”
and
“C,”
and any
other documents required by BFEDD or necessary to perfect a security
interest.
IV.
PRIORITY
OF PROMISSORY NOTE
The
agreement between Borrower and BFEDD shall be as set forth herein and as
set
forth
on
a
Promissory Note dated (Exhibit “A”),
and by
various other attachments to this Agreement and security instruments and
other
terms and conditions set forth herein. Any conflict between said Promissory
Note
and other documents under the terms of this Agreement shall be resolved in
favor
of the terms contained in the Promissory Note.
V.
COVENANTS
1.
Compliance
with the following covenants shall begin at the execution of this
Agreement, except for those items dependent upon the analysis
of
Borrower’s
financial statements for which annual determination of compliance shall commence
with Borrower’s
fiscal
year-end consolidated statement for its fiscal year. Borrower (including
any
subsidiaries as defined in Paragraph 2 below) hereby agrees that, without
prior
written consent of BFEDD:
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(a)
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As
defined by generally accepted accounting principles, the Borrower
will not
allow its net working capital position ratio of current assets
to current
liabilities to be less than 1.3 to 1.0.
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(b)
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It
will make no loans or advances to the Borrower’s
officers, employees, or owners, except those usually made in the
ordinary
course of business, and the total of all such loans and advances
outstanding shall not exceed Five Thousand Dollars ($5,000.00)
at any one
time.
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(c)
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It
will not become liable either directly or indirectly for obligations
of
others.
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(d)
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It
will pay no dividends and make no distributions on its ownership
interests.
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(e)
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It
will not further encumber its assets or incur indebtedness in addition
to
that now existing and that provided for in this Loan Agreement,
except
indebtedness regularly incurred in the ordinary course of business
and
payable within one (1) year without prior notification of the
BFEDD.
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(f)
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It
will not sell or transfer all or a substantial part of its assets,
except
those usually sold in the ordinary course of business.
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(g)
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It
will not pay annual compensation to its officers, directors (or
family
members of its officers, directors, or to any salaried individual,)
in
excess of One
Hundred Thousand
Dollars ($100,00.00)
annually for all of said persons combined during the life of the
loan.
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(h)
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It
will not purchase fixed assets or incur any additional long-term
lease and
lease-purchase obligations which require aggregate annual payments
exceeding twenty-four
Thousand Dollars ($24,000.00)
per year. No fixed asset expenditures shall be made or lease or
lease-purchase obligations incurred, the result of which would
be to
reduce Borrower’s
ratio of current assets to current liabilities below 1.3 to 1.0,
subject
to re-negotiation, depending upon the need and to be reviewed by
BFEDD.
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(i)
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It
will not permit its consolidated ratio of long-term debt (including
long-term lease and lease-purchase obligations that shall be capitalized
for the purposes of this Agreement) to equity (including subordinated
debt) to exceed at any time 3.0 to 1.0. Borrower certifies that
there is
currently no long-term debt except as may be disclosed on page
2
hereinabove.
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(j)
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It
will not purchase, retire, or acquire, except by gift, any of its
ownership interest, and it will not merge with any other corporation
or
business entity except as approved by the BFEDD, except in the
case of the
normal sale or acquiring of stock.
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(k)
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Borrower
will not pay annual rent on the premises at 000 Xxxxx Xxxxxx, Xxxxx
000,
Xxxxxxxx, XX 00000, in excess of forty-five
Thousand Dollars ($45,000.00)
during the life of the loan.
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2.
Borrower
warrants that none of its principal and/or owners has been debarred or
suspended, is ineligible, or has been voluntarily excluded from a transaction
covered by 15 CFR 26.2315, 26.220, and/or 26.625. If, after date hereof,
BFEDD
determines that borrower or any principals and/or owners have been debarred
or
suspended, then any amounts due BFEDD under this Loan Agreement and/or
the
Promissory Note shall become immediately due and payable in
full.
3. For
the
purposes of this Agreement, Borrower’s
consolidated financial statements, prepared in accordance with generally
accepted accounting principles, shall include Borrower and all its subsidiaries
(i.e., corporate, foreign and domestic, in which Borrower owns, directly
or
indirectly, more than fifty percent (50%) of the outstanding capital stock),
and
shall be consolidated in accordance with generally accepted accounting
principles.
4.
Borrower
shall submit to BFEDD, at least quarterly and more frequently if required
by
BFEDD, financial statements of Borrower, including an income, expense, and
retained earnings statement covering the period having elapsed from the date
of
the last prior such submissions, and a balance sheet which is not more than
thirty (30) days old. Where there is, in the opinion of BFEDD, evidence of
inaccuracies in the Borrower’s
accounting or noncompliance with the terms of this Agreement, BFEDD may,
at its
option, require Borrower’s
financial statements to be audited by an independent certified public
accountant. Should the audit verify the existence of such inaccuracies or
noncompliance, Borrower shall be required to reimburse BFEDD for the services
of
such certified public accountant. On an annual basis, Borrower shall supply
an
annual financial review statement prepared by a certified public accountant.
Based
upon financial review statements supplied by the Borrower, the BFEDD may
require
up to 50% of net earnings after taxes be applied to the principal of the
loan at
the end of each fiscal year.
5. Borrower
agrees that in any public announcements, other than paid advertising, concerning
subject business, the financial support of the BFEDD and (where applicable)
CDBG
shall be acknowledged.
6. Commencing
on the 1st
day of
January, 2005, the Borrower shall submit to BFEDD the Employment Monitoring
Form
detailing the number of employees, including job classification, race, sex
and
household income on Borrower’s
payroll
during the preceding three (3) months and such other employment information
as
BFEDD may from time to time require. THIS
PROVISION SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.
7. BFEDD
shall make no disbursements to Borrower under the terms of this Agreement
prior
to receipt of evidence, satisfactory to BFEDD, of Borrower’s
interest in and/or control of the real property which is part of the Project.
Such evidence may include a lease, a policy of title insurance, or other
evidence satisfactory to BFEDD indicating that Borrower has such interest
in
property as necessary for the operation of the Project during the term of
this
Agreement.
8. Borrower
warrants that there is no encumbrance, lien, easement, license, title cloud,
or
outstanding interest of any type which may in any way interfere with operations
and/or maintenance of Project contemplated herein. The fact that BFEDD has
required, examined, and/or passed on any document of title as described in
paragraph 7 above shall in no manner diminish the effect of the preceding
warranty, nor create any liability on the part of BFEDD, it being understood
and
agreed that the facts relating to control of the Project Area and related
real
estate interest are more readily available to Borrower than to
BFEDD.
9. Borrower
warrants that there has been no un-remedied adverse change since the date
of the
application for this loan in the financial or any other condition of Borrower
that would warrant withholding or not making any disbursements under this
agreement.
10. During
the term of this Agreement, Borrower shall not sell, transfer, exchange,
mortgage, lease, hypothecate, or otherwise encumber in any manner, all or
a
portion of the personal property, real property, or improvements now existing
or
hereafter acquired by Borrower as a part of Project, without prior written
consent of BFEDD except for the property sold in the ordinary course of
business.
11. Borrower
agrees that all contracts between Borrower and any other contractor or
contractors related to Project shall:
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(a)
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Be
awarded in accordance with all applicable laws and
regulations.
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(b)
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Prohibit
discrimination against any person who is employed in the work covered
by
such contracts, or who is a candidate for such employment, because
of sex,
race, age, religion, color, physical handicap, national origin,
or marital
status. Such provisions shall include, but not be limited to, the
following: employment upgrading, promotion or transfer, recruitment,
advertising, layoff or termination, rates of pay or other forms
of
compensation, and selection for training, including apprenticeship.
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(c)
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Require
contractor compliance with all air pollution and environmental
control
rules, regulations, ordinances, and statutes that apply to work
performed
pursuant to the contract, including, but not limited to, both the
National
Environmental Protection Act and the Washington State Environmental
Protection Act.
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12.
BFEDD
may, at any and all reasonable times during the term of this Agreement,
enter Borrower’s
business premises for the purpose of inspecting the Project during the
course of
or following the completion of the Project thereon, and for any other purpose
arising from the performance of this Agreement.
13. The
respective successors and assigns of Borrower shall be bound to observe the
terms of this Agreement, and Borrower shall deliver to BFEDD evidence that
any
successor or assign has agreed, in writing, to assume Borrower’s
responsibilities hereunder.
14. Borrower
shall at times during the term of this Agreement:
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(a)
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Continuously
operate in an efficient and economical manner all Project facilities
acquired, improved, maintained, and completed in full or in part,
as a
result of the loan made hereunder.
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(b)
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Maintain
in full force and effect, at the time of final approval by BFEDD
and prior
to disbursement of funds, and effective fire and hazard insurance
policy
to the full insurable value, and a liability insurance policy in
the
minimum amount of $1,000,000. Such policy or policies shall be
in a form
satisfactory to BFEDD and
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(1)
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Borrower
shall, upon receipt thereof, forthwith submit to BFEDD copies thereof,
including any new or renewal policies effective during the term
of this
Agreement. Copies of such policy or policies shall be submitted
at least
twenty (20) days prior to the effective date or dates
thereof.
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(2)
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Such
policy or policies shall contain the following
endorsement:
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“The
Xxxxxx-Xxxxxxxx Economic Development District, its officers, employees,
and agents, are hereby declared to be additional insured, and
lender’s
loss payee under the terms of this policy, as to activities of
both
IsoRay
Medical, Inc.
and Xxxxxx-Xxxxxxxx Economic Development District with respect
to the
Project, and this policy shall not be cancelled without thirty
(30)
days’
written notice to Xxxxxx-Xxxxxxxx Economic Development
District.”
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(3)
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Loss
under said fire hazard and liability insurance policy or policies
shall be
payable to BFEDD, as its interest may appear, for deposit in an
appropriate trust fund. If BFEDD deems it appropriate, the proceeds
may be
paid to Borrower upon Borrower’s
application for the reconstruction of the destroyed or damaged
facilities.
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(4)
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BFEDD
shall not be held liable for the payment of any premiums or assessments
of
such insurance policy or policies; EXCEPT THAT, should the Borrower
fail
to ay any insurance premiums when due, or fail to maintain in full
force
and effect insurance as provided for in this paragraph, BFEDD may
pay the
insurance premium, or provide insurance as provided for in this
paragraph,
and the amount so paid for said insurance with interest at the
rate set
forth in Exhibit “A”,
shall be added to and become a part of the amount due under the
terms of
Exhibit “A.”
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15. Maintain
in full force and effect a life insurance policy on the life of Xxxxx
Xxxxxx
in an
amount sufficient to protect BFEDD’s
interest herein, and naming BFEDD as primary beneficiary or, at
BFEDD’s
option,
ensure that the proceeds thereof are assigned to BFEDD. This requirement
shall
extend to any successor in interest of Xxxxx
Xxxxxx.
16. In
the
event that Borrower fails to make any payments as provided, or if the Borrower
fails to follow or abide by any of the loan covenants agreed to in consideration
of this Financing Agreement or breaches this agreement in any other manner
and
has been given fifteen (15) days written notice of such breach of, non-payment
and/or inefficient operation or maintenance of the business, breach of loan
covenants and has failed to correct the same, then the interest rate of any
amount due on this Financing Agreement shall increase to thirteen (13%) per
annum compounded on a monthly basis.
17. In
the
event that Borrower fails to make any payment as provided, of if Borrower
fails
to efficiently operate and/or maintain the Project, or breaches this Agreement
in any other manner and has been given fifteen (15) days’
written
notice of such breach, non-payment, or inefficient operation or maintenance,
and
has failed to correct the same, then all outstanding amounts of principal
and
interest of this loan shall become due and payable immediately, and BFEDD
may
pursue any legal remedy available to it to secure prompt payment of any and
all
monies owned by Borrower. Nothing herein shall preclude BFEDD from waiving
any
breach or breaches, which, in the sole judgment of BFEDD, are not substantial
or
do not affect the repayment of the loan herein prescribed. Waiver by BFEDD
of
any one or more breaches shall not be deemed a waiver of the right of BFEDD
to
pursue any legal remedy, which it may have with regard to any other breach
or
breaches. The remedies provided by this paragraph are cumulative and in addition
to and independent of any other remedies given BFEDD by law, and may include
the
requirement that Borrower avail itself of management assistance available
through sources other than Borrower’s.
18. Borrower
shall indemnify, hold harmless, and defend BFEDD, its officers, agents, and
employees against any and all claims, demands, damages, and costs arising
out of
acquisition, development, operation, or maintenance of the property or Project
described herein, except for liability arising out of the concurrent or sole
negligence of the BFEDD, its officers, agents, or employees.
19. In
the
event the BFEDD is named as co-defendant with Borrower in any court proceeding,
Borrower shall bear any BFEDD costs incurred for any representation that
BFEDD
may require. In this regard, BFEDD shall include its associated
entities.
20. Borrower
is a Washington Foreign profit corporation and agrees to do all things necessary
to maintain its legal corporate status, and shall furnish to BFEDD evidence
necessary to show that the corporate status is maintained during the term
of
this Agreement.
21. Borrower
warrants:
(a) That
this
Project is or will be located within the boundaries of Xxxxxx County. If
Borrower removes its
headquarters/head
office/principal place of business of the Project facilities from this
area, all
principal and accrued interest then owed by Borrower hereunder will
automatically become due and payable in full.
(b) That
this
Project is in compliance with all applicable local, state, and federal
land use
and permit requirements.
(a) That
if
the Project involves construction then, if applicable, accessibility to
the
handicapped is assured by compliance with the standards of 41 CFR, Part
01.
(d) Borrower
shall not discriminate against any employee or against any applicant for
employment because of sex, race, religion, color, physical handicap, national
origin, or marital status. Such provisions shall include, but not be limited
to,
the following: employment, layoff or termination, rates of pay or other
forms of
compensation, and selection for training, including apprenticeship.
22.
BFEDD
shall be under no obligation to disburse funds unless Borrower is in compliance
with the following requirements, and Borrower shall comply with and require
each
of his contractors and subcontractors employed in the completion of the
Project
to comply with all applicable federal and state laws. In complying with
these
laws, Borrower agrees, among other things it till take all positive steps
necessary, when required by BFEDD, to conform to the respective regulations
issued hereunder, including the institution of enforcement proceedings,
said
regulations being attached hereto as Exhibit “D”
and
incorporated herein by reference and including, but not limited to:
| (a) |
The
Xxxxx-Xxxxx Act, as amended (40 U.S.C. 276a-276a(5); 42 U.S.C.
3222).
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| (b) |
The
Contract Work Hours Standard Act, as amended (40 U.S.C.
327-332)
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| (c) |
The
Xxxxxxxx “Anti-Kickback”
Act, as amended (40 U.S.C. 276(c); 18 U.S.C.
847)
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| (d) |
No
federally appropriated funds have been paid or will be paid by
or on
behalf of the undersigned to any person for influencing or attempting
to
influence an officer or employee of any agency, a member of Congress,
an
officer or employee of Congress, or an employee of a member of
Congress in
connection with the awarding of any Federal contract, the making
of any
Federal grant, the making of any Federal loan, the entering into
of any
cooperative agreement, and the extension, continuation, renewal,
amendment, or modification of any Federal contract, grant, loan,
or
cooperative agreement.
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| (e) |
If
any funds other than federally appropriated funds have been paid
or will
be paid to any person for influencing or attempting to influence
an
officer or employee of any agency, a member of Congress, an officer
or
employee of Congress, or an employee of a member of Congress in
connection
with this Federal contract, grant, or cooperative agreement, the
undersigned shall complete and submit Standard Form LLL, “Disclosure
Form to Report Lobbying,”
in
accordance with its instructions.
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| (f) |
Title
VI of the Civil Rights Act of 1964, as amended (42 U.S.C. 2000(d)
-
2000(d)(4)); and Executive Orders 11114, 11246, and
11375.
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| (g) |
All
applicable laws, rules, and regulations applicable under the Title
IX EDA
Revolving Loan Fund Grant to BFEDD.
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| (h) |
All
Block Grant Requirements (if applicable) under Exhibit “E”
(attached hereto and incorporated herein by reference). In this
regard,
Borrower shall be required to execute and shall be bound by Exhibit
“E”
and its attachments.
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23. In
the
event either party desires or is required to send notice to the other,
such
notice shall be deemed to have been given when mailed to the address set
out
below with first class postage fully prepaid thereon
TO
LENDER: Xxxxxx-Xxxxxxxx
Economic Development District
X.X.
Xxx
000
Xxxxxxxx,
Xxxxxxxxxx 00000
TO
BORROWER: IsoRay
Medical, Inc.
000
Xxxxx
Xxxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
or
to
such other address as may be directed in writing.
24. Borrower
agrees to make affirmative effort to hire low and moderate income persons
and
the long-term unemployed. Borrower will furnish to BFEDD documentation
on
persons hired as a result of the expansion, establishing whether newly
hired
employees meet this criterion. The form of reporting is attached hereto
as
Exhibit “F”,
however, this form may be changed by BFEDD during the term of this Agreement.
25. Borrower
warrants that, as a result of this loan, it intends to be able to increase
its
employment to forty (40)
persons
within forty-eight (48)
months.
This intent has been taken into consideration in granting this loan, and
if
Borrower is unable, for any reason, to attain this employment increase,
BFEDD
may, at its option, increase the interest on this loan by three and one-half
percent (3-1/2%) to a total of Eleven
percent
(11%).
26. Borrower
understands that this Agreement and the obligation of BFEDD to disburse funds
pursuant to this Agreement are based entirely upon the availability of funds
under the Economic Development Administration Title IX of the Public Works
and
Economic Development Act of 1965, as amended, and if for some reason the
funds
or any portion thereof cease to be available at any time, then the BFEDD
is not
liable for failure to complete the terms of this loan.
27. Borrower
waives any claim or causes of action it may have against BFEDD for failure
to
advance the monies as provided for in this Agreement.
28. Failure
to BFEDD to exercise any right—whether
once or often—shall
not
be construed as a waiver of any covenant or condition or of the breach of
such
covenant or condition. Such failure shall also not affect the exercise of
such
rights without notice upon any subsequent breach of the same or any other
covenant or condition.
29. Time
is
of the essence in this Agreement and its supporting documentation, including
the
Promissory Note and security instruments. This Agreement constitutes the
only
agreement between the parties and there are no other agreements, oral or
written, pertaining to the subject matter herein.
30. ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW AND
BORROWER WILL MAKE NO CLAIM AGAINST BFEDD AS TO ANY ALLEGED ORAL AGREEMENTS
OR
COMMITMENTS BY OR FROM BFEDD, ITS AGENTS, EMPLOYEES, EMPLOYEES, OR OTHERS
CLAIMING TO REPRESENT BFEDD.
IN
WITNESS WHEREOF, the parties have executed this Agreement the day and year
first
above written.
XXXXXX-XXXXXXXX
ECONOMIC DISTRICT IsoRay
Medical, Inc.
|
By:
/s/ Xxxx Xxxxx
|
By:
/s/ Xxxxx Xxxxxx
|
||
|
Xxxx
Xxxxx
|
Xxxxx Xxxxxx, President, CEO
|
||
|
Title:
Executive Director
|
|||
|
/s/ Xxxxxxx Xxxxxx
|
|||
|
Xxxxxxx Xxxxxx,
Secretary/Treasurer/CFO
|
EXHIBIT
A
XXXXXX-XXXXXXXX
ECONOMIC DEVELOPMENT DISTRICT
REGIONAL
REVOLVING LOAN FUND
PROMISSORY
NOTE
| $230,000 |
15th
September, 2004
|
||
| Richland, Washington |
This
Promissory Note is given as evidence of the obligation of the undersigned
to
repay all sums which the XXXXXX-XXXXXXXX ECONOMIC DEVELOPMENT DISTRICT (BFEDD)
may advance to IsoRay,
Medical, Inc.
(BORROWER), pursuant to the terms of a Development Loan Agreement between
BFEDD
and BORROWER dated the 15th
day of
September,
2004
for
Two
Hundred Thirty Thousand Dollars
($230,000),
which
is the maximum amount to be loaned.
For
value
received, the undersigned promises to pay to the order of the XXXXXX-XXXXXXXX
ECONOMIC DEVELOPMENT DISTRICT at its office at 0000 Xxxxxxxx Xxxxx (X.X.
Xxx
000), Xxxxxxxx, Xxxxxxxxxx 00000, or such other address as may be directed,
the
total unpaid principal balance of all advances, plus interest thereon at
the
rate of Seven
and one-half percent
(7.5%) per annum from the date funds are advanced, plus a loan servicing
fee of
one-half of one-percent (1/2%) per annum on the unpaid principal balance.
Principal, interest, and service fees are payable in installments as
follows:
1. Commencing
on the 1st day of October 2004, and on the 1st day of each month for
sixty
(60)
consecutive months thereafter, there shall be due monthly the payment
of
$2,855.00.
Each
monthly payment shall be applied first to service charges, then interest,
and
then to principal. The entire balance, including principal, interest, and
service charge shall be payable in full on or before the 1st
day of
October,
2009.
2. In
the
event Borrower fails to meet the employment projections set out in Paragraph
25
of the Development Loan Agreement of even date, BFEDD has the option of
increasing, from date of written notice of intent to do so, the interest
rate of
7.5 herein to eleven
percent
(11%).
Any
payment hereunder that has not been received by BFEDD within fifteen (15)
days
of the due date shall be deemed to be late and a penalty of five percent
(5%) of
the payment due will be assessed as a late charge and shall be deducted before
any application of the funds to principal or interest or service
charges.
Disbursements
under this loan shall be made in accordance with the Development Loan Agreement.
Any such disbursements in conformity with the Development Loan Agreement
shall
be conclusively presumed to have been made to, or for the benefit of,
IsoRay
Medical, Inc.,
the
BORROWER. The undersigned warrants that this loan is, and the disbursements
hereunder are, for the purposes set forth in the Loan Agreement.
For
value
received, each party signing or endorsing this Promissory Note waives
presentment, demand, protest and notice of non-payment and agrees to be bound
as
a principal and not as a surety and promises to pay all costs of collection,
including reasonable attorney fees, whether or not suit is commenced. Should
default be made in a payment of any installment when due, the whole sum of
principal, interest, late fees, and loan maintenance fees shall become
immediately due at the option of BFEDD, without notice.
In
case
of suit or action to enforce the terms of this Promissory Note, each party
signing or endorsing this Promissory Note consents to the personal jurisdiction
of the Washington courts and the federal courts located in the State of
Washington and, at the option of the holder of this Promissory Note, venue
may
be in either Xxxxxx or Xxxxxxxx County, Washington.
DATED
this 15th
day of
September,
2004.
|
IsoRay
Medical, Inc.
|
||
|
By:
/s/ Xxxxx Xxxxxx
|
||
|
|
Xxxxx Xxxxxx, President, CEO | |
|
By:
/s/
Xxxxxxx Xxxxxx
|
||
|
Xxxxxxx
Xxxxxx, Secretary/Treasurer
|
||
|
Exhibit
“A” -
Page 1
|
Initials
/s/ MFD
|
|
|
Initials
/s/ RG
|
SECURITY
AGREEMENT -
EQUIPMENT
(Except
Aircraft)
As
security for the payment by IsoRay
Medical, Inc.,
a
Washington corporation (“Borrower”)
to
Xxxxxx-Xxxxxxxx
Economic Development District (“Bank”)
of a
promissory note executed by Borrower in favor of Bank now, in the past or
in the
future, together with interest thereon, and all renewals, modifications,
or
extensions thereof, (a) all existing and future obligations of any Borrower
hereunder to Bank, direct, indirect or contingent, joint or several, whether
or
not such obligations are related to the original obligations being secured,
by
class or kind, are now contemplated by Borrower and Bank or are identified
as
being secured by the Collateral; and (b) all amounts advanced or expended
by
Bank for the maintenance or preservation of the Collateral, Borrower hereby
grants to Bank a security interest in the following property (herein called
“Collateral”):
IN
ALL OF
BORROWER’S
EQUIPMENT, INCLUDING MACHINERY AND OFFICE EQUIPMENT, TOGETHER WITH ALL PARTS,
FITTINGS, ACCESSORIES, AND SPECIAL TOOLS, AND RENEWALS OR REPLACEMENTS OF
ALL OR
ANY PART THEREOF; AND IN ALL WORK IN PROCESS AND FINISHED GOODS, WHETHER
NOW
OWNED OR HEREAFTER ACQUIRED BY BORROWER, AND LOCATED IN KENNEWICK,
WASHINGTON
including all current and future patents.
together
with any and all accessories, equipment, parts, appliances and appurtenances
now
or hereafter a part thereof, substitutions therefore, accessions and repairs
thereto, and the increase and increment thereof, and in case this Agreement
specifically describes furniture, furnishings, machinery, equipment or
appliances, then, in addition, Borrower grants Bank a security interest in
all
of the furniture, furnishings, equipment, appliances, and personal property
of
every kind and nature not specifically described herein, but not or hereafter
owned by Borrower, or in which Borrower may have or may hereafter acquire
any
interest, and now or hereafter located at, upon or about, or located in or
attached to buildings on, the premises at the address set forth below; Provided,
however, that Bank’s
security interest shall not attach to consumer goods, other than accessions
or
replacements, in which Borrower acquires an interest ten days subsequent
to the
time Bank gives value under the terms hereof.
THE
BORROWER UNDERSTANDS AND AGREES THAT THE PROVISIONS APPEARING ON THE ATTACHED
HEREOF CONSTITUTE A PART OF THIS INSTRUMENT AS FULLY AS IF THEY WERE PRINTED
ON
THE FACE HEREOF ABOVE THE BORROWER’S
SIGNATURE.
DATED
this 15th
day of
September, 2004.
|
IsoRay
Medical, Inc.
|
||
|
By:
/s/ Xxxxx Xxxxxx
|
||
|
|
Xxxxx Xxxxxx, President, CEO | |
|
By:
/s/
Xxxxxxx Xxxxxx
|
||
|
Xxxxxxx
Xxxxxx,
Secretary/Treasurer/CFO
|
EXHIBIT
“B”
TERMS
AND
CONDITIONS
|
1.
|
Borrower
hereby warrants that Borrower is the sole owner and in possession
of all
the Collateral, and that the Collateral is free of all liens,
encumbrances, and adverse claims, with the exception of the security
agreements herein created. Borrower agrees, at his or her own expense,
to
appear in and defend any and all actions and proceedings affecting
title
to the Collateral or any part thereof, or affecting the security
interest
of Bank therein.
|
|
2.
|
Borrower
hereby agrees: To do all acts which may be necessary to maintain,
preserve, and protect the Collateral and to keep the Collateral
in good
condition and repair; not to cause or permit any waste or unusual
or
unreasonable depreciation thereof or any act for which the Collateral
might be confiscated; to pay before delinquency all taxes, assessments,
and liens now or hereafter imposed upon the Collateral; not to
sell,
lease, encumber, or dispose of all or any part of the Collateral;
at any
time upon demand of Bank, to exhibit to and allow inspection by
Bank of
the Collateral; not to remove or permit the removal of the Collateral,
other than motor vehicles, from the premises where it is now located,
nor
of any motor vehicle from the State of Washington, nor to change
the
address where any motor vehicle is regularly garaged, without the
prior
written consent of Bank; to provide, maintain, and deliver to Bank
policies insuring the Collateral against loss or damage by such
risks in
such amounts, forms, and companies as Bank requires with loss payable
solely to Bank. If Bank takes possession of the Collateral, the
insurance
policy or policies and any unearned or returned premium thereon
shall, at
the option of the Bank, become the sole property of Bank upon Bank
crediting the amount of any unearned premium upon the obligations
secured
hereby, such policies being hereby assigned to Bank.
|
|
3.
|
If
Borrower fails to make any payment or do any act as herein required,
then
Bank, but without obligation so to do, and without notice to or
demand
upon Borrower, may make such payments and do such acts as Bank
may deem
necessary to protect its security interest in the Collateral, Bank
being
hereby authorized (without limiting the general nature of the authority
herein conferred) to take possession of the Collateral, to pay,
purchase,
contest, and compromise any encumbrances, charge or lien which
in the
judgment of Bank appears to be prior or superior to its security
interest,
and in exercising any such powers and authority to pay necessary
expenses,
employ counsel and pay reasonable fees therefor, Borrower hereby
agrees to
repay immediately, and without demand, all sums so expended by
Bank,
including all reasonable attorney fees (including reasonable value
of
staff counsel) and related costs whether or not a suit is filed,
an appeal
is sought, or the matter is referred to arbitration, with interest
from
date of expenditure at the rate of twelve percent (12%) per
annum.
|
|
4.
|
Any
officer or employee of Bank is hereby irrevocably appointed the
attorney-in-fact of Borrower, with full power of substitution,
to sign any
certificate of ownership, registration card, application therefor,
affidavits, or documents necessary to transfer title to any of
the
Collateral, to receive and receipt for all licenses, registration
cards,
and certificates of ownership, and to do all acts necessary or
incident to
the powers granted to Bank herein, as fully as Borrower might.
Borrower
agrees to deliver to Bank all such certificates of ownership not
in
Bank’s
possession.
|
|
5.
|
Borrower
hereby assigns to Bank all rents, issues, income and profits of
or from
the Collateral. Any moneys received by Bank under the provisions
hereof
may at its option be applied upon any indebtedness secured hereby,
or
released.
|
|
6.
|
It
is specifically understood and agreed by each and every person
who is a
Borrower hereunder or Guarantor hereof that Bank may from time
to time and
without notice release or otherwise deal with any person now or
hereafter
liable for the payment or performance of any obligation hereunder
or
secured hereby, and renew, extend, or alter the time of terms of
payment
of any such obligation, and release, surrender, or substitute any
property
or other security for such obligation, or accept any type of further
security therefor, without in any way affecting the obligation
hereunder
of any Borrower or Guarantor; and consent is hereby given to delay
or
indulgence in enforcing payment or performance of any such obligation,
and
diligence, presentment, protest and demand and notice of every
kind, as
well as the right to require Bank to proceed against any person
liable for
the payment of any such obligation or to foreclose upon, dispose,
or
otherwise realize upon or collect or apply any other property,
real or
personal, securing any such obligation, as a condition or prior
to
proceeding hereunder, are hereby
waived.
|
|
7.
|
Should:
(1) default be made in the payment of any obligation, or breach
be made of
any warranty, statement, promise, term, or condition, contained
herein or
hereby secured; (2) any statement or representation made for the
purpose
of obtaining credit hereunder is determined by Bank to be false;
or (3)
Bank deem the Collateral inadequate or unsafe or in danger of misuse;
the
in any such event; Bank may, at its option and without demand first
made
and without notice to Borrower (if given, notice by ordinary mail
to
Borrower’s
address shown herein being sufficient), do any one or more of the
following: (a) Declare all sums secured hereby immediately due
and
payable; (b) immediately take possession of the Collateral wherever
it may
be found, using all necessary force so to do, or require Borrower
to
assemble the Collateral and make it available to Bank at a place
designated by Bank which is reasonably convenient to Borrower and
Bank,
and Borrower waives all claims for damages due to or arising from
or
connected with any such taking; (c) Proceed in the foreclosure
of
Bank’s
security interest and sale of the Collateral in any manner permitted
by
law, or provided for herein; (d) Sell, lease, or otherwise dispose
of the
Collateral at public or private sale, with or without having the
Collateral at the place of sale, and upon terms and in such manner
as Bank
may determine, and Bank may purchase same at any such sale; (e)
Retain the
Collateral in full satisfaction of the obligations secured thereby;
(f)
Exercise any remedies of a secured party under the Uniform Commercial
Code. Prior to any such disposition, Bank may, at its option, cause
any of
the Collateral to be repaired or reconditioned in such manner and
to such
extent as to Bank may seem advisable, and any sums expended therefor
by
Bank shall be repaid by Borrower and secured hereby. Bank shall
have the
right to enforce one or more remedies hereunder successively or
concurrently, and any such action shall not stop or prevent Bank
from
pursuing any further remedy which it may have hereunder or by law.
If a
sufficient sum is not realized from any such disposition of Collateral
to
pay all obligations secured hereby, Borrower hereby promises and
agrees to
pay Bank any deficiency.
|
|
8.
|
If
Bank takes possession of the Collateral and it contains any property
other
than Collateral, Bank is authorized, at Borrower’s
sole option, to either (a) send such other property by ordinary
mail,
parcel post, freight, or other means to Borrower at the address
show
above, unless Borrower has notified Bank of a different address
in
writing; or (b) store such other property with a public warehouse
for the
account of Borrower and send to Borrower at such address by ordinary
mail
the warehouse receipt issued therefore. Such sending or store shall
be at
Borrower’s
expense and risk and shall relieve Bank from all liability in connection
with such property.
|
|
9.
|
The
right to plead the statute of limitations as a defense to any and
all
obligations contained herein or secured hereby is waived, to the
full
extent permissible by law. Any Borrower who is a married person
hereby
expressly agrees that recourse may be had against his or her separate
property for any deficiency after sale of the Collateral. Time
and
exactitude of each of the terms, obligations, covenants and conditions
are
hereby declared to be the essence hereof. No waiver by Bank of
any breach
or default shall be deemed a waiver of any breach or default thereafter
occurring and the taking of any action by Bank shall not be deemed
to be
an election of that action, but rather the rights and privileges
and
options granted to Bank under the terms of this security agreement
shall
be deemed cumulative, the one with the other and not
alternative.
|
SECURITY
AGREEMENT
ACCOUNTS
RECEIVABLE AND/OR INVENTORY
THIS
AGREEMENT
is
entered into between
IsoRay Medical, Inc.
(“Borrower”)
and
Xxxxxx-Xxxxxxxx
Economic
Development
District (“Bank”).
1. As
used
in this Agreement, the following terms shall have the following
meanings:
A. “Accounts”
means
any right to payment for goods sold or leased, or to be sold or to be leased,
or
for services rendered or to be rendered no matter how evidenced, including
accounts receivable, chattel paper, contract rights, purchase orders, notes,
instruments, drafts, acceptances and other forms of obligations and
receivables.
B. “Inventory”
means
all of Borrower’s
goods,
merchandise and other personal property which are held for sale or lease
including those held for display or demonstration or out on lease or consignment
or to be furnished under a contract of service or are raw materials, work
in
process or materials used or consumed, or to be used or consumed, in
Borrower’s
business, and shall include all general intangibles, proprietary rights,
patents, trademarks, copyrights, plans, drawings, diagrams, schematics, assembly
and display materials relating thereto.
C. “Collateral”
means
the property subject to Bank’s
security
interest.
D. “Obligations”
means
all loans, advances, debts, liabilities, obligations, lease payments,
guarantees, covenants, and duties owing by the Borrower
to
Bank
of any
kind and description (whether or not evidenced by this Agreement, any note
or
other instrument or any other agreement between Bank
and
Borrower
and
whether or not for the payment of money), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, including,
without limitation , any debt, liability or obligation owing from Borrower
to
others which Bank
may have
obtained by assignment or otherwise, and further including, without limitation,
all interest and Bank
costs
and fees which
Borrower
is
required to pay or reimburse by this Agreement.
E. Any
words
or phrases appearing in this Agreement and not defined in “A”
through
“D”
above
shall be defined where applicable in accordance with the various definitions
set
forth in the Uniform Commercial Code.
2. As
security for any and all obligations of Borrower
to
Bank,
whether
now owing or hereafter incurred and whether direct, indirect, absolute, or
contingent, Borrower
hereby
grants to Bank
a
security interest in the following property: (a) all present and future
Accounts, chattel paper, security agreements and debts secured thereby,
documents, notes, drafts, instruments, contract rights, general intangibles,
all
guarantees and security therefor and all returned goods; (b) all present
and
hereafter acquired Inventory wherever located, including, but not limited
to,
raw materials, work in process and finished goods, goods held for sale or
lease,
goods under lease or consignment held by others, and materials used or consumed
in
Borrower’s
business; (c) all proceeds and products of the foregoing, including but not
limited to money, the Collateral account, goods, insurance proceeds, and
other
tangible or intangible property received upon the sale or disposition of
the
foregoing; (d) all
present and future patents, trade name and trademarks;
(e) all
present and future books and records pertaining to the foregoing and the
equipment containing said books and records. So long as Borrower
is
indebted to Bank,
Borrower
will
execute and deliver to Bank
such
assignments, including Bank’s
standard
forms of specific or general assignment covering individual accounts, notices,
financing statements, or other documents and papers as
Bank may
require or give any third party, including the account debtors obligated
on the
Accounts, notice of Bank’s
interest
in the Collateral. All future loans or advances shall be secured by the
Collateral, whether or not such future loans or advances are (a) related
to the
original obligations being secured, by class or kind, (b) now contemplated
by
Borrower
and
Bank,
or (c)
identified as being secured by the Collateral. Nothing contained in this
Agreement shall be construed as obligating Bank
to make
any future loan or advance.
3. Until
Bank
exercises its rights to collect the Accounts and Inventory proceeds pursuant
to
this Agreement:
Borrower
will
collect with diligence all Borrower’s
Accounts
and Inventory proceeds; provided, that no legal action shall be maintained
thereon or in connection therewith, without
Bank’s
prior
written consent.
Borrower
will
collect with diligence all Borrower’s
Accounts
and Inventory proceeds; provided, that no legal action shall be maintained
thereon or in connection therewith, without Bank’s
prior
written consent. Any collection of accounts by Borrower
under
which Bank
has
specifically made loans against, whether in the form of cash, checks, notes,
or
other instruments for the payment of money (properly endorsed or assigned
where
required to enable Bank
to
collect same) shall be in trust for Bank
and
Borrower
shall
keep all collections separate and apart from all other funds and property
so as
to be capable of identification as the property of Bank
and
deliver said collections daily to Bank
in the
identical form received. The proceeds of such collections when received by
the
Bank
may be
applied by Bank
directly
to payment of any obligation secured hereby, or at Bank’s
option
may be deposited in the Collateral Account. Bank
shall
have the right at all times and from time to time, in its sole discretion,
to
apply all or any part of the moneys in payment of any of the obligations
secured
hereby. In the event collections are deposited in the Collateral Account,
Borrower
acknowledges that payment on its obligations secured thereby shall not be
made
until such time as Bank
applies
the balance of the Collateral Account in payment of its obligations.
Bank,
in its
sole discretion, may apply collections directly to any note(s) evidencing
such
obligations. Borrower
shall
pay Bank
interest
at the rate specified in Borrower’s
note(s)
evidencing such obligations on the amount of all such payments for a period
of
three business days subsequent to the date of credit to Borrower’s
obligations.
Any credit given by Bank upon receipt of said proceeds shall be conditional
credit subject to collection. Returned items, at Bank’s
option,
may be charged to Borrower’s
general
account. Collections for such accounts shall be set forth on an itemized
schedule, showing the name of the account debtor, the amount of each payment,
and such other information as Bank
may
request.
4. Until
Bank
exercises its rights to collect the Accounts or Inventory proceeds pursuant
to
this Agreement, Borrower
may
continue its present policies with respect to returned merchandise and
adjustments. However, Borrower
shall
immediately notify Bank
of all
cases involving returns, rejection, repossessions, and loss or damage of
or to
merchandise represented by the Accounts or constituting Inventory and of
any
credits, adjustments or disputes arising in connection with the goods or
services represented by the Accounts or constituting Inventory.
5. Borrower
represents and warrants to Bank:
(a) if
Borrower
is a
corporation, that Borrower
is duly
organized and existing in the State of its incorporation and the execution,
delivery and performance hereof are within Borrower’s
corporate powers, have been duly authorized and are not in conflict with
law or
the terms of any charger, by-law or other incorporation papers, or of any
indenture, agreement or undertaking to which Borrower
is a
party or by which Borrower
is bound
or affected; (b) Borrower
is the
true and lawful owner of the Collateral, becomes subject to which is free
and
clear of all liens and encumbrances other than Bank’s
security
interest, therein; (c) each Account is, or at the time the Account comes
into
existence will be, a true and collect statement of a bona fide indebtedness
incurred by the account debtor named therein in the amount of the Account
for
either merchandise sold and delivered (or being held subject to delivery
instructions of the account debtor) to, or services rendered, performed and
accepted by, the account debtor; (d) that there are or will be no defenses,
counterclaims, or setoffs which may be asserted against the Accounts; (e)
any
and all financial information, including information relating to the Collateral,
submitted by Borrower
to
Bank,
whether
previously or in the future, is or will be true and correct; (f) so long
as
Borrower
is
indebted to Bank,
the
representations and warranties contained herein shall have a continuing
effect.
6. Borrower
will:
(a) furnish Bank
from
time to time such financial statements and information as Bank
may
reasonably request and inform Bank
immediately upon the occurrence of a material adverse change therein; (b)
furnish Bank
periodically, in such form and detail and at such times as
Bank
may
require, statements showing aging and reconciliation of the Accounts and
collections thereof, and reports as to the Inventory and sales thereof; (c)
furnish Bank
periodically, in such form and detail and at such times as Bank
may
require, statements showing aging and reconciliation of Borrower’s
accounts
payable; (d) maintain a system of accounting in accordance with generally
accepted accounting principals consistently applied, which system shall not
be
modified without the prior written consent of the
Bank;
(e) not
enter into, modify or terminate any agreement with an accounting firm or
service
bureau for the preparation or storage of Borrower’s
accounting records without the prior written consent of Bank
which
consent shall be conditioned upon the agreement of said accounting firm or
service bureau to provide information requested by Bank;
(f)
permit Bank
and any
of its employees, officers or agents, upon demand, during Borrower’s
usual
business hours, or the usual business hours of third persons having control
thereof, to have access to and examine all Borrower’s
books
relating to the Accounts and Inventory, Borrower’s
obligations to Bank,
Borrower’s
financial
condition and the results of Borrower’s
operations and, in connection therewith, permit Bank
or any
of its agents, employees or officers to copy and make extracts therefrom;
(g)
maintain Inventory only at the following location(s); all
locations
and
notify Bank
in
writing of each new or changed location at which Inventory is or will be
kept,
other than for temporary processing, storage or similar purposes, and any
removal thereof to a new location of Borrower’s
chief
executive office and of each office at which books and records relating to
the
Accounts are kept; (h) promptly notify Bank
of any
attachment or other legal process levied against any of the Collateral and
any
information received by Borrower
relative
to the Collateral, including the Accounts, the Account debtors or other persons
obligated in connection therewith, which may in any way affect the value
of the
Collateral or the rights and remedies of Bank
in
respect thereof; (I) reimburse Bank
upon
demand for any and all legal costs, including reasonable attorneys’
fees and
other expenses incurred in collecting any sums payable by Borrower
under
Borrower’s
loan or
any other obligation secured hereby, enforcing any term or provisions of
this
Agreement or otherwise, or in the checking, handling, and collection of the
Collateral and the preparation and enforcement of any agreement relating
thereof; (j) provide, maintain and deliver to Bank
policies
insuring the Collateral against loss or damage by such risks and in such
amounts, forms, and companies as Bank may require and with loss payable solely
to Bank,
and, in
the event Bank
takes
possession of the Collateral, the insurance policy or policies and any unearned
or returned premium thereof shall be at the option of Bank
become
the sole property of Bank,
such
policies and the proceeds of any other insurance covering or in any way relating
to the Collateral, whether now in existence or hereafter obtained being hereby
assigned to Bank;
(k) do
all acts necessary to maintain preserve and protect all inventory, keep all
Inventory in good condition and repair and not to cause any waste or unusual
or
unreasonable depreciation thereof, (l) pay before delinquency all taxes,
assessments, and liens now or hereafter imposed upon the Collateral or any
portion thereof.
7. Bank
may at
any time without prior notice to Borrower,
collect
the Accounts and Inventory proceeds and may give notice of Bank’s
security
interest to any and all account debtors, and Borrower
does
hereby make, constitute and appoint
Bank
its
irrevocable, true and lawful attorney with power to receive, open and dispose
of
all mail addressed to Borrower,
to
endorse the name of Borrower
upon any
checks or other evidences of payment that may come into the possession of
Bank
upon the
Accounts or as proceeds of Inventory; to endorse the name of the undersigned
upon any document or instrument relating to the Collateral; in its name or
otherwise to demand, xxx for, collect and give acquittances for; any and
all
moneys due or to become due upon the Accounts, to compromise, prosecute or
defend any action, claim or proceeding with respect thereto; and to do any
and
all things necessary and proper to carry out the purpose herein contemplated.
8. Until
the
obligations secured hereby shall have been repaid in full, Borrower
shall
not, except in the ordinary course of business, sell, dispose of or grant
a
security interest in any of the Collateral other than to Bank.
9. Should
(I) default be made in the payment of any obligation secured hereby, or breach
be made of any warranty, statement, promise, term or condition contained
herein;
(ii) any statement or representation made for the purpose of obtaining credit
hereunder is determined by Bank
to be
false; (iii) Bank
deem the
Collateral inadequate or unsafe or in danger of misuse; (iv) Borrower
become
insolvent, commit an act of Bankruptcy,
or make an assignment for the benefit of creditors; (v) any proceeding be
commenced by or against Borrower
under
any Bankruptcy,
reorganization, arrangement, readjustment or debt or moratorium, law or statute;
(iv) any writ of attachment, garnishment, execution or other legal process
be
issued against any property of Borrower
or if
any assessment for taxes against Borrower,
other
than real property, is made by the Federal or state government or any department
thereof; (vii) any guarantor or endorser of any obligations secured hereby
shall
revoke or terminate a guarantee, make an assignment for the benefit of
creditors, permit the appointment of a receiver over any part of such
guarantor’s
or
endorser’s
property; then in any such event, Bank may, at its option and without demand
first made and without notice to Borrower,
do any
one or more of the following: (a) declare all Obligations secured hereby
immediately due and payable; (b) immediately take possession of the Collateral
wherever it may be found, using all necessary force so to do, or require
Borrower
to
assemble the Collateral and make it available to Bank
at
a
place designated by Bank
which is
reasonably convenient to Borrower
and
Bank,
and
Borrower
waives
all claims for damages due or arising from or connected with any such taking
and
to maintain possession of and dispose of the Collateral on any premises of
the
Borrower or
under
Borrower’s
control;
(c) proceed in the foreclosure of Bank’s
security
interest and sale of the Collateral in any manner permitted by law, or provided
for herein; (d) sell, lease or otherwise dispose of the Collateral at public
or
private sale, with or without having the Collateral at the place of sale,
and
upon terms and in such manner as Bank
may
determine, and Bank
may
purchase same at any such sale; (e) retain the Collateral in full satisfaction
of the Obligations secured hereby; (f) exercise any remedies of a secured
party
under the Uniform Commercial Code; (g) exercise the right of set off against
any
deposit account maintained with Bank
by
Borrower.
Prior
to any disposition of Collateral, Bank
may, at
its option, cause the Collateral to be repaired or reconditioned in such
manner
and to such extent as to Bank
may seem
advisable, any sums expended therefore by Bank
shall be
repaid by Borrower
and
secured hereby. Bank
shall
have the right to endorse one or more remedies hereunder successively or
concurrently, and any such action shall not stop or prevent Bank
from
pursuing any further remedy which it may pursue hereunder or by
law.
10. Nothing
herein shall in any way limit the effect of the terms and conditions of any
other security or other agreement executed by Borrower, but each and every
condition hereof shall be in addition thereto.
EXECUTED
this 15th
day of
September 2004.
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IsoRay
Medical, Inc.
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||
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By:
/s/ Xxxxx Xxxxxx
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|
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Xxxxx Xxxxxx, President, CEO | |
|
By:
/s/
Xxxxxxx Xxxxxx
|
||
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Xxxxxxx
Xxxxxx,
Secretary/Treasurer/CFO
|
