BUSINESS
      LOAN AGREEMENT

    


    
      	
              Principal

              $375,000.00

            	
              Loan
                Date

              03-01-2006

            	
              Maturity

              03-01-2007

            	
              Loan
                No.

              79535R

            	
              Call/Coll

              532
                / 5900

            	
              Account

              479273

            	
              Officer

              454

            	
              Initials

            
	 	 	 	 	 	 	 	 
	References
              in the shaded areas are for Lender’s use
              and do not limit the applicability of this document to any particular
              loan
              or item. Any item above containing “***” has been omitted due to text
              length limitations. 


    

     

    
      	Borrower:  	ISORAY
              MEDICAL, INC.
350 HILLS STREET, SUITE 106
RICHLAND, WA
              99352	 	Lender: 	Columbia
              River Bank
Meadow Springs
139 Gage Blvd
Richland,
              WA 99352 


    

     

    THIS
      BUSINESS LOAN AGREEMENT
      dated
      March 1, 2006, is made and executed between ISORAY MEDICAL, INC. (“Borrower”)
      and Columbia River Bank (“Lender”) on the following terms and conditions.
      Borrower has received prior commercial loans from Lender or has applied to
      Lender for a commercial loan or loans or other financial accommodations,
      including those which may be described on any exhibit or schedule attached
      to
      this Agreement (“Loan”). Borrower understands and agrees that: (A) in granting,
      renewing, or extending any Loan, Lender is relying upon Borrower’s
      representations, warranties, and agreements as set forth in this Agreement;
      (B)
      the granting, renewing, or extending of any Loan by Lender at all times shall
      be
      subject to Lender’s sole judgment and discretion; and (C) all such Loans shall
      be and remain subject to the terms and conditions of this
      Agreement.

    


    TERM:
      This
      Agreement shall be effective as of March 1, 2006, and shall continue in full
      force and effect until such time as all of Borrower’s Loans in favor of Lender
      have been paid in full, including principal, interest, costs, expenses,
      attorneys’ fees, and other fees and charges, or until such time as the parties
      may agree in writing to terminate this Agreement.

    


    CONDITIONS
      PRECEDENT TO EACH ADVANCE.
      Lender’s obligation to make the initial Advance and each subsequent Advance
      under this Agreement shall be subject to the fulfillment to Lender’s
      Satisfaction of all of the conditions set forth in this Agreement and in the
      Related Documents.

    


    Loan
      Documents. Borrower shall provide to Lender the following documents for the
      Loan: (1) the Note; (2) Security Agreements granting to Lender security
      interests in the Collateral: (3) financing statements and all other documents
      perfecting Lender’s Security Interests; (4) evidence of insurance as required
      below; (5) guaranties; (6) together with all such Related Documents as Lender
      may require the Loan; all in form and substance satisfactory to Lender and
      to
      Lender’s counsel.

    


    Borrower’s
      Authorization. Borrower shall have provided in form and substance satisfactory
      to Lender properly certified resolutions, duly authorizing the execution and
      delivery of this Agreement, the Note and the Related Documents. In addition,
      Borrower shall have provided such other resolutions, authorizations, documents
      and instruments as Lender or its counsel, may require.

    


    Payment
      of Fees and Expenses. Borrower shall have paid to Lender all fees, charges,
      and
      other expenses which are then due and payable as specified in this Agreement
      or
      any Related Documents.

    


    Representations
      and Warranties. The representations and warranties set forth in this Agreement,
      in the Related Documents, and in any document or certificate delivered to Lender
      under this Agreement are true and correct.

    


    No
      Event
      of Default. There shall not exist at the time of any Advance a condition which
      would constitute an Event of Default under this Agreement or under any Related
      Document.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    REPRESENTATIONS
      AND WARRANTIES.
      Borrower represents and warrants to Lender, as of the date of this Agreement,
      as
      of the date of each disbursement of loan proceeds, as of the date of any
      renewal, extension or modification of any Loan, and at all times any
      indebtedness exists:

    


    Organization.
      Borrower is a corporation for profit which is, and at all times shall be, duly
      organized, validly existing, and in good standing under and by virtue of the
      laws of the State of Delaware. Borrower is duly authorized to transact business
      in all other states in which Borrower is doing business, having obtained all
      necessary filings, governmental licenses and approvals for each state in which
      Borrower is doing business. Specifically, Borrower is, and at all times shall
      be, duly qualified as a foreign corporation in all states in which the failure
      to so qualify would have a material adverse effect on its business or financial
      condition. Borrower has the full power and authority to own its properties
      and
      to transact the business in which it is presently engaged or presently proposes
      to engage. Borrower maintains an office at 350 HILLS STREET, SUITE 106,
      RICHLAND, WA 99352. Unless Borrower has designated otherwise in writing, the
      principal office is the office at which Borrower keeps its books and records
      including its records concerning the Collateral. Borrower shall do all things
      necessary to preserve and to keep in full force and effects its existence,
      rights and privileges, and shall comply with all regulations, rules, ordinances,
      statutes, orders and decrees of any governmental or quasi-governmental authority
      or court applicable to Borrower and Borrower’s business activities.

    


    Assumed
      Business Names. Borrower has filed or recorded all documents or filings required
      by law relating to all assumed business names used by Borrower. Excluding the
      name of Borrower, the following is a complete list of all assumed business
      names
      under which Borrower does business: None.

    


    Authorization.
      Borrower’s execution, delivery, and performance of this Agreement and all the
      Related Documents have been duly authorized by all necessary action by Borrower
      and do not conflict with, result in a violation of, or constitute a default
      under (1) any provision of (a) Borrower’s articles of incorporation or
      organization, or bylaws, or (b) any agreement or other instrument binding upon
      Borrower or (2) any law, governmental regulation, court decree, or order
      applicable to Borrower or to Borrower’s properties.

    


    Financial
      Information. Each of Borrower’s financial statements supplied to Lender truly
      and completely disclosed Borrower’s financial condition as of the date of the
      statement, and there has been no material adverse change in Borrower’s financial
      condition subsequent to the date of the most recent financial statement supplied
      to Lender. Borrower has no material contingent obligations except as disclosed
      in such financial statements.

    


    Legal
      Effect. This Agreement constitutes, and any instrument or agreement Borrower
      is
      required to give under this Agreement when delivered will constitute legal,
      valid, and binding obligations of Borrower enforceable against Borrower in
      accordance with their respective terms.

    


    Properties.
      Except as contemplated by this Agreement or as previously disclosed in
      Borrower’s financial statements or in writing to Lender and as accepted by
      Lender, and except for property tax liens for taxes not presently due and
      payable, Borrower owns and has good title to all of Borrower’s properties free
      and clear of all Security Interests, and has not executed any security documents
      or financing statements relating to such properties. All of Borrower’s
      properties are titled in Borrower’s legal name, and Borrower has not used or
      filed a financing statement under any other name for at least the last five
      (5)
      years.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Hazardous
      Substances. Except as disclosed to and acknowledged by Lender in writing,
      Borrower represents and warrants that: (1) During the period of Borrower’s
      ownership of the Collateral, there has been no use, generation, manufacture,
      storage, treatment, disposal, release or threatened release of any Hazardous
      Substance by any person on, under, about or from any of the Collateral. (2)
      Borrower has no knowledge of, or reason to believe that there has been (a)
      any
      breach or violation of any Environmental Laws; (b) any use, generation,
      manufacture, storage, treatment, disposal, release or threatened release of
      any
      Hazardous Substance on, under, about or from the Collateral by any prior owners
      or occupants of any of the Collateral; or (c) any actual or threatened
      litigation or claims of any kind by any person relating to such matters. (3)
      Neither Borrower nor any tenant, contractor, agent or other authorized user
      of
      any of the Collateral shall use, generate, manufacture, store, treat, dispose
      of
      or release any Hazardous Substance on, under, about or from any of the
      Collateral; and any such activity shall be conducted in compliance with all
      applicable federal, state, and local laws, regulations, and ordinances,
      including without limitation all Environmental Laws. Borrower authorizes Lender
      and its agents to enter upon the Collateral to make such inspections and tests
      as Lender may deem appropriate to determine compliance of the Collateral with
      this section of the Agreement. Any inspections or tests made by Lender shall
      be
      at Borrower’s expense and for Lender’s purposes only and shall not be construed
      to create any responsibility or liability on the part of Lender to Borrower
      or
      to any other person. The representations and warranties contained herein are
      based on Borrower’s due diligence in investigating the Collateral for hazardous
      waste and Hazardous Substances. Borrower hereby (1) releases and waives any
      future claims against Lender for indemnity and hold harmless Lender against
      any
      and all claims, losses, liabilities, damages, penalties, and expenses which
      Lender may directly or indirectly sustain or suffer resulting from a breach
      of
      this section of the Agreement or as a consequence of any use, generation,
      manufacture, storage, disposal, release or threatened release of a hazardous
      waste or substance on the Collateral. The provisions of this section of the
      Agreement, including the obligation to indemnify, shall survive the payment
      of
      the Indebtedness and the termination, expiration or satisfaction of this
      Agreement and shall not be affected by Lender’s acquisition of any interest in
      any of the Collateral, whether by foreclosure or otherwise.

     

    Litigation
      and Claims. No litigation, claim, investigation, administrative proceeding
      or
      similar action (including those for unpaid taxes) against Borrower is pending
      or
      threatened, and no other event has occurred which may materially adversely
      affect Borrower’s financial condition or properties, other than litigation,
      claims, or other events, if any, that have been disclosed to and acknowledged
      by
      Lender in writing.

    


    Taxes.
      To
      the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that
      are or were required to be filed, have been filed, and all taxes, assessments
      and other governmental charges have been paid in full, except those presently
      being or to be contested by Borrower in good faith in the ordinary course of
      business and for which adequate reserves have been provided.

    


    Lien
      Priority. Unless otherwise previously disclosed to Lender in writing, Borrower
      has not entered into or granted any Security Agreements, or permitted the filing
      or attachment of any Security Interests on or affecting any of the Collateral
      directly or indirectly securing repayment of Borrower’s Loan and Note, that
      would be prior or that may in any way be superior to Lender’s Security Interests
      and rights in and to such Collateral.

    


    Binding
      Effect. This Agreement, the Note, all Security Agreements (if any), and all
      Related Documents are binding upon the signers thereof, as well as upon their
      successors, representatives and assigns, and are legally enforceable in
      accordance with their respective terms.

    


    AFFIRMATIVE
      COVENANTS. Borrower
      covenants and agrees with Lender that, so long as this Agreement remains in
      effect, Borrower will:

    


    Notices
      of Claims and Litigation. Promptly inform Lender in writing of (1) all material
      adverse changes in Borrower’s financial condition, and (2) all existing and all
      threatened litigation, claims, investigations, administrative proceedings or
      similar actions affecting Borrower or any Guarantor which could materially
      affect the financial condition of Borrower or the financial condition of any
      Guarantor.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Financial
      Records. Maintain its books and records in accordance with GAAP, applied on
      a
      consistent basis, and permit Lender to examine and audit Borrower’s books and
      records at all reasonable times.

    


    Financial
      Statements. Furnish Lender with the following:

    


    Annual
      Statements. As soon as available, but in no event later than ninety (90) days
      after the end of each fiscal year, Borrower’s balance sheet and income statement
      for the year ended, audited by a certified public accountant satisfactory to
      Lender.

    


    Interim
      Statements. As soon as available, but in no event later than thirty (30) days
      after the end of each fiscal quarter, Borrower’s balance sheet and profit and
      loss statement for the period ended, compiled by a certified public accountant
      satisfactory to Lender.

    


    Tax
      Returns. As soon as available, but in no event later than one-hundred-twenty
      (120) days after the applicable filing date for the tax reporting period ended,
      Federal and other governmental tax returns, prepared by a certified public
      accountant satisfactory to Lender.

    


    All
      financial reports required to be provided under this Agreement shall be prepared
      in accordance with GAAP, applied on a consistent basis, and certified by
      Borrower as being true and correct.

    


    Additional
      Information. Furnish such additional information and statements, as Lender
      may
      request from time to time.

    


    Insurance.
      Maintain fire and other risk insurance, public liability insurance, and such
      other insurance as Lender may require with respect to Borrower’s properties and
      operations, in form, amounts, coverages and with insurance companies acceptable
      to Lender. Borrower, upon request of Lender, will deliver to Lender from time
      to
      time the policies or certificates of insurance in form satisfactory to Lender,
      including stipulations that coverages will not be cancelled or diminished
      without at least ten (10) days prior written notice to Lender. Each insurance
      policy also shall include an endorsement providing that coverage in favor of
      Lender will not be impaired in any way by any act, omission or default of
      Borrower or any other person. In connection with all policies covering assets
      in
      which Lender holds or is offered a security interest for the Loans, Borrower
      will provide Lender with such lender’s loss payable or other endorsements as
      Lender may require.

    


    Insurance
      Reports. Furnish to Lender, upon request of Lender, reports on each existing
      insurance policy showing such information as Lender may reasonably request,
      including without limitation, the following: (1) the name of the insurer; (2)
      the risks insured; (3) the amount of the policy; (4) the properties insured;
      (5)
      the then current property values on the basis of which insurance has been
      obtained, and the manner of determining those values; and (6) the expiration
      date of the policy. In addition, upon request of Lender (however not more often
      than annually), Borrower will have an independent appraiser satisfactory to
      Lender determine, as applicable, the actual cash value or replacement cost
      of
      any Collateral. The cost of such appraisal shall be paid by
      Borrower.

    


    Guaranties.
      Prior to disbursement of any Loan proceeds, furnish executed guaranties of
      the
      Loans in favor of Lender, executed by the guarantors named below, on Lender’s
      forms, and in the amounts and under the conditions set forth in those
      guaranties.

     

    
      	
              Names
                of Guarantors 

            	 	Amounts 
	 	 	 
	
              ROGER
                E. GIRARD

            	 	$105,000.00
	
              DONALD
                R. SEGNA

            	 	$100,000.00
	
              MICHAEL
                K. DUNLOP

            	 	$  35,000.00
	
              DAVID
                J. SWANBERG

            	 	$  30,000.00
	
              COLLIER
                LIVING TRUST

            	 	$  25,000.00
	
              FRED
                O. BATES

            	 	$  20,000.00
	
              KAREN
                L. THOMPSON

            	 	$  20,000.00
	
              LANE
                A. AND GWEN M. BRAY TRUST

            	 	$ 
              20,000.00
	
              LARRY
                M. FOOKES

            	 	$ 
              20,000.00


    

       

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Other
      Agreements. Comply with all terms and conditions of all other agreements,
      whether now or hereafter existing, between Borrower and any other party and
      notify Lender immediately in writing of any default in connection with any
      other
      such agreements.

    


    Loan
      Proceeds. Use all Loan proceeds solely for Borrower’s business operations,
      unless specifically consented to the contrary by Lender in writing.

    


    Taxes,
      Charges and Liens. Pay and discharge when due all of its indebtedness and
      obligations, including without limitation all assessments, taxes, governmental
      charges, levies and liens, of every kind and nature, imposed upon Borrower
      or
      its properties, income, or profits, prior to the date on which penalties would
      attach, and all lawful claims that, if unpaid might become a lien or charge
      upon
      any of Borrower’s properties, income or profits.

    


    Performance.
      Perform and comply, in a timely manner, with all terms, conditions, and
      provisions set forth in this Agreement, in the Related Documents, and in all
      other instruments and agreements between Borrower and Lender. Borrower shall
      notify Lender immediately in writing of any default in connection with any
      agreement.

    


    Operations.
      Maintain executive and management personnel with substantially the same
      qualifications and experience as the present executive and management personnel;
      provide written notice to Lender of any change in executive and management
      personnel; conduct its business affairs in a reasonable and prudent
      manner.

    


    Environmental
      Studies. Promptly conduct and complete, at Borrower’s expense, all such
      investigations, studies, samplings and testings as may be requested by Lender
      or
      any governmental authority relative to any substance, or any waste or by-product
      of any substance defined as toxic or a hazardous substance under applicable
      federal, state, or local law, rule, regulation, order or directive, at or
      affecting any property or any facility owned, leased or used by
      Borrower.

    


    Compliance
      with Governmental Requirements. Comply with all laws, ordinances, an
      regulations, now or hereafter in effect, of all governmental authorities
      applicable to the conduct of Borrower’s properties, businesses and operations,
      and to the use or occupancy of the Collateral, including without limitation,
      the
      American with Disabilities Act. Borrower may contest in good faith any such
      law,
      ordinance, or regulation and withhold compliance during any proceeding,
      including appropriate appeals, so long as Borrower has notified Lender in
      writing prior to doing so and so long as, in Lender’s sole opinion, Lender’s
      interests in the Collateral are not jeopardized. Lender may require Borrower
      to
      post adequate security or a surety bond, reasonably satisfactory to Lender,
      to
      protect Lender’s interest.

    


    Inspection.
      Permit employees or agents of Lender at any reasonable time to inspect any
      and
      all Collateral for the Loan or Loans and Borrower’s other properties and to
      examine or audit Borrower’s books, accounts, and records and to make copies and
      memoranda of Borrower’s books, accounts, and records. If Borrower now or at any
      time hereafter maintains any records including without limitation computer
      generated records and computer software programs for the generation of such
      records) in the possession of a third party, Borrower, upon request of Lender,
      shall notify such party to permit Lender free access to such records at all
      reasonable times and to provide Lender with copies of any records it may
      request, all at Borrower’s expense.

    


    Environmental
      Compliance and Reports. Borrower shall comply in all respects with any and
      all
      Environmental Laws; not cause or permit to exist, as a result of an intentional
      or unintentional action or omission on Borrower’s part or on the part of any
      third, party, on property owned and/or occupied by Borrower, any environmental
      activity where damage may result to the environment, unless such environmental
      activity is pursuant to and in compliance with the conditions of a permit issued
      by the appropriate federal, state or local governmental authorities; shall
      furnish to Lender promptly and in any event within thirty (30) days after
      receipt thereof a copy of any notice, summons, lien, citation, directive, letter
      or other communication from any governmental agency or instrumentality
      concerning any intentional or unintentional action or omission on Borrower’s
      part in connection with any environmental activity whether or not there is
      damage to the environment and/or other natural resources.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Additional
      Assurances. Make, execute and deliver to Lender such promissory notes,
      mortgages, deeds of trust, security agreements, assignments, financing
      statements, instruments, documents and other agreements as Lender or its
      attorneys may reasonably request to evidence and secure the Loans and to perfect
      all Security Interests.

    


    RECOVERY
      OF ADDITIONAL COSTS.
      If the
      imposition of or any change in any law, rule, regulation or guideline, or the
      interpretation or application of any thereof by any court or administrative
      or
      governmental authority (including any request or policy not having the force
      of
      law) shall impose, modify or make applicable any taxes (except federal, state
      or
      local income or franchise taxes imposed on Lender), reserve requirements,
      capital adequacy requirements or other obligations which would (A) increase
      the
      cost to Lender for extending or maintaining the credit facilities to which
      this
      Agreement relates, (B) reduce the amounts payable to Lender under this Agreement
      or the Related Documents, or (C) reduce the rate of return on Lender’s capital
      as a consequence of Lender’s obligations with respect to the credit facilities
      to which this Agreement relates, then Borrower agrees to pay Lender such
      additional amounts as will compensate Lender therefore, within five (5) days
      after Lender’s written demand for such payment, which demand shall be
      accompanied by an explanation of such imposition or change and a calculation
      in
      reasonable detail of the additional amounts payable by Borrower, which
      explanation and calculations shall be conclusive in the absence of manifest
      error.

    


    LENDER’S
      EXPENDITURES.
      If any
      action or proceeding is commenced that would materially affect Lender’s interest
      in the Collateral or if Borrower fails to comply with any provision of this
      Agreement or any Related Documents, including but not limited to Borrower’s
      failure to discharge or pay when due any amounts Borrower is required to
      discharge or pay under this Agreement or any Related Documents, Lender on
      Borrower’s behalf may (but shall not be obligated to) take any action that
      Lender deems appropriate, including but not limited to discharging or paying
      all
      taxes, liens, security interests, encumbrances and other claims, at any time
      levied or placed on any Collateral and paying all costs for insuring,
      maintaining and preserving any Collateral. All such expenditures incurred or
      paid by Lender for such purposes will then bear interest at the rate charged
      under the Note from the date incurred or paid by Lender to the date of repayment
      by Borrower. All such expenses will become a part of the indebtedness and,
      at
      Lender’s option, will (A) be payable on demand; (B) be added to the balance of
      the Note and be apportioned among and be payable with any installment payments
      to become due during either (1) the term of any applicable insurance policy;
      or
      (2) the remaining term of the Note; or (C) be treated as a balloon payment
      which
      will be due and payable at the Note’s maturity.

    


    NEGATIVE
      COVENANTS.
      Borrower
      covenants and agrees with Lender that while this Agreement is in effect,
      Borrower shall not, without the prior written consent of Lender;

    


    Indebtedness
      and Liens. (1) Except for trade debt incurred in the normal course of business
      and indebtedness to Lender contemplated by this Agreement, create, incur or
      assume indebtedness for borrowed money, including capital leases, (2) sell,
      transfer, mortgage, assign, pledge, lease, grant a security interest in, or
      encumber any of Borrower’s assets (except as allowed as Permitted Liens), or (3)
      sell with recourse any of Borrower’s accounts, except to Lender.

    


    Continuity
      of Operations. (1) Engage in any business activities substantially different
      than those in which Borrower is presently engaged, (2) cease operations,
      liquidate, merge, transfer, acquire or consolidate with any other activity,
      change its name, dissolve or transfer or sell Collateral out of the ordinary
      course of business, or (3) pay any dividends on Borrower’s stock (other than
      dividends payable in its stock), provided, however that notwithstanding the
      foregoing, but only so long as no Event of Default has occurred and is
      continuing or would result from the payment of dividends, if Borrower is a
      “Subchapter S Corporation” (as defined in the Internal Revenue Code of 1986, as
      amended), Borrower may pay cash dividends on its stock to its shareholders
      from
      time to time in amounts necessary to enable the shareholders to pay income
      taxes
      and make estimated income tax payments to satisfy their liabilities under
      federal and state law which arise solely from their status as Shareholders
      of
      Subchapter S Corporation because of their ownership of shares of Borrower’s
      stock, or purchase or retire any of Borrower’s outstanding shares or alter or
      amend Borrower’s capital structure.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Loans,
      Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets
      to
      any other person, enterprise or entity, (2) purchase, create or acquire any
      interest in any other enterprise or entity, or (3) incur any obligation as
      surety or guarantor other than in the ordinary course of business.

    


    Agreements.
      Borrower will not enter into any agreement containing any provisions which
      would
      be violated or breached by the performance of Borrower’s obligations under this
      Agreement or in connection herewith.

    


    CESSATION
      OF ADVANCES.
      If
      Lender has made any commitment to make any Loan to Borrower, whether under
      this
      Agreement or under any other agreement, Lender shall have no obligation to
      make
      Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor
      is
      in default under the terms of this Agreement or any of the Related Documents
      or
      any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower
      or any Guarantor dies, becomes incompetent or becomes insolvent, files a
      petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C)
      there occurs a material adverse change in Borrower’s financial condition, in the
      financial condition of any Guarantor, or in the value of any Collateral securing
      any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit,
      modify or revoke such Guarantor’s guaranty of the Loan or any other loan with
      Lender; or (E) Lender in good faith deems itself insecure, even though no Event
      of Default shall have occurred.

    


    RIGHT
      OFSETOFF.
      To the
      extent permitted by applicable law, Lender reserves a right of setoff in all
      Borrower’s accounts with Lender (whether checking, savings, or some other
      account). This includes all accounts Borrower holds jointly with someone else
      and all accounts Borrower may open in the future. However, this does not include
      any IRA or Keogh accounts, or any trust accounts for which setoff would be
      prohibited by law. Borrower authorizes Lender, to the extent permitted by
      applicable law, to charge or setoff all sums on the indebtedness against any
      and
      all such accounts, and, at Lender’s option, to administratively freeze all such
      accounts to allow Lender to protect Lender’s charge and setoff rights provided
      in this paragraph.

    


    DEFAULT.
      Each of
      the following shall constitute an Event of Default under this
      Agreement:

    


    Payment
      Default. Borrower fails to make any payment when due under the
      Loan.

    


    Other
      Defaults. Borrower fails to comply with or to perform any other term,
      obligation, covenant or condition contained in this Agreement or in any of
      the
      Related Documents or to comply with or to perform any term, obligations,
      covenant or condition contained in any other agreement between Lender and
      Borrower.

    


    Default
      in Favor of Third Parties. Borrower or any Grantor defaults under any loan,
      extension of credit, security agreement, purchase of sales agreement, or any
      other agreement, in favor of any other creditor or person that may materially
      affect any of Borrower’s or any Grantor’s property or Borrower’s or any
      Grantor’s ability to repay the Loans or perform their respective obligations
      under this Agreement or any of the Related Documents.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    False
      Statements. Any warranty, representation or statement made or furnished to
      Lender by Borrower or on Borrower’s behalf under this Agreement or the Related
      Documents is false or misleading in any material respect, either now or at
      the
      time made or furnished or becomes false of misleading at any time
      thereafter.

    


    Insolvency.
      The dissolution or termination of Borrower’s existence as a going business, the
      insolvency of Borrower, the appointment of a receiver for any part of Borrower’s
      property, any assignment for the benefit of creditors, any type of creditor
      workout, or the commencement of any proceeding under any bankruptcy or
      insolvency laws by or against Borrower.

    


    Defective
      Collateralization. This Agreement or any of the Related Documents ceases to
      be
      in full force and effect (including failure of any collateral document to create
      a valid and perfected security interest or lien) at any time and for any
      reason.

    


    Creditor
      or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
      proceedings, whether by judicial proceeding, self-help, repossession or any
      other method, by any creditor of Borrower or by any governmental agency against
      any collateral securing the Loan. This includes a garnishment of any of
      Borrower’s accounts, including deposit accounts, with Lender. However, this
      Event of Default shall not apply if there is a good faith dispute by Borrower
      as
      to the validity or reasonableness of the claim which is the basis of the
      creditor or forfeiture proceeding and if Borrower gives Lender written notice
      of
      the creditor or forfeiture proceeding and deposits with Lender monies or a
      surety bond for the creditor or forfeiture proceeding, in an amount determined
      by Lender, in its sole discretion, as being an adequate reserve or bond for
      the
      dispute.

    


    Events
      Affecting Guarantor. Any of the preceding events occurs with respect to any
      Guarantor of any of the indebtedness or any Guarantor dies or becomes
      incompetent, or revokes or disputes the validity of, or liability under, any
      Guaranty of the Indebtedness. In the event of a death, Lender, at its option,
      may, but shall not be required to, permit the Guarantor’s estate to assume
      unconditionally the obligations arising under the guaranty in a manner
      satisfactory to lender, and, in doing so, cure any Event of
      Default.

    


    Change
      in
      Ownership. Any change in ownership of twenty-five percent (25%) or more of
      the
      common stock of Borrower.