Document:

Unassociated Document

     

    

      TRI-CITY
        INDUSTRIAL DEVELOPMENT COUNCIL

      

      PROMISSORY
        NOTE

      

      

      

      This
        Promissory Note is given as evidence of the obligation of the undersigned
        to
        repay all sums which the TRI-CITY INDUSTRIAL DEVELOPMENT COUNCIL (TRIDEC)
        may
        advance to IsoRay, Inc. (BORROWER) in the amount of Forty Thousand Dollars
        ($40,000.00), which is the maximum amount to be loaned.

      

      For
        value
        received, the undersigned promises to pay to the order of the TRI-CITY
        INDUSTRIAL DEVELOPMENT COUNCIL at its office at 901 N. Colorado, Kennewick,
        Washington 99336, or such other address as may be directed, the total unpaid
        principal balance of all advances from the date funds are advanced. Principal
        is
        payable in installments as follows:

      

      1. Commencing
        on the 1st
        day of
        August 2003, and on the 1st
        day of
        August each year for three (3) consecutive years thereafter, there shall
        be due
        annually the payment of $10,000.00.

      

      The
        entire balance shall be payable in full on or before the 1st
        day of
        August 2006.

      

      2. Any
        payment hereunder that has not been received by TRIDEC 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. 

      

      3. 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 payment of any installment when due, the whole sum of
        principal and late fees shall become immediately due at the option of TRIDEC,
        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 Benton or Franklin County, Washington.

      

      DATED
        this 22nd day of July 2002.

      

      

      IsoRay,
        Inc.

      

      

         By:
        /s/
        Donald R. Segna

      Donald
        R.
        Segna, President

      IsoRay,
        Inc.

      

        By:
        /s/
        Michael Dunlop 

      Michael
        Dunlop, Secretary/Treasurer

      IsoRay,
        Inc. 

      

      

      Initials
        /s/
        DS

      Initials
        /s/
        MRDUnassociated Document

     

    

      Battelle
        Project No. 45836

      

      Store
        Strontium-90 for IsoRay, Inc.

      

      Client:

      IsoRay,
        Inc., Richland, Washington

      

      Scope:

      Client’s
        Strontium-90 (7 curies) will be stored in the RPL Lab 23 hot cell 

      until
        need for follow-on research, funded by the Client

      

      Statement
        of Work

      

      This
        project is a zero-cost letter contract, and any actual costs will be covered
        under separate agreements. As background information, it is known that the
        Client
        (IsoRay,
        Inc.) intends to take title to 7 curies of strontium-90 chloride from the
        State
        of North Carolina. This zero-cost project assumes that the Client
        will
        enter into a separate agreement with Battelle
        for
        research, using 7 curies of strontium-90, to develop next-generation
        radiochemical separation methods. Since the Client
        does not
        currently have adequate radiological facilities or a radioactive materials
        license in the State of Washington, and since it cannot therefore take title
        to
        radioactive material without a place to store said material, Battelle
        will
        store this same 7 curies of strontium-90 for the Client,
        under
        its radioactive materials license with the State of Washington. Storage will
        take place in the Radiochemical Processing Laboratory (RPL), presumably in
        the
        RPL Lab 23 hot cell, until such time as it will be needed by the Client
        and
Battelle
        for
        proposed follow-on research, under a separate agreement, to develop said
        next-generation strontium/yttrium radiochemical separations technology. Later,
        and under a separate agreement, the Client
        will
        eventually transfer this same 7 curies of strontium-90 out from the RPL to
        its
        own facility. In the event the RPL becomes unavailable for follow-on separations
        research, or in the event that the strontium-90 commercial opportunity does
        not
        materialize for IsoRay, the Client
        will
        take responsibility for moving the 7 curies of strontium-90 out from the
        RPL, or
        transferring the 7 curies of strontium-90 to another party, or legally disposing
        of this source as radioactive waste at its own cost.

      

      Milestones
        and Schedule

      

      Receipt
        of strontium-90 will take place with funding from a project with the State
        of
        North Carolina (Battelle
        Project
        No. 45134). The State of North Carolina project provides adequate funds to
        receive, consolidate, and store the strontium-90 source material for its
        partner
        (IsoRay, Inc.) in the transfer of ownership of said 7 curies of strontium-90
        from the State of North Carolina to IsoRay. The performance of Battelle
        Project
        No. 45836 for storage of strontium-90 is dependent on execution of Battelle
        Project
        No. 45134 with the State of North Carolina (expected by about August, 2003).
        

      
        
           

        

        
           

          
            

          

        

        
           

           

        

      

      AGREEMENT
        45836

      

      BETWEEN

      

      BATTELLE
        MEMORIAL INSTITUTE

      PACIFIC
        NORTHWEST DIVISION

      

      AND

      

      ISORAY,
        INC.

      

      Battelle
        Memorial Institute,
        through
        its Pacific
        Northwest Division (BATTELLE)
        agrees
        to provide to IsoRay,
        Inc. (CLIENT)
        technical/research services substantially in accordance with BATTELLE’s
        Proposal
        No. 45836, (the Project) incorporated herein by reference, under the following
        terms and conditions:

      

      1.
ACCEPTANCE
        AND COMMENCEMENT

      

      BATTELLE’s
        Proposal
        may be accepted within sixty (60) days from the date of BATTELLE’s
        signature
        below. BATTELLE
        will
        begin work within (30) days of receipt of this Agreement executed by
CLIENT.
        The
        Project period is estimated as twelve (12) months from
        commencement.

       

      2.
PAYMENT

      

      BATTELLE
        estimates that the price to the CLIENT
        for
        performance of the Project, will be Zero
        Dollars and No Cents ($0.00)
        in U.S.
        Dollars.

       

      3. INTELLECTUAL
        PROPERTY

      

      Due
        to
        the nature of this Project, all inventions and technical information resulting
        from this Project will be owned by BATTELLE.
        Subject
        to rights previously granted to others, rights to practice such inventions
        are
        available to CLIENT
        by
        negotiation of a license between the parties.

      

      CLIENT
        will
        have the right to use, within the scope of the Project, all technical
        information generated on the Project and embodied in reports and correspondence
        transmitted to CLIENT
        subject,
        however, to any other intellectual property rights of BATTELLE,
        including property rights obtained on inventions resulting from the
        Project.

      

      In
        the
        event CLIENT
        is in
        material breach of its payment obligations under this Agreement, or is otherwise
        in material breach of its obligations under this Agreement, no rights described
        in this provision shall accrue to CLIENT.

       

      4. NO
        ENDORSEMENT/LITIGATION

      

      BATTELLE
        does not
        endorse products or services. Therefore, CLIENT
        agrees
        that it will not use or imply BATTELLE’s
        name, or
        use BATTELLE’s
        reports,
        for advertising, promotional 

      
        
           

        

        
           

          
            

          

        

        
           

           

        

      

      Research
        & Development Services Agreement 45836

      

      purposes,
        raising of capital, recommending investments, or any way that implies
        endorsement by BATTELLE,
        except
        with prior written approval of an officer of BATTELLE.

      

      BATTELLE
        does
        not
        undertake Projects for the purposes of litigation or to assign fault or blame
        and does not provide expert witness services. Therefore, CLIENT
        agrees
        not to use any Project results in any dispute, litigation, or legal
        action.

      

      If
        any
        event, if, at any time, BATTELLE
        or its
        employees are required to respond to any subpoenas, orders for attendance
        at
        depositions, hearings or trials, document requests, or other legal proceedings
        as a result of or relating to BATTELLE’s
        work on
        the Project, CLIENT
        agrees
        to reimburse BATTELLE,
        in
        addition to any other amounts payable under this Agreement, BATTELLE’s
        labor
        charges, attorney time and/or fees, travel, photocopying and other miscellaneous
        expenses.

       

      5. CONFIDENTIALITY

      

      BATTELLE
        agrees
        not to disclose the specific results of the Project as embodied in reports
        and
        correspondence transmitted to CLIENT,
        and not
        available to the public generally, without CLIENT’s
        written
        consent, except as required by law, or except as necessary to protect
BATTELLE’s
        intellectual property rights, such as filing for patent(s). Acceptance of
        this
        Agreement does not preclude BATTELLE’s
        undertaking work in this general field for others.

       

      6. LIMITATION
        OF LIABILITY

      

      BATTELLE
        will
        provide a high standard of professional service on a best efforts basis.
        However, BATTELLE,
        as a
        provider of such services, cannot guarantee success, thus BATTELLE
        MAKES NO WARRANTY OR GUARANTEE, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
        WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY, FOR ANY
        REPORT, DESIGN, ITEM, SERVICE OR OTHER RESULT TO BE DELIVERED UNDER THIS
        AGREEMENT.

      

      CLIENT
        assumes
        responsibility for its use, misuse, or inability to use the Project results
        and
        in no event shall BATTELLE
        have any
        liability for damages, including but not limited to any indirect, incidental,
        or
        consequential damages, arising from or in connection with this
        Agreement.

      

      CLIENT
        agrees
        to indemnify and hold BATTELLE
        harmless
        from any and all liabilities, suits, claims, demands, and damages, and all
        costs
        and expenses in connection therewith, in any manner relating to this Agreement
        or its performance, asserted by third parties from any cause whatsoever,
        except
        for injury or damage occurring during performance of the Project on BATTELLE-owned
        premises where fault of CLIENT
        is not a
        contributing cause.

       

      7. NATURE
        OF
        SERVICES

      

      CLIENT
        agrees
        that BATTELLE
        is an
        independent contractor and specifically acknowledges that BATTELLE
        is a
        service provider, not a manufacturer or supplier, CLIENT
        retains
        all final decision making authority and all responsibility for the formulation,
        design, manufacture, assembly, packaging, marketing and sale of CLIENT’s
        products, including, without limitation, product labeling, warnings,
        instructions to users, and for obtaining any governmental or other pre- or
        postmarked approvals, certifications, registrations, licenses, or
        permits.

      Research
        & Development Services Agreement 45836

      
        
           

        

        
           

          
            

          

        

        
           

           

        

      

      8.
        PRODUCT OF LIABILITY INSURANCE

      

      CLIENT
        shall
        maintain adequate product liability insurance coverage in amounts customary
        and
        prudent for a responsible entity in its industry in light of the nature of
        its
        product(s). Such insurance shall specifically cover any CLIENT
        products
        that may be developed in whole or in part based on BATTELLE’s
        work
        under this Agreement, and CLIENT
        shall
        provide evidence of such insurance upon request.

      

      9.FORCE
        MAJEURE

      

      Neither
        CLIENT
        nor
BATTELLE
        shall be
        liable in any way for failure to perform any provision of this Agreement
        (except
        payment of monetary obligations) if such failure is caused by any law, rule,
        or
        regulation, or any cause beyond the control of the party in default.

       

      10.
USE
        PERMIT

      

      Under
        the
        terms of Use Permit DE-GM0600RL01831 between BATTELLE
        and U.S.
        Department of Energy, BATTELLE
        is
        permitted to use certain facilities and equipment belonging to the U.S.
        Government that are located at BATTELLE’s
        Pacific
        Northwest Division. In the event that such facilities or equipment are utilized
        in performance of this Agreement, the provisions of the Use Permit are required
        to be incorporated herein by reference. A copy of the applicable provisions
        is
        available upon request or at the following web site: http://www.battelle.org/workingwithbattelle/PNNL-Usepermit.stm

      

      11.
CLIENT
        FURNISHED MATERIALS

      

      Any
        property, equipment, materials or other tangible property furnished by
CLIENT
        for use
        on the Project shall remain the property of CLIENT
        unless
        otherwise agreed in writing. BATTELLE
        shall
        have no responsibility for insuring such property against loss or damage,
        and
CLIENT,
        for
        itself and all persons claiming through CLIENT,
        hereby
        releases BATTELLE,
        its
        officers, employees and agents, from any liability on account of loss or
        damage
        to CLIENT-
        furnished property, excepting only loss or damage caused by BATTELLE’s
        intentional and malicious misconduct. In no event will BATTELLE
        be
        liable
        for any indirect, incidental or consequential damages as a result of any
        such
        loss or damage. CLIENT
        will
        cooperate in providing any information about such property upon request and
        BATTELLE
        may
        reasonably rely on the information so provided. CLIENT
        further
        agrees to hold BATTELLE
        harmless
        from any claims asserted by any third party relating to such
        property.

       

      12. EARLY
        TERMINATION

      

      Either
        party shall have the right to terminate this Agreement upon thirty (30)
        days’
        written
        notice for any good-faith basis. In the event of early termination, BATTELLE
        agrees
        to provide CLIENT
        with all
        reports, materials, or other deliverable items available as of the date of
        the
        termination, provided that CLIENT
        is not
        in default of its obligations under this Agreement. In any event, CLIENT
        agrees
        to pay all charges incurred or committed by BATTELLE,
        including costs of termination, within thirty (30) days of receipt of a final
        invoice.

      

      

      Research
        & Development Services Agreement 45836

       

      13. ENTIRE
        AGREEMENT

      

      This
        Agreement, including the Proposal incorporated herein, represents the entire
        Agreement of the parties and supersedes any prior discussions or understandings,
        whether written or oral, relating to the subject matter hereof. This Agreement
        may be modified or amended only by mutual agreement in writing. No course
        of
        dealing, usage of trade, waiver, or non-enforcement shall be construed to
        modify
        or otherwise alter the terms and conditions of this Agreement. In the event
        of
        any conflict or inconsistency between these terms and conditions and the
        Proposal, these terms and conditions shall control.

       

      14. APPLICABLE
        LAW

      

      This
        Agreement shall be governed by and construed in accordance with the laws
        of and
        enforced within the jurisdiction of the State of Washington. 

       

      15. MISCELLANEOUS

      

      This
        Agreement may not be assigned in whole or in part without the prior written
        approval of both parties. In any event, however, this Agreement shall be
        binding
        upon, inure to the benefit of, and be enforceable by and against the successors,
        assigns and transferees of the parties. If any part of this Agreement shall
        be
        held invalid or unenforceable, such invalidity and unenforceability shall
        not
        affect any other part of this Agreement. Captions used as headings in this
        Agreement are for convenience only and are not to be construed as a substantive
        part of this Agreement.

      

      
        	
                ISORAY,
                  INC.

              	 	
                BATTELLE
                  MEMORIAL INSTITUTE

                Pacific
                  Northwest Division

              
	
                By
                  /s/
                  Donald Segna

              	 	
                By
                  /s/
                  Kerry Cullerton

              
	
                Name
                  DONALD
                  R. SEGNA

              	 	
                Name
                  Kerry
                  Cullerton

              
	
                Title
                  CEO

              	 	
                Title
                  Contracting
                  Officer

              
	
                Date
                  6/20/03

              	 	
                Date
                  5/13/03

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