1. Definitions. When used in this agreement, the following terms shall have the following meanings:

2. Grant of security interest. As security for the payment of all liabilities, borrower assigns to the bank, and grants to the bank a continuing security interest in the following, whether now or in the future existing or acquired: all accounts receivable (whether or not eligible accounts receivable) and contract rights of borrower; all chattel paper and instruments evidencing any obligation to borrower for payment for goods sold or leased or services rendered; all interest of borrower in any goods the sale or lease of which shall have given or shall give rise to, and in all guaranties and other property securing the payment of or performance under, any accounts receivable, contract rights or any chattel paper or instruments; and all proceeds of any of the above.

3. Warranties. Borrower warrants that: no financing statement (other than any which may have been filed on behalf of the bank) covering any of the collateral is on file in any public office; borrower is and will be the lawful owner of all collateral, free of all liens and claims, other than the security interest under this agreement, with full power and authority to execute this agreement and perform borrower's obligations under this agreement, and to subject the collateral to the security interest under this agreement; and all information with respect to collateral and account debtors set forth in any schedule, certificate or other writing at any time previously or in the future furnished by borrower to the bank, and all other written information previously or in the future furnished by borrower to the bank, is and will be true and correct as of the date furnished.

4. Collections, etc. Until the bank notifies borrower of the revocation of such power and authority, borrower (a) will, at its own expense, endeavor to collect, as and when due, all amounts due under the collateral, including the taking of any action with respect to the collection as the bank may reasonably request or, in the absence of such request, as borrower may deem advisable, and (b) may grant, in the ordinary course of business, to any party obligated on any of the collateral, any rebate, refund or allowance to which the party may be lawfully entitled, and may accept the return of goods, the sale or lease of which shall have given rise to the collateral. The bank, however, may, at any time, whether before or after any revocation of such power and authority or the maturity of any of the liabilities, notify any parties obligated on any of the collateral to make payment to the bank of any amounts due or to become due and enforce collection of any of the collateral by suit or otherwise and surrender, release or exchange all or any part of the collateral, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness under the collateral or evidenced by the collateral. Upon request of the bank, borrower will, at its own expense, notify any parties obligated on any of the collateral to make payment to the bank of any amounts due or to become due.

Borrower will (except as the bank may otherwise consent in writing) immediately, on receipt, transmit and deliver to the bank, in the form received, all cash, checks, drafts and other instruments or writings for the payment of money (properly indorsed, where required, so that the items may be collected by the bank) which may be received by borrower at any time in full or partial payment or otherwise as proceeds of any of the collateral. Except as the bank may otherwise consent in writing, any of the items which may be received by borrower will not be commingled with any other of its funds or property, but will be held separate and apart from its own funds or property and on express trust for the bank until delivery is made to the bank. Borrower will comply with the terms and conditions of any consent given by the bank pursuant to the provisions of this paragraph.

5. Adjustments and returned and repossessed goods. In the event borrower obtains possession (by return, repossession or otherwise) of any goods, the sale or lease of which shall have given rise to any eligible account receivable, borrower will, not later than _________ days thereafter, pay to the bank the greater of the unpaid purchase price or lease rental of the goods or the amount of any rebate, refund or allowance granted by borrower in connection with obtaining possession of the goods. In the event borrower grants to any account debtor under any eligible account receivable any other rebate, refund or allowance (except a cash discount not exceeding _____% of the face amount of the applicable invoice, and except any allowance which has been deducted in computing the net amount of the invoice as shown in the original schedule furnished to the bank identifying the eligible account receivable), borrower will, not later than _________ days thereafter, pay to the bank the amount of the rebate, refund or allowance granted.

6. Certificates, schedules and reports. Borrower will from time to time, as the bank may request, deliver to the bank a schedule identifying each eligible account receivable (not previously identified) subject to the security interest under this agreement, and the additional schedules and the certificates and reports respecting all or any of the collateral at the time subject to the security interest under this agreement, the items or amounts received by borrower in full or partial payment of any of the collateral, and any goods (the sale or lease of which shall have given rise to any of the collateral) possession of which has been obtained by borrower, all to the extent the bank may request. Any schedule, certificate or report shall be executed by a duly authorized officer of borrower and shall be in the form and detail the bank may specify. Any schedule identifying any eligible account receivable subject to the security interest under this agreement shall be accompanied (if the bank requests) by a true and correct copy of the invoice evidencing the eligible account receivable and by evidence of shipment or performance.

7. Agreements of borrower. Borrower (a) will, on request of the bank, execute financing statements and other documents (and pay the cost of filing or recording them in all public offices deemed necessary by the bank) and do any other acts and things, all as the bank may from time to time request to establish and maintain a valid security interest in the collateral (free of all other liens, claims and rights of third parties) to secure the payment of the liabilities; (b) will keep, at its address shown above, its records concerning the collateral, which records will be of such character as will enable the bank or its designees to determine at any time the status of the collateral, and borrower will not, unless the bank shall otherwise consent in writing, duplicate any records at any other address; (c) will furnish the bank with any information concerning borrower, the collateral and the account debtors as the bank may from time to time reasonably request; (d) will permit the bank and its designees, from time to time, to inspect, audit and make copies of and extracts from all records and all other papers in the possession of borrower pertaining to the collateral and the account debtors, and will, on request of the bank, deliver to the bank all the records and papers; (e) will, on request of the bank, stamp on its records concerning the collateral a notation, in a form satisfactory to the bank, of the security interest of the bank under this agreement; (f) will immediately deliver to the bank, appropriately indorsed to the order of the bank, any note, trade acceptance, chattel paper or other instrument or writing which shall be received by borrower and which may at any time evidence any obligation to borrower and which may at any time evidence any obligation to borrower for payment for goods sold or leased or services rendered; (g) will not sell, assign or create or permit to exist any lien on or security interest in any inventory of borrower; and (h) will reimburse the bank for all expenses, including reasonable attorneys' fees and legal expenses, incurred by the bank in seeking to collect or enforce any rights under the collateral and, in case of default, incurred by the bank in seeking to collect each note and all other liabilities and to enforce rights under this agreement.

8. Default. Whenever a default shall exist, each note and all other liabilities may (notwithstanding any provisions of the note or other liabilities), at the option of the bank, and without demand or notice of any kind, be declared, and shall immediately become, due and payable, and the bank may exercise from time to time any rights and remedies available to it under applicable law. Any notification of intended disposition of any of the collateral required by law shall be deemed reasonably and properly given if given at least _________ days before disposition. Any proceeds of any disposition by the bank of any of the collateral may be applied by the bank to the payment of expenses in connection with the collateral, including reasonable attorneys' fees and legal expenses, and any balance of the proceeds may be applied by the bank toward the payment of any of the liabilities, and in the order of application, the bank may from time to time elect.

9. General. The bank shall be deemed to have exercised reasonable care in the custody and preservation of any of the collateral in its possession if it takes such action for that purpose as borrower requests in writing, but failure of the bank to comply with any request shall not of itself be deemed a failure to exercise reasonable care. No failure of the bank to preserve or protect any rights with respect to the collateral against prior parties, or to do any act with respect to the preservation of the collateral not so requested by borrower, shall be deemed a failure to exercise reasonable care in the custody or preservation of the collateral.

Any notice from the bank to borrower, if mailed, shall be deemed given when mailed, postage prepaid, addressed to borrower either at borrower's address shown above, or at any other address of borrower appearing on the records of the bank.

No delay on the part of the bank in the exercise of any right or remedy shall operate as a waiver of the right or remedy, and no single or partial exercise by the bank of any right or remedy shall preclude other or further exercise of the right or remedy or the exercise of any other right or remedy.

Either the bank or borrower may terminate this agreement at any time on written notice to the other of the termination; provided, however, that the termination shall in no way affect, and this agreement shall remain fully operative as to, any transactions entered into or rights granted or liabilities incurred prior to the receipt of the notice by the party to whom given. Prior to termination, this agreement shall be a continuing agreement in every respect.

This agreement has been delivered at _________[city and state], and shall be governed by the laws of the State of _________. Wherever possible each provision of this agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this agreement shall be prohibited by, or invalid under, applicable law, the provision shall be ineffective to the extent of the prohibition or invalidity without invalidating the remainder of the provision or the remaining provisions of this agreement.

The rights and privileges of the bank under this agreement shall inure to the benefit of its successors and assigns.

10. Special provisions. _________[If none, insert "None."].