EXHIBIT 10.2

CREDIT AGREEMENT 

(LINE OF CREDIT)
(EQUIPMENT PURCHASE)
(LETTER OF CREDIT SUB-FACILITY)
(FOREIGN EXCHANGE SUB-FACILITY)
This Agreement (the "Agreement") is made and entered intoas of June 30, 2004, by and between BANK OF THE WEST (the "Bank") and SCIENTIFICTECHNOLOGIES INCORPORATED, WHICH WILL DO BUSINESS IN CALIFORNIA AS OREGONSCIENTIFIC TECHNOLOGIES (the "Borrower"), on the terms and conditions thatfollow: 
**SECTION
**1**
**DEFINITIONS**
1.1 **Certain Defined Terms**: Unless elsewheredefined in this Agreement, the following terms shall have the following meanings(such meanings to be generally applicable to the singular and plural forms ofthe terms defined):

1.1.1 **"Advance"**: shall mean an advance to theBorrower under the credit facility (ies) described in Section 2. 

1.1.2 **"Business Day"**: shall mean a day, other thana Saturday or Sunday, on which commercial banks are open for business inCalifornia. 

1.1.3 "**Close-Out Date":** shall mean the BusinessDay on which the Bank closes out and liquidates an FX Transaction. 

1.1.4 "**Closing Value":** has the meaning given to itin Section 8.5(i) hereof. 

1.1.5 **"Closing Gain" and "Closing****Loss"**:shall mean the amount determined in accordance with Section 8.5(ii) hereof.

1.1.6 **"Collateral"**: shall mean the propertydescribed in Section 3, together with any other personal or real property inwhich the Bank may be granted a lien or security interest to secure payment ofthe Obligations. 

1.1.7 **"Credit Percentage"**: shall mean 10%.

1.1.8 "**Current Liabilities"**: shall mean currentliabilities as determined in accordance with generally accepted accountingprinciples, including any negative cash balance on the Borrower's financialstatement and Indebtedness for borrowed money under lines of credit with theBank used by the Borrower for working capital purposes. 

1.1.9 **"Debt"**: shall mean all liabilities of theBorrower less Subordinated Debt, if any. 

1.1.10 **"Effective Tangible Net Worth"**: shall meanthe Borrower's stated net worth plus Subordinated Debt but less all intangibleassets of the Borrower (i.e., goodwill, trademarks, patents, copyrights,organization expense, and similar intangible items including, but not limitedto, investments in and all amounts due from parent companies, affiliates,officers or employees). 

1.1.11 **"Environmental Claims"**: shall mean allclaims, however asserted, by any governmental authority or other person allegingpotential liability or responsibility for violation of any Environmental Law orfor Discharge or injury to the environment or threat to public health, personalinjury (including sickness, disease or death), property damage, naturalresources damage, or otherwise alleging liability or responsibility for damages(punitive or otherwise), cleanup, removal, remedial or response costs,restitution, civil or criminal penalties, injunctive relief, or other type ofrelief, resulting from or based upon (a) the presence, placement, discharge,emission or release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental placement, spills,leaks, Discharges, emissions or releases) of any Hazardous Material at, in, orfrom property, whether or not owned by the Borrower, or (b) any othercircumstances forming the basis of any violation, or alleged violation, of anyEnvironmental Law. 

1.1.12 **"Environmental Laws"**: shall mean allfederal, state or local laws, statutes, common law duties, rules, regulations,ordinances and codes, together with all administrative orders, directed duties,requests, licenses, authorizations and permits of, and agreements with, anygovernmental authorities, in each case relating to environmental, health, safetyand land use matters; including the Comprehensive Environmental Response,Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act, theFederal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, theFederal Resource Conservation and Recovery Act, the Toxic Substances ControlAct, the Emergency Planning and Community Right-to-Know Act, the CaliforniaHazardous Waste Control Law, the California Solid Waste Management, Resource,Recovery and Recycling Act, the California Water Code and the California Healthand Safety Code. 

1.1.13 **"Environmental Permits"**: shall have themeaning provided in Section 5.11 hereof. 

1.1.14 **"Equipment"**: shall mean equipment asdefined in the Uniform Commercial Code. 

1.1.15 **"Equipment Purchase Facility"**: shall meanthe credit facility described as such in Section 2. 

1.1.16 **"Equipment Value"**: shall mean the lesserof: the invoice cost of the equipment (excluding taxes, license fees,transportation costs, insurance premiums, and installation and connectionexpenses, fees and costs); or the book value of the equipment; or theliquidation value of the equipment as determined by the Bank. 

1.1.17 **"ERISA"**: shall mean the Employee RetirementIncome Security Act of 1974, as amended from time to time, including (unless thecontext otherwise requires) any rules or regulations promulgated thereunder.

1.1.18 **"Event of Default"**: shall have the meaningset forth in Section 7. 

1.1.19 **"Expiration Date"**: shall mean June 30,2005, or the date of termination of the Bank's commitment to lend under thisAgreement pursuant to Section 8, whichever shall occur first. 

1.1.20 **"Foreign Currency"**: shall mean any legallytraded currency other than US dollars and which may be transferred by paperlesswire transfer or cash and in which the Bank regularly trades. 

1.1.21 **"Foreign Exchange Facility"**: shall mean thecredit facility described as such in Section 2. 

1.1.22 **"FX Risk Liability"**: shall mean the productof (a) the Credit Percentage, times (b) the aggregate of the Notional Values ofall FX Transactions outstanding, net of any Offsetting Transactions. 

1.1.23 **"FX Limit"**: shall mean $1,000,000.00.

1.1.24 **"FX Transaction"**: shall mean anytransaction between the Bank and the Borrower pursuant to which the Bank hasagreed to sell to or to purchase from the Borrower a Foreign Currency of anagreed amount at an agreed price in US dollars or such other agreed upon ForeignCurrency, deliverable and payable on an agreed date. 

1.1.25 **"Hazardous Materials"**: shall mean all thosesubstances which are regulated by, or which may form the basis of liabilityunder, any Environmental Law, including all substances identified under anyEnvironmental Law as a pollutant, contaminant, hazardous waste, hazardousconstituent, special waste, hazardous substance, hazardous material, or toxicsubstance, or petroleum or petroleum derived substance or waste. 

1.1.26 **"Indebtedness"**: shall mean, with respect tothe Borrower, (i) all indebtedness for borrowed money or for the deferredpurchase price of property or services in respect of which the Borrower isliable, contingently or otherwise, as obligor, guarantor or otherwise, or inrespect of which the Borrower otherwise assures a creditor against loss and (ii)obligations under leases which shall have been or should be, in accordance withgenerally accepted accounting principles, reported as capital leases in respectof which the Borrower is liable, contingently or otherwise, or in respect ofwhich the Borrower otherwise assures a creditor against loss. 

1.1.27 **"Letter of Credit Facility"**: shall mean thecredit facility described as such in Section 2. 

1.1.28 **"Line Account"**: shall have the meaningprovided in Section 2.5 hereof. 

1.1.29 **"Line of Credit"**: shall mean the creditfacility described as such in Section 2. 

1.1.30 **"Notional Value"**: shall mean the US Dollarequivalent of the price at which the Bank agreed to purchase or sell to theBorrower a Foreign Currency. 

1.1.31 **"Obligations"**: shall mean all amounts owingby the Borrower to the Bank pursuant to this Agreement including, but notlimited to, the unpaid principal amount of any loans or advances. 

1.1.32 **"Offsetting Transaction"**: shall mean a FXTransaction to purchase a Foreign Currency and a FX Transaction to sell the sameForeign Currency , each with the same Settlement Date and designated as anOffsetting Transaction at the time of entering into the FX Transaction.

1.1.33 **"Ordinary Course of Business"**: shall mean,with respect to any transaction involving the Borrower or any of itssubsidiaries or affiliates, the ordinary course of the Borrower's business, asconducted by the Borrower in accordance with past practice and undertaken by theBorrower in good faith and not for the purpose of evading any covenant orrestriction in this Agreement or in any other document, instrument or agreementexecuted in connection herewith. 

1.1.34 **"Permitted Liens"**: shall mean: (i) liensand security interests securing indebtedness owed by the Borrower to the Bank;(ii) liens for taxes, assessments or similar charges not yet due; (iii) liens ofmaterialmen, mechanics, warehousemen, or carriers or other like liens arising inthe Ordinary Course of Business and securing obligations which are not yetdelinquent; (iv) purchase money liens or purchase money security interests uponor in any property acquired or held by the Borrower in the Ordinary Course ofBusiness to secure Indebtedness outstanding on the date hereof or permitted tobe incurred herein; (v) liens and security interests which, as of the datehereof, have been disclosed to and approved by the Bank in writing; and (vi)those liens and security interests which in the aggregate constitute animmaterial and insignificant monetary amount with respect to the net value ofthe Borrower's assets. 

1.1.35 **"Prime Rate"**: shall mean an index for avariable interest rate which is quoted, published or announced by Bank as itsprime rate and as to which loans may be made by Bank at, above or below suchrate. 

1.1.36 **"Settlement Date"**: shall mean the BusinessDay on which the Borrower has agreed to (a) deliver the required amount ofForeign Currency, or (b) pay in US dollars the agreed upon purchase price of theForeign Currency. 

1.1.37 **"Subordinated Debt"**: shall mean suchliabilities of the Borrower which have been subordinated to those owed to theBank in a manner acceptable to the Bank. 

1.1.38 **"Variable Rate Advance"**: shall have therespective meaning as it is defined for each facility under Section 2, hereof.

1.1.39 **"Variable Rate"**: shall have the respectivemeaning as it is defined for each facility under Section 2, hereof.

1.2 **Accounting Terms**: All references to financialstatements, assets, liabilities, and similar accounting items not specificallydefined herein shall mean such financial statements or such items prepared ordetermined in accordance with generally accepted accounting principlesconsistently applied and, except where otherwise specified, all financial datasubmitted pursuant to this Agreement shall be prepared in accordance with suchprinciples. 

1.3 **Other Terms**: Other terms not otherwise definedshall have the meanings attributed to such terms in the Uniform Commercial Codeas in effect on July 1, 2001 and from time to time thereafter. 

 
**SECTION 

2****CREDIT FACILITIES 

2.1 THE LINE OF CREDIT**
2.1.1 **The Line of Credit**: On terms andconditions as set forth herein, the Bank agrees to make Advances to the Borrowerfrom time to time from the date hereof to the Expiration Date, provided theaggregate amount of such Advances outstanding at any time does not exceed$5,000,000.00 (the "Line of Credit"). Within the foregoing limits, the Borrowermay borrow, partially or wholly prepay, and reborrow under this Section 2.1.Proceeds of the Line of Credit shall be used to provide funds for workingcapital requirements.  

2.1.2 **Making Line Advances**: Each Advance shall beconclusively deemed to have been made at the request of and for the benefit ofthe Borrower (i) when credited to any deposit account of the Borrower maintainedwith the Bank or (ii) when paid in accordance with the Borrower's writteninstructions. Subject to the requirements of Section 4 and provided such requestis made in a timely manner as provided in Section 2.1.5 below, Advances shall bemade by the Bank under the Line of Credit.  

2.1.3 **Repayment**: On the Expiration Date, theBorrower hereby promises and agrees to pay to the Bank in full the aggregateunpaid principal amount of all Advances then outstanding, together with allaccrued and unpaid interest thereon.  

2.1.4 **Interest on Advances**: Interest shall accruefrom the date of each Advance under the Line of Credit at a variable rate perannum equivalent to the Prime Rate (the "Variable Rate"). Interest shall beadjusted concurrently with any change in the Prime Rate. An Advance based uponthe Variable Rate is hereinafter referred to as a "Variable Rate Advance". 

Interest shall be computed on the basis of 360 days per year,but charged on the actual number of days elapsed. The Borrower hereby promisesand agrees to pay interest in arrears on the last day of each month. 

If interest is not paid as and when it is due, it shall beadded to the principal, become and be treated as a part thereof, and shallthereafter bear like interest. 

2.1.5 **Notice of Borrowing**: Upon written ortelephonic notice which shall be received by the Bank at or before 2:00 p.m.(California time) on a Business Day, the Borrower may borrow under the Line ofCredit by requesting a Variable Rate Advance. A Variable Rate Advance may bemade on the day notice is received by the Bank, provided however, that if theBank shall not have received notice at or before 2:00 p.m. on the day suchAdvance is requested to be made, such Variable Rate Advance may, at the Bank'soption, be made on the next Business Day.  

2.2 **EQUIPMENT PURCHASE FACILITY**
2.2.1 **Equipment Purchase****Facility**: The Bankhereby agrees to make loans and advances ("Advances") to assist the Borrower inpurchasing items of equipment, upon a request therefor made by the Borrower tothe Bank prior to the Expiration Date (the "Equipment Purchase Facility"). EachAdvance made hereunder shall be in an amount not to exceed 100% of the EquipmentValue of the item(s) of new and used Equipment being purchased; provided,however, that at no time shall the total aggregate outstanding principal amountof Advances made hereunder exceed the sum of $1,000,000.00; and provided furtherthat the amount of any Advance which is repaid, in whole or in part, may not bereborrowed.  

2.2.2 **Equipment Account**: The Bank shall maintainon its books a record of account in which the Bank shall make entries for eachAdvance and such other debits and credits as shall be appropriate in connectionwith the Equipment Purchase Facility (the "Equipment Account").  

2.2.3 **Security Interest in Equipment**. TheBorrower, shall execute and deliver to the Bank, security agreements, financingstatements, disbursement instructions and such other documents and instrumentswhich the Bank may require with respect to such Advance and the perfection ofthe Bank's security interest in the Equipment pertaining to such Advance. 

2.2.4 **Repayment**: Unless sooner due in accordancewith the terms of the Agreement, on the Expiration Date, the Borrower herebypromises and agrees to pay to the Bank in full the aggregate unpaid principalamount of all Advances then outstanding hereunder, together with all accrued andunpaid interest thereon.  

2.2.5 **Interest on Advances**: Interest shall accruefrom the date of each Advance under the Equipment Purchase Facility at avariable rate per annum equivalent to the Prime Rate (the "Variable Rate").Interest shall be adjusted concurrently with any change in the Prime Rate. AnAdvance based upon the Variable Rate is hereinafter referred to as a "VariableRate Advance".  

Interest shall be computed on the basis of 360 days per year,but charged on the actual number of days elapsed. The Borrower hereby promisesand agrees to pay interest in arrears on the last day of each month. 

If interest is not paid as and when it is due, it shall beadded to the principal, become and be treated as a part thereof, and shallthereafter bear like interest. 

2.2.6 **Notice of Borrowing**: Upon written noticewhich shall be received by the Bank at or before 2:00 p.m. (California time) ona Business Day, the Borrower may borrow under the Equipment Purchase Facility byrequesting a Variable Rate Advance. A Variable Rate Advance may be made on theday notice is received by the Bank, provided however, that if the Bank shall nothave received notice at or before 2:00 p.m. on the day such Advance is requestedto be made, such Variable Rate Advance may, at the Bank's option, be made on thenext Business Day.  

2.2.7 **Term Loan Conversion**: The Borrower may, bygiving written notice to the Bank at least 30 day(s) prior to the ExpirationDate, convert the principal balance outstanding under the Equipment PurchaseFacility as of the Expiration Date of Equipment Purchase Facility to be payableon a term loan basis. The term loan (the "Term Loan") shall be in the amount ofsuch outstanding principal balance and shall be evidenced by a promissory noteor credit agreement in form and substance satisfactory to the Bank (the "TermNote"). Accrued and unpaid interest under the Equipment Purchase Facility shallbe paid to the Bank concurrently with the Borrower's execution of the Term Note.Interest shall accrue and principal and interest shall be paid in accordancewith the terms and provisions of the Term Note.  

2.3 **LETTER OF CREDIT SUB-FACILITY**
2.3.1 **Letter of Credit Sub-Facility:** The Bankagrees to issue commercial and/or standby letters of credit (each a "Letter ofCredit") on behalf of the Borrower of up to $1,000,000.00. At no time, however,shall the total principal amount of all Advances outstanding under the FXFacility, together with the total face amount of all Letters of Creditoutstanding, less any partial draws paid by the Bank, exceed the Line of Credit. 

For the purposes hereof, any Letters of Credit issued andoutstanding for the account of the Borrower as of the date hereof shall bedeemed to be issued hereunder. 

(i) Upon the Bank's request, the Borrower shall promptlypay to the Bank issuance fees and such other fees, commissions, costs and anyout-of-pocket expenses charged or incurred by the Bank with respect to anyLetter of Credit.  

(ii) The commitment by the Bank to issue Letters ofCredit shall, unless earlier terminated in accordance with the terms of theAgreement, automatically terminate on the Expiration Date of the Line of Creditand no commercial letter of credit shall expire on a date which is more than 90days after the Expiration Date and no standby letter of credit shall expire on adate which is more than twelve (12) months after the Expiration Date.  

(iii) Each Letter of Credit shall be in form andsubstance satisfactory to the Bank and in favor of beneficiaries satisfactory tothe Bank, provided that the Bank may refuse to issue a Letter of Credit due tothe nature of the transaction or its terms or in connection with any transactionwhere the Bank, due to the beneficiary or the nationality or residence of thebeneficiary, would be prohibited by any applicable law, regulation or order fromissuing such Letter of Credit.  

(iv) Prior to the issuance of each Letter of Credit, butin no event later than 10:00 a.m. (California time) on the day such Letter ofCredit is to be issued (which shall be a Business Day), the Borrower shalldeliver to the Bank a duly executed form of the Bank's standard form ofapplication for issuance of a Letter of Credit with proper insertions.  

(v) The Borrower shall, upon the Bank's request, promptlypay to and reimburse the Bank for all costs incurred and payments made by theBank by reason of any future assessment, reserve, deposit or similar requirementor any surcharge, tax or fee imposed upon the Bank or as a result of the Bank'scompliance with any directive or requirement of any regulatory authoritypertaining or relating to any Letter of Credit.  

 In the event that the Borrower fails to pay any drawing underany Letter of Credit or the balances in the depository account or accountsmaintained by the Borrower with Bank are insufficient to pay such drawing,without limiting the rights of Bank hereunder or waiving any Event of Defaultcaused thereby, Bank may, and Borrower hereby authorizes Bank to create anAdvance bearing interest at the rate or rates provided in Section 9.2 hereof topay such drawing. 

2.4 **FOREIGN EXCHANGE SUB-FACILITY**
2.4.1 **Foreign Exchange Sub-Facility**: The Bankagrees to enter into FX Transactions with the Borrower, at the Borrower'srequest therefor made prior to the Expiration Date, provided however, that at notime shall the aggregate FX Risk Liability of the Borrower exceed the FX Limit,and together with the total principal amount of all outstanding Advances, exceedthe Line of Credit. Each FX Transaction shall be used to hedge the Borrower'sforeign exchange exposure.  

(i) **Requests**. Each request for a FX Transactionshall be made by telephone to the Bank's Treasury Department ("Request"), shallspecify the Foreign Currency to be purchased or sold, the amount of such ForeignCurrency and the Settlement Date. Each Request shall be communicated to the Bankno later than 3:00 p.m. California time on the Business Day on which the FXTransaction is requested.  

(ii) **Tenor**. No FX Transaction shall have aSettlement Date which is more than 365 days after the date of entry into such FXTransaction, and provided further, no FX Transaction shall expire on a datewhich is more than 90 days after the Expiration Date.  

(iii) **Availability**. Bank may refuse to enter intoa FX Transaction with the Borrower where the Bank, at its sole discretion,determines that (1) the requested Foreign Currency is unavailable, or (2) theBank is not then dealing in the requested Foreign Currency, or (3) the Bankwould be prohibited by any applicable law, rule, regulation or order frompurchasing such Foreign Currency.  

(iv) **Payment**. Payment is due on the SettlementDate of the relevant FX Transaction. The Bank is hereby authorized by theBorrower to charge the full settlement price of any FX Transaction against thedepository account or accounts maintained by the Borrower with the Bank on theSettlement Date. In the event that the Borrower fails to pay the settlementprice of any FX Transaction on the Settlement Date or the balances in thedepository account or accounts maintained with Bank are insufficient to pay thesettlement price, without limiting the rights of Bank hereunder or waiving anyEvent of Default caused thereby, Bank may , and Borrower hereby authorizes Bankto, create an Advance bearing interest at the Variable Rate to pay thesettlement price on the Settlement Date.  

(v) **Increased Costs**. Borrower shall promptly payto and reimburse the Bank for all costs incurred and payments made by the Bankby reason of any assessment, reserve, deposit, capital maintenance or similarrequirement or any surcharge, tax or fee imposed upon the Bank or as a result ofthe Bank's compliance with any directive or requirement of any regulatoryauthority pertaining or relating to any FX Transaction.  

(vi) **Impossibility of Performance**. In the eventthat the Borrower or the Bank cannot perform under a FX Transaction due to forcemajeure or an act of State or it becomes unlawful or impossible to perform, allin the good faith judgement of the Borrower or the Bank, then upon notice to theother party, the Borrower or the Bank may require the close-out and liquidationof the affected FX Transaction in accordance with the provisions of thisAgreement.  

2.5 **Line Account**: The Bank shall maintain on itsbooks a record of account in which the Bank shall make entries for each Advanceand such other debits and credits as shall be appropriate in connection with thecredit facilities granted hereunder (the "Line Account"). The Bank shall providethe Borrower with a statement of the Borrower's Line Account, which statementshall be considered to be correct and conclusively binding on the Borrowerunless the Borrower notifies the Bank to the contrary within 30 days after theBorrower's receipt of any such statement which it deems to be incorrect. 

2.6 **Authorization to Charge Account(s):**TheBorrower hereby authorizes the Bank to charge, from time to time, against any orall of the Borrower's deposit accounts with the Bank any amount so due underthis Agreement, including, but not limited to, account # 054-004049 maintainedwith the Bank.  

2.7 **Payments:**If any payment required to be madeby the Borrower hereunder becomes due and payable on a day other than a BusinessDay, the due date thereof shall be extended to the next succeeding Business Dayand interest thereon shall be payable at the then applicable rate during suchextension. All payments required to be made hereunder shall be made to theoffice of the Bank designated for the receipt of notices herein or such otheroffice as Bank shall from time to time designate.  

2.8 **Late Payment**: In addition to any other rightsthe Bank may have hereunder, if any payment of principal or interest or anyportion thereof, under this Agreement is not paid within 5 days of when due, alate payment charge equal to five percent (5%) of such past due payment may beassessed and shall be immediately payable.  
**SECTION 

3****COLLATERAL**
3.1 **The Collateral**: To secure payment andperformance of all the Borrower's Obligations under this Agreement and all otherliabilities, loans, guarantees, covenants and duties owed by the Borrower to theBank, whether or not evidenced by this or by any other agreement, absolute orcontingent, due or to become due, now existing or hereafter and howsoevercreated, the Borrower hereby grants the Bank a security interest in and to allof the following property ("Collateral"): 

(i) **Equipment.** All goods now owned or hereafteracquired by the Borrower or in which the Borrower now has or may hereafteracquire any interest, including, but not limited to, all machinery, equipment,furniture, furnishings, fixtures, tools, supplies and motor vehicles of everykind and description, and all additions, accessions, improvements, replacementsand substitutions thereto and thereof (the "Equipment").  

(ii) **Inventory.** All inventory now owned orhereafter acquired by the Borrower, including, but not limited to, all rawmaterials, work in process, finished goods, inventory leased to others or heldfor lease, merchandise, parts and supplies of every kind and description,including inventory temporarily out of the Borrower's custody or possession,together with all returns on accounts (the "Inventory").  

(iii) **Accounts.** All accounts, letter of creditrights, commercial tort claims, contract rights and general intangibles,including software and payment intangibles, now owned or hereafter created oracquired by the Borrower, including, but not limited to, all receivables,including as-extracted receivables, credit card receivables, health carereceivables, insurance receivables, software receivables and license fees,goodwill, trademarks, trademark applications, trade styles, trade names,patents, patent applications, copyrights and copyright applications, customerlists, business records and computer programs, tapes, disks and related dataprocessing software that at any time evidence or contain information relating toany of the Collateral.  

(iv) **Documents**. All documents, instruments andchattel paper, whether electronic or tangible, now owned or hereafter acquiredby the Borrower, including, but not limited to, warehouse and other receipts,bills of sale, promissory notes and bills of lading.  

(v) **Monies**. All monies, deposit accounts,certificates of deposit, investment property and securities of the Borrower nowor hereafter in the Bank's or its agents' possession.  

(vi) **Assets**. All assets of the Borrower, whethernow existing or hereafter acquired, and the products and proceeds thereof.
The Bank's security interest in the Collateral shall be acontinuing lien and shall include the proceeds and products of the Collateralincluding, but not limited to, the proceeds of any insurance thereon. 

Borrower hereby consents to and instructs Bank to filefinancing statements in all locations deemed appropriate by the Bank from timeto time. 

The security interest granted to Bank in the Collateral shallnot secure or be deemed to secure any Indebtedness of the Borrower to the Bankwhich is, at the time of its creation, subject to the provisions of any state orfederal consumer credit or truth-in-lending disclosure statutes. 
**SECTION 

4**
 
**CONDITIONS PRECEDENT**
4.1 **Conditions Precedent to the Initial Extensionof Credit**: The obligation of the Bank to make the initial Advance or thefirst extension of credit to or on account of the Borrower hereunder is subjectto the conditions precedent that the Bank shall have received before the date ofsuch initial Advance or such first extension of credit all of the following, inform and substance satisfactory to the Bank:  

(i) **Authority to Borrow.** Evidence that theexecution, delivery and performance by the Borrower of this Agreement and anydocument, instrument or agreement required hereunder have been duly authorized. 

(ii) **Fees.** A fee of $15,000.00, such fee to bedeemed to be fully earned upon payment.  

(iii) **Fees.** Payment of all of the Bank's out-of-pocket expenses in connection with the preparation and negotiation of thisAgreement.  

(iv) **Financing Statements.** UCC-1 financingstatement(s) describing the Collateral, which have been filed with the Secretaryof State or the county recorder as a lien of first priority.  

(v) **Miscellaneous.** Such other evidence as the Bankmay request to establish the consummation of the transaction contemplatedhereunder and compliance with the conditions of this Agreement.  

4.2 **Conditions Precedent to All Extensions ofCredit**: The obligation of the Bank to make each Advance or each otherextension of credit, as the case may be, to or on account of the Borrower(including the initial Advance or the first extension of credit) shall besubject to the further conditions precedent that, on the date of each Advance oreach extension of credit and after the making of such Advance or extension ofcredit:  

(i) **Reporting Requirements.** The Bank shall havereceived the documents set forth in Section 6.1.  

(ii) **Subsequent Approvals.** The Bank shall havereceived such supplemental approvals, opinions or documents as the Bank mayreasonably request.  

(iii) **Representations and Warranties.** Therepresentations contained in Section 5 and in any other document, instrument orcertificate delivered to the Bank hereunder are true, correct and complete. 

(iv) **Event of Default.** No event has occurred andis continuing which constitutes, or with the lapse of time or giving of noticeor both, would constitute an Event of Default.  

(v) **Collateral.** The security interest in theCollateral has been duly authorized, created and perfected with first priorityand is in full force and effect.  

The Borrower's acceptance of the proceeds of any loan,Advance or extension of credit, or the Borrower's applying for any Letter ofCredit, or the Borrower's execution of any document or instrument evidencing orcreating any Obligation hereunder shall be deemed to constitute the Borrower'srepresentation and warranty that all of the above statements are true andcorrect. 
**SECTION 

5****REPRESENTATIONS AND WARRANTIES**
The Borrower hereby makes the following representationsand warranties to the Bank, which representations and warranties are continuing:

5.1 **Status**: The Borrower's correct legal name isas stated in this Agreement and the Borrower is a corporation duly organized andvalidly existing under the laws of the state of Oregon and with its chiefexecutive office in the state of Oregon and is properly licensed and isqualified to do business and in good standing in, and, where necessary tomaintain the Borrower's rights and privileges, has complied with the fictitiousname statute of every jurisdiction in which the Borrower is doing business. 

5.2 **Authority**: The execution, delivery andperformance by the Borrower of this Agreement and any instrument, document oragreement required hereunder have been duly authorized and do not and will not:(i) violate any provision of any law, rule, regulation, order, writ, judgment,injunction, decree, determination or award presently in effect havingapplication to the Borrower; (ii) result in a breach of or constitute a defaultunder any material indenture or loan or credit agreement or other materialagreement, lease or instrument to which the Borrower is a party or by which itor its properties may be bound or affected; or (iii) require any consent orapproval of its stockholders or violate any provision of its articles ofincorporation or by-laws.  

5.3 **Legal Effect**: This Agreement constitutes, andany instrument, document or agreement required hereunder when deliveredhereunder will constitute, legal, valid and binding obligations of the Borrowerenforceable against the Borrower in accordance with their respective terms. 

5.4 **Fictitious Trade Styles**: There are nofictitious trade styles used by the Borrower in connection with its businessoperations. The Borrower shall notify the Bank not less than 30 days prior toeffecting any change in the matters described herein or prior to using any otherfictitious trade style at any future date, indicating the trade style andstate(s) of its use.  

5.5 **Financial Statements**: All financialstatements, information and other data which may have been or which mayhereafter be submitted by the Borrower to the Bank are true, accurate andcorrect and have been or will be prepared in accordance with generally acceptedaccounting principles consistently applied and accurately represent thefinancial condition or, as applicable, the other information disclosed therein.Since the most recent submission of such financial information or data to theBank, the Borrower represents and warrants that no material adverse change inthe Borrower's financial condition or operations has occurred which has not beenfully disclosed to the Bank in writing.  

5.6 **Litigation**: Except as have been disclosed tothe Bank in writing, there are no actions, suits or proceedings pending or, tothe knowledge of the Borrower, threatened against or affecting the Borrower orthe Borrower's properties before any court or administrative agency which, ifdetermined adversely to the Borrower, would have a material adverse effect onthe Borrower's financial condition or operations or on the Collateral.  

5.7 **Title to Assets**: The Borrower has good andmarketable title to all of its assets (including, but not limited to, theCollateral) and the same are not subject to any security interest, encumbrance,lien or claim of any third person except for Permitted Liens.  

5.8 **ERISA**: If the Borrower has a pension, profitsharing or retirement plan subject to ERISA, such plan has been and willcontinue to be funded in accordance with its terms and otherwise complies withand continues to comply with the requirements of ERISA.  

5.9 **Taxes**: The Borrower has filed all tax returnsrequired to be filed and paid all taxes shown thereon to be due, includinginterest and penalties, other than such taxes which are currently payablewithout penalty or interest or those which are being duly contested in goodfaith.  

5.10 **Margin Stock.** The proceeds of any loan oradvance hereunder will not be used to purchase or carry margin stock as suchterm is defined under Regulation U of the Board of Governors of the FederalReserve System.  

5.11 **Environmental Compliance**. The operations ofthe Borrower comply, and during the term of this Agreement will at all timescomply, in all respects with all Environmental Laws; the Borrower has obtainedall licenses, permits, authorizations and registrations required under anyEnvironmental Law ("Environmental Permits") and necessary for itsordinary course operations, all such Environmental Permits are in good standing,and the Borrower is in compliance with all material terms and conditions of suchEnvironmental Permits; neither the Borrower nor any of its present property oroperations is subject to any outstanding written order from or agreement withany governmental authority nor subject to any judicial or docketedadministrative proceeding, respecting any Environmental Law, Environmental Claimor Hazardous Material; there are no Hazardous Materials or other conditions orcircumstances existing, or arising from operations prior to the date of thisAgreement, with respect to any property of the Borrower that would reasonably beexpected to give rise to Environmental Claims; provided, however, thatwith respect to property leased from an unrelated third party, the foregoingrepresentation is made to the best knowledge of the Borrower. In addition, (i)the Borrower does not have any underground storage tanks that are not properlyregistered or permitted under applicable Environmental Laws, or that are leakingor disposing of Hazardous Materials off-site, and (ii) the Borrower has notifiedall of their employees of the existence, if any, of any health hazard arisingfrom the conditions of their employment and have met all notificationrequirements under Title III of CERCLA and all other Environmental Laws. 

5.12 **Inventory**:  

(i) The Borrower keeps correct and accurate records.(itemizing and describing the kind, type, quality and quantity of inventory, theBorrower's cost therefor and selling price thereof, and the daily withdrawalstherefrom and additions thereto).  

(ii) All inventory is of good and merchantable quality,free from defects.  

(iii) The inventory is not stored with a bailee,warehouseman or similar party.  
**SECTION 

6****COVENANTS**
The Borrower covenants and agrees that, during the termof this Agreement, and so long thereafter as the Borrower is indebted to theBank under this Agreement, the Borrower will, unless the Bank shall otherwiseconsent in writing: 

6.1 **Reporting and Certification Requirements**:Deliver or cause to be delivered to the Bank in form and detail satisfactory tothe Bank:  

(i) Not later than 90 days after the end of each of theBorrower's fiscal years, a copy of the annual audited financial report of theBorrower for such year, prepared by a firm of certified public accountantsacceptable to Bank and accompanied by an unqualified opinion of such firm. 

(ii) Not later than 45 days after the end of eachquarter, a copy of the Borrower's financial statement as of the end of suchperiod.  

(iii) Promptly upon the Bank's request, such otherinformation pertaining to the Borrower, the Collateral or any guarantorhereunder as the Bank may reasonably request.  

6.2 **Financial Condition**: The Borrower promises andagrees, during the term of this Agreement and until payment in full of all ofthe Borrower's Obligations, the Borrower will maintain at all times: 

(i) A minimum Effective Tangible Net Worth of at least$18,000,000.00.  

(ii) A ratio of Debt to Effective Tangible Net Worth ofnot more than 1.00 to 1.  

(iii) A ratio of the sum of cash, cash equivalents andaccounts receivable to Current Liabilities of not less than 1.10 to 1.  

(iv) Not allow any losses exceeding $1,000,000.00 in anyone fiscal year.  

6.3 **Preservation of Existence; Compliance withApplicable Laws**: Maintain and preserve its existence and all rights andprivileges now enjoyed; and conduct its business and operations in accordancewith all applicable laws, rules and regulations.  

6.4 **Merge or Consolidate**: Not liquidate ordissolve, merge or consolidate with or into, or acquire any other businessorganization.  

6.5 **Maintenance of Insurance**: Keep and maintainthe Collateral insured for not less than its full replacement value against allrisks of loss and damage and maintain insurance in such amounts and coveringsuch risks as is usually carried by companies engaged in similar businesses andowning similar properties in the same general areas in which the Borroweroperates and maintain such other insurance and coverages as may be required bythe Bank. All such insurance shall be in form and amount and with companiessatisfactory to the Bank.  

With respect to insurance covering properties in which theBank maintains a security interest or lien, such insurance shall name the Bankas loss payee pursuant to a loss payable endorsement satisfactory to the Bankand shall not be altered or canceled except upon 10 days' prior written noticeto the Bank. Upon the Bank's request, the Borrower shall furnish the Bank withthe original policy or binder of all such insurance. 

6.6 **Maintenance of Collateral and OtherProperties**: Except for Permitted Liens, keep and maintain the Collateralfree and clear of all levies, liens, encumbrances and security interests(including, but not limited to, any lien of attachment, judgment or execution)and defend the Collateral against any such levy, lien, encumbrance or securityinterest; comply with all laws, statutes and regulations pertaining to theCollateral and its use and operation; execute, file and record such statements,notices and agreements, take such actions and obtain such certificates and otherdocuments as necessary to perfect, evidence and continue the Bank's securityinterest in the Collateral and the priority thereof; maintain accurate andcomplete records of the Collateral which show all sales, claims and allowances;and properly care for, house, store and maintain the Collateral in goodcondition, free of misuse, abuse and deterioration, other than normal wear andtear. The Borrower shall also maintain and preserve all its properties in goodworking order and condition in accordance with the general practice of otherbusinesses of similar character and size, ordinary wear and tear excepted. 

6.7 **Payment of Obligations and Taxes**: Make timelypayment of all assessments and taxes and all of its liabilities and obligationsincluding, but not limited to, trade payables, unless the same are beingcontested in good faith by appropriate proceedings with the appropriate court orregulatory agency. For purposes hereof, the Borrower's issuance of a check,draft or similar instrument without delivery to the intended payee shall notconstitute payment.  

6.8 **Depository Relationships**: Except for permittedinvestments, maintain its primary business depository relationship with Bank,including general, operating and administrative deposit accounts and cashmanagement services.  

6.9 **Inspection Rights and Accounting Records**: TheBorrower will maintain adequate books and records in accordance with generallyaccepted accounting principles consistently applied and in a manner otherwiseacceptable to Bank, and, at any reasonable time and from time to time, permitthe Bank or any representative thereof to examine and make copies of the recordsand visit the properties of the Borrower and discuss the business and operationsof the Borrower with any employee or representative thereof. If the Borrowershall maintain any records (including, but not limited to, computer generatedrecords or computer programs for the generation of such records) in thepossession of a third party, the Borrower hereby agrees to notify such thirdparty to permit the Bank free access to such records at all reasonable times andto provide the Bank with copies of any records which it may request, all at theBorrower's expense, the amount of which shall be payable immediately upondemand.  

6.10 **Additional Indebtedness**: Not, after the datehereof, create, incur or assume, directly or indirectly, any additionalIndebtedness other than (i) Indebtedness owed or to be owed to the Bank or (ii)Indebtedness to trade creditors incurred in the Ordinary Course of Business. 

6.11 **Loans**: Not make any loans or advances orextend credit to any third person, including, but not limited to, directors,officers, shareholders, partners, employees, affiliated entities andsubsidiaries of the Borrower, except for credit extended in the Ordinary Courseof Business as presently conducted, loans to any parent corporation holding atleast 75% of the capital stock of the Borrower and except up to $100,000.00 inthe aggregate.  

6.12 **Liens and Encumbrances**: Not create, assume orpermit to exist any security interest, encumbrance, mortgage, deed of trust, orother lien (including, but not limited to, a lien of attachment, judgment orexecution) affecting any of the Borrower's properties, or execute or allow to befiled any financing statement or continuation thereof affecting any of suchproperties, except for Permitted Liens or as otherwise provided in thisAgreement.  

6.13 **Transfer Assets**: Not, after the date hereof,sell, contract for sale, convey, transfer, assign, lease or sublet, any of itsassets (including, but not limited to, the Collateral) except in the OrdinaryCourse of Business and, then, only for full, fair and reasonable consideration. 

6.14 **Change in Nature of Business**: Not make anymaterial change in its financial structure or the nature of its business asexisting or conducted as of the date hereof.  

6.15 **Maintenance of Jurisdiction**: Borrower shallmaintain the jurisdiction of its organization and chief executive office, or ifapplicable, principal residence, as set forth herein and not change suchjurisdiction name or form of organization without 30 days prior written noticeto Bank.  

6.16 **Compensation of Employees**: Compensate itsemployees for services rendered at an hourly rate at least equal to the minimumhourly rate prescribed by any applicable federal or state law or regulation. 

6.17 **Notice**: Give the Bank prompt written noticeof any and all (i) Events of Default; (ii) litigation, arbitration oradministrative proceedings to which the Borrower is a party or which affects theCollateral; (iii) other matters which have resulted in, or might result in amaterial adverse change in the Collateral or the financial condition or businessoperations of the Borrower, and (iv) any enforcement, cleanup, removal or othergovernmental or regulatory actions instituted, completed or threatened againstthe Borrower or any of its properties.  

6.18 **Environmental Compliance**: The Borrower shallconduct its operations and keep and maintain all of its property in compliancewith all Environmental Laws and, upon the written request of the Bank, theBorrower shall submit to the Bank, at the Borrower's sole cost and expense, atreasonable intervals, a report providing the status of any environmental, healthor safety compliance, hazard or liability.  

6.19 **Inventory**:  

(i) Except as provided herein below, the Borrower'sinventory shall, at all times, be in the Borrower's physical possession, shallnot be held by others on consignment, sale on approval, or sale or return. 

(ii) The Borrower shall keep correct and accuraterecords.  

(iii) All inventory shall be of good and merchantablequality, free from defects.  

(iv) The inventory shall not at any time or timeshereafter be stored with a bailee, warehouseman or similar party without theBank's prior written consent and, in such event, the Borrower will concurrentlytherewith cause any such bailee, warehouseman or similar party to issue anddeliver to the Bank, in form acceptable to the Bank, warehouse receipts in theBank's name evidencing the storage of inventory.  

(v) At any reasonable time and from time to time, allowBank to have the right, upon demand, to inspect and examine inventory and tocheck and test the same as to quality, quantity, value and condition and theBorrower agrees to reimburse the Bank for the Bank's reasonable costs andexpenses in so doing.  

6.20 **Location and Maintenance of Equipment**.: 

(i) The Equipment shall at all times be in the Borrower'sphysical possession, shall not be held for sale or lease.  

The Borrower shall not secrete, abandon or remove, or permitthe removal of, the Equipment, or any part thereof, from the location(s) shownabove or remove or permit to be removed any accessories now or hereafter placedupon the Equipment. 

(ii) Upon the Bank's demand, the Borrower shallimmediately provide the Bank with a complete and accurate description of theEquipment including, as applicable, the make, model, identification number andserial number of each item of Equipment. In addition, the Borrower shallimmediately notify the Bank of the acquisition of any new or additionalEquipment or the replacement of any existing Equipment and shall supply the Bankwith a complete description of any such additional or replacement Equipment. 

(iii) The Borrower shall, at the Borrower's sole cost andexpense, keep and maintain the Equipment in a good state of repair and shall notdestroy, misuse, abuse, illegally use or be negligent in the care of theEquipment or any part thereof. The Borrower shall not remove, destroy,obliterate, change, cover, paint, deface or alter the name plates, serialnumbers, labels or other distinguishing numbers or identification marks placedupon the Equipment or any part thereof by or on behalf of the manufacturer, anydealer or rebuilder thereof, or the Bank. The Borrower shall not be releasedfrom any liability to the Bank hereunder because of any injury to or loss ordestruction of the Equipment. The Borrower shall allow the Bank and itsrepresentatives free access to and the right to inspect the Equipment at alltimes and shall comply with the terms and conditions of any leases covering thereal property on which the Equipment is located and any orders, ordinances,laws, regulations or rules of any federal, state or municipal agency orauthority having jurisdiction of such real property or the conduct of thebusiness of the persons having control or possession of the Equipment.  

(iv) The Equipment is not now and shall not at any timehereafter be so affixed to the real property on which it is located as to becomea fixture or a part thereof. The Equipment is now and shall at all timeshereafter be and remain personal property of the Borrower.  
**SECTION 

7****EVENTS OF DEFAULT**
Any one or more of the following described events shallconstitute an event of default (an "Event of Default") under this Agreement:

7.1 **Non-Payment**: Any Borrower shall fail to paythe principal amount of any Obligations when due or interest on the Obligationswithin 5 days of when due.  

7.2 **Performance Under This Agreement**: TheBorrowers shall fail in any material respect to perform or observe any term,covenant or agreement contained in this Agreement or in any document, instrumentor agreement relating to this Agreement or any other document or agreementexecuted by the Borrowers with or in favor of Bank and any such failure shallcontinue unremedied for more than 30 days after the occurrence thereof. 

7.3 **Representations and Warranties; FinancialStatements**: Any representation or warranty made by the Borrower under or inconnection with this Agreement or any financial statement given by the Borroweror any guarantor shall prove to have been incorrect in any material respect whenmade or given or when deemed to have been made or given.  

7.4 **Other Agreements**: If there is a default underany agreement to which Borrower is a party with Bank or with a third party orparties resulting in a right by the Bank or by such third party or parties,whether or not exercised, to accelerate the maturity of any Indebtedness. 

7.5 **Insolvency**: The Borrower or any guarantorshall: (i) become insolvent or be unable to pay its debts as they mature; (ii)make an assignment for the benefit of creditors or to an agent authorized toliquidate any substantial amount of its properties and assets; (iii) file avoluntary petition in bankruptcy or seeking reorganization or to effect a planor other arrangement with creditors; (iv) file an answer admitting the materialallegations of an involuntary petition relating to bankruptcy or reorganizationor join in any such petition; (v) become or be adjudicated a bankrupt; (vi)apply for or consent to the appointment of, or consent that an order be made,appointing any receiver, custodian or trustee, for itself or any of itsproperties, assets or businesses; or (vii) in an involuntary proceeding, anyreceiver, custodian or trustee shall have been appointed for all or substantialpart of the Borrower's or guarantor's properties, assets or businesses and shallnot be discharged within 30 days after the date of such appointment.  

7.6 **Execution**: Any writ of execution or attachmentor any judgment lien shall be issued against any property of the Borrower andshall not be discharged or bonded against or released within 30 days after theissuance or attachment of such writ or lien.  

7.7 **Suspension**: The Borrower shall voluntarilysuspend the transaction of business or allow to be suspended, terminated,revoked or expired any permit, license or approval of any governmental bodynecessary to conduct the Borrower's business as now conducted.  

7.8 **Material Adverse Change**: If there occurs amaterial adverse change in the Borrower's business or financial condition, or ifthere is a material impairment of the prospect of repayment of any portion ofthe Obligations or there is a material impairment of the value or priority ofthe Bank's security interest in the Collateral, or if a Borrower who is anatural person shall die.  

7.9 **Change in Ownership**: There shall occur a sale,transfer, disposition or encumbrance (whether voluntary or involuntary), or anagreement shall be entered into to do so, with respect to more than 10% of theissued and outstanding capital stock of the Borrower.  

7.10 **Impairment of Collateral**. There shall occurany injury or damage to all or any part of the Collateral or all or any part ofthe Collateral shall be lost, stolen or destroyed.  
**SECTION 

8****REMEDIES ON DEFAULT**
Upon the occurrence of any Event of Default, the Bankmay, at its sole and absolute election, without demand and only upon such noticeas may be required by law: 

8.1 **Acceleration**: Declare any or all of theBorrower's indebtedness owing to the Bank, whether under this Agreement or anyother document, instrument or agreement, immediately due and payable, whether ornot otherwise due and payable.  

8.2 **Cease Extending Credit**: Cease making Advancesor otherwise extending credit to or for the account of the Borrower under thisAgreement or under any other agreement now existing or hereafter entered intobetween the Borrower and the Bank.  

8.3 **Termination**: Terminate this Agreement as toany future obligation of the Bank without affecting the Borrower's obligationsto the Bank or the Bank's rights and remedies under this Agreement or under anyother document, instrument or agreement.  

8.4 **Letters of Credit**: Require the Borrower to payimmediately to the Bank, for application against drawings under any outstandingLetters of Credit, the outstanding principal amount of any such Letters ofCredit which have not expired. Any portion of the amount so paid to the Bankwhich is not applied to satisfy draws under any such Letters of Credit or anyother obligations of the Borrower to the Bank shall be repaid to the Borrowerwithout interest.  

8.5 **Close-Out and Liquidation**: Close-out andliquidate each outstanding FX Transaction so that each FX Transaction iscanceled in accordance with the following:  

(i) **Closing Value**. The Bank shall calculate valueof such canceled FX Transaction by converting (1) in the case of a FXTransaction whose Settlement Date is the same as or later than the Close-OutDate, the amount of Foreign Currency into US dollars at a rate of exchange atwhich the Bank can buy or sell US dollars with or against the Foreign Currencyfor delivery on the Settlement Date of the relevant FX Transaction; or (2) inthe case of a FX Transaction whose Settlement Date precedes the Close-Out Date,the amount of the Foreign Currency adjusted by adding interest with respectthereto at the Variable Rate from the Settlement Date to the Close-Out Date,into US Dollars at a rate of exchange at which the Bank can buy or sell USdollars with or against the Foreign Currency for delivery on the Close-Out Date. 

(ii) **Closing Gain or Loss**. (1) For a FXTransaction for which the Bank agreed to purchase a Foreign Currency, the amountby which the Closing Value exceeds the Notional Value shall be a Closing Lossand the amount by which the Closing Value is less than the Notional Value shallbe a Closing Gain; and (2) For a FX Transaction for which the Bank agreed tosell a Foreign Currency, the amount by which the Closing Value exceeds theNotional Value shall be a Closing Gain and the amount by which the Closing Valueis less than the Notional Value shall be a Closing Loss.  

(iii) **Net Present Value**. The Closing Gain orClosing Loss for each Settlement Date falling after the Close-out Date will bediscounted by the Bank to it net present value.  

(iv) **Payment**. To the extent that the net amount ofthe aggregate Closing Gains exceeds the Closing Losses, such amount shall bepayable by the Bank to the Borrower. To the extent that the aggregate net amountof the Closing Losses exceeds the Closing Gains, such amount shall be payable bythe Borrower to the Bank.  

8.6 **Protection of Security Interest**: Make suchpayments and do such acts as the Bank, in its sole judgment, considers necessaryand reasonable to protect its security interest or lien in the Collateral. TheBorrower hereby irrevocably authorizes the Bank to pay, purchase, contest orcompromise any encumbrance, lien or claim which the Bank, in its sole judgment,deems to be prior or superior to its security interest. Further, the Borrowerhereby agrees to pay to the Bank, upon demand therefor, all expenses andexpenditures (including attorneys' fees) incurred in connection with theforegoing.  

8.7 **Foreclosure**: Enforce any security interest orlien given or provided for under this Agreement or under any security agreement,mortgage, deed of trust or other document, in such manner and such order, as toall or any part of the properties subject to such security interest or lien, asthe Bank, in its sole judgment, deems to be necessary or appropriate and theBorrower hereby waives any and all rights, obligations or defenses now orhereafter established by law relating to the foregoing. In the enforcement ofits security interest or lien, the Bank is authorized to enter upon the premiseswhere any Collateral is located and take possession of the Collateral or anypart thereof, together with the Borrower's records pertaining thereto, or theBank may require the Borrower to assemble the Collateral and records pertainingthereto and make such Collateral and records available to the Bank at a placedesignated by the Bank. The Bank may sell the Collateral or any portionsthereof, together with all additions, accessions and accessories thereto, givingonly such notices and following only such procedures as are required by law, ateither a public or private sale, or both, with or without having the Collateralpresent at the time of the sale, which sale shall be on such terms andconditions and conducted in such manner as the Bank determines in its solejudgment to be commercially reasonable. The Collateral may be disposed of in itsthen condition without any preparation or processing. In connection with anydisposition of the Collateral, the Bank may disclaim any warranty relating totitle, possession or quiet enjoyment. Any deficiency which exists after thedisposition or liquidation of the Collateral shall be a continuing liability ofthe Borrower to the Bank and shall be immediately paid by the Borrower to theBank.  

8.8 **Non-Exclusivity of Remedies**: Exercise one ormore of the Bank's rights set forth herein or seek such other rights or pursuesuch other remedies as may be provided by law, in equity or in any otheragreement now existing or hereafter entered into between the Borrower and theBank, or otherwise.  

8.9 **Application of Proceeds**: All amounts receivedby the Bank as proceeds from the disposition or liquidation of the Collateralshall be applied to the Borrower's indebtedness to the Bank as follows: first,to the costs and expenses of collection, enforcement, protection andpreservation of the Bank's lien in the Collateral, including court costs andreasonable attorneys' fees, whether or not suit is commenced by the Bank; next,to those costs and expenses incurred by the Bank in protecting, preserving,enforcing, collecting, liquidating, selling or disposing of the Collateral;next, to the payment of accrued and unpaid interest on all of the Obligations;next, to the payment of the outstanding principal balance of the Obligations;and last, to the payment of any other indebtedness owed by the Borrower to theBank. Any excess Collateral or excess proceeds existing after the disposition orliquidation of the Collateral will be returned or paid by the Bank to theBorrower.  

If any non-cash proceeds are received in connection with anysale of Collateral, the Bank shall not apply such non-cash proceeds to theObligations unless and until such proceeds are converted to such; provided,however, that if such non-cash proceeds are not expected on the date of receiptthereof to be converted to cash within one year after such date, the Bank shalluse commercially reasonable efforts to convert such non-cash proceeds to cashwithin such one year period. 
**SECTION 

9****MISCELLANEOUS**
9.1 **Amounts Payable on Demand**: If the Borrowershall fail to pay on demand any amount so payable under this Agreement, the Bankmay, at its option and without any obligation to do so and without waiving anydefault occasioned by the Borrower having so failed to pay such amount, createan Advance under this Agreement in an amount equal to the amount so payable,which Advance shall thereafter bear interest as provided hereunder.  

9.2 **Default Interest Rate**: If an Event of Default,or an event which, with notice or passage of time could become an Event ofDefault, has occurred or is continuing, the Borrower shall pay to the Bankinterest on any Indebtedness or amount payable under this Agreement at a ratewhich is 3% in excess of the rate or rates then in effect under this Agreement. 

9.3 **Reliance and Further Assurances**: Eachwarranty, representation, covenant, obligation and agreement contained in thisAgreement shall be conclusively presumed to have been relied upon by the Bankregardless of any investigation made or information possessed by the Bank andshall be cumulative and in addition to any other warranties, representations,covenants and agreements which the Borrower now or hereafter shall give, orcause to be given, to the Bank. Borrower agrees to execute all documents andinstruments and to perform such acts as the Bank may reasonably deem necessaryto confirm and secure to the Bank all rights and remedies conferred upon theBank by this agreement and all other documents related thereto.  

9.4 **Attorneys' Fees**: Borrower shall pay to theBank all costs and expenses, including but not limited to reasonable attorneysfees, incurred by Bank in connection with the administration, enforcement,including any bankruptcy, appeal or the enforcement of any judgment or anyrefinancing or restructuring of this Agreement or any document, instrument oragreement executed with respect to, evidencing or securing the indebtednesshereunder.  

9.5 **Notices**: All notices, payments, requests,information and demands which either party hereto may desire, or may be requiredto give or make to the other party hereto, shall be given or made to such partyby hand delivery or through deposit in the United States mail, postage prepaid,or by facsimile delivery, or to such other address as may be specified from timeto time in writing by either party to the other.  

**To the Borrower:****