Document:

Exhibit 10.25

                               SECURITY AGREEMENT

         THIS  SECURITY  AGREEMENT is made as of the 14th day of June,  2002 (as
amended, supplemented or otherwise modified from time to time in accordance with
its terms,  this  "Agreement"),  between E-LOAN,  INC., a corporation  organized
pursuant to the laws of the State of Delaware  (together with its successors and
assigns,  the "Debtor"),  and MERRILL LYNCH MORTGAGE CAPITAL INC., a corporation
organized  pursuant  to the laws of the  State of  Delaware  (together  with its
successors and assigns, the "Secured Party").

         WHEREAS  the  Debtor has  agreed to grant a  security  interest  in and
collateral  assignment  of its rights in and to the  Collateral  to the  Secured
Party in order to secure the payment and  performance of its  Obligations to the
Secured  Party  pursuant  to the Loan  Agreement,  dated as of June 14, 2002 (as
amended, supplemented or otherwise modified from time to time in accordance with
its terms, the "Loan Agreement"),  between the Debtor and the Secured Party, and
the other Loan Documents;

         AND WHEREAS this is the  Security  Agreement  contemplated  in the Loan
Agreement;

         NOW,  THEREFORE,  THIS AGREEMENT WITNESSES that in consideration of the
premises and the covenants and agreements herein  contained,  and for other good
and  valuable  consideration  (the receipt and  sufficiency  of which are hereby
acknowledged), the parties hereto hereby agree as follows:

         I.  REFERENCE TO LOAN  AGREEMENT.  This Agreement is being executed and
delivered in connection with that certain Loan Agreement. The terms, conditions,
and provisions of the Loan Agreement are incorporated  herein by reference,  the
same as if set forth herein verbatim,  which terms,  conditions,  and provisions
shall continue to be in full force and effect hereunder so long as Secured Party
is  obligated  to lend  under  the  Loan  Agreement  and  thereafter  until  the
Obligations are paid and performed in full.

         II. INTERPRETATION.

             (a)  DEFINITIONS.   In  this  Agreement,  (i)  the  terms  "general
         intangibles",  "chattel paper", "accounts" and "proceeds" whenever used
         herein  have the  meanings  given to those  terms in the UCC,  and (ii)
         capitalized  terms which are used but not otherwise  defined herein and
         which are  defined  in the Loan  Agreement  shall  have the  respective
         meanings attributed to such terms in the Loan Agreement.

             (b) SECTIONS AND  HEADINGS.  The  division of this  Agreement  into
         Articles and Sections and the insertion of headings are for convenience
         of   reference   only  and  will  not   affect  the   construction   or
         interpretation of this Agreement. The terms "this Agreement", "hereof",
         "hereunder" and similar  expressions refer to this Agreement and not to
         any particular Article, Section or other portion hereof and include any
         supplement, amendment or other modification hereto. Unless something in
         the  subject  matter or context is  inconsistent  therewith,  reference
         herein to Articles  and  Sections  are to Articles and Sections of this
         Agreement.

             (c) EXTENDED  MEANINGS.  In this  Agreement,  words  importing  the
         singular number only include the plural and VICE VERSA, words importing
         any gender  include  all genders and words

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         importing  persons  include  individuals,  partnerships,  associations,
         trusts, unincorporated organizations and corporations.

         III. SECURITY INTEREST.  As security for the payment and performance of
the Revolving  Credit Note and all other  Obligations of Debtor to Secured Party
and any  subsidiary  or  affiliate  of Secured  Party,  whether now  existing or
hereafter arising, Debtor hereby grants, conveys, assigns, transfers and pledges
to Secured Party a first priority, perfected security interest, and collaterally
pledges and assigns to Secured  Party,  all right,  title and interest which the
Debtor now has or may  hereafter  have,  be  possessed  of, be  entitled  to, or
acquire,  in,  to  and  under  the  Collateral  (such  interest,  the  "Security
Interest"). Such Security Interest is granted, and the pledge and assignment are
made, as security only and shall not subject Secured Party to, or transfer or in
any way modify,  any  obligation of Debtor with respect to any of the Collateral
or any transaction involving or giving rise thereto.

         IV. COLLATERAL.  As used herein, the term "Collateral" means all of the
following  property,  whether now owned or hereafter acquired or arising, of the
Debtor:

             (a) All of Debtor's  right,  title and interest in chattel paper or
         other  instruments  or  documents  (which  shall  include  any  and all
         Certificates of Title and other such security instruments) arising from
         Contracts for financing the purchase of Vehicles by Obligors evidencing
         both a debt and security interest in such Financed  Vehicles  ("Vehicle
         Chattel Paper"), the Receivables due thereunder,  and all rights of the
         Debtor in and to all Financed Vehicles;

             (b) All substitutes and replacements for the Vehicle Chattel Paper;

             (c)  The  Collection  Account,   the  Concentration   Account,  the
         Collection  Sweep Investment  Account,  the Checking  Account,  the ACH
         Account,  all  accounts  relating  thereto,  and all  amounts and other
         property therein from time to time;

             (d) All cash and non-cash  proceeds of the Vehicle  Chattel  Paper,
         including but not limited to all present and future accounts,  contract
         rights,  general intangibles,  chattel paper,  documents,  instruments,
         payment intangibles,  supporting obligations,  and other Rights arising
         from or by virtue of, or from the voluntary or involuntary sale, lease,
         or other  disposition of, or collections  with respect to, or insurance
         proceeds  payable  with  respect to, or  proceeds  payable by virtue of
         warranty or other claims  against  manufacturers  of, or claims against
         any  other  Person  with  respect  to,  all or any part of the  Vehicle
         Chattel Paper;

             (e) All Contract Purchase  Agreements with all Contract  Purchasers
         and the proceeds thereof;

             (f) All books and records (including, without limitation, customers
         lists, credit files, tapes, ledger cards,  computer printouts and other
         computer  materials and records)  evidencing or containing  information
         regarding or otherwise pertaining to any of the foregoing; and

             (g) All  income,  payments  and  proceeds  of any of the  foregoing
         property in any form derived, directly or indirectly,  from any dealing
         with any such property or that  indemnifies or compensates for the loss
         of or damage to such property.

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         V. ATTACHMENT OF SECURITY INTEREST.  Debtor acknowledges that value has
been given and agrees that the Security Interest granted hereby will attach when
the Debtor signs this  Agreement.  Debtor  represents  and warrants  that it has
rights in, to and under the Collateral and shall at all times have rights in, to
and under the Collateral.

         VI.  FORM  OF  DOCUMENTS.  Debtor  acknowledges  and  agrees  that  all
documents  relating to the Secured Party's  Security  Interest in the Collateral
shall be in form and substance satisfactory to the Secured Party.

         VII. RELEASE.  Any item of Collateral released pursuant to the terms of
this  Agreement and the Loan Agreement  shall be evidenced by a UCC-3  amendment
statement,  if necessary or desirable,  and a payoff and release letter executed
and delivered by the Secured Party,  in form and substance  satisfactory  to the
parties  hereto;  PROVIDED that any such release of Collateral  arising from the
Seller's  sale of  Contracts  to (A) E-LOAN Auto Fund One,  LLC  pursuant to the
Contribution  and Sale  Agreement  or (B) any Contract  Purchaser  pursuant to a
Contract Purchase Agreement,  shall, in each case, be deemed to be automatically
made upon  repayment  to the  Lender  of the  entire  outstanding  amount of the
Revolving  Credit  Loans  made in respect  thereof,  together  with all  accrued
interest  thereon and any other  amounts  payable  under the Loan  Agreement  in
respect thereof,  and without any action being taken by the Secured Party.

         VIII.    REPRESENTATIONS   AND   WARRANTIES.   In   addition   to   the
representations  and  warranties  of the  Debtor  as  Borrower  under  the  Loan
Agreement,  Debtor hereby  represents  and warrants to Secured  Party that:

             (a) Debtor has the power and  authority to execute and deliver this
         Agreement  and the other Loan  Documents  to which it is a party and to
         carry  out  their  terms  and to grant  the  Security  Interest  in the
         Collateral  to the  Secured  Party;  and the  execution,  delivery  and
         performance of this Agreement and the other Loan Documents to which the
         Debtor  is a party  have  been  duly  authorized  by the  Debtor by all
         necessary action.

             (b) No security  interest (other than the Security Interest granted
         to the Secured Party  hereunder) and no Liens,  except Permitted Liens,
         have been or will be granted or permitted by the Debtor with respect to
         any or all of the  Collateral  that  has not  been,  as of the  related
         Borrowing  Date,  released  and such  release is the  legal,  valid and
         binding release of the party releasing such security  interest or Lien,
         as the case may be. In addition,  none (other than those Liens in favor
         of  Secured  Party)  of  the  Permitted   Liens,   including,   without
         limitation,  the  Liens of GMAC  Bank or  Greenwich  Capital  Financial
         Products,  Inc., as identified in Section IV hereof,  are Liens against
         any Collateral.

             (c) Debtor is a  "registered  organization"  within the  meaning of
         Article 9 of the UCC, duly  incorporated and validly existing under the
         laws of the State of Delaware,  with its chief executive office located
         at the address as shown in  Schedule  I. The  present  and  foreseeable
         location of Debtor's books and records concerning the Collateral is its
         chief executive office, and all such books,  records and Collateral are
         in Debtor's possession. All of Debtor's assets are currently located at
         the locations described on Schedule I.

             (d) All  Collateral  that is Contracts,  accounts,  chattel  paper,
         instruments,  proceeds, payment intangibles,  or general intangibles is
         free from any claim for credit,  deduction,  or

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         allowance  of an Obligor or any third party and free from any  defense,
         dispute,  setoff,  or  counterclaim,  and  there  is  no  extension  or
         indulgence with respect thereto.

             (e) At the  option of  Secured  Party,  any  amounts  arising  from
         Collateral  that is Contracts,  accounts,  chattel paper,  instruments,
         proceeds, payment intangibles, or general intangibles that are not paid
         in  full,  whether  on any  installment  date  or at  maturity,  may be
         deducted from any payment then or thereafter  due from Secured Party to
         Debtor,  and Secured Party may retain such Contract,  account,  chattel
         paper,   instrument,   proceeds,   payment   intangibles,   or  general
         intangibles   as  Collateral  for  any   outstanding   portion  of  the
         Obligations.

             (f)  Schedule II sets forth a correct and  complete  listing of all
         real  property  owned by Debtor and a legal  description  with  respect
         thereto,  all leases and  subleases  of real or  personal  property  by
         Debtor as lessee or sublessee,  and all leases and subleases or real or
         personal property by Debtor as lessor, lessee,  sublessor or sublessee.
         All  Collateral  that is an assigned  contract or assigned  lease is in
         full force and effect; there have been no renewals or extensions of, or
         amendments,  modifications,  or supplements to, any thereof about which
         Secured Party has not been advised in writing;  Debtor is in possession
         of the property covered by each such assigned lease; and, no default or
         potential  default  has  occurred  and is  continuing  under  any  such
         assigned contract or assigned lease.

The  delivery  at any  time by  Debtor  to  Secured  Party of  Collateral  or of
additional  specific  descriptions  of certain  Collateral  shall  constitute  a
representation  and  warranty  by Debtor to  Secured  Party  hereunder  that the
representations  and  warranties  of this Section VIII are true and correct with
respect to each item of such Collateral.

         IX. CERTAIN COVENANTS.  Until all Obligations are paid and performed in
full, Debtor covenants and agrees with Secured Party that Debtor shall:

             (a) Maintain at Debtor's chief executive office a current record of
         where all  Collateral  is located,  permit  representatives  of Secured
         Party to inspect and make abstracts  from such records,  and furnish to
         Secured  Party,  at such  intervals  as  Secured  Party may  reasonably
         request, such documents, lists, descriptions,  certificates,  and other
         information  as may be  necessary  or  proper  to  keep  Secured  Party
         informed with respect to the identity, location, status, condition, and
         value of the Collateral.

             (b) Fully  perform all of Debtor's  duties under and in  connection
         with each of the Loan  Documents  and each other  document to which the
         Collateral,  or any part thereof,  relates, so that the amounts thereof
         shall  be  paid  to  Secured   Party  without   abatement,   reduction,
         diminution, offset, defense (other than prior payment), counterclaim or
         recoupment.

             (c) Promptly notify Secured Party of any dispute, claim, action, or
         proceeding  which might have a Material Adverse Effect on all or any of
         the Collateral or the Security  Interest and, at the request of Secured
         Party,  appear in and defend, at Debtor's  expense,  any such action or
         proceeding.

             (d) Hold in trust (and not  commingle  with other assets of Debtor)
         for Secured  Party all  Collateral  that is Contracts,  chattel  paper,
         instruments,  or documents at any time  received by Debtor and promptly
         deliver same to Secured Party unless Secured Party at its option (which

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         may be evidenced only by a writing signed by Secured Party stating that
         Secured Party elects to permit Debtor to so retain)  permits  Debtor to
         retain the same.

             (e) Not sell,  lease, or otherwise  dispose of, or permit the sale,
         lease, or disposition of, any Collateral except for sales,  leases, and
         other dispositions  permitted by the terms of the Loan Agreement or any
         other Loan Document.

             (f) Use,  operate,  maintain,  and  store  any  Collateral  that is
         equipment  and  which is in its  possession  from  time to  time,  with
         reasonable  care,  skill, and caution and keep the same in good repair,
         working order, and conditions,  and promptly make all necessary repairs
         or replacements to that end.

             (g) At  Debtor's  expense and Secured  Party's  request,  before or
         after an Event of Default,  file or cause to be filed such applications
         and take such other actions as Secured Party may reasonably  request to
         document   or   otherwise   obtain  the  consent  or  approval  of  any
         Governmental Authority to Secured Party's Rights hereunder,  including,
         without limitation, any documents or consents which may be necessary to
         sell  any or all of the  Collateral  upon an  Event  of  Default  (and,
         because Debtor agrees that Secured Party's  remedies at Law for failure
         of Debtor to comply with this  provision  would be inadequate  and that
         such failure would not be  adequately  compensable  in damages,  Debtor
         agrees  that  its  covenants  in  this  provision  may be  specifically
         enforced).

             (h) At its expense,  perfect the  security  interest of the Secured
         Party in the Collateral by filing,  registration  or recordation in all
         offices in all jurisdictions where required by applicable law to do so.
         The Debtor shall renew such filings,  registrations  and  recordings as
         and when  required  to keep them in full  force and effect at all times
         and shall provide the Secured  Party with an annual  opinion of counsel
         on the  earlier  of each  anniversary  of the  Closing  Date  and  each
         extension  of the  Commitment  Termination  Date by the  Lender  of its
         Commitment under and pursuant to the terms of the Loan Agreement and at
         such other times as shall be reasonably  required by the Secured Party,
         that all such filings, registrations and recordings have been duly made
         on a timely basis.

             (i) From time to time promptly execute and deliver to Secured Party
         all such further  assurances,  security  agreements,  pledges,  control
         agreements, assignments, certificates, supplemental documents and other
         instruments of conveyance,  transfer,  mortgage,  pledge or charge, and
         financing statements,  and do all other acts or things as Secured Party
         may reasonably request from time to time in order to more fully create,
         evidence,  perfect, continue, maintain and preserve the priority of the
         Security  Interest in the  Collateral  and to  evidence  and secure the
         payment and performance of the obligations of the Debtor under the Loan
         Documents.

             (j) Not use any of the  Collateral,  or permit the same to be used,
         for  any  unlawful  purpose  or in any  manner  inconsistent  with  the
         provisions  or  requirements  of any policy of insurance  thereon,  nor
         affix  or  install  any  accessories,   equipment,  or  device  on  the
         Collateral or on any component thereof if such addition will impair the
         original intended function or use of the Collateral or such component.

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             (k) Not  modify  or  substitute,  or  permit  the  modification  or
         substitution  of, any contract to which any of the Collateral  which is
         chattel  paper or  accounts  relates,  nor extend or grant  indulgences
         regarding any chattel paper or account which is Collateral.

             (l) Not change its jurisdiction of  organization;  or cease to be a
         "registered  organization" within the meaning of the applicable UCC; or
         relocate its chief  executive  office or place where Debtor's books and
         records  related to accounts and chattel  paper are kept,  or otherwise
         relocate any of the other Collateral to a state other than as indicated
         above,  unless prior thereto Debtor (i) gives Secured Party thirty (30)
         days prior written notice of such proposed  change or relocation  (such
         notice to include, without limitation, the name of the state into which
         such  relocation is to be made) and (ii) (unless the relocation is to a
         jurisdiction in which existing  financing  statements or other required
         filings have previously  been made to perfect the Security  Interest in
         such  Collateral)  executes and delivers all such additional  documents
         and  performs  all  additional  acts  as  Secured  Party,  in its  sole
         discretion,  may request in order to continue or maintain the existence
         and  priority  of the  Security  Interest in such  Collateral,  and not
         relocate any of the Collateral to any commonwealth,  nation, territory,
         possession, or country outside the United States of America.

             (m) Not change  Debtor's name or address to which it is entitled to
         receive  notices  hereunder  unless prior thereto  Debtor gives Secured
         Party thirty (30) days prior written notice of such proposed change and
         executes and delivers all such  additional  documents  and performs all
         additional acts as Secured Party, in its sole  discretion,  may request
         in order to continue  or maintain  the  existence  and  priority of the
         Security Interest in all of the Collateral.

         X. DEFAULT; REMEDIES.

             (a) On or after the occurrence of any Event of Default,  (i) any or
         all of the  Obligations  will at the option of the Secured Party become
         immediately due and payable or be subject to immediate performance,  as
         the case may be, without presentment,  demand, diligence, suit, protest
         or notice of dishonor or nonpayment,  all of which are hereby expressly
         waived by the Debtor; (ii) the obligation, if any, of the Secured Party
         to extend  further  credit to the Debtor will  cease;  (iii) any or all
         security  granted  hereby  will,  at the option of the  Secured  Party,
         become  immediately  enforceable;  and (iv)  without  prejudice  and in
         addition to any right,  power or remedy provided by the Loan Documents,
         law or  equity,  the  Secured  Party will have the  rights,  powers and
         remedies set out below,  all of which rights,  powers and remedies will
         be enforceable successively, concurrently or both:

                  1.  Secured  Party may by  appointment  in  writing  appoint a
                  receiver  (each herein  referred to as the  "Receiver") of the
                  Collateral  (which  term  when  used  in this  Section  X will
                  include  the  whole  or any  part of the  Collateral)  and may
                  remove  or  replace  such  Receiver  from  time to time or may
                  institute  proceedings in any court of competent  jurisdiction
                  for the  appointment  of a Receiver of the  Collateral  or the
                  Debtor; and the term "Secured Party" when used in this Section
                  X will  include  any  Receiver  so  appointed  and the agents,
                  officers and employees of such Receiver; and the Secured Party
                  will  not in any  way be  responsible  for any  misconduct  or
                  negligence  of any such  Receiver;

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                  2. Secured  Party may take  possession of the  Collateral  and
                  require  Debtor to assemble the Collateral and deliver or make
                  the  Collateral  available  to Secured  Party at such place or
                  places as may be specified by Secured Party;

                  3. Secured Party may surrender,  or cause Debtor to surrender,
                  any policies of insurance on all or part of the Collateral and
                  receive  and apply the  unearned  premiums  as a credit on the
                  Obligations  under the Loan  Documents;

                  4. Secured Party may apply to the Obligations any cash held by
                  Secured   Party  under  this   Agreement  or  may  setoff  and
                  compensate and apply any and all deposits, general or special,
                  time or demand,  provisional  or final,  matured or unmatured,
                  and any other  indebtedness at any time owing by Secured Party
                  to or for the credit of or the account of the Debtor,  against
                  and on account of the Obligations  notwithstanding that any of
                  them are contingent or unmatured;

                  5. Secured  Party may open  Debtor's  mail and collect any and
                  all amounts due such Debtor from  account  debtors or insurers
                  and exercise any and all of such Debtor's  rights and remedies
                  with respect to such accounts and policies;

                  6. The  Secured  Party  may  hold,  sell,  lease or  otherwise
                  dispose  of the  Collateral  (in  lots or as an  entirety)  at
                  public  auction,   by  private  tender,  by  private  sale  or
                  otherwise  either for cash or upon  credit upon such terms and
                  conditions as Secured  Party may determine and without  notice
                  to Debtor unless required by law in satisfaction of any or all
                  of the Obligations. Secured Party may purchase at such sale or
                  sales  the  Collateral  for its  own  account  (with  whatever
                  consequential  credit to the  Obligations  as may be  required
                  herein or by law);

                  7.  Secured  Party may enforce any rights of Debtor in respect
                  of the Collateral by any manner permitted by law;

                  8. Secured Party may accept the Collateral in  satisfaction of
                  the Obligations  upon notice to the Debtor of its intention to
                  do so in the manner required by law;

                  9.  Secured  Party and/or its agents may enter upon all or any
                  of the  premises  occupied by the Debtor in order to seize and
                  remove any Collateral  located in or on such premises;

                  10. If the Debtor has failed to perform  any of its  covenants
                  or  agreements  in any Loan  Document,  the Secured  Party may
                  bring an action to compel  performance or recover  damages for
                  breach  thereof,  and in any event may,  but shall be under no
                  obligation to, perform any such covenants or agreements in any
                  reasonable  manner  without  thereby  waiving  any  rights  to
                  enforce such Loan Document. The reasonable expenses (including
                  any legal  costs) paid or  incurred  by the  Secured  Party in
                  respect of the  foregoing  shall be  secured  by the  Security
                  Interest granted in the Collateral;

                  11.  Secured  Party may  charge on its own  behalf  and pay to
                  others all  reasonable  amounts for expenses  incurred and for
                  services  rendered  in  connection  with the

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                  exercise  of the  rights and  remedies  of the  Secured  Party
                  hereunder,  including,  without limiting the generality of the
                  foregoing,  reasonable legal, Receiver and accounting fees and
                  expenses,  and in every such case the amounts so paid together
                  with all costs,  charges and expenses  incurred in  connection
                  therewith,  including  interest  thereon  at such  rate as the
                  Secured Party deems reasonable, will be added to and form part
                  of the Obligations hereby secured;

                  12.  Secured Party may discharge  any claim,  lien,  mortgage,
                  charge, security interest, encumbrance or any rights of others
                  that may exist or be threatened against the Collateral, and in
                  every  such case the  amounts  so paid  together  with  costs,
                  charges and expenses incurred in connection  therewith will be
                  added to the Obligations hereby secured; and

                  13.  Secured Party may, as it in its sole  discretion may deem
                  expedient to enforce or realize upon the Security Interest and
                  in  the  Collateral  and  to  cause  the  Debtor  to  pay  its
                  Obligations in full, take any other or additional  steps under
                  the Loan  Documents,  at law or in  equity,  all  without  any
                  additional  notice,  presentment,  demand,  protest  or  other
                  formality,  all of which are  hereby  expressly  waived by the
                  Debtor.

             (b) Secured Party may (i) grant  extensions of time,  (ii) take and
         perfect or abstain from taking and perfecting  security,  (iii) give up
         security,  (iv) accept compositions or compromises,  (v) grant releases
         and  discharges,  and  (vi)  release  any  part  of the  Collateral  or
         otherwise  deal with the Debtor,  debtors of the Debtor,  sureties  and
         others and with the  Collateral and other security as the Secured Party
         sees fit  without  prejudice  to the  liability  of the  Debtor  to the
         Secured Party or the Secured Party's rights hereunder.

             (c) Neither the Secured Party nor any of its  directors,  officers,
         employees,  advisors or agents  shall be liable or  responsible  to the
         Debtor or any other Person for any failure to seize, collect,  realize,
         or obtain  payment with respect to the  Collateral  or any part thereof
         and  none of them  will be bound to  institute  proceedings  or to take
         other  steps for the  purpose  of  seizing,  collecting,  realizing  or
         obtaining  possession or payment with respect to any  Collateral or for
         the purpose of preserving any rights of the Secured  Party,  the Debtor
         or any other  person,  in respect of the  Collateral or for any loss or
         damage upon the  realization  or  enforcement  of the Collateral or any
         part thereof.

             (d)  Secured  Party may apply any  proceeds of  realization  of the
         Collateral to payment of expenses in connection  with the  preservation
         and  realization of the  Collateral as above  described and the Secured
         Party  shall  apply any  balance  of such  proceeds  to  payment of the
         Obligations  in such order as the  Secured  Party sees fit. If there is
         any  surplus  remaining,  the  Secured  Party may pay it to any  person
         having a claim  thereto in  priority  to the Debtor of whom the Secured
         Party has knowledge and any balance  remaining must be paid promptly to
         the Debtor.  If the disposition of the Collateral  fails to satisfy the
         Obligations secured by this Agreement and the aforesaid  expenses,  the
         Debtor  will be  liable  to pay any  deficiency  to the  Secured  Party
         forthwith  on  demand.

             (e) All  authorizations  and agencies herein contained with respect
         to the  Collateral  are  irrevocable  and are  powers  coupled  with an
         interest.

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             (f) No failure on the part of the Secured Party to exercise, and no
         delay in  exercising,  any right,  remedy or power under this Agreement
         shall  operate  as a waiver  thereof,  nor shall any  single or partial
         exercise by the Secured Party of any right,  remedy or power  hereunder
         preclude  any other or future  exercise of any right,  remedy or power.
         Each and every right,  remedy and power  hereby  granted to the Secured
         Party or allowed the Secured Party by law or other  agreement  shall be
         cumulative  and not  exclusive of any other and may be exercised by the
         Secured Party from time to time.

             (g) The  rights  and  remedies  of the  Secured  Party  under  this
         Agreement  and the  other  Loan  Documents  are  cumulative  and are in
         addition to and not in substitution for any rights or remedies provided
         by law.  Any single or partial  exercise  by the  Secured  Party of any
         right  or  remedy  for a  default  or  breach  of any  term,  covenant,
         condition  or  agreement  contained  herein or in any of the other Loan
         Documents shall not be deemed to be a waiver of or to alter,  affect or
         prejudice  any other  right or remedy or other  rights or  remedies  to
         which the Secured  Party may be lawfully  entitled for the same default
         or breach.  Any waiver by the Secured  Party of the strict  observance,
         performance  or  compliance  with  any  term,  covenant,  condition  or
         agreement  contained herein or in any of the other Loan Documents,  and
         any indulgence  granted by the Secured Party, shall be deemed not to be
         a waiver of any  subsequent  default.

         XI. NOTICE AND APPLICATION OF PROCEEDS.

             (a) NOTIFICATION OF DEBTOR. As required by law, Secured Party shall
         notify  Debtor  of any sale or  other  disposition  of the  Collateral;
         PROVIDED,  HOWEVER,  that any  disposition of all or any portion of the
         Collateral shall be in accordance with this Agreement.

             (b)  NOTIFICATION OF OBLIGORS.  After the occurrence of an Event of
         Default, the Secured Party may give notice to any applicable Obligor to
         make all further  payments  relating to the  Collateral  to the Secured
         Party, and any payment or other proceeds of Collateral  received by the
         Debtor  from any such  Obligor  after  any such  notice is given by the
         Secured Party must be held by the Debtor in trust for the Secured Party
         and forthwith paid over to the Secured Party.

             (c) APPLICATION OF PROCEEDS. Secured Party shall apply the proceeds
         of any sale or other  disposition  of the  Collateral  in the following
         order:  first, to the payment of all its expenses incurred in retaking,
         holding  and  preparing  any  of  the  Collateral  for  sale  or  other
         disposition,  in arranging for such sale or other  disposition,  and in
         actually  selling  or  disposing  of  the  same  (all  of  which  shall
         constitute  part  of the  Obligations);  second,  toward  repayment  of
         amounts  expended by Secured  Party under  Section XII;  third,  toward
         payment of the balance of the  Obligations  in such order and manner as
         Secured Party, in its discretion,  may deem advisable, or as a court of
         competent  jurisdiction may direct,  fourth, to Debtor. If the proceeds
         are  insufficient to pay the  Obligations in full,  Debtor shall remain
         liable  for  any  deficiency.

         XII. OTHER RIGHTS OF SECURED PARTY.

             (a) PERFORMANCE. In the event Debtor shall fail to pay when due all
         Taxes on any of the  Collateral,  or to  preserve  the  first  priority
         perfected  security  interest  of  the  Secured  Party  in  any  of the
         Collateral,  or otherwise fail to perform any of its obligations  under
         the Loan Documents with respect to the  Collateral,  then Secured Party
         may,  at its  option,  but  without  being  required to do so, pay such
         Taxes, prosecute or defend any suits in relation to the Collateral,  or
         take all other

                                       9
<PAGE>

         action  which  Debtor is  required,  but has  failed or refused to take
         under the Loan Documents.  Any sum which may be reasonably  expended or
         paid by Secured Party under this  subsection  (a)  (including,  without
         limitation,  court  costs and  reasonable  attorneys'  fees) shall bear
         interest from the dates of  expenditure  or payment at the Default Rate
         until paid and, together with such interest, shall be payable by Debtor
         to Secured Party upon demand and shall be part of the Obligations.

             (b) COLLECTION.  Upon notice from Secured Party,  each Obligor with
         respect to any payments on any of the  Collateral  (including,  without
         limitation, dividends and other distributions with respect to insurance
         proceeds  payable by reason or loss or damage to any of the Collateral)
         is hereby authorized and directed by Debtor to make payment directly to
         Secured  Party,  regardless  of whether  Debtor was  previously  making
         collections thereon. Secured Party shall have the right in its own name
         or in the name of Debtor to  compromise  or extend time of payment with
         respect to all or any portion of the  Collateral  for such  amounts and
         upon such terms as Secured  Party may  determine;  to demand,  collect,
         receive,  receipt for, sue for, compound, and give acquittances for any
         and all amounts  due or to become due with  respect to  Collateral;  to
         take control of cash and other proceeds of any  Collateral;  to endorse
         the name of Debtor on any notes,  acceptances,  checks,  drafts,  money
         orders or other  evidences of payment on Collateral  that may come into
         the  possession  of  Secured  Party;  to sign the name of Debtor on any
         invoice or bill of lading  relating  to any  Collateral,  on any drafts
         against  Obligors  or other  Persons  making  payment  with  respect to
         Collateral,  on  assignments  and  verifications  of  accounts or other
         Collateral  and on notices to Obligors  making  payment with respect to
         Collateral;  to send requests for  verification  of  obligations to any
         Obligor; and to do all other acts and things necessary to carry out the
         intent of this  Agreement.  If any  Obligor  fails or  refuses  to make
         payment on any Collateral when due, Secured Party is authorized, in its
         sole  discretion,  either in its own name or in the name of Debtor,  to
         take such  action as  Secured  Party  shall  deem  appropriate  for the
         collection of any amounts owed with respect to Collateral or upon which
         a delinquency exists. Regardless of any other provision hereof, Secured
         Party  shall  never be liable for its  failure to  collect,  or for its
         failure to exercise  diligence in the  collection  of, any amounts owed
         with respect to Collateral,  nor shall it be under any duty whatever to
         anyone  except  Debtor  to  account  for funds  that it shall  actually
         receive  hereunder.  Without  limiting the generality of the foregoing,
         Secured  Party  shall  have  no  responsibility  for  ascertaining  any
         maturities, calls, conversions,  exchanges, offers, tenders, or similar
         matters  relating  to any  Collateral,  or for  informing  Debtor  with
         respect to any of such matters  (irrespective  of whether Secured Party
         actually has, or may be deemed to have, knowledge thereof). The receipt
         of Secured Party to any Obligor  shall be a full and complete  release,
         discharge, and acquittance to such Obligor, to the extent of any amount
         so paid to Secured Party.  The Rights granted  Secured Party under this
         subsection  (b) may be exercised  only upon the occurrence of a Default
         or an Event of Default and so long as such  Default or Event of Default
         is continuing.

             (c) CERTAIN PROCEEDS.  Upon the occurrence of a Default or an Event
         of  Default  and so  long  as such  Default  or  Event  of  Default  is
         continuing,  any  cash  proceeds  of  Collateral  which  come  into the
         possession of Secured Party may, at Secured Party's option,  be applied
         in whole or in part to the  Obligations  (to the extent  then due),  be
         released  in  whole  or in part to or on the  written  instructions  of
         Debtor for any general or specific purpose,  or be retained in whole or
         in part by Secured Party as additional Collateral.  Any cash Collateral
         in the  possession  of Secured  Party may only be  invested  by Secured
         Party in  certificates  of deposit  issued by Secured Party (if Secured
         Party issues such certificates),  or in securities issued or guaranteed
         by the United  States of America or any agency  thereof.  Secured Party
         shall never be  obligated to make any such

                                       10
<PAGE>

         investment  and shall never have any  liability  to Debtor for any loss
         which may result therefrom.  All interest and other amounts earned from
         any  investment of Collateral may be dealt with by Secured Party in the
         same manner as other cash Collateral.

             (d) USE AND OPERATION OF  COLLATERAL.  Should any  Collateral  come
         into the possession of Secured Party,  Secured Party may use or operate
         such  Collateral for the purpose of preserving it or its value pursuant
         to the order of a court of  appropriate  jurisdiction  or in accordance
         with  any  other  Rights  held by  Secured  Party  in  respect  of such
         Collateral.  Debtor covenants to promptly  reimburse and pay to Secured
         Party,  at  Secured  Party's  request,  the  amount  of all  reasonable
         expenses (including,  without limitation, the cost of any insurance and
         payment  of  Taxes or  other  charges)  incurred  by  Secured  Party in
         connection  with its custody and  preservation  of Collateral,  and all
         such expenses,  costs,  Taxes, and other charges shall bear interest at
         the Default Rate until repaid and,  together with such interest,  shall
         be payable by Debtor to Secured Party upon demand and shall become part
         of the Obligations.  Notwithstanding any provision to the contrary, the
         risk of  accidental  loss or damage to, or  diminution in value of, any
         Collateral  is on Debtor,  and Secured  Party  shall have no  liability
         whatever for failure to obtain or maintain insurance,  nor to determine
         whether any  insurance  ever in force is adequate as to amount or as to
         the risks insured. With respect to Collateral that is in the possession
         of Secured  Party,  Secured Party shall have no duty to fix or preserve
         Rights  against  prior  parties to such  Collateral  and shall never be
         liable for any failure to use  diligence to collect any amount  payable
         in respect of such  Collateral,  but shall be liable only to account to
         Debtor  for  what it may  actually  collect  or  receive  thereon.  The
         provisions of this subsection (d) shall be applicable  whether or not a
         Default or an Event of Default  has  occurred  and is  continuing.

             (e) PURCHASE MONEY COLLATERAL. To the extent that Secured Party has
         advanced  or will  advance  funds to or for the  account  of  Debtor to
         enable Debtor to purchase or otherwise  acquire  Rights in  Collateral,
         except as otherwise  provided in the Loan Agreement,  Secured Party, at
         its  option,  may pay such funds (i)  directly  to the Person from whom
         Debtor  will make such  purchase  or acquire  such  Rights,  or (ii) to
         Debtor, in which case Debtor covenants to promptly pay the same to such
         Person, and forthwith furnish to Secured Party evidence satisfactory to
         Secured  Party  that  such  payment  has been  made  from the  funds so
         provided by Secured Party for such payment.

             (f) SUBROGATION.  If any of the Obligations are given in renewal or
         extension or applied toward the payment of indebtedness  secured by any
         Permitted  Lien,  Secured Party shall be, and is hereby,  subrogated to
         all of the Rights, titles,  interests, and Permitted Liens securing the
         indebtedness so renewed, extended, or paid.

             (g)  INDEMNIFICATION.  DEBTOR HEREBY  ASSUMES ALL LIABILITY FOR ANY
         LOSS, EXPENSE, CLAIM OR DAMAGE TO OR ARISING OUT OF THE COLLATERAL, THE
         SECURITY INTEREST, AND ANY USE, POSSESSION, MAINTENANCE, AND MANAGEMENT
         OF, ALL OR ANY OF THE COLLATERAL,  INCLUDING,  WITHOUT LIMITATION,  ANY
         TAXES ARISING AS A RESULT OF, OR IN CONNECTION  WITH, THE  TRANSACTIONS
         CONTEMPLATED  HEREIN,  AND  AGREES  TO  ASSUME  LIABILITY  FOR,  AND TO
         INDEMNIFY AND HOLD SECURED PARTY HARMLESS FROM AND AGAINST, ANY AND ALL
         CLAIMS,  CAUSES OF ACTION,  OR LIABILITY,  FOR INJURIES TO OR DEATHS OF
         PERSONS AND DAMAGE TO PROPERTY,  HOWSOEVER  ARISING FROM OR INCIDENT TO
         SUCH USE, POSSESSION, MAINTENANCE, AND MANAGEMENT, WHETHER SUCH PERSONS
         BE AGENTS OR EMPLOYEES OF DEBTOR OR OF THIRD PARTIES, OR SUCH DAMAGE BE
         TO PROPERTY OF DEBTOR OR OF OTHERS.  DEBTOR AGREES TO INDEMNIFY,  SAVE,
         AND HOLD SECURED  PARTY  HARMLESS  FROM AND AGAINST,  AND  COVENANTS TO
         DEFEND  SECURED PARTY  AGAINST,  ANY AND ALL LOSSES,  DAMAGES,

                                       11
<PAGE>

         CLAIMS, COSTS, PENALTIES, LIABILITIES, AND EXPENSES, INCLUDING, WITHOUT
         LIMITATION,  COURT  COSTS AND  REASONABLE  ATTORNEYS'  FEES,  HOWSOEVER
         ARISING  OR  INCURRED  BECAUSE  OF,  INCIDENT  TO, OR WITH  RESPECT  TO
         COLLATERAL OR ANY USE, POSSESSION,  MAINTENANCE,  OR MANAGEMENT THEREOF
         (A  "CLAIM").  IN THE EVENT THAT ANY CLAIM IS BROUGHT  AGAINST  SECURED
         PARTY,  SECURED  PARTY AGREES TO GIVE PROMPT  WRITTEN  NOTICE TO DEBTOR
         WITH RESPECT TO SAME,  TOGETHER WITH A COPY OF SUCH CLAIM,  AND SO LONG
         AS NO EVENT OF DEFAULT  SHALL HAVE OCCURRED AND BE  CONTINUING,  DEBTOR
         SHALL HAVE THE RIGHT IN GOOD FAITH AND BY  APPROPRIATE  PROCEEDINGS  TO
         DEFEND SECURED PARTY AGAINST SUCH CLAIM AND EMPLOY  COUNSEL  ACCEPTABLE
         TO SECURED  PARTY TO CONDUCT SUCH DEFENSE (AT DEBTOR'S SOLE EXPENSE) SO
         LONG AS SUCH DEFENSE  SHALL NOT INVOLVE ANY DANGER OF THE  FORECLOSURE,
         SALE,  FORFEITURE  OR LOSS,  OR  IMPOSITION  OF ANY LIEN,  OTHER THAN A
         PERMITTED LIEN, ON ANY PART OF THE COLLATERAL, OR SUBJECT SECURED PARTY
         TO CRIMINAL  LIABILITY.  SHOULD  DEBTOR ELECT TO ENGAGE ITS OWN COUNSEL
         ACCEPTABLE TO SECURED PARTY,  SECURED PARTY MAY CONTINUE TO PARTICIPATE
         IN THE  DEFENSE OF ANY SUCH  CLAIM AND WILL  RETAIN THE RIGHT TO SETTLE
         ANY SUCH MATTER ON TERMS AND CONDITIONS  SATISFACTORY  TO SECURED PARTY
         AND DEBTOR.  ALL SUCH SETTLEMENTS  SHALL BE PAID BY AND REMAIN THE SOLE
         RESPONSIBILITY  OF  DEBTOR.  IN THE EVENT  DEBTOR  DOES NOT  ACCEPT THE
         DEFENSE OF THE CLAIM AS PROVIDED  ABOVE,  SECURED  PARTY SHALL HAVE THE
         RIGHT TO DEFEND AGAINST SUCH CLAIM, IN ITS SOLE DISCRETION,  AND PURSUE
         ITS RIGHTS  HEREUNDER.

             (h) DIMINUTION IN VALUE OF COLLATERAL.  Secured Party shall have no
         liability or responsibility whatsoever for any diminution in or loss of
         value of any Collateral.

             (i)  APPOINTMENT  OF  ATTORNEY-IN-FACT.  Debtor hereby  irrevocably
         appoints  Secured  Party or its designee as Debtor's  attorney-in-fact,
         with full authority in the place and stead of Debtor, from time to time
         in Secured  Party's  discretion  prior to, upon,  during,  and after an
         Event of  Default,  to take any action and to  execute  any  instrument
         which Secured Party may deem  necessary or advisable to accomplish  the
         purposes  of  this  Agreement,  including  without  limitation,  (i) to
         perfect and continue to perfect the security  interests created by this
         Agreement  and to maintain  the first  priority  thereof;  (ii) to ask,
         demand,  collect  or sue  for,  recover,  compound,  receive  and  give
         acquittance  in receipts for any monies due or becoming due under or in
         respect for any Collateral;  (iii) to receive,  endorse and collect any
         drafts or other instruments, documents and chattel paper, in connection
         with the Collateral;  and (iv) to file any claims or take any action or
         institute any  proceeding  which  Secured  Party may deem  necessary or
         desirable for the  collection of any Collateral or otherwise to enforce
         the rights of Secured Party in the Collateral;  and, in addition to the
         foregoing,  after an Event of  Default,  to sell or assign any  chattel
         paper or other Collateral upon such terms, for such amounts and at such
         time or times Secured Party deems  advisable.  Secured Party shall give
         Debtor three (3) business days prior written  notice before  exercising
         authority  as  attorney-in-fact  at any  time  which  is  prior  to the
         occurrence of an Event of Default.  The Debtor hereby ratifies all that
         said attorneys  shall do or cause to be done by virtue hereof.  Neither
         the Secured Party nor its designee  shall be under any duty to exercise
         any such  powers and none of the  Secured  Party,  its  designee or any
         their  respective  officers,  directors,  employees  or agents shall be
         responsible to the Debtor for any failure to act.

         XIII. MISCELLANEOUS.

             (a) REFERENCE TO LOAN DOCUMENTS. This Agreement is one of the "Loan
         Documents" referred to in the Loan Agreement.

                                       12

<PAGE>

             (b)  BENEFIT OF THE  AGREEMENT.  This  Agreement  will inure to the
         benefit of and be binding upon the successors and permitted  assigns of
         the parties hereto.

             (c) TERM.  Upon  full and  final  payment  and  performance  of the
         Obligations  by  Debtor  and  extinguishment  of the  Commitment,  this
         Agreement shall automatically  thereafter  terminate;  PROVIDED that no
         Obligor  on any of the  Collateral  shall  ever  be  obligated  to make
         inquiry as to the  termination  of this  Agreement,  but shall be fully
         protected in making payment directly to Secured Party.

             (d) ACTIONS NOT  RELEASED.  The Security  Interest and the Debtor's
         obligations and Secured Party's Rights hereunder shall not be released,
         diminished,  impaired,  or adversely  affected by the occurrence of any
         one or more of the following events: (i) the taking or accepting of any
         other security or assurance for any or all of the Obligations; (ii) any
         release, surrender, exchange, subordination, or loss of any security or
         assurance  at any time  existing in  connection  with any or all of the
         Obligations;  (iii) the  modification  of,  amendment  to, or waiver of
         compliance  with any terms of, any of the other Loan Documents  without
         the notification or consent of Debtor,  except as required therein (the
         Right to such notification or consent being herein  specifically waived
         by  Debtor);  (iv) any  renewal,  extension,  or  rearrangement  of the
         payment  of  any  or  all  of  the  Obligations,   or  any  adjustment,
         indulgence,  forbearance, or compromise that may be granted or given by
         Secured Party to Debtor; (v) any neglect, delay, omission,  failure, or
         refusal of Secured  Party to take or prosecute any action in connection
         with any other agreement, document, guaranty, or instrument evidencing,
         securing,  or assuring  the  payment of all or any of the  Obligations;
         (vi) any  failure of Secured  Party to notify  Debtor of the release of
         any   other   security;   (vii)   the   illegality,    invalidity,   or
         unenforceability  of all or any  part of the  Obligations  against  any
         party  obligated  with  respect  thereto by reason of the fact that the
         Obligations,  or the interest  paid or payable  with  respect  thereto,
         exceeds  the  amount   permitted  by  Law,  the  act  of  creating  the
         Obligations,  or any part  thereof,  is ULTRA VIRES,  or the  officers,
         partners,  members or trustees  creating  same acted in excess of their
         authority,  or for any other  reason;  or (viii) if any  payment by any
         party obligated with respect thereto is held to constitute a preference
         under applicable Laws or for any other reason Secured Party is required
         to refund such payment or pay the amount thereof to someone else.

             (e) DEBTOR WAIVERS.  To the fullest extent permitted by Law, Debtor
         WAIVES (i) any Right to require  Secured  Party to proceed  against any
         other Person, to exhaust its Rights in the Collateral, or to pursue any
         other Right which Secured Party may have;  and (ii) with respect to the
         Obligations,  presentment  and demand for payment,  protest,  notice of
         protest and nonpayment, and notice of the intention to accelerate.

             (f) WAIVER OF MARSHALLING.  To the fullest extent permitted by Law,
         Debtor agrees that it will not at any time insist upon, plead, claim or
         take the  benefit or  advantage  of any law now or  hereafter  in force
         providing  for  any  appraisement,   valuation,   stay,   extension  or
         redemption,    and   Debtor,   for   itself,   its   heirs,   devisees,
         representatives,  receivers,  trustees, successors and assigns, and for
         any and all persons ever  claiming any interest in the  Collateral,  to
         the extent  permitted  by law,  Debtor  hereby  WAIVES and RELEASES all
         rights  of  redemption,  valuation,  appraisement,  stay of  execution,
         notice of  intention  to mature or declare due the whole of the secured
         indebtedness,  notice of election to mature or declare due the whole of
         the secured indebtedness and all rights to a marshalling of its assets,
         including the  Collateral,  or to a sale in inverse order of alienation
         in the event of foreclosure of the security interest hereby created.

                                       13
<PAGE>

             (g)  FINANCING  STATEMENT.  Secured  Party shall be entitled at any
         time to  file  this  Agreement  or a  carbon,  photographic,  or  other
         reproduction  of this  Agreement,  as a  financing  statement,  but the
         failure of Secured  Party to do so shall not  impair  the  validity  or
         enforceability of this Agreement.

             (h) AMENDMENTS AND WAIVERS.  This instrument may be amended only by
         an instrument in writing  executed jointly by Debtor and Secured Party,
         and  supplemented  only by  documents  delivered  or to be delivered in
         accordance with the express terms hereof. No waiver of any breach of or
         obligation  under any provision of this  Agreement will be effective or
         binding  unless made in writing and signed by the party  purporting  to
         give the same and,  unless  otherwise  provided in the written  waiver,
         will be limited to the  specific  breach or  obligation  waived for the
         particular instance noted.

             (i) MULTIPLE  COUNTERPARTS  AND  FACSIMILE.  This  Agreement may be
         executed in any number of counterparts, each of which when executed and
         delivered  shall be deemed  to be an  original,  and such  counterparts
         together shall constitute one and the same agreement.  For the purposes
         of this  Section,  the  delivery  of a  facsimile  copy of an  executed
         counterpart of this Agreement shall be deemed to be valid execution and
         delivery of this Agreement,  but the party  delivering a facsimile copy
         shall  deliver an original  copy of this  Agreement as soon as possible
         after delivering the facsimile copy.

             (j) PARTIES BOUND;  ASSIGNMENT.  This Agreement shall be binding on
         Debtor and its successors and assigns and shall inure to the benefit of
         Secured Party and Secured  Party's  successors and assigns.  Debtor may
         not,  without the prior written  consent of Secured  Party,  assign any
         Rights, duties, or obligations hereunder. In the event of an assignment
         of all or part of the  Obligations,  the  Security  Interest  and other
         Rights and benefits  hereunder to the extent  applicable to the part of
         the Obligation so assigned,  shall be imposed on such  transferee,  but
         (unless  Secured  Party shall have so expressly  agreed in writing) the
         Debtor shall remain  primarily  liable in respect of all such  assigned
         Obligations.

             (k)  COLLATERAL   AGENT.   Secured  Party  may,   within  its  sole
         discretion,  appoint one or more  custodians  or  collateral  agents as
         bailee-in-possession  ("Collateral  Agent"),  or may, by an  instrument
         delivered to the Debtor,  declare that it is acting as collateral agent
         for  itself,  to  perfect  its  interests  in  and  to  administer  the
         Collateral  or any part thereof,  including,  without  limitation,  any
         notes,  accounts,  chattel  paper or  other  documents  or  instruments
         evidencing of the foregoing. Debtor shall pay all costs, fees and other
         charges of such Collateral Agent.

             (l) ENTIRETY.  This Agreement has been entered into pursuant to the
         provisions of the Loan Agreement and is subject to all of the terms and
         conditions  thereof  and,  if there is any  conflict  or  inconsistency
         between the provisions of this Agreement and the provisions of the Loan
         Agreement,  any such  conflict  or  inconsistency  shall be resolved to
         better assure the security interest and collateral  assignment  granted
         hereunder.   This   Agreement   cancels   and   supersedes   any  prior
         understandings  and agreements  between the parties hereto with respect
         thereto. There are no representations,  warranties,  terms, conditions,
         undertakings or collateral agreements,  express,  implied or statutory,
         between  the Secured  Party and the Debtor with  respect to the subject
         matter  hereof  except as  expressly  set  forth  herein or in the Loan
         Agreement.

                                       14
<PAGE>

             (m) GOVERNING  LAW. This Agreement and all other Loan Documents and
         Security  Documents  shall be construed in accordance with and governed
         by the laws of the State of New York without  regard to conflict of law
         principles;  PROVIDED that  Sections  5-1401 and 5-1402 of the New York
         General  Obligations Law shall apply, and the  obligations,  rights and
         remedies of the parties  hereunder  shall be  determined  in accordance
         with the laws of the State of New York.

             (n) NOTICES.  All notices,  requests and other communications to be
         given hereunder shall be in writing and shall be given to such party at
         its address or fax number set forth below or such other  address or fax
         number as such  party may  hereafter  specify  by notice to each  other
         party.  Each  such  notice,  request  or other  communication  shall be
         effective  (i) if given by fax during the  business  hours of the party
         receiving notice,  when transmitted to the fax number specified in this
         Section  and, on the day of  transmittal  thereof,  a  confirmation  of
         receipt  (which may be telephonic) is given by the recipient and in any
         event no later than the next  Business  Day,  (ii) if given by mail, on
         the third day after such  communication  is deposited in the mails with
         first class postage  prepaid,  addressed as aforesaid or (iii) if given
         by any other means  (including,  without  limitation,  by air courier),
         when delivered at the address specified in this Section;  PROVIDED that
         notices given under this subsection  (iii) shall not be effective until
         received by the respective addressee.  All notices shall also be given,
         simultaneously and in like manner, to such party's legal counsel at its
         address  or fax number  set forth  below or such  other  address or fax
         number  as such  party  may  hereafter  specify  by notice to the other
         parties.

<TABLE>
         <S>                                      <C>
         AS TO DEBTOR:                            WITH A COPY TO:

         E-LOAN, Inc.                             E-LOAN, Inc.
         5875 Arnold Road                         5875 Arnold Road
         Dublin, CA  94568                        Dublin, CA  94568
         Telephone:  (925) 241-2510               Telephone:  (925) 560-2631
         Telefax:  (925) 560-3408                 Telefax:  (925) 803-3503
         Attn:  Tom Knight, Treasurer             Attn: Edward A. Giedgowd, Esq.

         AS TO SECURED PARTY:                     WITH A COPY TO:

         Merrill Lynch Mortgage Capital Inc.      Merrill Lynch Mortgage Capital Inc.
         4 World Financial Center, 22nd Floor     4 World Financial Center, 22nd Floor
         New York, NY 10080                       New York, NY 10080
         Telephone: (212) 449-9369                Telephone: (212) 449-8486
         Telefax: (212) 449-6673                  Telefax: (212) 449-6673
         Attn: Jeffrey S. Cohen, Director         Attn: Michael Blum, Managing Director
</TABLE>

             (o) SEVERABILITY.  If any provision of this Agreement is determined
         to be invalid or  unenforceable in whole or in part, such invalidity or
         unenforceability will attach only to such provision or part thereof and
         the remaining  part of such provision and all other  provisions  hereof
         will continue in full force and effect.

             (p) ADDITIONAL CONTINUING SECURITY. This Agreement and the security
         interest and  collateral  assignment  granted hereby are in addition to
         and not in substitution for any other security now or hereafter held by
         the Secured Party.  This Agreement is a security  agreement (as defined
         in the UCC) and the security interest granted hereunder is a continuing
         security that will remain in full force and effect until  discharged by
         the Secured Party.

                                       15
<PAGE>

             (q)  FURTHER  ASSURANCES.  The  Debtor  from  time to time,  at its
         expense,  shall promptly do, execute and deliver,  or cause to be done,
         executed  and  delivered,   all  such  financing  statements,   further
         assignments, instruments, documents, acts, matters and things as may be
         reasonably  requested  by the  Secured  Party for the purpose of giving
         effect  to this  Agreement  and the  other  Loan  Documents  or for the
         purpose of establishing compliance with the representations, warranties
         and  covenants  herein  contained  and  contained  in  the  other  Loan
         Documents  and the  rights,  powers and  remedies  herein  and  therein
         granted.

             (r) DISCHARGE.  The Debtor will not  be discharged  from any of the
         Obligations  or from this  Agreement  except by a release or  discharge
         signed in writing by the Secured Party.

             (s) SUBMISSION TO JURISDICTION; WAIVERS. EACH OF THE PARTIES HERETO
         HEREBY IRREVOCABLY AND UNCONDITIONALLY:

                  1.  SUBMITS  ITSELF  AND  ITS  PROPERTY  TO THE  NON-EXCLUSIVE
                  GENERAL  JURISDICTION  OF THE COURTS OF THE STATE OF NEW YORK,
                  THE  FEDERAL  COURTS OF THE UNITED  STATES OF AMERICA  FOR THE
                  SOUTHERN  DISTRICT  OF NEW  YORK OR ANY  OTHER  FEDERAL  COURT
                  SITTING IN THE  BOROUGH OF  MANHATTAN  IN THE CITY OF NEW YORK
                  AND APPELLATE COURTS FROM ANY THEREOF;

                  2.  CONSENTS  THAT ANY ACTION OR  PROCEEDING  RELATING  TO THE
                  TRANSACTIONS   CONTEMPLATED   BY  OR  ARISING   FROM,  OR  FOR
                  RECOGNITION  OR ENFORCEMENT OF ANY JUDGMENT IN RESPECT OF, THE
                  LOAN DOCUMENTS MAY BE BROUGHT IN SUCH COURTS;

                  3. WAIVES ANY OBJECTION  THAT IT MAY NOW OR HEREAFTER  HAVE TO
                  THE VENUE OF ANY SUCH ACTION OR  PROCEEDING  IN ANY SUCH COURT
                  OR  THAT  SUCH  ACTION  OR   PROCEEDING   WAS  BROUGHT  IN  AN
                  INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

                  4.  AGREES  THAT ANY  SERVICE OF PROCESS IN ANY SUCH ACTION OR
                  PROCEEDING  MAY BE  EFFECTED  BY  MAILING  A COPY  THEREOF  BY
                  REGISTERED  OR CERTIFIED  MAIL (OR ANY  SUBSTANTIALLY  SIMILAR
                  FORM OF  MAIL),  POSTAGE  PREPAID,  TO ITS  ADDRESS  SET FORTH
                  HEREIN OR AT SUCH  OTHER  ADDRESS  OF WHICH  EACH OF THE OTHER
                  PARTIES HERETO SHALL HAVE BEEN NOTIFIED IN ACCORDANCE WITH THE
                  TERMS AND CONDITIONS OF THIS AGREEMENT; AND

                  5. AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
                  SERVICE  OF PROCESS IN ANY OTHER  MANNER  PERMITTED  BY LAW OR
                  SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

             (t)  WAIVER  OF JURY  TRIAL.  EACH  OF THE  PARTIES  HERETO  HEREBY
         IRREVOCABLY  WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
         ANY AND ALL  RIGHT TO A TRIAL BY JURY IN ANY LEGAL  PROCEEDING  ARISING
         OUT OF OR RELATING TO THIS  AGREEMENT  AND THE OTHER LOAN

                                       16
<PAGE>

         DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ARISING
         HEREUNDER OF THEREUNDER.

             (u) THIRD PARTIES.  No Person dealing with the Secured Party or any
         agent of the Secured  Party  shall be  required to inquire  whether the
         security interest has become  enforceable,  or whether the powers which
         the Secured  Party or any such agent is  purporting  to exercise are or
         have become exercisable,  or whether any Obligations remain outstanding
         upon the security  interest  granted to the Secured Party, or as to the
         necessity or expediency of the stipulations  and conditions  subject to
         which any sale  shall be made,  or  otherwise  as to the  propriety  or
         regularity of any sale or other  disposition  or any other dealing with
         the security interest granted to the Secured Party in, to and under the
         Collateral or any part thereof.

                            [Signature page follows.]

                                       17
<PAGE>
         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement on
the date first above written.

                                     Debtor:

                                     E-LOAN, INC.

                                     By:____________________________

                                     Its: ___________________________

                                              5875 Arnold Road
                                              Dublin, CA  94568

                                              3563 - 501 Philips Highway
                                              Jacksonville, FL  32207

                                     Secured Party:

                                     MERRILL LYNCH MORTGAGE CAPITAL INC.

                                     By:____________________________

                                     Its: ___________________________

                                              4 World Financial Center, 22nd Fl.
                                              New York, NY  10080

<PAGE>

                                   SCHEDULE I

                             E-LOAN, INC. LOCATIONS

A.       Location of Chief Executive Office:

         5875 Arnold Road
         Dublin, CA  94568

B.       Location of Books and Records as to Chattel Paper and Accounts:

         3563 - 501 Philips Highway
         Jacksonville, FL  32207

         5875 Arnold Road
         Dublin, CA  94568

C.       Location of Other Collateral:

         WHILE HELD IN TRUST BY DEBTOR

         3563 - 501 Philips Highway
         Jacksonville, FL  32207

D.       Location of Any Other Place(s) of Business:

         Main Corporate Office:
         5875 Arnold Road
         Dublin, CA  94568

         Branch Office (Main Location of Auto Operations):
         3563 - 501 Philips Highway
         Jacksonville, FL  32207

                                     S-I-I
<PAGE>

                                   SCHEDULE II

                              REAL PROPERTY; LEASES

5875 ARNOLD ROAD, DUBLIN, CA 94568

Multi-Tenant  Office Triple Net Lease dated August 19, 1998,  between  Creekside
South Trust, a Maryland Business Trust as Lessor and E-Loan, Inc. as Lessee;

3563 PHILIPS HIGHWAY, JACKSONVILLE, FL 32207

Metro Square Office Lease  Agreement dated February 4, 2000,  between  Southpart
Corporate Center, LLC as Lessor and E-LOAN, Inc. as Lessee.

EQUIPMENT LEASE

Master Lease Agreement dated March 4, 1998,  between  Comdisco,  Inc., as Lessor
and E-LOAN, Inc. as Lessee.

                                     S-II-ISERVICE AGREEMENT

SERVICE AGREEMENT

THIS AGREEMENT, dated as of the 24th day of April, 2002.

 

BETWEEN:
SUNPOWER CORPORATION, a Nevada registered company

with its head office at 112C Longview Drive, Los Alamos, NM, 87544.

(Hereinafter referred to as the "Company")

AND
A. SCHWAB & ASSOCIATES INC., a British Columbia company 

with its office at 414 Viewcrest Rd., Kelowna, British Columbia, V1W 4J8.

(Hereinafter referred to as "AS&A")

WHEREAS the Company is a public company whose common shares trade on OTCBB and wishes to engage AS&A to provide the services set out in this Agreement and AS&A is prepared to provide such services to the Company on the terms and conditions of this Agreement.

THEREFORE the parties agree as follows:

1.Engagement 

AS&A will provide general management, financial, strategic and other advice to the Company in the interest of maintaining the Company interests. In particular, the AS&A will:

1. provide referrals and references regarding any joint venture or potential investment interest in the Company;

2. assist in negotiations with potential investors, joint venture partners, its financial advisors and its principals;

3. at the direction of the Officers and Directors; prepare, manage and assist in the implementation of the Company's Business Plan;

4. undertake the responsibility for annual audit and general accounting procedures;

5. maintain corporate records and exchange filings;

6. administer and manage the Companies subsidiary companies;

7. communicate with Federal and State government, exchange and regulatory authorities, and coordinate investor relations services;

8. provide home office use, including overhead, rent and other charges relating to use of 414 Viewcrest Road, Kelowna, B.C. as the Company's Head Office.

2. Term

This Agreement will be from the date hereof until April 23, 2003 unless extended by mutual agreement of the Company and AS&A beyond such date.

This Agreement may be terminated at any time upon 60 days written notice.

3.Fees

In consideration of AS&A rendering services hereunder, the Company agrees to pay the sum of USD $8000.00 per month commencing as of May 1, 2002 and ASA agrees to defer and accrue $USD3000 of this monthly payment, until such time as the Company is more fully able to meet its payroll obligations, to April 31, 2003. 

In addition to the monthly fees, the Company agrees to advance or reimburse AS&A for expenses that AS&A may incur from time to time at the direction of the Company.

4.Benefit of Agreement

The agreement resulting from acceptance by execution of this agreement is solely for the benefit of the Company and AS&A and shall be binding upon and enure to the benefit of the legal, representatives, heirs, successors and assigns of such persons and no other person shall acquire or have any right under or by virtue hereof.

 

5.Ownership

Any notes, memoranda, records, lists of customers and suppliers and employees, correspondence, documents, computers and other disks and tape, data listing, codes, designs and drawings and other documents and material whatsoever relating to the business of the Company which may have been produced or created by AS&A at the expense of the Company, shall be and remain the property of the Company and shall be surrendered by AS&A on demand.

 

6.Amendments

No amendment, change, modification or addition to this Agreement will be valid unless made in writing and executed by both parties.

 

7.Notice

Any notice under this Agreement will be given in writing and must be delivered, sent by telecopier or mailed by prepaid post and addressed to the party to which notice is to be given at the address indicated above, or at another address designated by such party in writing.

If notice is sent by telecopier or is delivered, it will be deemed to have been given at the time of transmission or delivery.

If notice is mailed, it will be deemed to have been received 48 hours following the date of mailing of the notice.

If there is an interruption in normal mail service due to strike, labour unrest or other cause at or prior to the time a notice is mailed the notice will be sent by Telecopier or will be delivered.

 

8.Governing Law

This Agreement is governed by the laws of British Columbia and except as otherwise provided in the Agreement, the parties agree to the exclusive jurisdiction of the courts of British Columbia for the resolution of all disputes arising out of or in connection with this Agreement.

 

9.Assignment

Neither this Agreement nor any benefit or interest granted by it may be assigned by either party to this Agreement without the written consent of the other.

 

10.Previous Agreements

This Agreement supersedes, terminates and cancels any and all previous agreements, representations and warranties, written or oral, between the parties relating to the services to be provided by AS&A to this Agreement.

 

IN WITNESS of this Agreement, the parties have executed and delivered this Agreement as of the date given above.

AGREED AND ACCEPTED on behalf of:

SUNPOWER CORPORATION.

 

/s/ Andrew Schwab

___________________________________________

Authorized Signatory

 

 

AGREED AND ACCEPTED by: 

A. SCHWAB & ASSOCIATES INC.

 

/s/ Andrew Schwab

__________________________________________

Authorized Signatory

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