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GENERALLY - "You" means the Secured Party identified on page 1 of
<br />this agreement. "I," "me" and "my" means each person who signs
<br />this security agreement as Debtor, and who agrees to give the property
<br />described in this agreement as security for the Secured Debts. All
<br />terms and duties under this agreement are joint and individual. No
<br />modification of this security agreement is effective unless made in
<br />writing and signed by you and me. This security agreement remains in
<br />effect, even if the note is paid and I owe no other debt to you, until
<br />discharged in writing. Time is of the essence in this agreement.
<br />APPLICABLE LAW - I agree that this security agreement will be
<br />governed by the law of the state in which you are located. If property
<br />described in this agreement is located in another state, this agreement
<br />may also, in some circumstances, be governed by the law of the state
<br />in which the property is located.
<br />To the extent permitted by law, the terms of this agreement may
<br />vary applicable law. If any provision of applicable law may not be
<br />varied by agreement, any provision of this agreement that does not
<br />comply with that law will not be effective. If any provision of this
<br />agreement cannot be enforced according to its terms, this fact will not
<br />affect the enforceability of the remainder of this agreement.
<br />OWNERSHIP AND DUTIES TOWARD PROPERTY - I represent that I
<br />own all of the property, or to the extent this is a purchase money
<br />security interest I will acquire ownership of the property with the
<br />proceeds of the loan. I will defend it against any other claim. Your
<br />claim to the property is ahead of the claims of any other creditor. I
<br />agree to do whatever you require to protect your security interest and
<br />to keep your claim in the property ahead of the claims of other
<br />creditors. I will not do anything to harm your position.
<br />I will keep books, records and accounts about the property and my
<br />business in general. I will let you examine these records at any
<br />reasonable time. I will prepare any report or accounting you request,
<br />which deals with the property.
<br />I will keep the property in my possession and will keep it in good
<br />repair and use it only for the purpose(s) described on page 1 of this
<br />agreement. I will not change this specified use without your express
<br />written permission. I represent that I am the original owner of the
<br />property and, if I am not, that I have provided you with a list of prior
<br />owners of the property.
<br />I will keep the property at my address listed on page 1 of this
<br />agreement, unless we agree I may keep it at another location. If the
<br />property is to be used in another state, I will give you a list of those
<br />states. I will not try to sell the property unless it is inventory or I
<br />receive your written permission to do so. If I sell the property I will
<br />have the payment made payable to the order of you and me.
<br />You may demand immediate payment of the debt(s) if the debtor is
<br />not a natural person and without your prior written consent (1) a
<br />beneficial interest in the debtor is sold or transferred or (2) there is a
<br />change in either the identity or number of members of a partnership or
<br />(3) there is a change in ownership of more than 25 percent of the
<br />voting stock of a corporation.
<br />I will pay all taxes and charges on the property as they become
<br />due. You have the right of reasonable access in order to inspect the
<br />property. I will immediately inform you of any loss or damage to the
<br />property.
<br />LIMITATIONS - This agreement will not secure a debt described in the
<br />section entitled "Secured Debts" on page 1:
<br />1) if you fail to make any disclosure of the existence of this
<br />security interest required by law for such other debt;
<br />2) if this security interest is in my principal dwelling and you fail to
<br />provide (to afl persons entitled) any notice of right of rescission
<br />required by law for such other debt;
<br />3) to the extent that this security interest is in "household goods"
<br />and the other debt to be secured is a "consumer" loan (as those
<br />terms are defined in applicable federal regulations governing
<br />unfair and deceptive credit practices);
<br />4) if this security interest is in margin stock subject to the require-
<br />ments of 12 C.F.R. Section 207 or 221 and you do not obtain a
<br />statement of purpose if required under these regulations with
<br />respect to that debt; or
<br />5) if this security interest is unenforceable by law with respect to
<br />that debt.
<br />PURCHASE MONEY SECURITY INTEREST - For the sole purpose of
<br />determining the extent of a purchase money security interest arising
<br />under this security agreement: (a) payments on any non - purchase
<br />money loan also secured by this agreement will not be deemed to
<br />apply to the purchase money loan, and (b) payments on the purchase
<br />money loan will be deemed to apply first to the non - purchase money
<br />portion of the loan, if any, and then to the purchase money obligations
<br />in the order in which the items of collateral were acquired or if
<br />acquired at the same time, in the order selected by you. No security
<br />interest will be terminated by application of this formula. "Purchase
<br />money loan" means any loan the proceeds of which, in whole or in
<br />part, are used to acquire any collateral securing the loan and all
<br />extensions, renewals, consolidations and refinancings of such loan.
<br />AUTHORITY OF SECURED PARTY TO MAKE ADVANCES AND PER-
<br />FORM FOR DEBTOR - I agree to pay you on demand any sums you
<br />advanced on my behalf including, but not limited to, expenses incurred
<br />in collecting, insuring, conserving, or protecting the property or in any
<br />inventories, audits, inspections or other examinations by you in
<br />respect to the property. If I fail to pay such sums, you may do so for
<br />me, adding the amount paid to the other amounts secured by this
<br />agreement. All such sums will be due on demand and will bear interest
<br />at the highest rate provided in any agreement, note or other
<br />instrument evidencing the Secured Debt(s) and permitted by law at the
<br />time of the advance.
<br />If I fail to perform any of my duties under this security agreement,
<br />or any mortgage, deed of trust, lien or other security interest, you may
<br />without notice to me perform the duties or cause them to be
<br />performed. I understand that this authorization includes, but is not
<br />limited to, permission to: (1) prepare, file, and sign my name to any
<br />necessary reports or accountings; (2) notify any account debtor of
<br />your interest in this property and tell the account debtor to make the
<br />payments to you or someone else you name, rather than me; (3) place
<br />on any chattel paper a note indicating your interest in the property; (4)
<br />in my name, demand, collect, receive and give a receipt for,
<br />compromise, settle, and handle any suits or other proceedings
<br />involving the collateral; (5) take any action you feel is necessary in
<br />order to realize on the collateral, including performing any part of a
<br />contract or endorsing it in my name; and (6) make an entry on my
<br />books and records showing the existence of the security agreement.
<br />Your right to perform for me shall not create an obligation to perform
<br />and your failure to perform will not preclude you from exercising any
<br />of your other rights under the law or this security agreement.
<br />200007144
<br />INSURANCE - I agree to buy insurance on the property against the
<br />risks and for the amounts you require and to furnish you continuing
<br />proof of coverage. I will have the insurance company name you as
<br />loss payee on any such policy. You may require added security if you
<br />agree that insurance proceeds may be used to repair or replace the
<br />property. I will buy insurance from a firm licensed to do business in
<br />the state where you are located. The firm will be reasonably
<br />acceptable to you. The insurance will last until the property is released
<br />from this agreement. If I fail to buy or maintain the insurance (or fail to
<br />name you as loss payee) you may purchase it yourself.
<br />WARRANTIES AND REPRESENTATIONS - If this agreement includes
<br />accounts, I will not settle any account for less than its full value
<br />without your written permission. I will collect all accounts until you tell
<br />me otherwise. I will keep the proceeds from all the accounts and any
<br />goods which are returned to me or which I take back in trust for you. I
<br />will not mix them with any other property of mine. I will deliver them
<br />to you at your request. If you ask me to pay you the full price on any
<br />returned items or items retaken by myself, I will do so.
<br />If this agreement covers inventory, I will not dispose of it except in
<br />my ordinary course of business at the fair market value for the
<br />property, or at a minimum price established between you and me.
<br />If this agreement covers farm products I will provide you, at your
<br />request, a written list of the buyers, commission merchants or selling
<br />agents to or through whom I may sell my farm products. In addition to
<br />those parties named on this written list, I authorize you to notify at
<br />your sole discretion any additional parties regarding your security
<br />interest in my farm products. I remain subject to all applicable
<br />penalties for selling my farm products in violation of my agreement
<br />with you and the Food Security Act. In this paragraph the terms farm
<br />products, buyers, commission merchants and selling agents have the
<br />meanings given to them in the Federal Food Security Act of 1985.
<br />DEFAULT - I will be in default if any one or more of the following
<br />occur: (1) 1 fail to make a payment on time or in the amount due; (2) 1
<br />fail to keep the property insured, if required; (3) 1 fail to pay, or keep
<br />any promise, on any debt or agreement I have with you; (4) any other
<br />creditor of mine attempts to collect any debt I owe him through court
<br />proceedings; (5) 1 die, am declared incompetent, make an assignment
<br />for the benefit of creditors, or become insolvent (either because my
<br />liabilities exceed my assets or I am unable to pay my debts as they
<br />become due); (6) 1 make any written statement or provide any
<br />financial information that is untrue or inaccurate at the time it was
<br />provided; (7) 1 do or fail to do something which causes you to believe
<br />that you will have difficulty collecting the amount I owe you; (8) 1
<br />change my name or assume an additional name without first notifying
<br />you before making such a change; (9) failure to plant, cultivate and
<br />harvest crops in due season; (10) if any loan proceeds are used for a
<br />purpose that will contribute to excessive erosion of highly erodible
<br />land or to the conversion of wetlands to produce an agricultural
<br />commodity, as further explained in 7 C.F.R. Part 1940, Subpart G,
<br />Exhibit M.
<br />REMEDIES - If I am in default on this agreement, you have the
<br />following remedies:
<br />1) You may demand immediate payment of all I owe you under any
<br />obligation secured by this agreement.
<br />2) You may set off any obligation I have to you against any right I
<br />have to the payment of money from you.
<br />3) You may demand more security or new parties obligated to pay
<br />any debt I owe you as a condition of giving up any other
<br />remedy.
<br />4) You may make use of any remedy you have under state or
<br />federal law.
<br />5) If I default by failing to pay taxes or other charges, you may pay
<br />them (but you are not required to do so). If you do, I will repay
<br />to you the amount you paid plus interest at the highest contract
<br />rate.
<br />6) You may require me to gather the property and make it available
<br />to you in a reasonable fashion.
<br />7) You may repossess the property and sell it as provided by law.
<br />You may repossess the property so long as the repossession
<br />does not involve a breach of the peace or an illegal entry onto
<br />my property. You may sell the property as provided by law. You
<br />may apply what you receive from the sale of the property to:
<br />your expenses; your reasonable attorneys' fees and legal
<br />expenses (where not prohibited by law); any debt I owe you. If
<br />what you receive from the sale of the property does not satisfy
<br />the debts, you may take me to court to recover the difference
<br />(where permitted by law).
<br />I agree that 10 days written notice sent to my address listed on
<br />page 1 by first class mail will be reasonable notice to me under
<br />the Uniform Commercial Code.
<br />If any items not otherwise subject to this agreement are
<br />contained in the property when you take possession, you may
<br />hold these items for me at my risk and you will not be liable for
<br />taking possession of them.
<br />8) In some cases, you may keep the property to satisfy the debt.
<br />You may enter upon and take possession of all or any part of
<br />my property, so long as you do not breach the peace or illegally
<br />enter onto the property, including lands, plants, buildings,
<br />machinery, and equipment as may be necessary to permit you
<br />to manufacture, produce, process, store or sell or complete the
<br />manufacture, production, processing, storing or sale of any of
<br />the property and to use and operate the property for the length
<br />of time you feel is necessary to protect your interest, all without
<br />payment or compensation to me.
<br />By choosing any one or more of these remedies, you do not waive
<br />your right to later use any other remedy. You do not waive a default if
<br />you choose not to use any remedy, and, by electing not to use any
<br />remedy, you do not waive your right to later consider the event a
<br />default and to immediately use any remedies if it continues or occurs
<br />again.
<br />FILING - A carbon, photographic or other reproduction of this security
<br />agreement or the financing statement covering the property described
<br />in this agreement may be used as a financing statement where
<br />allowed by law. Where permitted by law, you may file a financing
<br />statement which does not contain my signature, covering the property
<br />secured by this agreement.
<br />CO- MAKERS - If more than one of us has signed this agreement, we
<br />are all obligated equally under the agreement. You may sue any one of
<br />us or any of us together if this agreement is violated. You do not have
<br />to tell me if any term of the agreement has not been carried out. You
<br />may release any co- signer and I will still be obligated under this
<br />agreement. You may release any of the security and I will still be
<br />obligated under this agreement. Waiver by you of any of your rights
<br />will not affect my duties under this agreement. Extending this
<br />agreement or new obligations under this agreement, will not affect my
<br />duty under the agreement.
<br />BANKERS SYSTEMS, INC., ST. CLOUD, MN (1 -800- 397 -2341) SECURITY AGREEMENT FORM SA 8/5/91 (page 2 of 2/
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