TERAFORCE TECHNOLOGY CORP
LOAN AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>5
<FILENAME>d17205exv10w1.htm
<DESCRIPTION>LOAN AGREEMENT
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<P align="right" style="font-size: 10pt"><B>Exhibit&nbsp;10.1</B>




<P align="center" style="font-size: 10pt"><B>LOAN AGREEMENT</B>




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS LOAN AGREEMENT (as it may be amended or modified from time to time,
together with all exhibits and schedules attached hereto from time to time,
this &#147;Agreement&#148;) is entered into as of the <B>30th day of July, 2004 </B>(the
&#147;Effective Date&#148;) by and between <B>DNA COMPUTING SOLUTIONS, INC., a Delaware
corporation, </B>(&#147;Borrower&#148;), Borrower&#146;s address for purposes of this Agreement
being <B>1240 East Campbell Road, Richardson, Texas 75081, </B>and, <B>FIRSTCAPITAL BANK,
SSB, 5433 Westheimer, Suite&nbsp;100, Houston, Texas 77056, </B>(together with its
successors and assigns, &#147;Lender&#148;). Borrower has applied to Lender for a
commercial loan and other financial accommodations, including those which may
be described on any exhibit or schedule attached to this Agreement. Such loan
and financial accommodations are referred to collectively in this Agreement as
the &#147;Loan&#148;. Borrower understands and agrees that: (a)&nbsp;in granting, renewing,
or extending the Loan, Lender is relying upon Borrower&#146;s representations,
warranties, and agreements, as set forth in this Agreement; (b)&nbsp;the granting,
renewing, or extending of the Loan by Lender at all times shall be subject to
Lender&#146;s sole judgment and discretion; and, (c)&nbsp;such Loan shall be and shall
remain subject to the following terms and conditions of this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>TERM. </B>This Agreement shall be effective as of the Effective Date, and
shall continue until the &#147;Final Maturity Date&#148; (as hereinafter defined), unless
sooner terminated in accordance with the terms hereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>DEFINITIONS. </B>The following words shall have the following meanings when
used in this Agreement. Terms not otherwise defined in this Agreement shall
have the meanings attributed to such terms in the Texas Business and Commerce
Code (the Texas Uniform Commercial Code). All references to dollar amounts
shall mean amounts in lawful money of the United States of America.


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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Accounts</B>. The word &#147;Accounts&#148; means all of Borrower&#146;s presently
existing or hereafter acquired or created accounts, accounts
receivable, and all other rights to receive the payment of money
or other considerations by virtue of merchandise sold or leased,
services rendered, or other considerations given, and including,
in any event, all accounts within the meaning of the Uniform
Commercial Code in effect in any applicable jurisdiction.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Advance</B>. The word &#147;Advance&#148; means a disbursement of Loan funds
under this Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Applicable Law</B>. The words &#147;Applicable Law&#148; mean that law in
effect from time to time and applicable to the Collateral, the
parties to this Agreement, and the Notes, which lawfully permits
the charging and collection of the highest permissible lawful
nonusurious rate of interest on the Notes, including laws of the
State of Texas and laws of the United States of America. In no
event shall the provisions of Chapter&nbsp;346 of the Texas Finance
Code (which regulates certain revolving credit loan accounts and
revolving tri-party accounts) apply to the Loan.</TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Base Rate</B>. The words &#147;Base Rate&#148; shall mean the prime rate of
interest as posted in the Money Rates section of the Wall Street
Journal, being the base rate on corporate loans posted by at least
75% of the nation&#146;s 30 largest banks. If the publication of this
rate is discontinued by the Wall Street Journal, a comparable
reference rate designated by Lender as a substitute therefor shall
be the Base Rate.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Borrowing Base</B>. The words &#147;Borrowing Base&#148; shall mean the sum of
Five Hundred Seventy-Five Thousand and No/100 Dollars
($575,000.00). In addition to the foregoing, if Lender, in its
sole and absolute discretion, determines that there has been a
material adverse change in the financial condition of any
Guarantor, Lender may reduce the Borrowing Base by the amount of
that Guarantor&#146;s Investment, as that amount is set forth in
<B>Exhibit &#147;A&#148; </B>to the Guaranty Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Business Day</B>. The words &#147;Business Day&#148; mean any day excluding
Saturday, Sunday, and any day which is a legal holiday under the
laws of the State of Texas or is a day on which banking
institutions located in the State of Texas are closed.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Collateral</B>. The word &#147;Collateral&#148; means all of Borrower&#146;s right,
title, and interest in and to the &#147;Accounts&#148;, the &#147;Equipment&#148;, and
the &#147;Inventory&#148; (as each such term is hereinafter defined),
whether now owned or existing or hereafter arising or acquired and
wherever arising or located, including all accessions, additions,
replacements, and substitutions thereto or thereof; and, all
products and proceeds thereof.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Equipment</B>. The word &#147;Equipment&#148; means all of Borrower&#146;s
equipment, machinery, chattels, tools, parts, machine tools,
furniture, furnishings, fixtures and supplies of every nature,
presently existing or hereafter acquired or created (including but
not limited to, all equipment and wherever located, all
accessions, additions and improvements thereto and substitutions
therefor and all parts and equipment which may be attached to or
which are necessary for the operation and use of such personal
property, whether or not the same shall be deemed to be affixed to
real property, and all rights under or arising out of present or
future contracts relating to the foregoing and in any event, all
equipment within the meaning of the Uniform Commercial Code in
effect in any applicable jurisdiction.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Event of Default</B>. The words &#147;Event of Default&#148; mean and include
without limitation any of the Events of Default set forth below in
the section entitled &#147;EVENTS OF DEFAULT&#148;.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Final Maturity Date</B>. The words &#147;Final Maturity Date&#148; mean the
date on which all amounts under all &#147;Loans&#148; (as hereinafter
defined) shall become fully due and payable. Unless extended in
writing by Borrower and Lender, the Final Expiration Date is that
day which is eighteen (18)&nbsp;months after the Effective Date.</TD>
</TR>


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<P align="center" style="font-size: 10pt">1
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    <TD width="1%" nowrap align="right">&nbsp;</TD>
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    <TD><B>Grantor</B>. The word &#147;Grantor&#148; means and includes without limitation
each and all of the persons or entities granting a Security
Interest in any Collateral for the Indebtedness, including without
limitation all Borrowers granting such a Security Interest.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Guarantor</B>. The word &#147;Guarantor&#148; means and includes without
limitation each and all of the guarantors, sureties, and
accommodation parties in connection with any Indebtedness.</TD>
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    <TD colspan="5">&nbsp;</TD>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Guaranty Agreement</B>. The words &#147;Guaranty Agreement&#148; mean that
Guaranty Agreement of even date herewith executed by the
Guarantors, whereby each of the Guarantors guaranties, among other
things, the payment of all or a portion of the Indebtedness.</TD>
</TR>

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    <TD colspan="5">&nbsp;</TD>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Indebtedness</B>. The word &#147;Indebtedness&#148; means and includes without
limitation all Loans, together with all other obligations, debts
and liabilities of Borrower to Lender, or any one or more of them,
as well as all claims by Lender against Borrower, or any one or
more of them, whether now or hereafter existing, voluntary or
involuntary, due or not due, absolute or contingent, liquidated or
unliquidated; whether Borrower may be liable individually or
jointly with others; and, whether Borrower may be obligated as a
guarantor, surety, or otherwise.</TD>
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    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Inventory</B>. The word &#147;Inventory&#148; means all of Borrower&#146;s inventory
in all of its forms, wherever located, now or hereafter existing
and whether acquired by purchase, merger or otherwise, and all raw
materials and work in process therefor, all finished goods thereof
and all materials used or consumed in the manufacture, packing,
shipping, advertising, selling, leasing or production thereof,
including such goods in which Borrower has an interest in mass or
a joint or other interest or right of any kind, and such goods
which are returned to or repossessed by Borrower, and all
accessions thereto and products thereof, and including in any
event all inventory within the meaning of the Uniform Commercial
Code in effect in any applicable jurisdiction.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Loan</B>. The word &#147;Loan&#148; means the commercial loan and financial
accommodations from Lender to Borrower which are described herein
or described on any exhibit or schedule attached to this Agreement
from time to time.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Maximum Legal Rate</B>. The words &#147;Maximum Legal Rate&#148; mean, at any
time, the maximum rate of interest under applicable law that the
Lender may charge a Borrower. The Maximum Legal Rate shall be
calculated in a manner that takes into account any and all fees,
payments, and other charges in respect of this Agreement and the
Related Documents that constitute interest under applicable law.
Each change in any interest rate provided for herein based upon
the Maximum Legal Rate resulting from a change in the Maximum
Legal Rate shall take effect without notice to the Borrower at the
time of such change in the Maximum Legal Rate. For purposes of
determining the Maximum Legal Rate under Texas law, the</TD>
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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>applicable rate ceiling shall be the weekly rate ceiling described
in, and computed in accordance with, Chapter&nbsp;303, Subchapter A, of
the Texas Finance Code.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Multiple Advance Credit Note/Note</B>. The words &#147;Multiple Advance
Credit Note&#148; and the word &#147;Note&#148; each means the $575,000.00 Note
to be dated as of the Effective Date and to be executed by
Borrower in favor of Lender pursuant to the credit facility
described in this Agreement, as well as any substitute,
replacement or refinancing note or notes therefore. The principal
amount outstanding under the Note may be prepaid, in full or in
part, at any time and from time to time, without premium or
penalty.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Related Documents</B>. The words &#147;Related Documents&#148; mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security
agreements, mortgages, deeds of trust, and all other instruments,
agreements and documents, whether now or hereafter existing,
executed in connection with the Indebtedness.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Security Agreement</B>. The words &#147;Security Agreement&#148; mean the
Security Agreement of even date herewith, to be executed by
Borrower, as debtor, and Lender, as secured party, covering, and
creating a Security Interest against the Collaterals, and securing
the payment of the Indebtedness, as it may be extended, modified,
or renewed from time to time, and any other agreements, whether
created by law, contract, or otherwise, evidencing, governing,
representing, or creating a Security Interest against any of the
Personal Property.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Security Interest</B>. The words &#147;Security Interest&#148; mean and
include, without limitation, any type of collateral security which
secures the payment of the Indebtedness or the performance of any
of Borrower&#146;s obligations as described in this Agreement, whether
in the form of a lien, charge, mortgage, deed of trust,
assignment, pledge, chattel mortgage, chattel trust, factor&#146;s
lien, equipment trust, conditional sale, trust receipt, lien or
title retention contract, lease or consignment intended as a
security device, or any other security or lien interest
whatsoever, whether created by law, contract, or otherwise.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>LINE OF CREDIT</B>. The line of credit covered by this Agreement consists of
a working capital revolving line of credit (the &#147;Line of Credit&#148;). Subject to
the conditions precedent to an Advance as specified herein, and subject to the
other terms and conditions of this Agreement: Lender agrees to make Advances to
Borrower from time to time from the Effective Date to the Final Maturity Date
pursuant to the Line of Credit, provided the aggregate amount of such Advances
pursuant to the Line of Credit outstanding at any time does not exceed the
Borrowing Base. The Line of Credit will be evidenced by the Revolving Credit
Note. Within the foregoing limits, Borrower may borrow, partially or wholly
repay, and reborrow under the Line of Credit as follows.


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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Conditions Precedent to Each Advance</B>. Lender&#146;s obligation to make
any Advance to or for the account of Borrower under the Line of
Credit is</TD>
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</TABLE>

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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>subject to the following conditions precedent, with all documents,
instruments, opinions, reports, and other items required under
this Agreement to be in form and substance satisfactory to Lender:</TD>
</TR>

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<P>
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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Lender shall have received evidence that this
Agreement and all Related Documents have been duly
authorized, executed, and delivered by Borrower to Lender.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Security Interests in the Collateral shall have
been duly authorized, created, and perfected with first lien
priority and shall be in full force and effect.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Guaranty Agreement shall have been executed by
each Guarantor, delivered to Lender, and shall be in full
force and effect.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Borrower shall have paid to Lender all fees, costs,
and expenses specified in this Agreement and the Related
Documents as are then due and payable.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under
this Agreement, or any of the Related Documents, and there
shall not exist a condition which, with the passage of time,
the giving of notice, or the performance of some other
ministerial act would constitute an Event of Default under
this Agreement or any of the Related Documents.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the remaining conditions of this Agreement, Lender will make
Advances to Borrower under the Revolving Credit Note as follows:


<P>
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    <TD width="1%">&nbsp;</TD>
    <TD><B>Making Loan Advances</B>. Advances under the Line of Credit may be
requested orally by authorized persons. Lender may, but need not,
require that all oral requests be confirmed in writing. Each
Advance shall be conclusively deemed to have been made at the
request of and for the benefit of Borrower: (a)&nbsp;when credited to
any deposit account of Borrower maintained with Lender; or, (b)
when advanced in accordance with the instructions of an authorized
person. Lender, at its option, may set a cutoff time, after which
all requests for Advances will be treated as having been requested
on the next succeeding Business Day. As long as Lender is acting
in good faith, Borrower hereby holds Lender harmless from any
claim that Lender made an Advance on the request of a person who
was not an authorized person.</TD>
</TR>

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    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Cessation of Advances</B>. If Lender has made any commitment to make
any Loan to Borrower, whether under this Agreement or under any
other agreement, Lender shall have no obligation to make Loan
Advances or to disburse Loan proceeds if: (a)&nbsp;Borrower is in
default under the terms of this Agreement or any of the Related
Documents or any other agreement that Borrower has with Lender;
(b)&nbsp;Borrower becomes insolvent, files a petition in bankruptcy or
similar proceedings, or is adjudged a bankrupt;</TD>
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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(c) there occurs a material adverse change in Borrower&#146;s financial
condition or in the value of any Collateral securing any Loan; (d)
any Guarantor seeks, claims or otherwise attempts to limit, modify
or revoke such Guarantor&#146;s guaranty of the Loan or any other loan
with Lender; or, (e)&nbsp;Lender in good faith deems itself insecure,
even though no Event of Default shall have occurred.</TD>
</TR>

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    <TD colspan="5">&nbsp;</TD>
</TR>

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    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Mandatory Loan Repayments</B>. If at any time the aggregate principal
amount of the outstanding Advances with respect to the Line of
Credit shall exceed the Borrowing Base, Borrower, immediately upon
written or oral notice from Lender, shall pay to Lender an amount
equal to the difference between: (i)&nbsp;the outstanding principal
balance of the Advances under the Line of Credit; and, (ii)&nbsp;the
Borrowing Base. On the Final Maturity Date, Borrower shall pay to
Lender in full the aggregate unpaid principal amount of all
Advances evidenced by the Revolving Credit Note then outstanding
and all accrued unpaid interest thereon, together with all other
applicable fees, costs and charges, if any, not yet paid with
respect to the Loan evidenced by the Revolving Credit Note.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Loan Account</B>. Lender shall maintain on its books a record of
account in which Lender shall make entries for each Advance and
such other debits and credits as shall be appropriate in
connection with the Line of Credit facility.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>COLLATERAL</B>. To secure the payment of the Loan and the performance of all
obligations and duties owed by Borrower to Lender and arising out of or related
in any way to this Agreement (collectively, the &#147;Obligations&#148;), Borrower shall
grant to Lender a Security Interest in the Collateral. Lender&#146;s Security
Interest in the Collateral shall be a continuing lien and shall include the
proceeds and products of the Collateral, including, without limitation, the
proceeds of any insurance.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NEGATIVE COVENANTS.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower covenants and agrees with Lender that, while this Agreement is in
effect, Borrower shall not, without the prior written consent of Lender:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Continuity of Operations. </B>(a)&nbsp;Engage in any business activities
substantially different from those in which Borrower is presently
engaged, (b)&nbsp;cease operations, liquidate, merge, transfer, acquire
or consolidate with any other entity, change ownership, change its
name, dissolve, transfer or sell Collateral out of the ordinary
course of business, or (c)&nbsp;make any distribution with respect to
any shares or capital account, whether by reduction of capital or
otherwise (except such distributions as are consistent with prior
distributions made by Borrower as reflected on the financial
reports made available to and acknowledged by Lender in writing,
and which are justifiable given the financial condition of
Borrower at the time of such distributions).</TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt">5
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Payments to Guarantors/Shareholders</B>. Pay, outside of the ordinary course
of Borrower&#146;s business, any amounts now outstanding and owing, or coming to be
owed, by Borrower, to any of the Guarantors or to any of the shareholders of
Borrower.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOTICE OF FINAL AGREEMENT. THIS AGREEMENT AND ALL OTHER DOCUMENTS
RELATING TO THESE LOANS CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING
TO THESE LOANS.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>UCC FINANCING STATEMENT</B>. Borrower hereby authorizes Lender or its agents
or assigns to file one or more such Financing Statements if permitted in the
relevant jurisdiction. Borrower will pay the cost of filing all such Financing
Statements in all public offices wherever filing is deemed by Lender to be
necessary or desirable.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>ADDENDUM</B>. This Agreement incorporates all addenda as if set forth in full
herein.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>RIGHT OF SETOFF</B>. Borrower grants to Lender a contractual security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender, all of Borrower&#146;s right, title, and interest in and to Borrower&#146;s
accounts with Lender (whether checking, savings, or other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding, however, all IRA and Keogh
accounts, and all trust accounts for which the grant of a security interest
would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EVENTS OF DEFAULT</B>. Each of the following shall constitute an Event of
Default under this Agreement.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Default on Indebtedness</B>. Failure of Borrower to make any payment
when due on the Loans.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Other Defaults</B>. Failure of Borrower to comply with or to perform
when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or
failure of Borrower to comply with or to perform any other term,
obligation, covenant or condition contained in any other agreement
between Lender and Borrower.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Default in Favor of Third Parties</B>. Should Borrower default under
any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other
creditor or person that may materially affect any of Borrower&#146;s
property or Borrower&#146;s ability to repay the Loans or perform their
respective obligations under this Agreement or any of the Related
Documents.</TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt">6
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>False Statements</B>. Any warranty, representation or statement made
or furnished to Lender by or on behalf of Borrower under this
Agreement or the Related Documents is false or misleading in any
material respect at the time made or furnished, or becomes false
or misleading at any time thereafter.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Defective Collateralization</B>. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure
of the Security Agreement to create a valid and perfected Security
Interest) at any time and for any reason.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Death or Insolvency</B>. The dissolution or termination of Borrower&#146;s
existence as a going business; the death of any one or more of the
Guarantors; the insolvency of any Borrower; the appointment of a
receiver for any part of Borrower&#146;s property; any assignment by
Borrower for the benefit of creditors; any type of creditor
workout; or, the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Creditor or Forfeiture Proceedings</B>. Commencement of foreclosure
or forfeiture proceedings, whether by judicial proceeding,
self-help, repossession or any other method, by any creditor of
Borrower against any Collateral, or by any governmental agency.
This includes a garnishment, attachment, or levy on or of any of
Borrower&#146;s deposit accounts with Lender. However, this Event of
Default shall not apply if there is a good faith dispute by
Borrower as to the validity or reasonableness of the claim which
is the basis of the creditor or forfeiture proceeding, and if
Borrower gives Lender written notice of the creditor or forfeiture
proceeding and furnishes reserves or a surety bond for the
creditor or forfeiture proceeding satisfactory to Lender.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Events Affecting Guarantor</B>. Any of the preceding events occurs
with respect to any Guarantor of any of the Indebtedness or any
Guarantor dies or becomes incompetent, or revokes or disputes the
validity of, or his or its liability under, the Guaranty
Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Change in Ownership</B>. The resignation or expulsion of any person
with an ownership interest (or sharing ratio) of twenty-five
percent (25%) or more in Borrower.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Adverse Change</B>. A material adverse change occurs in Borrower&#146;s or
a Guarantor&#146;s financial condition, or Lender believes the prospect
of payment or performance of the Indebtedness is impaired.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Insecurity</B>. Lender, in good faith, deems itself insecure.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Right to Cure</B>. If any default is curable, it may be cured (and no
Event of Default will have occurred) if Borrower or Guarantor, as
the case may be, after receiving written notice from Lender
demanding cure of such default: (a)&nbsp;cures the default within
fourteen (14)&nbsp;days; or, (b)&nbsp;with respect to a</TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt">7
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>non-monetary default, if the cure requires more than fourteen (14)
days, immediately initiates steps which Lender, in Lender&#146;s sole
discretion, deems to be sufficient to cure the default, and
thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably
practicable.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>EFFECT OF AN EVENT OF DEFAULT</B>. If any Event of Default shall occur,
except where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement, the Related
Documents, and every other agreement between Lender and any one or more of the
Borrowers immediately will terminate (including any obligation to make Loan
Advances or disbursements), and, at Lender&#146;s option, all Indebtedness
immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described
in the &#147;Death or Insolvency&#148; subsection above, including any such event as it
applies to any Guarantor, such acceleration shall be automatic and not
optional. In addition, Lender shall have all the rights and remedies expressly
provided elsewhere in this Agreement and in the Related Documents or available
at law, in equity, or otherwise. Except as may be prohibited by applicable
law, all of Lender&#146;s rights and remedies shall be cumulative and may be
exercised singularly or concurrently. Election by Lender to pursue any remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Borrower or of any
Guarantor shall not affect Lender&#146;s right to declare a default and to exercise
its rights and remedies.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>MISCELLANEOUS PROVISIONS</B>. The following miscellaneous provisions are a
part of this Agreement:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Amendments</B>. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties
as to the matters set forth in this Agreement. No alteration of
or amendment to this Agreement shall be effective unless given in
writing and signed by the party or parties sought to be charged or
bound by the alteration or amendment.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Governing Law</B>. <B>This Agreement has been delivered to Lender and
accepted by Lender in the State of Texas. If there is a lawsuit,
and if the transaction evidenced by this Agreement occurred in
Harris County, Texas, Borrower agrees upon Lender&#146;s request to
submit to the jurisdiction of the Federal or state courts of
Harris County, the State of Texas. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Texas and applicable Federal laws. The provisions of this
paragraph are subject to any provisions on arbitration contained
in this Agreement and/or in any Related Documents.</B></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Caption Headings</B>. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.</TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt">8
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Consent to Loan Participation</B>. Borrower agrees and consents to
Lender&#146;s sale or transfer, whether now or later, of one or more
participation interests in one or both of the Loans to one or more
purchasers, whether related or unrelated to Lender. Lender may
provide, without any limitation whatsoever, to any one or more
purchasers, or potential purchasers, any information or knowledge
Lender may have about Borrower or about any other matter relating
to the Loans, and Borrower hereby waives any rights to privacy it
may have with respect to such matters. Borrower additionally
waives any and all notices of sale of participation interests, as
well as all notices of any repurchase of such participation
interests, subject to the terms and conditions of the Loan
Agreement. Borrower also agrees that the purchasers of any such
participation interests will be considered as the absolute owners
of such interests in the Loans and will have all the rights
granted under the participation agreement or agreements governing
the sale of such participation interests. Borrower further waives
all rights of offset or counterclaim that it may have now or later
against Lender or against any purchaser of such a participation
interest and unconditionally agrees that either Lender or such
purchaser may enforce Borrower&#146;s obligation under the Loans
irrespective of the failure or insolvency of any holder of any
interest in the Loans. Borrower further agrees that the purchaser
of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may
have against Lender.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Costs and Expenses</B>. Except as otherwise limited by the Texas
Credit Code and the Texas Finance Code, Borrower agrees to pay
upon demand all of Lender&#146;s expenses related to the Loans,
including, without limitation, attorneys&#146; fees, incurred in
connection with the preparation, execution, enforcement, and
modification of this Agreement or in connection with the Loans
made pursuant to this Agreement. Lender may hire one or more
attorneys to help collect the Indebtedness if Borrower does not
pay, and Borrower will pay Lender&#146;s reasonable attorneys&#146; fees.
Borrower also will pay Lender all other amounts actually incurred
by Lender as court costs, and all lawful fees for filing,
recording, or releasing to any public office any instrument
securing the Indebtedness; the reasonable cost actually expended
for repossessing, storing, preparing for sale, and selling any
Collateral; fees for noting a lien on or transferring a
certificate of title to any motor vehicle offered as security for
the Indebtedness; and, premiums or identifiable charges incurred
in connection with the acquisition of insurance which Lender is
authorized to obtain hereunder or under any Related Documents.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Notices</B>. Subject to the ability of Lender, at its option, to make
Advances on the oral request of an authorized person as specified
hereinabove, all notices required to be given under this Agreement
shall be given in writing, may be sent by telefacsimile (unless
otherwise required by law), and shall be effective when actually
received by the party for whom intended or, if not sooner
received: on the first (1st) Business Day after deposited with a
nationally recognized overnight courier or deposited in the United
States mail, first class, postage prepaid, addressed to the party</TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt">9
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to whom the notice is to be given at the address shown above. Any
party may change its address for notices under this Agreement by
giving formal written notice to the other parties, specifying that
the purpose of the notice is to change the party&#146;s address. For
notice purposes, Borrower will keep Lender informed at all times
of Borrower&#146;s current address(es).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Payment of Interest and Fees</B>. Notwithstanding any other provision
of this Agreement or any provision of any Related Document,
Borrower does not agree or intend to pay, and Lender does not
agree or intend to contract for, charge, collect, take, reserve or
receive (collectively referred to herein as &#147;charge or collect&#148;),
any amount in the nature of interest or in the nature of a fee for
these Loans, or any other Loan with Borrower, which would in any
way or event (including demand, prepayment, or acceleration) cause
Lender to charge or collect more for the Loan than the maximum
Lender would be permitted to charge or collect by any applicable
federal law or any applicable law of the State of Texas. Any such
excess interest or unauthorized fee shall, instead of anything
stated to the contrary, be applied first to reduce the unpaid
principal balance of the Loan, and when the principal has been
paid in full, be refunded to Borrower. The right to accelerate
maturity of sums due under this Agreement does not include the
right to accelerate any interest which has not otherwise accrued
on the date of such acceleration, and Lender does not intend to
charge or collect any unearned interest in the event of
acceleration. All sums paid or agreed to be paid to Lender for
the use, forbearance or detention of sums paid under this
Agreement shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term
of the applicable Loan evidenced by this Agreement until payment
in full so that the rate or amount of interest on account of any
Loan evidenced by this Agreement does not exceed the applicable
usury ceiling. When the term &#147;interest&#148; is used in the context of
&#147;payment of interest&#148;, it is the intent of the parties that all
such references shall be to accrued and unpaid interest, and in no
event will Borrower ever be required to pay unearned interest.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Severability</B>. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to
any person or circumstance, such finding shall not render that
provision invalid or unenforceable as to any other persons or
circumstances. If feasible, any such offending provision shall be
deemed to be modified to be within the limits of enforceability or
validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and
enforceable.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Subsidiaries and Affiliates of Borrower</B>. To the extent the
context of any provisions of this Agreement makes it appropriate,
including, without limitation, any representation, warranty or
covenant, the word &#147;Borrower&#148; as used herein shall include all
subsidiaries and affiliates of Borrower. Notwithstanding the
foregoing however, under no circumstances shall this Agreement be
construed to require Lender to make any Loan or other financial
accommodation to any subsidiary or affiliate of Borrower.</TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt">10
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Successors and Assigns</B>. All covenants and agreements contained by
or on behalf of a party hereto shall bind its successors and
assigns and shall inure to the benefit of the other party, its
successors and assigns. Borrower shall not, however, have the
right to assign its rights under this Agreement or any interest
therein, without the prior written consent of Lender.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Survival</B>. All warranties, representations, and covenants made by
a party in this Agreement or in any certificate or other
instrument delivered by that party to the other party under this
Agreement shall be considered to have been relied upon by the
party to whom made and will survive the making of the Loans and
delivery to Lender of the Related Documents, regardless of any
investigation made by the party to whom made or on that party&#146;s
behalf.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Time is of the Essence</B>. Time is of the essence in the performance
of this Agreement.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Waiver</B>. A party hereto shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing
and signed by that party. No delay or extension on the part of a
party hereto in exercising any right shall operate as a waiver of
such right or any other right. A waiver by a party hereto of a
provision of this Agreement shall not prejudice or constitute a
waiver of that party&#146;s right otherwise to demand strict compliance
with that provision or any other provision of this Agreement. No
prior waiver by Lender, nor any course of dealing between Lender
and Borrower, or between Lender and any Guarantor, shall
constitute a waiver of any rights or of any obligations of either
party hereto or of any Guarantor as to any future transactions.
Whenever the consent of a party hereto is required under this
Agreement, the granting of such consent by that party in any
instance shall not constitute continuing consent in subsequent
instances where such consent is required, and in all cases such
consent may be granted or withheld in the sole discretion of that
party.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF THE
EFFECTIVE DATE.</B>


<P align="center" style="font-size: 10pt">11
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
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<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>BORROWER:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>LENDER:</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">DNA COMPUTING SOLUTIONS, INC., a
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FIRSTCAPITAL BANK, SSB</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Delaware corporation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">/s/ Robert P Capps</TD>

    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">/s/ Brian Dore</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><HR size="1" noshade>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><HR size="1" noshade>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert P Capps</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD colspan="2" align="left" valign="bottom">Brian Dore, Banking Officer</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executive Vice- President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">12
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