EXHIBIT 10.11




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                       AMENDED AND RESTATED LOAN AGREEMENT

                                  July 10, 2000

Avatar Systems, Inc.
5728 LBJ Freeway, Suite 270
Dallas, Texas 75240

Gentlemen:

         This Amended and Restated Loan  Agreement (the "Loan  Agreement")  will
serve to set forth the terms of the financing transactions by and between Avatar
Systems, Inc., a Texas corporation f/k/a Avatar International,  Inc. ("Borrower"
), and Bank One, Texas, N.A. ("Bank").  Pursuant to a Loan Agreement dated as of
August 26, 1998 between the Bank and Avatar Systems,  Ltd. (the  "Partnership").
the Partnership  borrowed $520,000 in a single advance from the Bank (the "Prior
Loan"). The Prior Loan has been partially paid, and the current principal amount
owing is  S288,888.96.  The  Partnership  has been  dissolved  and  Borrower has
assumed all  liabilities of the  Partnership  (the  "Reorganization").  Borrower
guaranteed  the Prior Loan and Borrower is executing  this Agreement to evidence
Borrower's direct liability on the Prior Loan.

         1. Credit Facilities.  Subject to the terms and conditions set forth in
this  Loan  Agreement  and  the  other  agreements,  instruments  and  documents
evidencing, securing, governing, guaranteeing and/or pertaining to the Loans, as
hereinafter defined (collectively, together with the Loan Agreement, referred to
hereinafter  as the  "Loan  Documents"),  Bank  has made a  credit  facility  or
facilities   available  to  the  Partnership  and  Borrower  has  assumed  those
liabilities (the "Credit Facilities"):

                  (a) Term Loan.  Subject to the terms and  conditions set forth
         herein,  Borrower  agrees to pay Bank, the amount of  $288,888.96  (the
         "Term Loan" or the "Loans").

         2.  Promissory  Notes.  The  Loans  shall be  evidenced  by one or more
promissory  notes (whether one or more,  together with any renewals,  extensions
and increases thereof, the "Notes") duly executed by Borrower and payable to the
order of Bank, in form and substance  acceptable to Bank.  Interest on the Notes
shall accrue at the rate set forth therein. The principal of and interest on the
Notes shall be due and payable in accordance  with the terms and  conditions set
forth in the Notes and in this Loan Agreement.

         3.  Collateral.   As  collateral  and  security  for  the  indebtedness
evidenced by the Notes and any and all other  indebtedness  or obligations  from
time to time owing by Borrower to Bank, Borrower shall grant, and hereby grants,
to Bank,  its  successors  and  assigns,  a first  and prior  lien and  security
interest in and to the property  described in the Security Agreement executed as
of  even  date  herewith  by  and  between  Borrower  and  Bank  (the  "Security
Agreement").

         4.  Guarantors.  Borrower  agrees to cause  Charles T.  Allen,  Orville
Gregory Allen and Robert C. Shreve, Jr. (referred to herein  collectively as the
"Guarantors",  and each,  individually,  as a  "Guarantor")  to each execute and
deliver  to  Bank  contemporaneously  herewith  a  guaranty  agreement  (each  a
"Guaranty"), inform and substance satisfactory to Bank.


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         5.  Representations  and  Warranties.  Borrower  hereby  represents and
warrants to Bank as follows:

                  (a)  Existence.  Borrower  is a  corporation  duly  organized,
         validly  existing and in good  standing  under the laws of the State of
         Texas  and all other  states  where it is doing  business,  and has all
         requisite   power  and  authority  to  execute  and  deliver  the  Loan
         Documents.

                  (b)  Binding   Obligation.   The  execution,   delivery,   and
         performance  of this Loan Agreement and all of the other Loan Documents
         by  Borrower  have  been duly  authorized  by all  necessary  action by
         Borrower,  and  constitute  legal,  valid and  binding  obligations  of
         Borrower, enforceable in accordance with their respective terms, except
         as  limited  by  bankruptcy,  insolvency  or  similar  laws of  general
         application relating to the enforcement of creditors' rights and except
         to the extent  specific  remedies may generally be limited by equitable
         principles.

                  (c) No Consent.  The  execution,  delivery and  performance of
         this Loan Agreement and the other Loan Documents,  and the consummation
         of the  transactions  contemplated  hereby  and  thereby,  do  not  (i)
         conflict with,  result in a violation of, or constitute a default under
         (A) any provision of its certificate or articles of  incorporation,  or
         any agreement or other  instrument  binding upon  Borrower,  or (B) any
         law,  governmental  regulation,  court  decree or order  applicable  to
         Borrower, or (ii) require the consent, approval or authorization of any
         third party.

                  (d) Financial Condition.  Each financial statement of Borrower
         supplied to the Bank truly  discloses  and fairly  presents  Borrower's
         financial  condition as of the date of each such  statement.  There has
         been no material adverse change in such financial  condition or results
         of  operations  of Borrower  subsequent to the date of the most recent,
         financial statement supplied to the Bank.

                  (e)  Litigation.  There are no actions,  suits or proceedings,
         pending  or,  to the  knowledge  of  Borrower,  threatened  against  or
         affecting  Borrower or the properties of Borrower,  before any court or
         governmental  department,  commission  or board,  which,  if determined
         adversely  to  Borrower,  would have a material  adverse  effect on the
         financial condition, proper-ties, or operations of Borrower.

                  (f)  Taxes,  Governmental  Charges.  Borrower  has  filed  all
         federal, state and local tax reports and returns required by any law or
         regulation to be filed by it and has either duly paid all taxes, duties
         and charges indicated due on the basis of such returns and reports,  or
         made adequate provision for the payment thereof,  and the assessment of
         any  material  amount of  additional  taxes in excess of those paid and
         reported is not reasonably expected.

                  (g) Year 2000 Compliance.  Borrower represents and warrants to
         Bank that:  (i) as of the date  hereof,  and (ii) as of the date of any
         renewal, extension or modification of the Loan Agreement:


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                           (1)  All  devices,  systems,  machinery,  information
                  technology,  computer  software and  hardware,  and other date
                  sensitive  technology  jointly and  severally  the  "Systems")
                  necessary  for  Borrower to carry on its business as presently
                  conducted  and as  contemplated  to be conducted in the future
                  are Year 2000 Compliant or will be Year 2000 Compliant  within
                  a  period  of  time   calculated  to  result  in  no  material
                  disruption  of  any of  Borrower's  business  operations.  For
                  purposes of these provisions, "Year 2000 Compliant" means that
                  such  Systems  are  designed  to be used prior to,  during and
                  after the  Gregorian  calendar year 2000 A.D. and will operate
                  during each such time period  without  error  relating to date
                  data,  specifically  including  any error  relating to, or the
                  product of, date data which represents or references different
                  centuries or. more than one century.

                           (2)   Borrower   has:   (A)   undertaken  a  detailed
                  inventory,  review,  and  assessment  of all areas  within its
                  business and  operations  that could be adversely  affected by
                  the failure of Borrower to be Year 2000  Compliant on a timely
                  basis;  (B)  developed  a  detailed  plan  and  time  line for
                  becoming Year 2000  Compliant on a timely basis;  (C) to date,
                  implemented that plan in accordance with that timetable in all
                  material respects.

                           (3) Borrower has made written  inquiry of each of its
                  key suppliers,  vendors,  and  customers,  and has obtained in
                  writing  confirmations  from all such  persons,  as to whether
                  such  persons  have  initiated  programs  to become  Year 2000
                  Compliant  and on the  basis of such  confirmations.  Borrower
                  reasonably believes that all such persons will be or become so
                  compliant.  For purposes hereof, key suppliers,  vendors,  and
                  customers" refers to those suppliers,  vendors,  and customers
                  of Borrower whose  business  failure  would,  with  reasonable
                  probability,  result  in a  material  adverse  change  in  the
                  business,  properties,  condition (financial or otherwise), or
                  prospects of Borrower.  For purposes of this paragraph,  Bank,
                  as a lender of funds  under  the terms of the Loan  Agreement,
                  confirms  to  Borrower   that  Bank  has   initiated  its  own
                  corporate-wide  Year 2000  program with respect to its lending
                  activities.

                           (4) The fair  market  value of all real and  personal
                  property,  if any, pledged to Bank as Collateral to secure the
                  Term  Loan  is not  and  shall  not  be  less  than  currently
                  anticipated  or subject to  deterioration  in value because of
                  the failure of such Collateral to be Year 2000 Compliant.

         6.  Conditions  Precedent  to  Closing.  This Loan  Agreement  shall be
effective upon the satisfaction of each of the following conditions:


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                  (a) Loan Documents. Each of the Loan Documents shall have been
         duly executed and delivered by the respective parties thereto.

                  (b) Reorganization Documents. Borrower shall have delivered to
         Bank certified copies of all documents evidencing the Reorganization.

                  (c)  Payment of Fees and  Expenses.  Borrower  shall have paid
         Bank a $5,000 closing fee, and shall have  reimbursed Bank for, or paid
         directly,  all fees,  costs and expenses  incurred by Bank's counsel in
         connection with closing of the transactions contemplated hereby.

                  (d)  Opinion.  Bank shall have  received a legal  opinion from
         counsel to Borrower, in form and substance acceptable to Bank.

         7. Affirmative Covenants. Until the Notes and all other obligations and
liabilities  of Borrower  under this Loan Agreement and the other Loan Documents
are fully paid and satisfied, Borrower agrees and covenants that it will, unless
Bank shall otherwise consent in writing:

                  (a) Accounts  and  Records.  Maintain its books and records in
         accordance with generally accepted accounting principles.

                  (b) Right of  Inspection.  Permit Bank to visit its properties
         and installations  and to examine,  audit and make and take away copies
         or  reproductions  of Borrower's  books and records,  at all reasonable
         times.

                  (c) Right to  Additional  Information.  Furnish Bank with such
         additional information and statements, lists of assets and liabilities,
         tax returns,  and other  reports with respect to  Borrower's  financial
         condition  and  business  operations  as Bank may request  from time to
         time.

                  (d) Compliance  with Laws.  Conduct its business in an orderly
         and  efficient  manner  consistent  with good business  practices,  and
         perform  and  comply  with  all  statutes,  rules,  regulations  and/or
         ordinances   imposed  by  any  governmental   unit  upon  Borrower  its
         businesses,  operations and properties  (including without  limitation,
         all  applicable   environmental   statutes,   rules,   regulations  and
         ordinances).

                  (e) Taxes.  Pay and discharge when due all of its indebtedness
         and obligations,  including without limitation, all assessments, taxes,
         governmental  charges,  levies  and liens,  of every  kind and  nature,
         imposed upon Borrower or its properties,  income, or profits,  prior to
         the date on which penalties  would attach,  and all lawful claims that,
         if  unpaid,  might  become  a lien or  charge  upon  any of  Borrower's
         properties, income, or profits; provided, however, Borrower will not be
         required to pay and discharge any such assessment,  tax, charge,  levy,
         lien or  claim  so  long  as (i) the  legality  of the  same  shall  be
         contested  in good faith by  appropriate  judicial,  administrative  or
         other legal  proceedings,  and (ii) Borrower shall have  established on
         its books adequate reserves with respect to such contested  assessment,
         tax, charge,  levy, lien or claim in accordance with generally accepted
         accounting principles, consistently applied.


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                  (f) Insurance.  Maintain insurance,  including but not limited
         to, fire insurance,  comprehensive  property damage,  public liability,
         worker's compensation, business interruption and other insurance deemed
         necessary or otherwise required by Bank.

                  (g)  Notice  of  Indebtedness.  Promptly  inform  Bank  of the
         creation,  incurrence  or  assumption  by  Borrower  of any  actual  or
         contingent liabilities not permitted under this Loan Agreement.

                  (h)  Notice of  Litigation.  Promptly  after the  commencement
         thereof,  notify Bank of all actions,  suits and proceedings before any
         court or any  governmental  department.  commission or board  affecting
         Borrower or any of its properties.

                  (i) Notice of Material Adverse Change. Promptly inform Bank of
         (i)  any and all  material  adverse  changes  in  Borrower's  financial
         condition,  and (ii) all  claims  made  against  Borrower  which  could
         materially affect the financial condition of Borrower.

                  (j) Year 2000  Compatibility.  Borrower  covenants  and agrees
         with Bank that, while any Loan is in effect, Borrower will: (i) furnish
         such additional information,  statements and other reports with respect
         to  Borrower's  activities,  course  of  action  and  progress  towards
         becoming Year 2000 Compliant as Bank may request from time to time; and
         (ii) in the event of any change in  circumstances  that  causes or will
         likely cause any of  Borrower's  representations  and  warranties  with
         respect to its being or becoming  Year 2000  Compliant  to no longer be
         true  (hereinafter,  referred to as a "Change in  Circumstances")  then
         Borrower  shall  promptly,  and in any  event  within  ten (10) days of
         receipt of  information  regarding a Change in  Circumstances,  provide
         Bank with written  notice (the  "Notice")  that describes in reasonable
         detail the Change in Circumstances and how such change in Circumstances
         caused or will likely cause Borrower's  representations  and warranties
         with respect to being or becoming  Year 2000  Compliant no longer to be
         true. Borrower shall,  within ten (10) days of a request,  also provide
         Bank with any  additional  information  Bank  requests  of  Borrower in
         connection  with the  Notice  and/or a Change  in  Circumstances-,  and
         promptly upon its becoming available,  furnish to Bank one copy of each
         financial statement, report, notice or proxy statement sent by Borrower
         to  stockholders  generally  and of each  regular or  periodic  report,
         registration  statement  or  prospectus  filed  by  Borrower  with  any
         securities  exchange or the Securities  and Exchange  Commission or any
         successor agency, and of any order issued by any governmental Authority
         in any  proceeding  to which  Borrower is a party.  For purposes of the
         provisions,  "Governmental Authority" shall mean any government (or any
         political subdivision or jurisdiction  thereof),  court, bureau, agency
         or other  governmental  entity  having or asserting  jurisdiction  over
         Borrower or any of its  business,  operations or  properties.  Further,
         Borrower  shall  give any  representative  of Bank  access  during  all
         business hours to, -and permit such representative to examine,  copy or
         make  excerpts  from,  any and all books,  records and documents in the
         possession of Borrower and relating to its affairs,  and to inspect any
         of -the  properties  and Systems of  Borrower,  and to project test the
         Systems to determine if they are Year 2000  Compliant in an  integrated
         environment, all at the sole cost and expense of Bank.


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                  (k) Additional Documentation. Execute and deliver, or cause to
         be executed and delivered, any and all other agreements, instruments or
         documents which Bank may reasonably  request in order to give effect to
         the transactions  contemplated  under this Loan Agreement and the other
         Loan Documents.

         8. Negative  Covenants.  Until the Notes and all other  obligations and
liabilities  of Borrower  under this Loan Agreement and the other Loan Documents
are fully paid and  satisfied,  Borrower  will not,  without  the prior  written
consent of Bank:

                  (a) Nature of Business. Make any material change in the nature
         of its business as carried on as of the date hereof.

                  (b) Liquidations, Mergers, Consolidations. Liquidate, merge or
         consolidate with or into any other entity.

                  (c) Sale of Assets. Sell, transfer or otherwise dispose of any
         of its  assets or  properties,  other  than in the  ordinary  course of
         business.

                  (d) Liens.  Create, incur or assume any lien or encumbrance on
         any of its assets or properties.  including  without  limitations,  the
         Collateral;  provided,  however,  that  Borrower  shall be permitted to
         create  purchase  money  liens up to an  aggregate  amount  of  $50,000
         ("Permitted Purchase Money Liens").

                  (e) Indebtedness. Create, incur or assume any indebtedness for
         borrowed  money or issue or assume any other note,  debenture,  bond or
         other evidences of indebtedness,  or guarantee any such indebtedness or
         such  evidences of  indebtedness  of others,  other than (i) borrowings
         from Bank, (ii) indebtedness secured by Permitted Purchase Money Liens,
         and (iii)  borrowings  outstanding  on the date hereof and disclosed in
         writing to Bank.

                  (f) Transfer of Ownership.  Permit the sale or other  transfer
         of any ownership  interest in Borrower if, as a result of any such sale
         or transfer,  Charles T, Allen and Orville  Gregory Allen  collectively
         cease  to own  at  least  fifty-one  percent  (5 1 %) of the  ownership
         interest in Borrower.

                  (g) Change in  Management/Change in Articles of Incorporation.
         Permit a change in the senior management of Borrower,  permit Robert C.
         Shreve,  Jr. to cease serving as President of Avatar  Systems,  Inc. or
         pen-nit any amendment,  restatement or other modification to Borrower's
         articles of incorporation.

                  (h)  Loans and  Investments.  The  Borrower  will not make any
         advance,  loan,  extension  of credit,  or capital  contribution  to or
         investment in, or purchase,  any stock,  bonds, notes,  debentures,  or
         other securities of, any person or entity, except:

                           (i)  readily  marketable  direct  obligations  of the
                  United States of America or any agency thereof with maturities
                  of one year or less from the date of acquisition; and


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                           (ii)  fully  insured  certificates  of  deposit  with
                  maturities  of one year or less  from the date of  acquisition
                  issued by Bank.

                  (i) Transactions with Affiliates.  Enter into any transaction,
         including,  without  limitation,  the  purchase,  sale or  exchange  of
         property  or the  rendering  of any  service,  with any  Affiliate  (as
         hereinafter defined) of Borrower,  except in the ordinary course of and
         pursuant to the reasonable requirements of Borrower's business and upon
         fair and  reasonable  terms no less favorable to Borrower than would be
         obtained  in a  comparable  arm's-length  transaction  with a person or
         entity  not  an  Affiliate  of  Borrower.  As  used  herein,  the  term
         "Affiliate"  means any  individual  or entity  directly  or  indirectly
         controlling,  controlled  by, or under  common  control  with,  another
         individual or entity.

                  (j) Distributions.  Make any distributions to any shareholder,
         or make any other  distributions with respect to any payment on account
         of the purchase,  redemption, or other acquisition or retirement of any
         ownership interest of Borrower,  or make any other distribution,  sale,
         transfer  or  lease  of any of  Borrower's  assets  other  than  in the
         ordinary  course of  business,  unless any such  amounts  are  directly
         utilized for the payment of principal or interest on  indebtedness  and
         obligations owing from time to time by Borrower to Bank.

         9. Intentionally Deleted.

         10. Reporting  Requirements.  Until the Notes and all other obligations
and  liabilities  of  Borrower  under  this Loan  Agreement  and the other  Loan
Documents  are fully  paid and  satisfied,  Borrower  will,  unless  Bank  shall
otherwise consent in writing, furnish to Bank:

                  (a) Annual Financial  Statements.  As soon as available and in
         any event within  ninety (90) days after the end of each fiscal year of
         Borrower,  a balance  sheet and income  statement of Borrower as of the
         end of such  fiscal  year,  in each case in form and  substance  and in
         reasonable detail  satisfactory to Bank and duly certified by the chief
         financial  officer of  Borrower  (i) as being  true and  correct in all
         material  respects  to the  best of his or her  knowledge  and  (ii) as
         having been prepared in accordance with generally  accepted  accounting
         principles,  consistently  applied. In addition to the above, each such
         annual   financial   statement  shall  include   sufficient   financial
         information to demonstrate,  and a certification by the chief financial
         officer of Borrower,  that as of the date of such  statement,  Borrower
         has not breached any financial  covenant set forth in Section 9 of this
         Agreement.

                  (b) Quarterly Financial Statement.  As soon as available,  and
         in any  event  within  sixty  (60) days  after  the end of each  fiscal
         quarter of Borrower,  a balance sheet and income  statement of Borrower
         as of the end of  such  fiscal  quarter,  in  each  case  in  form  and
         substance  and in  reasonable  detail  satisfactory  to Bank  and  duly
         certified  (subject  to  year-end  review  adjustments)  by  the  chief
         financial  officer of  Borrower  (i) as being  true and  correct in all
         material  aspects  to the  best of his or her  knowledge,  and  (ii) as
         having been prepared in accordance with generally  accepted  accounting
         principles,  consistently  applied. In addition to the above, each such
         quarterly financial  statement shall include sufficient  information to
         demonstrate,  and a  certification  by the chief  financial  officer of
         Borrower,  that  as of the  date of such  statement,  Borrower  has not
         breached  any  financial  covenant  set  forth  in  Section  9 of  this
         Agreement.  In addition to the above,  Borrower shall deliver (together
         with the quarterly financial  statements) a listing and detailed report
         in form acceptable to Bank of all accounts receivable of Borrower as of
         the last day of each fiscal  quarter,  and the period of time which has
         elapsed with  respect to such  accounts  receivable  since the original
         invoice date with respect thereto.


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                  (c)  Borrower's  Tax Returns.  Borrower  shall provide to Bank
         copies of Borrower's  federal  income tax returns  within  fifteen (15)
         days following the filing thereof with the Internal Revenue Service and
         in any event no less frequently than annually.

                  (d) Guarantor's Financial Statement.  As soon as available and
         in any event within (i) ninety (90) days after the end of each calendar
         year,  or other  period as  otherwise  required by a  Guaranty,  annual
         financial  statements (balance sheet, cash flow statement and statement
         of  contingent  liabilities)  of each  Guarantor  as of the end of such
         calendar  year,  and (ii)  thirty (30) days after the date of this Loan
         Agreement, financial statements of Charles T. Allen and Orville Gregory
         Allen as of January 1, 2000.

                  (e) Liabilities.  As soon as incurred or known, information of
         any material actual or contingent liability of Borrower.

         11. Events of Default. Each of the following shall constitute an "Event
of Default" under this Loan Agreement:

                  (a) The  failure,  refusal or neglect of  Borrower to pay when
         due any part of the  principal  of, or  interest  on,  the Notes or any
         other  indebtedness or obligations  owing to Bank by Borrower from time
         to time.

                  (b) The failure of Borrower or any Obligated Party (as defined
         below) to timely and properly  observe,  keep or perform any  covenant,
         agreement, warranty or condition required herein or in any of the other
         Loan Documents.

                  (c) The  occurrence  of an event of  default  under any of the
         other Loan  Documents  or under any other  agreement  now  existing  or
         hereafter arising between Bank and Borrower.

                  (d) Any representation contained herein or in any of the other
         Loan  Documents  made by  Borrower or any  Obligated  Party is false or
         misleading in any material respect.

                  (e) The occurrence of any event which permits the acceleration
         of the  maturity  of any  indebtedness  owing by  Borrower to any third
         party under any agreement or understanding.

                  (f) If Borrower or any Obligated Party: (i) becomes insolvent,
         or makes a transfer in fraud of creditors,  or makes an assignment  for
         the benefit of creditors, or admits in writing its inability to pay its
         debts as they become  due;  (ii)  generally  is not paying its debts as
         such debts  become  due;  (iii) has a  receiver,  trustee or  custodian
         appointed for, or take possession of, all or  substantially  all of the
         assets of such party,  either in a proceeding  brought by such party or
         in a proceeding  brought against such party and such appointment is not
         discharged or such possession is not terminated  within sixty (60) days
         after  the  effective  date  thereof  or  such  party  consents  to  or
         acquiesces in such  appointment or  possession;  (iv) -files a petition
         for relief under the United States Bankruptcy Code or any other present
         or future federal or state insolvency,  bankruptcy or similar laws (all
         of the foregoing hereinafter collectively called "Applicable Bankruptcy
         Law") or an involuntary petition for relief is filed against such party
         under any Applicable  Bankruptcy Law and such  involuntary  petition is
         not dismissed  within sixty (60) days after the filing  thereof,  or an
         order for relief  naming  such party is  entered  under any  Applicable
         Bankruptcy   Law,  or  any   composition,   rearrangement,   extension,
         reorganization or other relief of debtors now or hereafter  existing is
         requested or consented to by such party;  (v) fails to have  discharged
         within a period of thirty (30) days any  attachment,  sequestration  or
         similar writ levied upon any  property of such party;  or (vi) fails to
         pay within thirty (30)days any final money judgment against such party.


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                  (g) If  Borrower  or any  Obligated  Party is an  entity,  the
         liquidation,  dissolution,  merger or  consolidation of any such entity
         or, if Borrower or any Obligated  Party is an individual,  the death or
         legal incapacity of any such individual.

                  (h) The entry of any judgment against Borrower or the issuance
         or entry of any attachment or other lien against any of the property of
         Borrower for an amount in ' excess of 10,000, if undischarged, unbonded
         or undismissed within thirty (30) days after such entry.

                  (i) The failure of Guarantors to cash  collateralize the Loans
         as requested by Bank pursuant to any Guaranty.

Nothing  contained in this Loan Agreement shall be construed to limit the events
of default  enumerated in any of the other Loan Documents and all such events of
default shall be cumulative.  The term "Obligated Party", as used herein,  shall
mean any party other than Borrower who secures,  guarantees  and/or is otherwise
obligated to pay all or any portion of the indebtedness evidenced by the Notes.

         12. Remedies/Late  Charge Penalties.  Upon the occurrence of any one or
more of the  foregoing  Events of  Default,  (a) the  entire  unpaid  balance of
principal of the Notes,  together with all accrued but unpaid interest  thereon,
and all other  indebtedness owing to Bank by Borrower at such time shall, at the
option of Bank,  become  immediately  due and payable  without  further  notice,
demand, presentation, notice of dishonor, notice of intent to accelerate, notice
of  acceleration,  protest or notice of  protest  of any kind,  all of which are
expressly  waived by Borrower,  and (b) Bank may, at its option,  cease  further
advances  under  any  of  the  Notes;   provided,   however,   concurrently  and
automatically  with the occurrence of an Event of Default under subparagraph (f)
in the  immediately  preceding  paragraph (i) further  advances  under the Notes
shall  cease,  and (ii) the Notes and all  other  indebtedness  owing to Bank by
Borrower at such time shall, without any action by Bank, become due and payable,
without  further notice,  demand,  presentation,  notice of dishonor,  notice of
acceleration,  notice of intent to  accelerate,  protest or notice of protest of
any kind, all of which are expressly waived by Borrower. All rights and remedies
of Bank set forth in this Loan  Agreement and in any of the other Loan Documents
may also be  exercised  by  Bank,  at its  option  to be  exercised  in its sole
discretion, upon the occurrence of an Event of Default.


                                       9
<PAGE>

In the event that any amount due from  Borrower to Bank under this  Agreement or
under the Notes remains unpaid for a period of ten days or more, then Bank shall
be entitled to a late charge  penalty for each such  incident in an amount equal
to the  greater of (a) five  percent  (5%) of the  amount  due,  or (b)  $25.00;
provided, however, that the late charge penalty for each such incident shall not
exceed $1,500.

         13. Rights Cumulative.  All rights of Bank under the terms of this Loan
Agreement  shall be cumulative  of, and in addition to, the rights of Bank under
any and all other  agreements  between  Borrower  and Bank  (including,  but not
limited to, the other Loan Documents),  and not in substitution or diminution of
any rights now or hereafter held by Bank under the terms of any other agreement,

         14. Waiver and Agreement. Neither the failure nor any delay on the part
of Bank to exercise  any right,  power or  privilege  herein or under any of the
other Loan Documents shall operate as a waiver thereof,  nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise  thereof or the exercise of any other  right,  power or  privilege.  No
waiver of any  provision  in this  Loan  Agreement  or in any of the other  Loan
Documents and no departure by Borrower  therefrom shall be effective  unless the
same shall be in writing and signed by Bank, and then shall be effective only in
the  specific  instance  and for the  purpose  for which given and to the extent
specified in such writing.  No  modification or amendment to this Loan Agreement
or to any of the other Loan  Documents  shall be valid or  effective  unless the
same is signed by the party against whom it is sought to be enforced.

         15.  Benefits.  This Loan Agreement  shall be binding upon and inure to
the benefit of Bank and Borrower,  and their respective  successors and assigns,
provided,  however,  that Borrower may not, without the prior written consent of
Bank, assign any rights, powers, duties or obligations under this Loan Agreement
or any of the other Loan Documents.

         16. Notices.  All notices,  requests,  demands or other  communications
required or permitted to be given pursuant to this Agreement shall be in writing
and given by (i) personal  delivery,  (ii) expedited delivery service with proof
of  delivery,  or (iii) United  States mail,  postage  prepaid..  registered  or
certified mail, return receipt requested,  sent to the intended addressee at the
address set forth on the signature  page hereof and shall be deemed to have been
received either, in the case of expedited  delivery  service,  as of the date of
first attempted delivery at the address and in the manner provided herein, or in
the case of mail,  upon  deposit in a depository  receptacle  under the care and
custody of the United States Postal  Service.  Either party shall have the right
to change its  address for notice  hereunder  to any other  location  within the
continental  United  States by notice to the other  party of such new address at
least thirty (30) days prior to the effective date of such new address.

         17. Construction. This Loan Agreement and the other Loan Documents have
been  executed  and  delivered  in the State of Texas,  shall be governed by and
construed  in  accordance  with the laws of the  State of  Texas,  and  shall be
performable  by the  parties  hereto  in the  county in Texas  where the  Bank's
address set forth on the signature page hereof is located.


                                       10
<PAGE>

         18. Invalid Provisions.  If any provision of this Loan Agreement or any
of the other Loan  Documents  is held to be  illegal,  invalid or  unenforceable
under present or future laws,  such provision  shall be fully  severable and the
remaining  provisions of this Loan  Agreement or any of the other Loan Documents
shall  remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.

         19.  Expenses.  Borrower  shall pay all costs and expenses  (including,
without  limitation,  reasonable  attorneys'  fees) in  connection  with (i) any
action  required  in  the  course  of  administration  of the  indebtedness  and
obligations  evidenced  by the  Loan  Documents,  and  (ii)  any  action  in the
enforcement of Bank's rights upon the occurrence of an Event of Default.

         20.  Participation of the Loans.  Borrower agrees that Bank may, at its
option,  sell interests in the Loans and its rights under this Loan Agreement to
a financial  institution or institutions and, in connection with each such sale,
Bank  may  disclose  any  financial  and  other  information  available  to Bank
concerning Borrower to each perspective purchaser.

         21. Entire Agreement. This Loan Agreement (together with the other Loan
Documents) contains the entire agreement among the parties regarding the subject
matter  hereof  and  supersedes  all  prior  written  and  oral  agreements  and
understandings among the parties hereto regarding same.

         22.   Conflicts.   In  the  event  any  term  or  provision  hereof  is
inconsistent  with or conflicts with any provision of the other Loan  Documents,
the terms and provisions contained in this Loan Agreement shall be controlling.

         23. Counterparts. This Loan Agreement may be separately executed in any
number of  counterparts,  each of which shall be an original,  but all of which,
taken together, shall be deemed to constitute one and the same instrument.


                                       11
<PAGE>

         If the foregoing  correctly sets forth our mutual agreement,  please so
acknowledge by signing and returning this Loan Agreement to the undersigned.

                                         Very truly yours,

                                         BANK ONE, TEXAS, N.A.


                                         By:  /s/ Reed V. Thompson
                                             -----------------------------------
                                         Name:    Reed V. Thompson
                                         Title:   Vice President


                                         Bank's Address:

                                         1717 Main Street, 4th Floor
                                         Dallas, Texas 75201

ACCEPTED as of the date first written above.

AVATAR SYSTEMS, INC.                                Borrower's Address:

                                                    Avatar Systems, Inc.
                                                    5728 LBJ Freeway, Suite 270
By:   /s/ Robert C. Shreve, Jr.                     Dallas, Texas 75240
    ----------------------------------------
Name:    Robert C. Shreve, Jr.                   Attn: Mr. Robert C. Shreve, Jr.
Title:   President











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