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                                                                    EXHIBIT 10.5


                                 LOAN AGREEMENT

         THIS AGREEMENT is made and entered into as of July 19, 2000, by and
between GLOBAL ELECTION SYSTEMS, INC., a Delaware corporation, 1611 Wilmeth
Road, McKinney, Texas 75069 (the "Borrower") and HIBERNIA NATIONAL BANK (the
"Bank") having an office at 2300 Eldorado Parkway, McKinney, Texas 75070. This
Loan Agreement governs the terms and conditions of a Five Million and No/100
Dollars ($5,000,000.00) revolving line of credit from Bank to Borrower (herein
referred to as the "loan").

         Bank is willing to grant the aforementioned loan request upon the terms
as set forth hereinafter. It is expressly understood and agreed by the Bank and
Borrower that the agreements contained herein shall supersede and be substituted
for any prior agreement or amendment subsequent hereto, it being the intention
of the parties that this Loan Agreement govern henceforth the rights and
obligations of the parties relative to the indebtedness described herein.

                                   WITNESSETH:

         WHEREAS, The Borrower is currently indebted to Bank as evidenced by a
Promissory Note Dated October 12, 1998, Loan No. 3531597:0101, with the current
unpaid principal and accrued interest of $3,692,250;

         WHEREAS, Borrower has requested Bank to renew the outstanding balance
on the existing note and to advance to Borrower an additional sum of money under
a revolving line of credit up to Five Million Dollars ($5,000,000.00), to be
used by Borrower to support growth of accounts receivable and inventory;

         WHEREAS, Global Election Systems, Inc. Canada (herein called
"Guarantor"), having executed and delivered or will execute and deliver a
Guaranty Agreement (herein called the "Guaranty Agreement"); and

         WHEREAS, Bank has agreed to make the Loan subject, however, to the
remaining terms and provisions of this Agreement;

         NOW, THEREFORE, in consideration of the premises, Bank hereby agrees to
lend to Borrower, and Borrower hereby agrees to borrow from Bank, amounts of
money up to but not in excess of the principal sum of the Note on and subject to
the following terms and conditions.


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DEFINITIONS

"AFFILIATE" of any Person shall mean any other Person directly or indirectly,
controlling, controlled by, or under common control with such Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting shares or by contract or otherwise.

"CAPITAL LEASE" shall mean, as of any date, any lease of property, real or
personal, which would be capitalized on a balance sheet of the lessee prepared
as of such date in accordance with Generally Accepted Accounting Principles,
together with any other lease by such lessee which is in substance a financial
lease, including without limitation, any lease under which (i) such lessee has
or will have an option to purchase the property subject thereto at a nominal
amount or an amount less than reasonable estimate of the fair market value of
such property as of the date such lease is entered into, or (ii) the term of the
lease approximates or exceeds the expected useful life of the property leased
thereunder.

"CURRENT LIABILITIES" means, as of any date, the Current Liabilities which would
be reflected on a balance sheet of Borrower prepared as of such date in
accordance with Generally Accepted Accounting Principles.

"ELIGIBLE ACCOUNT RECEIVABLE" shall be defined as an Account Receivable which
meets each of the following requirements:

If it arises from the sale of goods, such goods have been shipped or delivered
to and, to the knowledge of Borrower, accepted by the Account Debtor under such
Account Receivable;

To the knowledge of Borrower, it is a valid, legally enforceable obligation of
the Account Debtor thereunder, and is not subject to any counterclaim or other
defense on the part of such Account Debtor or to any claim on the part of such
Account Debtor denying liability thereunder in whole or in part; ("in part" does
not include disputes in the normal course of business where the amount disputed
represents 10% or less of the invoice amount, and the collectibility of the
undisputed portion is unquestioned by Borrower);

It is not subject to any lien or security interest whatsoever, other than the
security interest hereunder;

It is evidenced by an invoice, dated no more than ninety (90) days before the
date of the Borrowing Base Certificate, rendered to such Account Debtor, and is
not evidenced by an instrument or chattel paper; It is not owing by an Account
Debtor who shall have failed to pay in full any invoice evidencing any Account
Receivable within one hundred twenty (120) days after the due date; and

No account debtor in respect of such account is (i) an Affiliate of Borrower, or
(ii) the subject of a proceeding under any applicable bankruptcy laws.

Values given to all Accounts Receivable must be on accordance with Generally
Accepted Accounting Principles.

An Account Receivable which at any time is an Eligible Account Receivable, but
which subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Account Receivable for so long as it shall
fail to requalify as an Eligible Account Receivable.

"INTANGIBLE ASSETS" means those assets which are (i) deferred assets, other than
prepaid insurance and prepaid taxes, (ii) patents, copyrights, trademarks, trade
names, franchises, goodwill, experimental expenses, and other similar assets
which would be classified as intangible assets on a balance sheet


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prepared in accordance with Generally Accepted Accounting Principles, and (iii)
unamortized debt discount and expense.

"INTEREST COVERAGE RATIO" shall mean the amount of earnings before interest and
taxes are deducted, divided by the amount of any interest payments.

"PERSON" includes an individual, a corporation, a joint venture, a general or
limited partnership, a trust, an unincorporated organization or a government or
any agency or political subdivision thereof.

"QUICK RATIO" Shall mean the amount of current assets, less inventory, divided
by current liabilities.

"SUBORDINATED INDEBTEDNESS" shall mean any Indebtedness of Borrower which
expressly contains in the instruments evidencing such Indebtedness or in the
indenture or other similar instrument under which such Indebtedness is issued
(which indenture or other similar instrument shall be binding on all holders of
such Indebtedness), subordination provisions (in form and substance satisfactory
to Bank) substantially to the effect that the holder agrees that the
Indebtedness evidenced by such instrument, and any renewals or extensions
thereof, shall at all times and in all respects be subordinated and junior in
right of payment to the Loan.

"TANGIBLE NET WORTH" means, as of any date, the total Capital which would appear
on a balance sheet of Borrowers prepared as of such date in accordance with
Generally Accepted Accounting Principles, less the aggregate book value of
Intangible Assets and assets due from Affiliates shown on such balance sheet,
plus subordinated indebtedness shown on such balance sheet.

THE LOAN

REVOLVING LINE OF CREDIT. Bank will make available to Borrower a Revolving Line
of Credit up to a maximum of Five Million and No/100 Dollars ($5,000,000.00).
Subject to the conditions of this Loan Agreement, Borrower may borrow, repay and
reborrow all or part of the Revolving Line of Credit, upon giving Bank notice no
later than noon Central Time (whether standard or daylight savings time) of its
requirement on any business day. All borrowings under the Revolving Line of
Credit must be made before five (5) days prior to the maturity of said loan, at
which time all the unpaid principal and accrued interest shall be due and
payable. The Revolving Line of Credit shall be evidenced by a promissory note
(the "Note"). All funds so advanced will be to support the growth of Borrower's
accounts receivable and inventory.

INTEREST. The unpaid principal balance of the Revolving Line of Credit shall
bear interest at the rate of WSJ Prime Floating per year, and which shall vary
concurrently with any change in such WSJ Prime. Interest shall be computed on
the basis of the actual number of days during which the principal is outstanding
divided by three hundred sixty (360) which shall, for the purposes of interest
computation, be considered one year. Interest shall be payable according to the
Note.

DEFAULT RATE OF INTEREST. If all or a portion of the principal amount of any of
the Loan made hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise) such overdue principal amount, and to
the extent permitted by law, overdue interest thereon, shall be payable on
demand at the highest lawful rate.


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PERIOD. All credit extended under this Revolving Line of Credit, including
interest thereon, shall be due and payable 364 days after closing, if not
earlier due and payable in accordance with the terms and conditions herein, by
operation of law, or upon the agreement of the parties hereto.

SECURITY. Borrower shall grant or cause to be granted to Bank a first priority
lien on the following assets subject only to such exceptions as are acceptable
to Bank:

Eighty percent (80%) of Borrower's accounts receivable less than one hundred
twenty (120) days old. If fifty percent (50%) or more of any account receivable
is greater than one hundred twenty (120) days old, the entire account shall be
deemed ineligible to be security hereunder for any loans to Borrower. In no
event shall the amount advanced hereunder to Borrower exceed the amount of
eligible accounts receivable.

LOAN GUARANTY OF GLOBAL ELECTION SYSTEMS, INC. CANADA

ANY AND ALL PROPERTY USED TO SECURE ANY OTHER INDEBTEDNESS OWED TO BANK BY
BORROWER. PRIOR TO ANY DISBURSEMENT OF THE LOAN, BORROWER WILL EXECUTE ALL
DOCUMENTS NECESSARY TO PERFECT THE SECURITY INTEREST.

CONTROLLING DOCUMENT. In the event of any inconsistency between the terms of
this Loan Agreement and the Note or any other documents required to be delivered
to Bank in connection with the Loan, the terms of the Note or such other
documents will prevail over the terms of this Loan Agreement.

PRODUCTION OF FINANCIAL STATEMENT. Bank shall have no obligation to advance any
funds hereunder until such time as Borrower provides to Bank a Financial
Statement as of March 31, 2000, as provided hereinafter in Section 4.4.

CONDITIONS PRECEDENT TO THE LOAN

Bank shall not disburse all or any portion of the proceeds of the Loan unless at
or prior to the time for the making of such disbursement, the following
conditions have been fulfilled:

COMPLIANCE. Borrower shall have performed and complied with all terms and
conditions required by this Agreement to be performed or complied with by it
prior to or at the date of the making of any disbursement and shall have
executed and delivered to Bank the Note and all other securing documents.

CURRENT FINANCIAL STATEMENT. Borrower shall have provided to Bank a statement of
Borrower as of March 31, 2000 as well as a copy of its SEC form 10Q as required
in Section 5.10 of this agreement.

GUARANTOR. Global Election Systems, Inc. Canada ("Guarantor") shall have
executed with respect to the Loan and delivered to Bank its continuing guaranty,
on the standard form for continuing guaranties used by Bank. Not later than
ninety (90) days following any renewal, extension or modification of this loan,
Borrower shall cause Guarantor to submit to Bank Guarantor's financial
statement.

SUBORDINATION. Borrower shall execute an affidavit acceptable to Bank stating
the non-existence of any debt of Borrower other than the Loan and debt incurred
in the ordinary course of business.

BORROWING RESOLUTION. Borrower shall have provided Bank with copies of
resolutions duly adopted by Borrower and authorizing this Agreement and all
things required of Borrower pursuant to this


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AGREEMENT. Such resolutions shall also designate the Persons who are authorized
to act on borrower's behalf in connection with this Agreement and to do the
things required of Borrower pursuant to this Agreement.

CONTINUING COMPLIANCE. At the time a requested disbursement is to be made, there
shall not exist any event, condition or act which constitutes an Event of
Default as defined in Section 7.1 hereof or any event, condition, or act which,
with notice, lapse of time, or both, would cause such an Event of Default to
exist immediately after the disbursement were it to be made.

REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants that:

PRINCIPAL BUSINESS ACTIVITY. The business of Borrower is the manufacture and
distribution of vote accumulation and tabulation equipment.

AUTHORITY TO BORROW. The execution, performance and delivery of this Agreement,
the Note and all other agreements and instruments required by Bank in connection
with the Loan are not in contravention of any of the terms of any indentures,
agreements, or undertakings to which Borrower is a party or by which it or any
of its property is bound of affected.

FINANCIAL STATEMENT. A statement of financial condition of Borrower as of March
31, 2000 has heretofore been furnished to Bank and is true and complete and
fairly represents Borrower's financial condition during the periods covered
thereby.

NO ADVERSE CHANGE. Except for assets which may have been disposed of in the
ordinary course of business, Borrower has good title to all property of
Borrower, free and clear of all liens, encumbrances, security interest and
adverse claims, except those specifically set forth, to all of the property
reflected in its statement of financial condition on March 31, 2000, and to all
property acquired by Borrower since that date.

LITIGATION. There is no litigation or proceeding pending or, to the knowledge of
Borrower, threatened against Borrower of any of its property, the results of
which, if decided adversely, would substantially affect the financial condition,
property, or business of Borrower in an adverse manner or result in liability in
excess of Borrower's insurance coverage.

DEFAULT. Borrower is not now in default in the payment of any of its material
obligations, and there exists no event, condition or act which constitutes an
Event of Default as defined in Section 1 hereof and no condition, event, or act
which with notice of lapse of time would constitute such Event of Default.

ORGANIZATION. Borrower is duly organized and existing under the laws of the
State of Delaware, without limitation to its existence, and has the power and
authority to carry on the business in which it is engaged and/or proposes to
engage, both in Delaware and the State of Texas.

POWER. Borrower has the power and authority to enter into this Agreement and to
execute and deliver the Note and all of the documents required by this
Agreement.

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AUTHORIZATION. This Agreement and all things required by this Agreement have
been duly authorized by all requisite actions of the directors of Borrower.

QUALIFICATION. Borrower is duly qualified and in good standing wherever such
qualification is required.

CONTINUING REPRESENTATIONS. These representations shall be considered to have
been made again at and as of the date of each disbursement of the Loan and shall
be true and correct as of that date.

ERISA. All defined benefit pension plans as defined in the Employees Retirement
Income Security Act of 1974, as amended ("ERISA"), of Borrower meet, as of the
date hereof, the minimum funding standards of Section 302 of ERISA, and no
Reportable Event or Prohibited Transaction as defined in ERISA has occurred with
respect to any such plan.

REGULATION U. No action has been taken or is currently planned by the Borrower,
or any agent action on its behalf, which would cause this Agreement or the Note
to violate Regulation U or any other regulation of the Board of Governors of the
Federal Reserve System or to violate the Securities and Exchange Act of 1934, in
each case as in effect now or as the same may hereafter be in effect. Borrower
is not engaged in the business of extending credit for the purpose of purchasing
or carrying margin stocks as one of its important activities.

AFFIRMATIVE COVENANTS OF BORROWER

Until the Note and all other sums payable pursuant to this Agreement or any
other agreement or instrument required by Bank in connection with the Loan have
been paid in full, unless Bank waives compliance in writing, Borrower agrees
that:

USE OF PROCEEDS. Borrower will use the net proceeds of the Loan only for the
purchase of inventory for the conduct of the business in which it is presently
engaged, or in which it presently proposes to engage, and to support the growth
of its accounts receivable.

PAYMENT OF OBLIGATIONS. Borrower will pay and discharge promptly all taxes,
assessments and other governmental charges and claims levied or imposed upon it
or its property, or any part thereof; provided, however, that Borrower shall
have the right in good faith to contest any such taxes, assessments, charges or
claims and, pending the outcome of such contest, to delay or refuse payment
thereof provided that adequate funded reserves are established by it to pay and
discharge any such taxes, assessments, charges and claims.

MAINTENANCE OF EXISTENCE. Borrower will maintain and preserve it existence and
assets and all rights, franchises, and other authority necessary for the conduct
of its business and will maintain and preserve its property, equipment, and
facilities in good order, condition, and repair. Bank may, at reasonable times,
visit and inspect any of the properties of Borrower.

MANAGEMENT OF BORROWER. Borrower will continue to be managed by its present
president. The management of Borrower will not be changed.


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RECORDS. Borrower will keep and maintain full and accurate accounts and records
of its operation according to Generally Accepted Accounting Principles and
Practices and will permit Bank to have access thereto, to make examination
thereof, and to make audits during regular business hours.

MINIMUM NET WORTH. Borrower shall maintain a minimum tangible net worth of Ten
Million and No/100 U.S. Dollars ($10,000,000.00) during the term of the loan, or
any renewals, modifications or extensions thereof.

MAXIMUM LIABILITIES. Borrower's ratio of Total Liabilities to Net Worth shall
not exceed 1.0:1.

QUICK RATIO. During the term of the loan, or any renewals, modifications or
extensions thereof, Borrower shall maintain a minimum Quick Ratio of 1.25:1.

INTEREST COVERAGE RATIO. During the term of the loan, or any renewals,
modifications or extensions thereof, Borrower shall maintain a minimum Interest
Coverage Ratio of 3.0:1. The interest coverage ratio will be calculated on a
rolling four (4) quarter basis.

INFORMATION FURNISHED. Borrower will furnish to Bank:


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A borrowing base report on a weekly basis; which frequency may be increased at
the discretion of Bank;

An accounts receivable aging on a monthly basis;

An accounts payable aging on a monthly basis;

A sales journal summary on a weekly basis;

A cash receipts summary on a weekly basis;

An accounts receivable reconciliation on a monthly basis;

Copies of all new contracts generated on a monthly basis;

A summary report of all open contract on a monthly basis;

A monthly internally prepared balance sheet and statement of income and expenses
no later than fifteen (15) days following each month end;

Within sixty (60) days after the close of each fiscal quarter, except for the
last quarter of each fiscal year, its unaudited income and expense statement
with supportive schedules and statement of retained earnings for that quarter,
prepared in accordance with General Accepted Accounting Principles and Practices
and certified as correct to the best of the knowledge and belief of its Chief
Financial Officer;

Within one-hundred twenty (120) days after the close of each fiscal year, a copy
of its statement of financial condition including, at least, its balance sheet
as of the close of such fiscal year, its income and expense statement and
retained earnings statement for such fiscal year, examined and prepared on an
audited basis by independent Certified Public Accountants selected by Borrower
and reasonable satisfactory to Bank, in accordance with Generally Accepted
Accounting Principles applied on a basis consistent with that of the previous
year;

Borrower shall provide lender a copy of its SEC forms 10Q and 10K within 15 days
of filing;

Copies of its federal income tax returns as Bank may reasonable request from
time to time.

Such other of its financial statements, books, or records as Bank may reasonably
request from time to time;

In connection with each financial statement provided hereunder, a statement
executed by the President or Chief Financial Officer of Borrower, certifying
that no defaults have occurred hereunder and no events exist which with the
passage of time would be defaults hereunder;

In connection with each fiscal year-end statement provided hereunder, the
management letter of Borrower's Certified Public Accountant if such a management
letter is issued.

OTHER REQUIREMENTS:

Borrower will maintain its operating account with Bank;

Borrower will maintain a Dominion Account with Bank. Borrower agrees to deposit
all proceeds collected and or received from accounts, contracts, etc. pledged to
Bank under the Mortgage into said Dominion Account. Each day, any balance in the
Dominion Account will used to reduce the then outstanding principal balance of
the note;

Bank shall be permitted to conduct a field audit of Borrower's accounts and
inventory on a semi-annual basis, which frequency may increased at the
discretion of Bank;

Borrower may be required at the discretion of Bank to maintain a lock box for
purposes of receipt of accounts receivable payments.


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INSURANCE. Borrower will keep all of its insurable property, real, personal, or
mixed adequately insured by good and responsible companies approved by Bank
against fire and such other risks as are customarily insured against by
companies conducting similar business with like properties.
Borrower will furnish to Bank statements of its insurance coverage, will
promptly furnish other or additional insurance deemed necessary by and upon
request of Bank to the extent that such insurance may be available, and hereby
assigns to Bank, as security for the payment of the Note, the proceeds of any
such insurance. Prior to any disbursement of the Loan, Bank will be named loss
payee on all policies insuring collateral. Borrower will maintain adequate
worker's compensation insurance and adequate insurance against liability for
damage to Persons and property. All policies shall require ten (10) days written
notice to Bank before any policy may be altered or canceled.

COSTS. Upon the occurrence of an Event of Default (other than the occurrence of
any Event of Default specified in Section 7.1 hereof, in which event the five
(5) day cure period set forth in Section 7.1(a) must first expire), Borrower
shall pay or reimburse Bank for all costs, expenses and fees incurred by Bank
associated with collection of funds due Bank or enforcement of Bank's remedies.

NOTICE OF DEFAULT. Borrower will give prompt written notice to bank of all
events of default known to Borrower under any of the terms or provisions of this
Agreement or of any other agreement, contract, document, or instrument entered,
or to be entered into by it, change in management, change in name, litigation,
and of any other matter which has resulted in, or might result in, a materially
adverse change in financial condition or operation.

LITIGATION AND ATTORNEYS' FEES. Upon the occurrence of an Event of Default
(other than the occurrence of any Event of Default specified in Section 7.1(a)
hereof, in which event the five (5) day cure period set forth in Section must
first expire), Borrower will pay promptly to Bank without demand, reasonable
attorneys' fees (including but not limited to the reasonable estimate of the
allocated costs and expenses paid or incurred by bank in collection or
compromising the Loan or in enforcing or exercising its rights or remedies
created by, connected with or provided in this Agreement or any other agreement
or instrument required by Bank in connection with the Loan), whether or not suit
is filed. If suit is filed, only the prevailing party shall be entitled to
attorneys' fees and court costs.

REPORTS UNDER PENSION PLANS. Borrower shall furnish to Bank, as soon as possible
and in any event within fifteen (15) days after Borrower knows or has reason to
know that any event or condition described in Section 4.12 herein has occurred,
a statement of a senior officer of Borrower describing such event or condition
and the action, if any, which Borrower proposes to take with respect thereto.

NEGATIVE COVENANTS OF BORROWER

Until the Note and all other sums payable pursuant to this Agreement or any
other agreement or instrument required by Bank in connection with the Loan have
been paid in full, unless Bank waives compliance in writing, Borrower agrees
that:

ENCUMBRANCES AND LIENS. Borrower will not create, assume or suffer to come into
existence after the date of the Note, any mortgage, pledge, security interest,
encumbrance, or lien on property of any kind, real, personal, or mixed, now
owned or hereafter acquired, or upon the income or profits thereof, except (a)
to bank; (b) minor encumbrances, easement, licenses, restrictions on real
property or minor

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irregularities in title thereto which do not materially affect its market value;
(c) purchase money security interests encumbering only the property purchased;
(d) subordinate landlord's lien; (e) materialmen's, mechanics', carriers',
workmen's, repairmen's or other like liens arising in the ordinary course of
business which are not delinquent or which are being contested in good faith; or
(f) liens for taxes not delinquent and for taxes and other items being contested
in good faith.

BORROWINGS. Except as provided in Section 6.03, Borrower will not sell, discount
or otherwise transfer any account receivable or any note, draft or other
evidence of indebtedness, except to Bank or except to a financial institution at
face value for deposit or collection purposes only and without any fee other
than fees normally charged by the financial institution for deposit or
collection services. Borrower will not borrow any money, become contingently
liable to borrow money, nor enter any agreement to directly or indirectly obtain
borrowed money, except:

INDEBTEDNESS TO BANK;

INDEBTEDNESS EXISTING ON THE DATE HEREOF AND REFLECTED IN THE FINANCIAL
STATEMENTS REFERRED TO IN SECTION 4.3;

UNSECURED INDEBTEDNESS INCURRED IN THE ORDINARY COURSE OF BUSINESS.

WAIVER OF SECURITY BY BANK. In the event Bank should, after review, refuse to
accept an account receivable or other indebtedness due Borrower as collateral to
advance additional sums to Borrower under the referenced line of credit,
Borrower shall then have the right to receive from Bank a written waiver of
Bank's security interest in and to account receivable or other indebtedness
only. After receiving such a written waiver, Borrower shall then (and only then)
have the right to use such account receivable or other indebtedness as security
for another loan which Borrower may then make.

LIQUIDATION OR MERGER. Borrower will neither liquidate nor dissolve nor enter
into any consolidation, merger, partnership, or other combination, nor convey,
nor sell, nor lease all or the greater part of its assets of business, nor
purchase nor lease all or the greater part of the assets or business of another.

LOANS, ADVANCES AND GUARANTIES. Borrower will not, except in the ordinary course
of business as currently conducted, make any loans or advances, nor become a
guarantor or surety, nor pledge its credit or properties in any manner, nor
extend credit.

EVENT OF DEFAULT

EVENT OF DEFAULT. If one or more of the following described Events of Default
shall occur:


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BORROWER SHALL DEFAULT IN THE DUE AND PUNCTUAL PAYMENT OF THE PRINCIPAL OR
INTEREST ON ANY NOTE ISSUED HEREUNDER, OR ANY OTHER INDEBTEDNESS DUE BANK; OR

ANY REPRESENTATION OR WARRANTY MADE BY BORROWER HEREIN OR IN ANY CERTIFICATE OR
FINANCIAL OR OTHER STATEMENT HERETOFORE OR HEREAFTER FURNISHED BY BORROWER, ITS
OFFICER OR ANY GUARANTOR, SHALL PROVE TO BE IN ANY MATERIAL RESPECT FALSE AND
MISLEADING; OR

DEFAULT SHALL BE MADE BY BORROWER IN THE DUE PERFORMANCE OR OBSERVANCE OF ANY
COVENANT OR CONDITION OF THIS AGREEMENT; OR

THE FILING BY BORROWER OR GUARANTOR OF ANY PETITION UNDER BANKRUPTCY,
REORGANIZATION, ARRANGEMENT, INSOLVENCY, OR OTHER DEBTOR'S RELIEF LAWS, OR THE
FILING AGAINST BORROWER OF ANY SUCH PETITION IF THE FILING AGAINST BORROWER IS
NOT DISMISSED WITHIN THIRTY (30) DAYS THEREAFTER; OR

THE MAKING BY BORROWER OF AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS; OR

THE LEVY OF ANY ATTACHMENT, EXECUTION OR OTHER LIKE PROCESS AGAINST ANY OF
BORROWER'S PROPERTY, IF SUCH ATTACHMENT, EXECUTION OR PROCESS IS NOT RELEASED
WITHIN THIRTY (30) DAYS THEREAFTER; OR

THE VOLUNTARY SUSPENSION OF BUSINESS BY BORROWER; OR

THE ENTRY OF ANY DECREE OR ORDER OF A COURT HAVING JURISDICTION OVER THE
PROPERTY APPOINTING A RECEIVER OF ALL OR ANY SUBSTANTIAL PART OF BORROWER'S
PROPERTY, IF SUCH ORDER OR DECREE IS NOT REVERSED OR VACATED WITHIN THIRTY (30)
DAYS THEREAFTER; OR

BORROWER SHALL COMMIT TO DO, OF FAIL TO COMMIT TO DO ANY ACT OR THING WHICH
WOULD CONSTITUTE AN EVENT OF DEFAULT UNDER ANY OF THE TERMS OF ANY OTHER
AGREEMENT, DOCUMENT, OR INSTRUMENT EXECUTED BY IT FOR THE BENEFIT OF BANK IN
CONNECTION WITH THE LOAN;

ANY SALE, LEASE, CONVEYANCE, ASSIGNMENT OR TRANSFER OF ALL OR ANY PART OF THE
PROPERTY OR ANY INTEREST THEREIN, WHETHER BY OPERATION OF LAW OR OTHERWISE,
EXCEPT AS ALLOWED AND PROVIDED IN THIS AGREEMENT;

BORROWER DISSOLVES OR TERMINATES ITS EXISTENCE OR DISCONTINUES ITS USUAL
BUSINESS; OR BORROWER IS ENJOINED, RESTRAINED OR IN ANY WAY PREVENTED BY COURT
ORDER OR ORDER OF ANY GOVERNMENTAL AUTHORITY FROM CONDUCTING ALL OR ANY MATERIAL
PART OF ITS BUSINESS AND SUCH ORDER SHALL NOT BE LIFTED WITHIN FORTY-FIVE (45)
DAYS;

DEFAULT BY BORROWER ON ANY LOAN, LEASE OR OTHER FINANCIAL OBLIGATION WITH A
FINANCIAL INSTITUTION OTHER THAN HIBERNIA NATIONAL BANK ITS SUCCESSORS OR
ASSIGNS.

Bank will provide Borrower with written notice of default and will allow
Borrower five (5) days in the case of 7.1(a) above, and thirty (30) days in the
case of any other default to cure the default. If the default has not been cured
upon the expiration of the applicable cure period, then, or at any time
thereafter, and in each and every case, at the option of Bank, the Loan
outstanding under this Loan Agreement shall thereupon, without presentment,
demand, protest, or further notice of any kind, all of which are hereby
expressly waived, be forthwith due and payable, if not otherwise then due and
payable, anything herein or in any note or other agreement, contract, document
or instrument contained to the contrary notwithstanding, and Bank may
immediately enforce payment of all liabilities of Borrower under this Agreement.
Notwithstanding anything to the contrary contained herein, Bank shall have no
duty to make advances during any cure period provided.


<PAGE>   12

MISCELLANEOUS PROVISIONS

ADDITIONAL REMEDIES. The rights, powers, and remedies given to Bank hereunder
shall be cumulative and not alternative and shall be in addition to all rights,
powers, and remedies given to Bank by law against Borrower or any other Person,
including but not limited to Bank's rights of setoff or banker's lien.

NONWAIVER. Any forbearance or failure or delay by Bank in exercising any right,
power or remedy hereunder shall not be deemed a waiver thereof and any single or
partial exercise of any right, power or remedy shall not preclude the further
exercise thereof. No waiver shall be effective unless it is in writing and
signed by an officer of the Bank.

In no event shall Lender's rights and interests under the Loan Documents be
construed to give Lender the right to control, or be deemed to indicate that
Lender is in control of, the business, properties, management function or
operating decisions made by Borrower.

The relationship between Lender and Borrower is solely that of lender and
borrower. Lender has no fiduciary or other special relationship with Borrower.
Nothing contained in the Loan Documents is intended to create any partnership,
joint venture or association between Borrower and Lender or in any way make
Lender a co-principal with Borrower with reference to the Property. Any
inferences to the contrary of any of the foregoing are hereby expressly negated.

All conditions to the obligations of Lender to make advances hereunder are
imposed solely and exclusively for the benefit of Lender and its assigns, and no
other person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Lender will make
advances in the absence of strict compliance with any or all thereof, but any or
all of such conditions may be freely waived in whole or in part by the Lender at
any time if in its sole discretion it deems it advisable to do so.

It is the intention of the parties hereto to conform strictly to applicable
state and federal usury laws. Accordingly, notwithstanding anything to the
contrary in the Note, this Agreement, or any of the other Loan Documents, it is
agreed as follows: (i) the aggregate of all charges which constitute interest
under the applicable state and federal laws that are contracted for, chargeable
or receivable under the Note, this Agreement, or any of the other Loan Documents
shall under no circumstances exceed the maximum amount of interest permitted by
applicable law, and any excess shall be deemed a mistake in calculation and
canceled automatically and, if theretofore paid, shall be either refunded to
Borrower or credited on the principal amount of the Note; and (ii) in the event
that the maturity of the Note is accelerated by reason of an election of Lender
resulting from an Event of Default under the Note, this Agreement or any of the
other Loan Documents, then earned interest may never include more than the
maximum amount permitted by applicable law, and unearned interest, if any,
provided for in the Note, this Agreement, or any of the other Loan Documents
shall be canceled automatically and, if theretofore paid, shall be either
refunded to Borrower or credited on the principal amount of the Note. It is
further agreed that without limitation of the foregoing, all calculations of the
rate of interest contracted for, charged or received under the Note, this
Agreement, or any of the other Loan Documents which are made for the purpose of
determining whether such rate exceeds the applicable maximum lawful contract
rate, shall be made, to the extent permitted by such applicable laws, by
amortizing, prorating, allocating and spreading in equal parts during the period
of the full stated term of the loan evidenced hereby, all interest at any time
contracted for, charged or received from Borrower or otherwise by the holder or
holders of the Note.

INUREMENT. The benefits of this Agreement shall inure to the successors and
assigns of Bank and the permitted successors and assignees of Borrower.


<PAGE>   13

APPLICABLE LAW. This Agreement and all other agreements and instruments required
by Bank in connection therewith shall be governed by and construed according to
the laws of the State of Texas, and to the jurisdiction of whose courts the
parties hereto agree to submit.

PERFORMANCE. This Agreement and all other agreements and instruments required by
Bank in connection therewith shall be performable in Collin County, Texas.

SEVERABILITY. Should any one or more provisions of this Agreement be determined
to be illegal or unenforceable, all other provisions nevertheless shall be
effective.

TIME OF THE ESSENCE. Time is hereby declared to be of the essence of this
Agreement and of every part thereof.

INTEGRATION CLAUSE. Except for documents and instruments specifically referenced
herein, this Agreement constitutes the entire agreement between Bank and
Borrower regarding the Loan and all prior communications verbal or written
between Borrower and Bank shall be of no further effect or evidentiary value.

CONSTRUCTION. The paragraph headings herein are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

AMENDMENTS. This Agreement may be amended only in writing signed by all parties
hereto.

DOCUMENTATION. All documentation evidencing or pertaining to the Loan shall be
on Bank's standard forms or in form and content acceptable to Bank.

KNOWLEDGE. In the context hereof and in the associated loan documents, knowledge
shall be imputed to Borrower when known by Global Election Systems, Inc. upon
notice sent to the address listed in Section 9.01.

SERVICE OF NOTICE

MANNER OF NOTICE. Any notices or other communications provided for or allowed
hereunder shall be considered to have been validly given if delivered personally
with appropriate evidence of same or two (2) days after being deposited in the
United States Mail by registered or certified mail, return receipt requested,
postage prepaid and address:

          If to Borrower:                GLOBAL ELECTION SYSTEMS, INC.
                                         1611 Wilmeth Road
                                         McKinney, Texas 75069

          If to Bank:                    HIBERNIA NATIONAL BANK
                                         P.O. Box 399
                                         McKinney, Texas 75070
<PAGE>   14

TELEPHONIC REQUEST FOR ADVANCES. Borrower authorizes Bank to make advances on
the Revolving Line of Credit in response to telephonic requests by Borrower.
Borrower acknowledges that Bank's agreement to permit Borrower to request
advances by telephonic notice is solely for the convenience of Borrower, and
Borrower agrees that Bank shall (in the absence of actual knowledge to the
contrary) be entitled to rely on the authority of any Person purporting to be a
Person authorized by Borrower in writing to give such notices and shall not have
any liability for acting in accordance with any such telephonic notice believed
by Bank in good faith to have been by an authorized individual. If Bank, in good
faith, does not believe the Person requesting advances has the requisite
authority to make such request, Bank shall not be obligated to make advances
pursuant to said request.

CHANGE OF ADDRESS. The addresses to which notices or demands are to be given
maybe changed from time to time by notice served as provided above.

THIS AGREEMENT is executed on behalf of the parties by duly authorized officers
as of the date first above written.


                                      HIBERNIA NATIONAL BANK


                                      By:
                                         ---------------------------------


                                      GLOBAL ELECTION SYSTEMS, INC.


                                      By:
                                         ---------------------------------


<PAGE>   15

                                                                      SCHEDULE 1

                               COMMERCIAL GUARANTY
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
  PRINCIPAL  LOAN DATE    MATURITY      LOAN NO.        CALL      COLLATERAL       ACCOUNT        OFFICER      INITIALS
                                                                                                   1044
------------ ---------- ------------- -------------- ----------- -------------- -------------- -------------- -----------
<S>          <C>        <C>           <C>            <C>         <C>            <C>            <C>            <C>
   References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
                                                 particular loan or item.

-------------------------------------------------------------------------------------------------------------------------


BORROWER:                                           Global Election Systems, Inc. (TIN: 850394190)
                                                    1611 Wilmeth Road
                                                    McKinney, TX 75069

LENDER:                                             Hibernia National Bank
                                                    Attn: Loan Documentation-Alexandria
                                                    2318 Richmond Rd.
                                                    Texarkana, TX 75503

GUARANTOR:                                          Global Election Systems, Inc. Canada
                                                    1562 Rand Avenue
                                                    Vancouver, BC V6P3G2

=========================================================================================================================
</TABLE>

AMOUNT OF GUARANTY. The amount of this Guaranty is Unlimited.

CONTINUING UNLIMITED GUARANTY. For good and valuable consideration, Global
Election Systems, Inc. Canada ("Guarantor") absolutely and unconditionally
guarantees and promises to pay to Hibernia National Bank ("Lender") or its
order, in legal tender of the United States of America, the Indebtedness (as
that term is defined below) of Global Election Systems, Inc. ("Borrower") to
Lender on the terms and conditions set forth in this Guaranty. Under this
Guaranty, the liability of Guarantor is unlimited and the obligations of
Guarantor are continuing.

DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:

         BORROWER. The word "Borrower" means Global Election Systems, Inc..

         GUARANTOR. The word "Guarantor" means Global Election Systems, Inc.
Canada.

         GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor for
the benefit of Lender dated July 19, 2000.

         INDEBTEDNESS. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower's liabilities, obligations,
debts, and indebtedness to Lender, now existing or hereinafter incurred or
created, including, without limitation, all loans, advances, interest, costs,
attorneys' fees, debts, overdraft indebtedness, credit card indebtedness, lease
obligations, other obligations, and liabilities of Borrower, or any of them, and
any present or future judgments against Borrower, or any of them; and whether
any such Indebtedness is voluntarily or involuntarily incurred, due or not due,
absolute or contingent, liquidated or unliquidated, determined or undetermined;
whether Borrower may be liable individually or jointly with others, or primarily
or secondarily, or as guarantor or surety; whether recovery on the Indebtedness
may be or may become barred or unenforceable against Borrower for any reason
whatsoever; and whether the Indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires, or otherwise.


<PAGE>   16

         LENDER. The word "Lender" means Hibernia National Bank, its successors
and assigns.

         RELATED DOCUMENTS. The words "Related Documents" 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.


NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open and
continuous for so long as this Guaranty remains in force. Guarantor intends to
guarantee at all times the performance and prompt payment when due, whether at
maturity or earlier by reason of acceleration or otherwise, of all Indebtedness.
Accordingly, no payments made upon the Indebtedness will discharge or diminish
the continuing liability of Guarantor in connection with any remaining portions
of the Indebtedness or any of the Indebtedness which subsequently arises or is
thereafter incurred or contracted.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all other obligations of Guarantor
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at the address
of Lender listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation and Lender's written acknowledgment of receipt. For this purpose and
without limitation, the term "new Indebtedness" does not include Indebtedness
which at the time of notice of revocation is contingent, unliquidated,
undetermined or not due and which later becomes absolute, liquidated, determined
or due. This Guaranty will continue to bind Guarantor for all Indebtedness
incurred by Borrower or committed by Lender prior to receipt of Guarantor's
written notice of revocation, including any extensions, renewals, substitutions
or modifications of the Indebtedness. All renewals, extensions, substitutions,
and modifications of the Indebtedness granted after Guarantor's revocation, are
contemplated under this Guaranty and, specifically will not be considered to be
new Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or incapacity of Guarantor,
regardless of Lender's actual notice of Guarantor's death. Subject to the
foregoing, Guarantor's executor or administrator or other legal representative
may terminate this Guaranty in the same manner in which Guarantor might have
terminated it and with the same effect. Release of any other guarantor or
termination of any other guaranty of the Indebtedness shall not affect the
liability of Guarantor under this Guaranty. A revocation received by Lender from
any one or more Guarantors shall not affect the liability of any remaining
Guarantors under this Guaranty. It is anticipated that fluctuations may occur In
the aggregate amount of Indebtedness covered by this Guaranty, and it is
specifically acknowledged and agreed by Guarantor that reductions in the amount
of Indebtedness, even to zero dollars ($0.00), prior to written revocation of
this Guaranty by Guarantor shall not constitute a termination of this Guaranty.
This Guaranty is binding upon Guarantor and Guarantor's heirs, successors and
assigns so long as any of the guaranteed Indebtedness remains unpaid and even
though the Indebtedness guaranteed may from time to time be zero dollars
($0.00).


<PAGE>   17

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
or otherwise affecting Guarantor's liability under this Guaranty, from time to
time: (a) prior to revocation as set forth above, to make one or more additional
secured or unsecured loans to Borrower, to lease equipment or other goods to
Borrower, or otherwise to extend additional credit to Borrower; (b) to alter,
compromise, renew, extend, accelerate, or otherwise change one or more times the
time for payment or other terms of the Indebtedness or any part of the
Indebtedness, including increases and decreases of the rate of interest on the
Indebtedness; extensions may be repeated and may be for longer than the original
loan term; (c) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (d) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (e) to determine how, when and what application
of payments and credits shall be made on the Indebtedness; (f) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(g) to sell, transfer, assign, or grant participations in all or any part of the
Indebtedness; and (h) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (a) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(b) this Guaranty is executed at Borrower's request and not at the request of
Lender; (c) Guarantor has full power, right and authority to enter into this
Guaranty; (d) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (e) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (f) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present the financial condition of Guarantor as
of the dates the financial information is provided; (g) no material adverse
change has occurred in Guarantor's financial condition since the date of the
most recent financial statements provided to Lender and no event has occurred
which may materially adversely affect Guarantor's financial condition; (h) no
litigation, claim, investigation, administrative proceeding, or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(i) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (j) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower's financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any

<PAGE>   18

presentment, protest, demand, or notice of any kind, including notice of any
nonpayment of the Indebtedness or of any nonpayment related to any collateral,
or notice of any action or non-action on the part of Borrower, Lender, any
surety, endorser, or other guarantor in connection with the Indebtedness or in
connection with the creation of new or additional loans or obligations; (c) to
resort for payment or to proceed directly or at once against any person,
including Borrower or any other guarantor; (d) to proceed directly against or
exhaust any collateral held by Lender from Borrower, any other guarantor, or any
other person; (e) to give notice of the terms, time, and place of any public or
private sale of personal property security held by Lender from Borrower or to
comply with any other applicable provisions of the Uniform Commercial Code; (f)
to pursue any other remedy within Lender's power; or (g) to commit any act or
omission of any kind, or at any time, with respect to any matter whatsoever. If
now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws. Guarantor waives all rights
of Guarantor under Chapter 34 of the Texas Business and Commerce Code. Guarantor
also waives any and all rights or defenses arising by reason of (a) any "one
action" or "anti-deficiency" law or any other law which may prevent Lender from
bringing any action, including a claim for deficiency, against Guarantor, before
or after Lender's commencement or completion of any foreclosure action, either
judicially or by exercise of a power of sale; (b) any election of remedies by
Lender which destroys or otherwise adversely affects Guarantor's subrogation
rights or Guarantor's rights to proceed against Borrower for reimbursement,
including without limitation, any loss of rights Guarantor may suffer by reason
of any law limiting, qualifying, or discharging the Indebtedness; (c) any
disability or other defense of Borrower, of any other guarantor, or of any other
person, or by reason of the cessation of Borrower's liability from any cause
whatsoever, other than payment in full in legal tender, of the Indebtedness; (d)
any right to claim discharge of the Indebtedness on the basis of unjustified
impairment of any collateral for the Indebtedness; (e) any statute of
limitations, if at any time any action or suit brought by Lender against
Guarantor is commenced there is outstanding Indebtedness of Borrower to Lender
which is not barred by any applicable statute of limitations; or (f) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower's
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of enforcement of this Guaranty. Guarantor
further waives and agrees not to assert or claim at any time any deductions to
the amount guaranteed under this Guaranty for any claim of setoff, counterclaim,
counter demand, recoupment or similar right, whether such claim, demand or right
may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.


<PAGE>   19

LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender by
law, Lender shall have, with respect to Guarantor's obligations to Lender under
this Guaranty and to the extent permitted by law, a contractual security
interest in and a right of setoff against, and Guarantor hereby assigns,
conveys, delivers, pledges, and transfers to Lender all of Guarantor's right,
title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, whether held
jointly with someone else, or whether held for safekeeping or otherwise,
excluding however all IRA, Keogh, and trust accounts. Every such security
interest and right of setoff may be exercised without demand upon or notice to
Guarantor. No security interest or right of setoff shall be deemed to have been
waived by any act or conduct on the part of Lender or by any neglect to exercise
such right of setoff or to enforce such security interest or by any delay in so
doing. Every right of setoff and security interest shall continue in full force
and effect until such right of setoff or security interest is specifically
waived or released by an instrument in writing executed by Lender.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:

         AMENDMENTS. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Guaranty. No alteration of or amendment to this
Guaranty 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.

         APPLICABLE LAW. This Guaranty 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 Guaranty occurred in Bowie

<PAGE>   20

County, Guarantor agrees upon Lender's request to submit to the jurisdiction of
the courts of Bowie County, State of Texas. Lender and Guarantor hereby waive
the right to any jury trial in any action, proceeding, or counterclaim brought
by either Lender or Guarantor against the other. This Guaranty shall be governed
by and construed in accordance with the laws of the State of Texas and
applicable Federal laws.

         ATTORNEYS' FEES. In addition to the amount of this Guaranty set forth
above, Lender may hire an attorney to help enforce this Guaranty if Guarantor
does not pay, and Guarantor will pay Lender's reasonable attorneys' fees.
Guarantor also will pay Lender all other amounts actually incurred by Lender as
court costs, lawful fees for filing, recording, or releasing to any public
office any instrument securing this Guaranty; the reasonable cost actually
expended for repossessing, storing, preparing for sale, and selling any
security; and fees for noting a lien on or transferring a certificate of title
to any motor vehicle offered as security for this Guaranty.

         NOTICES. All notices required to be given by either party to the other
under this Guaranty shall be in writing, may be sent by telefacsimile (unless
otherwise required by law), and, except for revocation notices by Guarantor,
shall be effective when actually delivered or when deposited with a nationally
recognized overnight courier, or when deposited in the United States mail, first
class postage prepaid, addressed to the party to whom the notice is to be given
at the address shown above or to such other addresses as either party may
designate to the other in writing. All revocation notices by Guarantor shall be
in writing and shall be effective only upon delivery to Lender as provided above
in the section titled "DURATION OF GUARANTY." If there is more than one
Guarantor, notice to any Guarantor will constitute notice to all Guarantors. For
notice purposes, Guarantor agrees to keep Lender informed at all times of
Guarantor's current address.

         INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be deemed
to have been used in the plural where the context and construction so require;
and where there is more than one Borrower named in this Guaranty or when this
Guaranty is executed by more than one Guarantor, the words "Borrower" and
"Guarantor" respectively shall mean all and any one or more of them. The words
"Guarantor," "Borrower," and "Lender" include the heirs, successors, assigns,
and transferees of each of them. Caption headings in this Guaranty are for
convenience purposes only and are not to be used to interpret or define the
provisions of this Guaranty. If a court of competent jurisdiction finds any
provision of this Guaranty 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, and all provisions of
this Guaranty in all other respects shall remain valid and enforceable. If any
one or more of Borrower or Guarantor are corporations or partnerships, it is not
necessary for Lender to inquire into the powers of Borrower or Guarantor or of
the officers, directors, partners, or agents acting or purporting to act on
their behalf, and any Indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed under this Guaranty.

         WAIVER. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender. No delay
or omission on the part of Lender in exercising any right shall operate as a
waiver of such right or any other right. A waiver by Lender of a provision of
this Guaranty shall not prejudice or constitute a waiver of Lender's right
otherwise to demand strict compliance with that provision or any other provision
of this Guaranty. No prior waiver

<PAGE>   21

by Lender, nor any course of dealing between Lender and Guarantor, shall
constitute a waiver of any of Lender's rights or of any of Guarantor's
obligations as to any future transactions. Whenever the consent of Lender is
required under this Guaranty, the granting of such consent by Lender in any
instance shall not constitute continuing consent to subsequent instances where
such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED JULY 19, 2000.

GUARANTOR:

GLOBAL ELECTION SYSTEMS, INC. CANADA

BY: /s/ HOWARD VAN PALT
   ------------------------------------
   Howard Van Pelt, President


<PAGE>   22

                                                                      SCHEDULE 2



                          COMMERCIAL SECURITY AGREEMENT
<TABLE>
<CAPTION>
------------------- ----------- -------------- ----------- ------------- ------------ ------------ ------------ ------------
    Principal       Loan Date     Maturity      Loan No.       Call      Collateral     Account      Officer     Initials
<S>                 <C>         <C>            <C>         <C>           <C>          <C>          <C>          <C>
   $5,000,000.00    07-19-2000   07-18-2001                                                           1044
------------------- ----------- -------------- ----------- ------------- ------------ ------------ ------------ ------------
     References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
                                                    particular loan or item.
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

BORROWER: Global Election Systems, Inc.     LENDER: Hibernia National Bank
          (TIN:  850394190)                         Attn:  Loan Documentation -
          1611 Wilmeth Road                         Alexandria
          McKinney, TX  75069                       2318 Richmond Rd.
                                                    Texarkana, TX  75503
================================================================================

THIS COMMERCIAL SECURITY AGREEMENT IS ENTERED INTO BETWEEN GLOBAL ELECTION
SYSTEMS, INC. (REFERRED TO BELOW AS "GRANTOR"); AND HIBERNIA NATIONAL BANK
(REFERRED TO BELOW AS "LENDER"). FOR VALUABLE CONSIDERATION, GRANTOR GRANTS TO
LENDER A SECURITY INTEREST IN THE COLLATERAL TO SECURE THE INDEBTEDNESS AND
AGREES THAT LENDER SHALL HAVE THE RIGHTS STATED IN THIS AGREEMENT WITH RESPECT
TO THE COLLATERAL, IN ADDITION TO ALL OTHER RIGHTS WHICH LENDER MAY HAVE BY LAW.

DEFINITIONS. 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 Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

AGREEMENT. The word "Agreement" means this Commercial Security Agreement, as
this Commercial Security Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Commercial Security
Agreement from time to time.

COLLATERAL. The word "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:

         ALL ACCOUNTS AND GENERAL INTANGIBLES

In addition, the word "Collateral" includes all the following, whether now owned
or hereafter acquired, whether now existing or hereafter arising, and wherever
located:

         (a) All accessions, accessories, increases, and additions to and all
replacements of and substitutions for any property described above.

         (b) All products and produce of any of the property described in this
Collateral section.

         (c) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described in this Collateral section.


<PAGE>   23

         (d) All proceeds (including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property described in this
Collateral section.

         (e) All records and data relating to any of the property described in
this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of Grantor's
right, title, and interest in and to all computer software required to utilize,
create, maintain, and process any such records or data on electronic media.

EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"Events of Default."

GRANTOR. The word "Grantor" means Global Election Systems, Inc., its successors
and assigns.

GUARANTOR. The word "Guarantor" means and includes without limitation each and
all of the guarantors, sureties, and accommodation parties in connection with
the Indebtedness.

INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by the
Note, including all principal and earned interest, together with all other
indebtedness and costs and expenses for which Grantor is responsible under this
Agreement or under any of the Related Documents. In addition, the word
"Indebtedness" includes all other obligations, debts and liabilities, plus
interest thereon, of Grantor, or any one or more of them, to Lender, as well as
all claims by Lender against Grantor, or any one or more of them, whether
existing now or later; whether they are voluntary or involuntary, due or not
due, direct or indirect, absolute or contingent, liquidated or unliquidated;
whether Grantor may be liable individually or jointly with others; whether
Grantor may be obligated as guarantor, surety, accommodation party or otherwise.

LENDER. The word "Lender" means Hibernia National Bank, its successors and
assigns.

NOTE. The word "Note" means the note or credit agreement dated July 19, 2000, in
the principal amount of $5,000,000.00 from Global Election Systems, Inc. to
Lender, together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of and substitutions for the note or credit
agreement.

RELATED DOCUMENTS. The words "Related Documents" 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.

RIGHT OF SETOFF. Grantor hereby grants Lender a contractual security interest in
and hereby assigns, conveys, delivers, pledges, and transfers all of Grantor's
right, title and interest in and to Grantor's accounts with Lender (whether
checking, savings, or some other account), including all accounts held jointly
with someone else and all accounts Grantor 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. Grantor authorizes Lender, to
the extent permitted by applicable law, to charge or setoff all Indebtedness
against any and all such accounts.

OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:

ORGANIZATION. Grantor is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Texas. Grantor has
its chief executive office at 1611 Wilmeth Road, McKinney, TX 75069. Grantor
will notify Lender of any change in the location of Grantor's chief executive
office.

AUTHORIZATION. The execution, delivery, and performance of this Agreement by
Grantor have been duly authorized by all necessary action by Grantor and do not
conflict with, result in a violation of, or constitute a default under (a) any
provision of its articles of incorporation or organization, or bylaws, or any
agreement or other instrument binding upon Grantor or (b) any law, governmental
regulation, court decree, or order applicable to Grantor.


<PAGE>   24

PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to perfect
and continue Lender's security interest in the Collateral. Upon request of
Lender, Grantor will deliver to Lender any and all of the documents evidencing
or constituting the Collateral, and Grantor will note Lender's interest upon any
and all chattel paper if not delivered to Lender for possession by Lender.
Grantor hereby appoints Lender as its irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect or to continue the
security interest granted in this Agreement. Lender may at any time, and without
further authorization from Grantor, file a carbon, photographic or other
reproduction of any financing statement or of this. Agreement for use as a
financing statement. Grantor will reimburse Lender for all expenses for the
perfection and the continuation of the perfection of Lender's security interest
in the Collateral. Grantor promptly will notify Lender before any change in
Grantor's name including any change to the assumed business names of Grantor.
THIS IS A CONTINUING SECURITY AGREEMENT AND WILL CONTINUE IN EFFECT EVEN THOUGH
ALL OR ANY PART OF THE INDEBTEDNESS IS PAID IN FULL AND EVEN THOUGH FOR A PERIOD
OF TIME GRANTOR MAY NOT BE INDEBTED TO LENDER.

NO VIOLATION. The execution and delivery of this Agreement will not violate any
law or agreement governing Grantor or to which Grantor is a party, and its
certificate or articles of incorporation and bylaws do not prohibit any term or
condition of this Agreement.

ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of accounts,
chattel paper, or general intangibles, the Collateral is enforceable in
accordance with its terms, is genuine, and complies with applicable laws
concerning form, content and manner of preparation and execution, and all
persons appearing to be obligated on the Collateral have authority and capacity
to contract and are in fact obligated as they appear to be on the Collateral. At
the time any account becomes subject to a security interest in favor of Lender,
the account shall be a good and valid account representing an undisputed, bona
fide indebtedness incurred by the account debtor, for merchandise held subject
to delivery instructions or theretofore shipped or delivered pursuant to a
contract of sale, or for services theretofore performed by Grantor with or for
the account debtor; there shall be no setoffs or counterclaims against any such
account; and no agreement under which any deductions or discounts may be claimed
shall have been made with the account debtor except those disclosed to Lender in
writing.

REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above, or at such other
locations as are acceptable to Lender. Except in the ordinary course of its
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing locations without the prior written consent of
Lender. To the extent that the Collateral consists of vehicles, or other titled
property, Grantor shall not take or permit any action which would require
application for certificates of title for the vehicles outside the State of
Texas, without the prior written consent of Lender.

TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not sell,
offer to sell, or otherwise transfer or dispose of the Collateral. Grantor shall
not pledge, mortgage, encumber or otherwise permit the Collateral to be subject
to any lien, security interest, encumbrance, or charge, other than the security
interest provided for in this Agreement, without the prior written consent of
Lender. This includes security interests even if junior in right to the security
interests granted under this Agreement. Unless waived by Lender, all proceeds
from any disposition of the Collateral (for whatever reason) shall be held in
trust for Lender and shall not be commingled with any other funds; provided
however, this requirement shall not constitute consent by Lender to any sale or
other disposition. Upon receipt, Grantor shall immediately deliver any such
proceeds to Lender.

TITLE. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing statement covering any of
the Collateral is on file in any public office other than those which reflect
the security interest created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons.

COLLATERAL SCHEDULES AND LOCATIONS. As often as lender shall require, and
insofar as the Collateral consists of accounts and general intangibles, Grantor
shall deliver to Lender schedules of such Collateral, including such information
as Lender may require, including without limitation names and addresses of
account debtors and agings of accounts and general intangibles. Such information
shall be submitted for Grantor and each of its subsidiaries or related
companies.

MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all tangible
Collateral in good condition and repair. Grantor will not commit or permit
damage to or destruction of the Collateral or any part of the Collateral. Lender
and its designated representatives and agents shall have the right at all
reasonable times to examine, inspect, and audit the Collateral wherever located.
Grantor shall immediately notify Lender of all cases involving the return,
rejection, repossession, loss or damage of or to any Collateral; of any request
for credit or adjustment or of any other dispute arising with respect to the
Collateral; and generally of all happenings and events affecting the Collateral
or the value or the amount of the Collateral.

TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes, assessments
and liens upon the Collateral, its use or operation, upon this Agreement, upon
any promissory note or notes evidencing the Indebtedness, or upon any of the
other Related Documents. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest

<PAGE>   25

the obligation to pay and so long as Lender's interest in the Collateral is not
jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien
which is not discharged within fifteen (15) days, Grantor shall deposit with
Lender cash, a sufficient corporate surety bond or other security satisfactory
to Lender in an amount adequate to provide for the discharge of the lien plus
any interest, costs, attorneys' fees or other charges that could accrue as a
result of foreclosure or sale of the Collateral. In any contest Grantor shall
defend itself and Lender and shall satisfy any final adverse judgment before
enforcement against the Collateral. Grantor shall name Lender as an additional
obligee under any surety bond furnished in the contest proceedings.

COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly with
all laws, ordinances, rules and regulations of all governmental authorities, now
or hereafter in effect, applicable to the ownership, production, disposition, or
use of the Collateral. Grantor may contest in good faith any such law, ordinance
or regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Lender's interest in the Collateral, in Lender's
opinion, is not jeopardized.

HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral never
has been, and never will be so long as this Agreement remains a lien on the
Collateral, used for the generation, manufacture, storage, transportation,
treatment, disposal, release or threatened release of any hazardous waste or
substance, as those terms are defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of
1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., or other applicable state or Federal laws, rules,
or regulations adopted pursuant to any of the foregoing. The terms "hazardous
waste" and "hazardous substance" shall also include, without limitation,
petroleum and petroleum by-products or any fraction thereof and asbestos. The
representations and warranties contained herein are based on Grantor's due
diligence in investigating the Collateral for hazardous wastes and substances.
Grantor hereby (a) releases and waives any future claims against Lender for
indemnity or contribution in the event Grantor becomes liable for cleanup or
other costs under any such laws, and (b) agrees to indemnify and hold harmless
Lender against any and all claims and losses resulting from a breach of this
provision of this Agreement. This obligation to indemnify shall survive the
payment of the Indebtedness and the satisfaction of this Agreement.

MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all risks
insurance, including without limitation fire, theft and liability coverage
together with such other insurance as Lender may require with respect to the
Collateral, in form, amounts, coverages and basis reasonably acceptable to
Lender. GRANTOR MAY FURNISH THE REQUIRED INSURANCE WHETHER THROUGH EXISTING
POLICIES OWNED OR CONTROLLED BY GRANTOR OR THROUGH EQUIVALENT INSURANCE FROM ANY
INSURANCE COMPANY AUTHORIZED TO TRANSACT BUSINESS IN THE STATE OF TEXAS. If
Grantor fails to provide any required insurance or fails to continue such
insurance in force, Lender may, but shall not be required to, do so at Grantor's
expense, and the cost of the insurance will be added to the Indebtedness. If any
such insurance is procured by Lender at a rate or charge not fixed or approved
by the State Board of Insurance, Grantor will be so notified, and Grantor will
have the option for five (5) days of furnishing equivalent insurance through any
insurer authorized to transact business in Texas. Grantor, upon request of
Lender, will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that coverages
will not be cancelled or diminished without at least thirty (30) days' prior
written notice to Lender and not including any disclaimer of the insurer's
liability for failure to give such a notice. Each insurance policy also shall
include an endorsement providing that coverage in favor of Lender will not be
impaired in any way by any act, omission or default of Grantor or any other
person. In connection with all policies covering assets in which Lender holds or
is offered a security interest, Grantor will provide Lender with such loss
payable or other endorsements as Lender may require. If Grantor at any time
fails to obtain or maintain any insurance as required under this Agreement,
Lender may (but shall not be obligated to) obtain such insurance as Lender deems
appropriate, including if it so chooses "single interest insurance," which will
cover only Lender's interest in the Collateral.

APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of any
loss or damage to the Collateral. Lender may make proof of loss if Grantor fails
to do so within fifteen (15) days of the casualty. All proceeds of any insurance
on the Collateral, including accrued proceeds thereon, shall be held by Lender
as part of the Collateral. If Lender consents to repair or replacement of the
damaged or destroyed Collateral, Lender shall, upon satisfactory proof of
expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost
of repair or restoration. If Lender does not consent to repair or replacement of
the Collateral, Lender shall retain a sufficient amount of the proceeds to pay
all of the Indebtedness, and shall pay the balance to Grantor. Any proceeds
which have not been disbursed within six (6) months after their receipt and
which Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.

INSURANCE RESERVES. Lender may require Grantor to maintain with Lender reserves
for payment of insurance premiums, which reserves shall be created by monthly
payments from Grantor of a sum estimated by Lender to be sufficient to produce,
at least fifteen (15) days before the premium due date, amounts at least equal
to the insurance premiums to be paid. If fifteen (15) days before payment is
due, the reserve funds are insufficient, Grantor shall upon demand pay any
deficiency to Lender. The reserve funds shall be held by Lender as a general
deposit and shall constitute a non-interest-bearing account which Lender may
satisfy by payment of the insurance premiums required to be paid by Grantor as
they become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance premiums
required to be paid by Grantor. The responsibility for the payment of premiums
shall remain Grantor's sole responsibility.


<PAGE>   26

INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to Lender
reports on each existing policy of insurance showing such information as Lender
may reasonably request including the following: (a) the name of the insurer; (b)
the risks insured; (c) the amount of the policy; (d) the property insured; (e)
the then current value on the basis of which insurance has been obtained and the
manner of determining that value; and (f) the expiration date of the policy. In
addition, Grantor shall upon request by Lender (however not more often than
annually) have an independent appraiser satisfactory to Lender determine, as
applicable, the cash value or replacement cost of the Collateral.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
Indebtedness.

EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the Note rate from the date incurred or paid by
Lender to the date of repayment by Grantor. All such expenses shall become a
part of the Indebtedness and, at Lender's option, will (a) be payable on demand,
(b) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (i) the term of any
applicable insurance policy or (ii) the remaining term of the Note, or (c) be
treated as a balloon payment which will be due and payable at the Note's
maturity. This Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon the occurrence of an Event of Default.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due on the
Indebtedness.

OTHER DEFAULTS. Failure of Grantor to comply with or to perform any other term
obligation, covenant or condition contained in this Agreement or in any of the
Related Documents or in any other agreement between Lender and Grantor.

FALSE STATEMENTS. Any warranty, representation or statement made or furnished to
Lender by or on behalf of Grantor under this Agreement, the Note or the Related
Documents is false or misleading in any material respect, either now or at the
time made or furnished.


<PAGE>   27

DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
documents to create a valid and perfected security interest or lien) at any time
and for any reason.

INSOLVENCY. The dissolution or termination of Grantor's existence as a going
business, the insolvency of Grantor, the appointment of a receiver for any part
of Grantor's property, any assignment 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 Grantor.

CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Grantor or by any governmental agency against
the Collateral or any other collateral securing the Indebtedness. This includes
a garnishment of any of Grantor's deposit accounts with Lender.

EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect to
any Guarantor of any of the Indebtedness or such Guarantor dies or becomes
incompetent.

ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.

INSECURITY. Lender, in good faith, deems itself insecure.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Texas Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:

ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness immediately
due and payable, without notice.

ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all or any
portion of the Collateral and any and all certificates of title and other
documents relating to the Collateral. Lender may require Grantor to assemble the
Collateral and make it available to Lender at a place to be designated by
Lender. Lender also shall have full power to enter, provided Lender does so
without a breach of the peace or a trespass, upon the property of Grantor to
take possession of and remove the Collateral. If the Collateral contains other
goods not covered by this Agreement at the time of repossession, Grantor agrees
Lender may take such other goods, provided that Lender makes reasonable efforts
to return them to Grantor after repossession.

SELL THE COLLATERAL. Lender shall have full power to sell, lease, transfer, or
otherwise deal with the Collateral or proceeds thereof in its own name or that
of Grantor. Lender may sell the Collateral at public auction or private sale.
Unless the Collateral threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Lender will give Grantor reasonable
notice of the time after which any private sale or any other intended
disposition of the Collateral is to be made. The requirements of reasonable
notice shall be met if such notice is given at least ten (10) days before the
time of the sale or disposition. All expenses relating to the disposition of the
Collateral, including without limitation the expenses of retaking, holding,
insuring, preparing for sale and selling the Collateral, shall become a part of
the Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the Note rate from date of expenditure until repaid.

APPOINT RECEIVER. To the extent permitted by applicable law, Lender shall have
the following rights and remedies regarding the appointment of a receiver: (a)
Lender may have a receiver appointed as a matter of right, (b) the receiver may
be an employee of Lender and may serve without bond, and (c) all fees of the
receiver and his or her attorney shall become part of the Indebtedness secured
by this Agreement and shall be payable on demand, with interest at the Note rate
from date of expenditure until repaid.

COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a receiver,
may collect the payments, rents, income, and revenues from the Collateral.
Lender may at any time in its discretion transfer any Collateral into its own
name or that of its nominee and receive the payments, rents, income, and
revenues therefrom and hold the same as security for the Indebtedness or apply
it to payment of the Indebtedness in such order of preference as Lender may
determine. Insofar as the Collateral consists of accounts, general intangibles,
insurance policies, instruments, chattel paper, choses in action, or similar
property, Lender may demand, collect, receipt for, settle, compromise, adjust,
sue for, foreclose, or realize on the Collateral as Lender may determine,
whether or not Indebtedness or Collateral is then due. For these purposes,
Lender may, on behalf of and in the name of Grantor, receive, open and dispose
of mail addressed to Grantor; change any address to which mail and payments are
to be sent; and endorse notes, checks, drafts, money orders, documents of title,
instruments and items pertaining to payment, shipment, or storage of any
Collateral. To facilitate collection, Lender may notify account debtors and
obligors on any Collateral to make payments directly to Lender.




<PAGE>   28

OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency remaining on the
Indebtedness due to Lender after application of all amounts received from the
exercise of the rights provided in this Agreement. Grantor shall be liable for a
deficiency even if the transaction described in this subsection is a sale of
accounts or chattel paper.

OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies of a
secured creditor under the provisions of the Uniform Commercial Code, as may be
amended from time to time. In addition, Lender shall have and may exercise any
or all other rights and remedies it may have available at law, in equity, or
otherwise.

CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether evidenced by
this Agreement or the Related Documents or by any other writing, 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
Grantor under this Agreement, after Grantor's failure to perform, shall not
affect Lender's right to declare a default and to exercise its remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a
part of this Agreement:

AMENDMENTS. 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.

APPLICABLE LAW. This Agreement has been delivered to Lender and accepted by
Lender in the State of Texas. If there is a lawsuit, Grantor agrees upon
Lender's request to submit to the jurisdiction of the courts of the State of
Texas. Lender and Grantor hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Grantor against
the other. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas and applicable Federal laws.

ATTORNEYS' FEES AND OTHER COSTS. Lender may hire an attorney to help collect the
Note if Grantor does not pay, and Grantor will pay Lender's reasonable
attorneys' fees. Grantor also will pay Lender all other amounts actually
incurred by Lender as court costs, lawful fees for filing, recording, or
releasing to any public office any instrument securing the Note; the reasonable
cost actually expended, for repossessing; storing, preparing for sale, and
selling any security; and fees for noting a lien on or transferring a
certificate of title to any motor vehicle offered as security for the Note, or
premiums or identifiable charges received in connection with the sale of
authorized insurance.

CAPTION HEADINGS. 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.

NOTICES. 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 delivered or when deposited with a nationally
recognized overnight courier or deposited in the United States mail first class,
postage prepaid, addressed to the party 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's address. To the extent
permitted by applicable law, if there is more than one Grantor, notice to any
Grantor will constitute notice to all Grantors. For notice purposes, Grantor
will keep Lender informed at all times of Grantor's current address(es).

POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover all
sums of money or other property which may now or hereafter become due, owing or
payable from the Collateral; (b) to execute, sign and endorse any and all
claims, instruments, receipts, checks, drafts or warrants issued in payment for
the Collateral; (c) to settle or compromise any and all claims arising under the
Collateral, and, in the place and stead of Grantor, to execute and deliver its
release and settlement for the claim; and (d) to file any claim or claims or to
take any action or institute or take part in any proceedings, either in its own
name or in the name of Grantor, or otherwise, which in the discretion of Lender
may seem to be necessary or advisable. This power is given as security for the
Indebtedness, and the authority hereby conferred is and shall be irrevocable and
shall remain in full force and effect until renounced by Lender.

SEVERABILITY. 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.


<PAGE>   29

SUCCESSOR INTERESTS. Subject to the limitations set forth above on transfer of
the Collateral, this Agreement shall be binding upon and inure to the benefit of
the parties, their successors and assigns.

WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No delay
or omission on the part of Lender in exercising any right shall operate as a
waiver of such right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender'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 Grantor, shall constitute a waiver of any of Lender's rights or of
any of Grantor's obligations as to any future transactions. Whenever the consent
of Lender is required under this Agreement, the granting of such consent by
Lender in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may be
granted or withheld in the sole discretion of Lender.

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JULY 19,
2000.

GRANTOR:


GLOBAL ELECTION SYSTEMS, INC.

By:
   -------------------------------
   Howard T. Van Pelt, President