Line of Credit Note


    
      	
               

            	
              Line
                of Credit Note

            
	 	
               

              $2,000,000.00

            
	 	
              Date:
                March 1, 2007 

            


    

    


    Promise
      to Pay.
      On or
      before April 1, 2008, for value received, Advanced Materials, Inc. (the
      "Borrower") promises to pay to JPMorgan
      Chase Bank, N.A.,
      whose
      address is 1717 Main Street, Dallas, TX 75201 (the "Bank") or order, in lawful
      money of the United States of America, the sum of Two
      Million and 00/100 Dollars ($2,000,000.00)
      or such
      lesser sum as is indicated on Bank records, plus interest computed on the basis
      of the actual number of days elapsed in a year of 360 days
      unless
      that calculation would result in a usurious interest rate, in which case
      interest will be calculated on the basis of a 365 or 366 day year, as the case
      may be
      at the
      rate of
      0% per
      annum above the Prime Rate (the "Note Rate"), and at the rate of 3.00% per
      annum
      above the Note Rate, at the Bank's
      option,
      upon the occurrence of any default under this Note, whether or not the Bank
      elects to accelerate the maturity of this Note, from the date such increased
      rate is imposed by the Bank. In this Note, "Prime Rate" means the rate of
      interest per annum announced from time to time by the Bank as its prime rate.
      The Prime Rate is a variable rate and each change in the Prime Rate is effective
      from and including the date the change is announced as being effective. THE
      PRIME RATE IS A REFERENCE RATE AND MAY NOT BE THE BANK’S LOWEST
      RATE.

    


    In
      no
      event shall the interest rate exceed the maximum rate allowed by law. Any
      interest payment that would for any reason be unlawful under applicable law
      shall be applied to principal.

    


    Interest
      will be computed on unpaid principal balance from the date of each
      borrowing.

    


    Until
      maturity, the Borrower will pay consecutive quarterly
      installments of interest only commencing May 1, 2007.

    


    The
      Borrower shall make all payments on this Note and the other Related Documents,
      without
      setoff, deduction, or counterclaim, to the
      Bank
      at the Bank's address above or at such other place as the Bank may designate
      in
      writing. If
      any
      payment of principal or interest on this Note shall become due on a day that
      is
      not a Business Day, the payment will be made on the next succeeding Business
      Day. The term "Business Day" in this Note means a day other than a Saturday,
      Sunday or any other day on which national banking associations are authorized
      to
      be closed. Payments shall be allocated among principal, interest and fees at
      the
      discretion of the Bank unless otherwise agreed or required by applicable law.
      Acceptance by the Bank of any payment that is less than the payment due at
      that
      time shall not constitute a waiver of the Bank's
      right
      to receive payment in full at that time or any other time.

    


    Authorization
      for Direct Payments (ACH Debits). To effectuate any payment due under
      this Note, the Borrower hereby authorizes the Bank to initiate debit entries
      to
      Account Number ------------------------- at the Bank and to debit the same
      to such account. This authorization to initiate debit entries shall remain
      in
      full force and effect until the Bank has received written notification of its
      termination in such time and in such manner as to afford the Bank a reasonable
      opportunity to act on it. The Borrower represents that the Borrower is and
      will
      be the owner of all funds in such account. The Borrower acknowledges (1) that
      such debit entries may cause an overdraft of such account which may result
      in
      the Bank’s refusal to honor items drawn on such account until adequate deposits
      are made to such account; (2) that the Bank is under no duty or obligation
      to
      initiate any debit entry for any purpose; and (3) that if a debit is not made
      because the above-referenced account does not have a sufficient available
      balance, or otherwise, the payment may be late or past due.

    


    Purpose
      of Loan.
      The
      Borrower acknowledges and agrees that this Note evidences a loan for a business,
      commercial, agricultural or similar commercial enterprise purpose, and that
      all
      advances made under this Note shall not be used for any personal, family or
      household purpose. The proceeds of the loan shall be used only for working
      capital.

    


    Credit
      Facility.
      The Bank
      has approved a credit facility to the Borrower in a principal amount not to
      exceed the face amount of this Note. The credit facility is in the form of
      advances made from time to time by the Bank to the Borrower. This Note evidences
      the Borrower's obligation to repay those advances. The aggregate principal
      amount of debt evidenced by this Note is the amount reflected from time to
      time
      in the records of the Bank. Until the earliest of maturity, the occurrence
      of
      any default, or the occurrence of any event that would constitute a default
      but
      for the giving of notice or the lapse of time or both until the end of any
      grace
      or cure period, the Borrower may borrow, pay down and reborrow under this Note
      subject to the terms of the Related Documents. 

    


    Liabilities.
      The term
      "Liabilities" in this Note means all debts, obligations, and liabilities of
      every kind and character of the Borrower, whether individual, joint and several,
      contingent or otherwise, now or hereafter existing in favor of the Bank,
      including without limitation, all liabilities, interest, costs and fees, arising
      under or from any note, open account, overdraft, credit card, lease, letter
      of
      credit application, endorsement, surety agreement, guaranty, Rate Management
      Transaction, acceptance, foreign exchange contract or depository service
      contract, whether payable to the Bank or to a third party and subsequently
      acquired by the Bank, any monetary obligations (including interest) incurred
      or
      accrued during the pendency of any bankruptcy, insolvency, receivership or
      other
      similar proceedings, regardless of whether allowed or allowable in such
      proceeding, and all renewals, extensions, modifications, consolidations,
      rearrangements, restatements, replacements or substitutions of any of the
      foregoing. The term "Rate Management Transaction" in this Note means any
      transaction (including an agreement with respect thereto) that is a rate swap,
      basis swap, forward rate transaction, commodity swap, commodity option, equity
      or equity index swap, equity or equity index option, bond option, interest
      rate
      option, foreign exchange transaction, cap transaction, floor transaction, collar
      transaction, forward transaction, currency swap transaction, cross-currency
      rate
      swap transaction, currency option, derivative transaction or any other similar
      transaction (including any option with respect to any of these transactions)
      or
      any combination thereof, whether linked to one or more interest rates, foreign
      currencies, commodity prices, equity prices or other financial
      measures.

    


    Related
      Documents.
      The term
      "Related Documents" in this Note means this Note, all loan agreements, credit
      agreements, reimbursement agreements, security agreements, mortgages, deeds
      of
      trust, pledge agreements, assignments, guaranties, and any other instrument
      or
      document executed in connection with this Note or in connection with any of
      the
      Liabilities.

    


    Security.
      The term
      "Collateral" in this Note means all real or personal property described in
      all
      security agreements, pledge agreements, mortgages, deeds of trust, assignments,
      or other instruments now or hereafter executed in connection with this Note
      or
      in connection with any of the Liabilities. If applicable, the Collateral secures
      the payment of this Note and the Liabilities.

    


    Bank's
      Right of Setoff.
      In
      addition to the Collateral, if any, the Borrower grants to the Bank a security
      interest in the Accounts, and the Bank is authorized to setoff and apply, all
      Accounts, Securities and Other Property, and Bank Debt against any and all
      Liabilities of the Borrower. This right of setoff may be exercised at any time
      and from time to time, and without prior notice to the Borrower. This security
      interest in the Accounts and right of setoff may be enforced or exercised by
      the
      Bank regardless of whether or not the Bank has made any demand under this
      paragraph or whether the Liabilities are contingent, matured, or unmatured.
      Any
      delay, neglect or conduct by the Bank in exercising its rights under this
      paragraph will not be a waiver of the right to exercise this right of setoff
      or
      enforce this security interest in the Accounts. The rights of the Bank under
      this paragraph are in addition to other rights the Bank may have in the Related
      Documents or by law. In this paragraph: (a) the term "Accounts" means any and
      all accounts and deposits of the Borrower (whether general, special, time,
      demand, provisional or final) at any time held by the Bank (including all
      Accounts held jointly with another, but excluding any IRA or Keogh Account,
      or
      any trust Account in which a security interest would be prohibited by law);
      (b)
      the term "Securities and Other Property" means any and all financial assets,
      securities entitlements, securities accounts, investment property and other
      personal property of the Borrower in the custody, possession or control of
      the
      Bank, JPMorgan Chase & Co. and their respective subsidiaries and affiliates
      (other than property held by the Bank in a fiduciary capacity); and (c) the
      term
      "Bank Debt" means all indebtedness at any time owing by the Bank, to or for
      the
      credit or account of the Borrower and any claim of the Borrower (whether
      individual, joint and several or otherwise) against the Bank now or hereafter
      existing.

    


    Representations
      by Borrower.
      Each
      Borrower represents and warrants that each of the following is and will remain
      true and correct until the later of maturity or the date on which all
      Liabilities evidenced by this Note are paid in full: (a) the execution and
      delivery of this Note and the performance of the obligations it imposes do
      not
      violate any law, conflict with any agreement by which it is bound, or require
      the consent or approval of any governmental authority or other third party;
      (b)
      this Note is a valid and binding agreement of the Borrower, enforceable
      according to its terms; (c) all balance sheets, profit and loss statements,
      other financial statements and applications for credit furnished to the Bank
      in
      connection with the Liabilities are accurate and fairly reflect the financial
      condition of the organizations and persons to which they apply on their
      effective dates, including contingent liabilities of every type, which financial
      condition has not materially and adversely changed since those dates; and,
      if
      the Borrower is not a natural person (i) it is duly organized, validly existing
      and in good standing under the laws of the state where it is organized and
      in
      good standing in each state where it is doing business;
      and
      (ii) the
      execution and delivery of this Note and the performance of the obligations
      it
      imposes (A) are within its powers and have been duly authorized by all necessary
      action of its governing body, and (B) do not contravene the terms of its
      articles of incorporation or organization, its by-laws, regulations or any
      partnership, operating or other agreement governing its organization and
      affairs.

    


    Events
      of Default/Acceleration.
      If any
      of the following events occurs this Note shall become due immediately, without
      notice, at the Bank's option, and the Borrower hereby waives notice of intent
      to
      accelerate maturity of this Note and notice of acceleration of this Note upon
      any of the following events:

    


    
      	1.  	
              The
                Borrower, or any guarantor of any of the Liabilities (the "Guarantor"),
                fails to pay when due any amount payable under this Note, under any
                of the
                Liabilities, or under any agreement or instrument evidencing debt
                to any
                creditor.

            


    

    
      	2.  	
              The
                Borrower or any Guarantor (a) fails to observe or perform or otherwise
                violates any other term, covenant, condition, or agreement of any
                of the
                Related Documents; (b) makes any materially incorrect or misleading
                representation, warranty, or certificate to the Bank; (c) makes any
                materially incorrect or misleading representation in any financial
                statement or other information delivered to the Bank; or (d) defaults
                under the terms of any agreement or instrument relating to any debt
                for
                borrowed money (other than the debt evidenced by this Note) and the
                effect
                of such default will allow the creditor to declare the debt due before
                its
                maturity.

            


    

    
      	3.  	
              In
                the event (a) there is a default under the terms of any Related Document,
                (b) any guaranty of the loan evidenced by this Note is terminated
                or
                becomes unenforceable in whole or in part, (c) any Guarantor fails
                to
                promptly perform under its guaranty, or (d) the Borrower fails to
                comply
                with, or pay, or perform under any agreement, now or hereafter in
                effect,
                between the Borrower and JPMorgan
                Chase & Co.,
                or any of its subsidiaries or affiliates or their
                successors.

            


    

    
      	4.  	
              There
                is any loss, theft, damage, or destruction of any Collateral not
                covered
                by insurance.

            


    

    
      	5.  	
              A
                "reportable event" (as defined in the Employee Retirement Income
                Security
                Act of 1974 as amended) occurs that would permit the Pension Benefit
                Guaranty Corporation to terminate any employee benefit plan of the
                Borrower or any Guarantor or any affiliate of the Borrower or any
                Guarantor.

            


    

    
      	6.  	
              The
                Borrower or any Guarantor becomes insolvent or unable to pay its
                debts as
                they become due.

            


    

    
      	7.  	
              The
                Borrower or any Guarantor (a) makes an assignment for the benefit
                of
                creditors; (b) consents to the appointment of a custodian, receiver,
                or
                trustee for itself or for a substantial part of its assets; or (c)
                commences any proceeding under any bankruptcy, reorganization,
                liquidation, insolvency or similar laws of any
                jurisdiction.

            


    

    
      	8.  	
              A
                custodian, receiver, or trustee is appointed for the Borrower or
                any
                Guarantor or for a substantial part of its
                assets.

            


    

    
      	9.  	
              Proceedings
                are commenced against the Borrower or any Guarantor under any bankruptcy,
                reorganization, liquidation, or similar laws of any jurisdiction,
                and they
                remain undismissed for thirty (30) days after commencement; or the
                Borrower or the Guarantor consents to the commencement of those
                proceedings.

            


    

    
      	10.  	
              Any
                judgment is entered against the Borrower or any Guarantor, or any
                attachment, levy, or garnishment is issued against any property of
                the
                Borrower or any Guarantor.

            


    

    
      	11.  	
              The
                Borrower or any Guarantor dies,
                or a guardian or conservator is appointed for the Borrower or any
                Guarantor or all or any portion of the Borrower's assets, any Guarantor's
                assets, or the Collateral.

            


    

    
      	12.  	
              The
                Borrower or any Guarantor, without the Bank's written consent (a)
                is
                dissolved, (b) merges or consolidates with any third party, (c) leases,
                sells or otherwise conveys a material part of its assets or business
                outside the ordinary course of its business, (d) leases, purchases,
                or
                otherwise acquires a material part of the assets of any other business
                entity, except in the ordinary course of its business, or (e) agrees
                to do
                any of the foregoing (notwithstanding the foregoing, any subsidiary
                may
                merge or consolidate with any other subsidiary, or with the Borrower,
                so
                long as the Borrower is the
                survivor).

            


    

    
      	13.  	
              Any
                material adverse change occurs in the business, assets, affairs,
                prospects
                or financial condition of the Borrower or any Guarantor or any subsidiary
                of the Borrower. 

            


    

    


    Remedies.
      If this
      Note is not paid at maturity, whether by acceleration or otherwise, the Bank
      shall have all of the rights and remedies provided by any law or agreement.
      The
      Bank is authorized to cause all or any part of the Collateral to be transferred
      to or registered in its name or in the name of any other person or business
      entity, with or without designating the capacity of that nominee. Without
      limiting any other available remedy, the Borrower is liable for any deficiency
      remaining after disposition of any Collateral. The Borrower is liable to the
      Bank for all reasonable costs and expenses of every kind incurred (or charged
      by
      internal allocation) in connection with the negotiation, preparation, execution,
      filing, recording, modification, supplementing and waiver of this Note or the
      Related Documents and the making, servicing and collection of this Note or
      the
      Related Documents and any other amounts owed under this Note or the Related
      Documents, including without limitation reasonable attorneys' fees and court
      costs. These costs and expenses include without limitation any costs or expenses
      incurred by the Bank in any bankruptcy, reorganization, insolvency or other
      similar proceeding. 

    


    Waivers.
      Any
      party liable on this Note waives (a) to the extent permitted by law, all rights
      and benefits under any laws or statutes regarding sureties, as may be amended;
      (b) any right to receive notice of the following matters before the Bank
      enforces any of its rights: (i) the Bank's acceptance of this Note, (ii) any
      credit that the Bank extends to the Borrower, (iii) the Borrower's default,
      (iv)
      any demand, diligence, presentment, dishonor and protest, or (v) any action
      that
      the Bank takes regarding the Borrower, anyone else, any Collateral, or any
      of
      the Liabilities, that it might be entitled to by law or under any other
      agreement; (c) any right to require the Bank to proceed against the Borrower,
      any other obligor or guarantor of the Liabilities, or any Collateral, or pursue
      any remedy in the Bank's power to pursue; (d) any defense based on any claim
      that any endorser or other parties' obligations exceed or are more burdensome
      than those of the Borrower; (e) the benefit of any statute of limitations
      affecting liability of any endorser or other party liable hereunder or the
      enforcement hereof; (f) any defense arising by reason of any disability or
      other
      defense of the Borrower or by reason of the cessation from any cause whatsoever
      (other than payment in full) of the obligation of the Borrower for the
      Liabilities; and (g) any defense based on or arising out of any defense that
      the
      Borrower may have to the payment or performance of the Liabilities or any
      portion thereof. Any party liable on this Note consents to any extension or
      postponement of time of its payment without limit as to the number or period,
      to
      any substitution, exchange or release of all or any part of the Collateral,
      to
      the addition of any other party, and to the release or discharge of, or
      suspension of any rights and remedies against, any person who may be liable
      for
      the payment of this Note. The Bank may waive or delay enforcing any of its
      rights without losing them. Any waiver affects only the specific terms and
      time
      period stated in the waiver. No modification or waiver of any provision of
      this
      Note is effective unless it is in writing and signed by the party against whom
      it is being enforced. 

    


    Cooperation.
      The
      Borrower agrees to fully cooperate with the Bank and not to delay, impede or
      otherwise interfere with the efforts of the Bank to secure payment from the
      assets which secure the Liabilities including actions, proceedings, motions,
      orders, agreements or other matters relating to relief from automatic stay,
      abandonment of property, use of cash collateral and sale of the Bank’s
      collateral free and clear of all liens.

    


    Additional
      Waivers.
      To the
      extent not prohibited by applicable law, the Borrower waives (a) to the extent
      the Borrower is subject to the Texas Revised Partnership Act (“TRPA”) or Section
      152.306 of the Texas Business Organizations Code (“BOC”), compliance by the Bank
      with Section 3.05(d) of TRPA and Section 152.306(b) of BOC; and (b) if the
      Liabilities are secured by an interest in real property, all rights of the
      Borrower under Sections 51.003, 51.004, and 51.005 of the Texas Property Code
      (as amended from time to time).

    


    Rights
      of Subrogation.
      Any
      party liable on this Note waives and agrees not to enforce any rights of
      subrogation, contribution or indemnification that it may have against the
      Borrower, any person liable on the Liabilities, or the Collateral, until the
      Borrower and such party liable on this Note have fully performed all their
      obligations to the Bank, even if those obligations are not covered by this
      Note.

    


    Reinstatement.
      The
      Borrower agrees that to the extent any payment or transfer is received by the
      Bank in connection with the Liabilities evidenced by this Note, and all or
      any
      part of the payment or transfer is subsequently invalidated, declared to be
      fraudulent or preferential, set aside or required to be transferred or repaid
      by
      the Bank or transferred or paid over to a trustee, receiver or any other entity,
      whether under any bankruptcy act or otherwise (any of those payments or
      transfers is hereinafter referred to as a "Preferential Payment"), then this
      Note shall continue to be effective or shall be reinstated, as the case may
      be,
      even if all those Liabilities have been paid in full and whether or not the
      Bank
      is in possession of this Note, or whether the Note has been marked paid,
      released or canceled, or returned to the Borrower and, to the extent of the
      payment, repayment or other transfer by the Bank, the Liabilities or part
      intended to be satisfied by the Preferential Payment shall be revived and
      continued in full force and effect as if the Preferential Payment had not been
      made.

    


    Governing
      Law and Venue.
      This
      Note shall be governed by and construed in accordance with the laws of the
      State
      of Texas (without giving effect to its laws of conflicts). The Borrower agrees
      that any legal action or proceeding with respect to any of its obligations
      under
      this Note may be brought by the Bank in any state or federal court located
      in
      the State of Texas, as the Bank in its sole discretion may elect. By the
      execution and delivery of this Note, the Borrower submits to and accepts, for
      itself and in respect of its property, generally and unconditionally, the
      non-exclusive jurisdiction of those courts. The Borrower waives any claim that
      the State of Texas is not a convenient forum or the proper venue for any such
      suit, action or proceeding. 

    


    Usury. The
      Bank
      does not intend to charge, collect or receive any interest that would exceed
      the
      maximum rate allowed by law. If the effect of any applicable law is to render
      usurious any amount called for under this Note or the other Related Documents,
      or if any amount is charged or received with respect to this Note, or if any
      prepayment by the Borrower results in the Borrower having paid any interest
      in
      excess of that permitted by law, then all excess amounts collected by the Bank
      shall be credited on the principal balance of this Note (or, if this Note and
      all other indebtedness arising under or pursuant to the other Related Documents
      have been paid in full, refunded to the Borrower), and the provisions of this
      Note and the other Related Documents immediately shall be deemed reformed and
      the amounts thereafter collectable reduced, without the necessity of the
      execution of any new document, so as to comply with the then applicable law.
      All
      sums paid, or agreed to be paid, by the Borrower for the use, forbearance,
      or
      detention of money under this Note or the other Related Documents shall, to
      the
      maximum extent permitted by applicable law, be amortized, prorated, allocated
      and spread throughout the full term of such indebtedness until payment in full
      so that the rate or amount of interest on account of such indebtedness does
      not
      exceed the usury ceiling from time to time in effect and applicable to such
      indebtedness for so long as such indebtedness is outstanding. To the extent
      federal law permits the Bank to contract for, charge or receive a greater amount
      of interest, the Bank will rely on federal law instead of the Texas Finance
      Code. In no event shall Chapter 346 of the Texas Finance Code apply to this
      Note. To the extent that Chapter 303 of the Texas Finance Code is applicable
      to
      this Note, the "weekly ceiling" specified in Chapter 303 is the applicable
      ceiling.

    


    Miscellaneous.
      Each
      Borrower is liable jointly and severally for the obligations represented by
      this
      Note, the term "Borrower" means any one or more of them, and the receipt of
      value by any one of them constitutes the receipt of value by the others. This
      Note binds the Borrower and its successors, and benefits the Bank, its
      successors and assigns. Any reference to the Bank includes any holder of this
      Note. This Note is issued pursuant and entitled to the benefits of that certain
      Credit Agreement by and between the Borrower and the Bank, dated February 15,
      2007,
      and all
      replacements thereof (the
      "Credit Agreement") to which reference is hereby made for a more complete
      statement of the terms and conditions under which the loan evidenced hereby
      is
      made and is to be repaid. The terms and provisions of the Credit Agreement
      are
      hereby incorporated and made a part hereof by this reference thereto with the
      same force and effect as if set forth at length herein. No reference to the
      Credit Agreement and no provisions of this Note or the Credit Agreement shall
      alter or impair the absolute and unconditional obligation of the Borrower to
      pay
      the principal and interest on this Note as herein prescribed. Capitalized terms
      not otherwise defined herein shall have the meanings assigned to such terms
      in
      the Credit Agreement. Section headings are for convenience of reference only
      and
      do not affect the interpretation of this Note. Any notices and demands under
      or
      related to this document shall be in writing and delivered to the intended
      party
      at its address stated herein, and if to the Bank, at its main office if no
      other
      address of the Bank is specified herein, by one of the following means: (a)
      by
      hand, (b) by a nationally recognized overnight courier service, or (c) by
      certified mail, postage prepaid, with return receipt requested. Notice shall
      be
      deemed given: (a) upon receipt if delivered by hand, (b) on the Delivery Day
      after the day of deposit with a nationally recognized courier service, or (c)
      on
      the third Delivery Day after the notice is deposited in the mail. "Delivery
      Day"
      means a day other than a Saturday, a Sunday, or any other day on which national
      banking associations are authorized to be closed. Any party may change its
      address for purposes of the receipt of notices and demands by giving notice
      of
      such change in the manner provided in this provision. This Note and any Related
      Documents embody the entire agreement between the Borrower and the Bank
      regarding the terms of the loan evidenced by this Note and supercede all oral
      statements and prior writings relating to that loan. If any provision of this
      Note cannot be enforced, the remaining portions of this Note shall continue
      in
      effect. The Borrower agrees that the Bank may provide any information or
      knowledge the Bank may have about the Borrower or about any matter relating
      to
      this Note or the Related Documents to JPMorgan
      Chase & Co.,
      or any
      of its subsidiaries or affiliates or their successors, or to any one or more
      purchasers or potential purchasers of this Note or the Related Documents. The
      Borrower agrees that the Bank may at any time sell, assign or transfer one
      or
      more interests or participations in all or any part of its rights and
      obligations in this Note to one or more purchasers whether or not related to
      the
      Bank.

    


    Government
      Regulation.
      Borrower shall not (a) be or become subject at any time to any law, regulation,
      or list of any government agency (including, without limitation, the U.S. Office
      of Foreign Asset Control list) that prohibits or limits Bank from making any
      advance or extension of credit to Borrower or from otherwise conducting business
      with Borrower, or (b) fail to provide documentary and other evidence of
      Borrower's identity as may be requested by Bank at any time to enable Bank
      to
      verify Borrower's identity or to comply with any applicable law or regulation,
      including, without limitation, Section 326 of the USA Patriot Act of 2001,
      31
      U.S.C. Section 5318.

    


    USA
      PATRIOT ACT NOTIFICATION.
      The
      following notification is provided to Borrower pursuant to Section 326 of the
      USA Patriot Act of 2001, 31 U.S.C. Section 5318:

    


    IMPORTANT
      INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government
      fight the funding of terrorism and money laundering activities, Federal law
      requires all financial institutions to obtain, verify, and record information
      that identifies each person or entity that opens an account, including any
      deposit account, treasury management account, loan, other extension of credit,
      or other financial services product. What this means for Borrower: When Borrower
      opens an account, if Borrower is an individual Bank will ask for Borrower's
      name, taxpayer identification number, residential address, date of birth, and
      other information that will allow Bank to identify Borrower, and if Borrower
      is
      not an individual Bank will ask for Borrower's name, taxpayer identification
      number, business address, and other information that will allow Bank to identify
      Borrower. Bank may also ask, if Borrower is an individual to see Borrower's
      driver’s license or other identifying documents, and if Borrower is not an
      individual to see Borrower's legal organizational documents or other identifying
      documents.

    


    WAIVER
      OF SPECIAL DAMAGES.
      THE
      BORROWER WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT THE
      UNDERSIGNED MAY HAVE TO CLAIM OR RECOVER FROM THE BANK IN ANY LEGAL ACTION
      OR
      PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.


    


    JURY
      WAIVER.
      THE
      BORROWER AND THE BANK (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY,
      IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE
      IN
      RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) BETWEEN
      THE BORROWER AND THE BANK ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE
      OR
      THE OTHER RELATED DOCUMENTS. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE
      BANK
      TO PROVIDE THE FINANCING EVIDENCED BY THIS NOTE. 

    


    


    THIS
      NOTE AND THE OTHER RELATED DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
      THE
      PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
      OR
      SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

    THERE
      ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     

    
      	 	 	 	
              Borrower:

            
	
               

              Address:

            	
              3303
                Lee Parkway, Suite 105

              Dallas
                Texas 75219

            	 	
              Advanced
                Materials, Inc.

               

            
	 	 	 	
              By:

            	 /s/William
              G Mortensen
	 	 	 	 	 William
              G Mortensen	
              President
                and CFO 

            
	 	 	 	 	
              Printed
                Name

            	
              Title

            
	 	
               

              Date
                Signed:

            	
               

              February
                26, 2007 

            


    

    


    


    The
      Bank
      is executing this Note for the purpose of acknowledging and agreeing to the
      Jury
      Waiver, the notice given under §26.02 of the Texas Business and Commerce Code
      and to comply with the waiver requirements of TRPA and BOC, and the Bank’s
      failure to execute or authenticate this Note will not invalidate this
      Note.

    


    
      	
               

              Bank:

            
	
               

              JPMorgan
                Chase Bank, N.A.

            
	
               

              By:

            	
               

              /s/James
                H Cunningham

            
	 	 James
              H Cunningham	
              SVP 

            
	 	
              Printed
                Name

            	
              Title