Exhibit 10.1



                                 LOAN AGREEMENT

                                  BY AND AMONG

                              AMEN PROPERTIES, INC.

                                  AS BORROWER;

                                       AND

                          MCGRAW BROTHERS INVESTMENTS,

                           MORIAH INVESTMENT PARTNERS,

                                LCM PARTNERSHIP,

                              W POWER & LIGHT, LP,

                               JAMES M. ALEXANDER,

                                 JON M. MORGAN,

                                  ERIC OLIVER,

                                  JOHN NORWOOD,

                               BRUCE E. EDGINGTON,

                              FORREST GILLIAM, JR.,

                                       AND

                                  JOHN BERGMAN,

                                 AS GUARANTORS;

                                       AND

                             WESTERN NATIONAL BANK,

                                    AS LENDER



$5,000,000.00                                                 February 28, 2005


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                                 LOAN AGREEMENT

         THIS LOAN  AGREEMENT (the  "AGREEMENT")  is made and entered into as of
this 28th day of February  2005, by and among AMEN  PROPERTIES,  INC, a Delaware
corporation (alternatively, "AMEN" or the "BORROWER"), whose address is 303 West
Wall Street, Suite 2300, Midland,  Texas 79701; MCGRAW BROTHERS  INVESTMENTS,  a
Texas  general   partnership,   MORIAH  INVESTMENT  PARTNERS,  a  Texas  general
partnership,  LCM PARTNERSHIP,  a Texas general partnership,  W POWER AND LIGHT,
LP, a Delaware limited partnership, whose address is 310 West Wall Street, Suite
100, Midland, Texas 79701; JAMES M. ALEXANDER., an individual, JON M. MORGAN, an
individual,  whose  address is 303 W. Wall Street,  Suite 2300,  Midland,  Texas
79701; ERIC OLIVER, an individual, JOHN NORWOOD, an individual, BRUCE EDGINGTON,
an  individual,  FORREST  GILLIAM,  JR., an  individual,  and JOHN  BERGMAN,  an
individual,  (collectively,  the  "GUARANTORS");  and WESTERN  NATIONAL  BANK, a
national  banking  association,  with  offices and place of business at 508 West
Wall, Suite 1100, Midland, Texas 79701 (alternatively, "WESTERN" or the "BANK").

NOTICE IS TAKEN OF THE FOLLOWING:

A.       Borrower is a publicly traded company which has formed a subsidiary,  W
         Power and Light,  LP, a Delaware  limited  partnership  (alternatively,
         "WPL" or the  "SUBSIDIARY") to compete in the Texas retail  electricity
         market  providing  said  electricity,  related  billing  services,  and
         customer service collection and remittance  services to residential and
         commercial customers.

B.       The Borrower and the Guarantors  have requested that the Lender advance
         a line of credit to the  Borrower in order to provide  interim  funding
         for  the  accounts   receivable  of  the  Subsidiary.   The  Borrower's
         obligations  and  commitments  will be secured by accounts  receivables
         pledged by the  Subsidiary.  In addition,  the Borrower's  indebtedness
         will be guaranteed by each of the Subsidiary's  limited  partners,  and
         those guarantees will be supported by letters of credit.

C.       The Bank has agreed to accommodate the requests of the Borrower and the
         Guarantors, but only upon and subject to the terms and provisions which
         are hereinafter specified.

         NOW,  THEREFORE,  for and in  consideration of the premises and Ten and
No/100 Dollars and other good and valuable  consideration granted by the Bank to
the Borrower, which is of direct and material benefit to Guarantors, the receipt
and  sufficiency  of which is  specifically  acknowledged  by the  Borrower  and
Guarantors, the parties do hereby agree as follows:

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                                    ARTICLE I
                               DEFINITION OF TERMS

         In addition to those terms defined in the preamble and the  recitations
found above,  the following terms shall have the respective  meanings  indicated
below for purposes of this Agreement:


         1.01. ADVANCE: The disbursement of a sum loaned or to be loaned by Bank
to the Borrower pursuant to this Agreement.

         1.02.  AGREEMENT:  This Loan Agreement,  as amended,  supplemented,  or
otherwise modified from time to time.

         1.03.  BANK  LIENS:  The  Liens in favor of Bank,  securing  all or any
portion of the Obligation,  including, without limitation,  rights in any of the
Collateral created in favor of Bank, whether by mortgage, pledge, hypothecation,
assignment, transfer or other granting or creation of Liens.

         1.04. BORROWING BASE: The lesser of the following amounts: (a) the face
amount of the Note, or (b) the Adjusted Eligible Accounts  established  pursuant
to the terms of Section 3.07 of this Agreement plus $500,000.00 availability for
issuance of Letters of Credit.

         1.05.  BUSINESS DAY: Every day (other than Saturday or Sunday) on which
Bank is open to the public generally for the transaction of banking business.

         1.06.  CAP:  The sum of Two Million  Five  Hundred  Thousand and No/100
Dollars  ($2,500,000.00),  which,  regardless of the face amount of the Note and
the Borrowing  Base is the maximum amount that the Bank has agreed to advance to
the Borrower under the terms of this Agreement, as of the execution hereof.

         1.07.  COLLATERAL:  All of the items and types of property described in
the Loan  Documents  conveyed by the  Borrower and WPL to Western to secure full
and complete payment and performance of the Obligation.

         1.08.  CURRENT ASSETS:  The current assets of any person shall mean, as
of any date,  the current  assets that would be reflected on a balance  sheet of
that person prepared as of any date in conformity with GAAP.

         1.09.  CURRENT  LIABILITIES:  The  current  liabilities  that  would be
reflected on a balance sheet of any person prepared as of any date in conformity
with GAAP.

         1.10.  DEBT:  As to  any  person,  all  liabilities,  obligations,  and
indebtedness  to any  person,  of any kind or nature,  now or  hereafter  owing,
arising, due or payable,  howsoever evidenced,  created,  incurred,  acquired or
owing, whether primary, secondary, direct, contingent, fixed, or otherwise.

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         1.11. DEBT SERVICE COVERAGE RATIO: As to any person,  the ratio of Cash
Flow,  subsequent  to  effecting  any  permissible  distributions,   during  any
specified  time period,  to those  payments of principal  and interest  required
under the Note for the same time period.

         1.12.  EVENT OF DEFAULT:  Any one of those events  described in Article
VIII below giving rise to a breach by the Borrower or any of the  Guarantors  of
the terms of this Agreement.

         1.13.  FINANCING  STATEMENT:   The  financing  statement  or  financing
statements (prepared upon standard Uniform Commercial Code forms),  executed and
delivered by the Borrower and the  Guarantors  in  connection  with any security
agreements or assignments relating to the Loan.

         1.14.  GAAP:  Generally  accepted  accounting  principles  consistently
applied.

         1.15. GOVERNMENTAL  AUTHORITY:  The United States of America, the State
of Texas,  the County of  Midland,  Texas,  the City of Midland,  Texas,  or any
agency, department, commission, bureau or instrumentality of any of them.

         1.16. GUARANTORS: All of the Guarantors acting individually pursuant to
the Guaranty Agreements to be executed at closing.

         1.17. GUARANTY AGREEMENTS: Collectively, the instruments to be executed
by each of the  Guarantors at closing as additional  security for the Loan.  For
purposes of this  Agreement,  the Guaranty  Agreements of the  Guarantors  shall
guaranty the performance of the Borrower, without limitation.

         1.18.  HIGHEST  LAWFUL RATE: The maximum  nonusurious  rate of interest
(or, if the context so requires, an amount calculated at such rate) that Bank is
allowed to contract for, charge,  take, reserve, or receive under applicable law
after taking into account, to the extent required by applicable law, any and all
relevant payments or charges under the Loan Documents.

         1.19.  LIEN:  Any  lien,  mortgage,   security  interest,   charge,  or
encumbrance of any kind, including,  without limitation, the rights of a vendor,
lessor,  or similar party under any  conditional  sales agreement or other title
retention agreement or lease substantially  equivalent thereto,  any other right
of, or  arrangement  with,  any creditor to have its claim  satisfied out of any
property or assets, or the proceeds therefrom, prior to the general creditors of
the owner thereof.

         1.20.  LOAN:  The  obligations  of the  Borrower to the Bank under that
certain  Revolving Line of Credit Note, dated February 25, 2005, in the original
principal amount of $5,000,000.00, evidenced by the Note, of even date herewith,
in the original principal amount of $5,000,000.00  which is described in greater
detail in Article III below.

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         1.21.   LOAN  DOCUMENTS:   This  Agreement,   the  Note,  the  Security
Agreements,  the Financing  Statements,  the Guaranty  Agreements  and all other
agreements or assignments  reasonably required by Bank which secure or relate to
the Loan.

         1.22. LOAN PARTIES: Collectively, the Borrower and the Guarantors.

         1.23. MATERIAL ADVERSE CHANGE: Any set of circumstances or events that:
(i) will or could reasonably be expected to have any significant effect upon the
validity,  performance, or enforceability of any Loan Document; (ii) is or could
reasonably be expected to be material and adverse to the financial  condition or
business  operations  of the  Borrower or any of the  Guarantors;  (iii) will or
could reasonably be expected to impair the ability of the Borrower or any of the
Guarantors to fulfill its obligations under the terms and conditions of the Loan
Documents;  or (iv) will or could  reasonably  be  expected to cause an Event of
Default.

         1.24.  MATERIAL  AGREEMENT:  Any  material  written or oral  agreement,
contract, commitment, or understanding to which any person is a party, having an
annualized  value of  Twenty-Five  Thousand and No/100 Dollars  ($25,000.00)  or
more,  by which such  person is directly or  indirectly  bound,  or to which any
assets of such person may be subject,  which is not subject to  cancellation  by
such person upon 30 days or less notice  without  liability for further  payment
other than nominal penalty.

         1.25. MATURITY DATE: MARCH 31, 2008, being the final maturity date when
all of the  outstanding  principal  and  accrued  interest  then due  under  the
Revolver Loan shall be finally due and payable.

         1.26.  NOTE:  The certain  Revolving  Line of Credit Note, of even date
with this  Agreement,  in the original amount of Five Million and No/100 Dollars
($5,000,000.00).

         1.27. OBLIGATION: All present and future indebtedness,  obligations and
liabilities,  and all renewals and extensions thereof, or any part thereof,  now
or hereafter owed to Bank by the Borrower and the  Guarantors,  arising from, by
virtue of, or pursuant to any Loan Document, together with all interest accruing
thereon and costs,  expenses, and attorneys' fees incurred in the enforcement or
collection thereof, whether such indebtedness,  obligations, and liabilities are
direct, indirect, fixed, contingent,  liquidated,  unliquidated, joint, several,
or joint and several or were, prior to acquisition thereof by Bank, owed to some
other person.

         1.28.  SECURITY  AGREEMENTS:  Those  instruments  to be executed by the
Borrower  and the  Subsidiary,  under  which  they  grant to  Western a security
interest  in the  following  types  of  Collateral:  (i) all of  their  accounts
receivable,   chattel  paper,  documents  and  instruments;   (ii)  all  general
intangibles;  (iii)  any  related  or  additional  property  from  time  to time
delivered to or deposited with Western expressly  securing the Obligation;  (iv)
all property in any state or  condition  used or usable in  connection  with any
property  referred to in (i) through  (vi) above;  (v) all policies of insurance
(whether or not required by Western)  covering any of their  property;  (vi) all
proceeds,  products,  replacements,  additions to, substitutions for, accessions
of, and property necessary for the operation of any of the foregoing, including,
without  limitation,  insurance  payable  as a result  of loss or  damage to the
foregoing property and any proceeds thereunder,  refunds or unearned premiums of
any such insurance policy, and claims against third parties; (vii) all books and
records related to any of the foregoing,  including  without  limitation any and
all books of account,  customer  lists and other records  relating in any way to
the  accounts and  inventory;  and (viii) any of the  aforementioned  collateral
hereafter acquired by any of them as well as Collateral which they now own or in
which  they  otherwise  have  rights  related  to any  property  of the type and
character described above.

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         1.29.  TANGIBLE NET WORTH:  The sum of any person's total assets,  less
that person's total liabilities and intangible assets. "INTANGIBLE ASSETS" shall
mean those  assets that are:  (a)  organizational  costs;  (b) accounts or notes
receivable from officers or stockholders,  shareholders,  partners,  members, or
other  holders of equity  interests;  (b)  deferred  assets,  other than prepaid
insurance and prepaid  taxes;  and (c) patents,  copyrights,  trademarks,  trade
names,   franchises,   goodwill  (including   capitalization  of  noncompetition
agreements net of amortization),  experimental expenses and other similar assets
that would be  classified as  intangible  assets on a balance sheet  prepared in
conformity with GAAP.

         1.30. OTHER DEFINITIONAL PROVISIONS:

                  A.       All terms  defined in this  Agreement  shall have the
                           above described  meanings when used in any other Loan
                           Document  or in  any  certificate,  report  or  other
                           document   made  or   delivered   pursuant   to  this
                           Agreement,  unless  same  shall  otherwise  expressly
                           require.

                  B.       Terms used herein in the  singular  shall  import the
                           plural and VICE VERSA.

                  C.       Terms not specifically  defined herein shall have the
                           meanings  accorded  them  under  generally   accepted
                           accounting   principles,   or   the   Texas   Uniform
                           Commercial Code, as appropriate.

                  D.       The words "hereof," "herein,"  "hereto,"  "hereunder"
                           and similar terms when used in this  Agreement  shall
                           refer  to this  Agreement  as a whole  and not to any
                           particular provisions of this Agreement.

                                   ARTICLE II
                             SCHEDULES AND EXHIBITS

         Attached hereto are the following  Schedule and Exhibits,  the terms of
which are for all purposes incorporated herein by reference:

                  Exhibit "A"         Form of Borrowing Base Certificate
                  Exhibit "B"         Form of Compliance Certificate


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                                   ARTICLE III
                             THE ORIGINAL OBLIGATION

         3.01.  THE REVOLVER  LOAN.  Bank hereby  agrees to lend to the Borrower
(and the  Borrower  hereby  agrees to borrow  from Bank) the Loan,  to be in the
original principal amount of Five Million and No/100 Dollars ($5,000,000.00) and
subject to the terms and provisions of this Agreement,  such sum to be evidenced
by the Note.

         3.02.  LIMITATIONS  ON ADVANCES AND  BORROWER'S  LIABILITY.  Borrower's
liability  for repayment of the interest on account of the Loan shall be limited
to and  calculated  with respect to proceeds from the Note actually  advanced to
Borrower pursuant to the terms of this Agreement and only from the date or dates
of such Advances.  Loan proceeds advanced by Bank (acting in its sole discretion
upon the  occurrence  of an Event of Default) by journal  entry to pay interest,
financing  costs, and any other costs  associated with  foreclosure,  as well as
Loan proceeds  advanced directly by Bank to pay costs or expenses required to be
paid by Borrower pursuant to this Agreement, shall constitute actual Advances to
Borrower.

         3.06. ORIGINAL OBLIGATION. The Advances to be made under the Loan shall
constitute   Borrower's  Original  Obligation  to  Bank  for  purposes  of  this
Agreement.

         3.07.  BORROWING  BASE. At any time, and from time to time, the amounts
outstanding  under the Note shall not exceed the lesser of: (a) the face  amount
of the Note; or (b) the Borrowing  Base, as determined  from time to time by the
Bank,  acting in its sole and  unlimited  discretion  (said lesser  amount being
referred to herein as the  "COMMITMENT").  As used in this  Agreement,  the term
"BORROWING BASE" shall mean an amount equal to seventy-five percent (75%) of the
Eligible Accounts of Borrower and the Subsidiary.

         For the purposes of this Agreement,  the term "ELIGIBLE  ACCOUNT" shall
mean an account  receivable of the Borrower or the Subsidiary (net of any credit
balance,  trade discount, or unbilled amount or retention) for which each of the
following  statements  is  accurate  and  complete  (and  the  Borrower  and the
Subsidiary,  by including  such account  receivable  in any  computation  of the
Borrowing Base shall be deemed to represent and warrant to the Bank the accuracy
and completeness of such statements):

                           a.       Said  account  receivable  is a binding  and
                                    valid obligation of the obligor thereon,  in
                                    full force and effect,  and  enforceable  in
                                    accordance with its terms;

                           b.       Said account  receivable is genuine,  in all
                                    respects,   as  appearing  on  its  face  as
                                    represented in the books and records of Loan
                                    Parties,   and  all  information  set  forth
                                    therein is true and correct;

                           c.       Said  account  receivable  is  free  of  all
                                    default of any party thereto, counterclaims,
                                    offsets,   and   defenses,   and   from  any
                                    rescission,  cancellation, or avoidance, and
                                    all right  thereof,  whether by operation of
                                    law or otherwise;

                           D.       The payment of said  account  receivable  is
                                    not more than  ninety (90) days past due the
                                    invoice date thereof;

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                           e.       Said   account   receivable   is   free   of
                                    concessions  or   understandings   with  the
                                    obligor thereon of any kind not disclosed to
                                    and approved by the Bank in writing;

                           f.       Said account receivable is, and at all times
                                    will be, free and clear of all liens  except
                                    those in favor of the Bank;

                           g.       Said account  receivable is not a receivable
                                    arising   from   intercompany   indebtedness
                                    existing  between  or among  any of the Loan
                                    Parties;

                           h.       Said  account  receivable  is  derived  from
                                    sales  made  or  services  rendered  to  the
                                    obligor  in  the  ordinary   course  of  the
                                    business of the Loan Parties;

                           i.       The obligor on said account  receivable  (i)
                                    is located  within the United  States or the
                                    District  of  Columbia;   (ii)  is  not  the
                                    subject  of  any  Bankruptcy  or  insolvency
                                    proceeding,  nor has a trustee  or  receiver
                                    been appointed for all or a substantial part
                                    of its  property,  nor has said obligor made
                                    an assignment  for the benefit of creditors,
                                    admitted  its  inability to pay its debts as
                                    they mature or suspended its business, (iii)
                                    is not  affiliated,  directly or indirectly,
                                    with  AMEN  or  WPL  as  a   subsidiary   or
                                    affiliate,  employee or otherwise;  and (iv)
                                    is  not  a  state  or   federal   government
                                    department,  commission,  board,  bureau, or
                                    agency; and

                           j.       Said account  receivable  did not arise from
                                    sales to an obligor  as to whom ten  percent
                                    (10%)   or  more  of  the   total   accounts
                                    receivable owing by such obligor to the Loan
                                    Parties are delinquent  accounts  receivable
                                    (that  is,  an  account  that is  more  than
                                    ninety (100) days delinquent).

         During the period from the date of this Agreement until March 31, 2005,
the amount of the Borrowing Base for borrowings  under the Revolver Note will be
the lesser amount of: (a) $5,000,000.00 or (b) seventy-five percent (75%) of the
Eligible  Accounts of Borrower and the  Subsidiary.  Within  thirty (30) days of
March 31,  2005,  and  thereafter  within  thirty  (30) days of each  month end,
Borrower  shall  submit  to the Bank a  completed  Borrowing  Base  Certificate,
prepared upon the form attached hereto as Exhibit "A." Also, discounted from the
Borrowing Base will be those face amounts of any  outstanding  Letters of Credit
issued by the Bank for the benefit of the Borrower.  Upon receipt of a completed
version  of the  Borrowing  Base  Certificate,  the Bank shall  redetermine  the
Borrowing  Base, in the exercise of its sole  discretion and in accordance  with
its customary  practices and standards for loans of a similar  nature.  The Bank
specifically  reserves the right to discount all or part of any receivable  from
the Borrowing  Base  calculations.  Each  redetermination  of the Borrowing Base
shall be effective and applicable  for the purposes of this Agreement  until the
effective date of the next redetermination of the Borrowing Base.

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<PAGE>

         If the aggregate  amounts  outstanding  under the Revolver Note exceeds
the Revolver  Commitment at any time,  the Bank shall provide  written notice of
that event to the Borrower.  On or before the tenth (10th) day following receipt
of such notification by the Borrower, Borrower shall either (a) make a mandatory
payment to the Bank of the  principal of the Note in an amount at least equal to
the amount necessary to cause the outstanding  principal  balance of the Note to
be less than or equal to the Borrowing  Base or (b) create liens on other assets
of the Borrower, satisfactory in nature, quantity, and value to the Bank, acting
in its sole discretion.

         3.08.  LIMITATION TO CAP. Regardless of the face amount of the Revolver
Note and the Borrowing Base, as presently determined or subsequently determined,
Borrowers and the Bank  acknowledge and agree that the Bank will not be required
to advance any amount under the Revolver Loan in excess of the Cap.

                                   ARTICLE IV
                                COLLATERALIZATION

         4.01.  COLLATERAL.  To secure full and complete payment and performance
of the Obligation, Borrower and WPL hereby grant, convey to, and create in favor
of Bank  Liens  in,  to,  and on all of the  property  covered  by the  Security
Agreement (the "COLLATERAL").

         4.02.  GUARANTY  AGREEMENTS.  In addition to the Borrower's  grant of a
security interest in the collateral, Borrower's performance under the loan shall
be supported by the execution by the Guarantors of the Guaranty Agreements.  The
Guaranty  Agreement under which WPL guarantees the Obligation will be unlimited.
The Guaranty Agreement of each of the other Guarantors will be up to, but not to
exceed the following amounts:

                          McGraw Brothers Investments      $1,000,000.00
                          Moriah Investment Partners       $1,000,000.00
                          Jon M. Morgan                    $  562,480.00
                          Eric Oliver                      $  562,520.00
                          John Norwood                     $  500,000.00
                          LCM Partnership                  $  250,000.00
                          Forrest Gilliam, Jr.             $  500,000.00
                          John Bergman                     $  250,000.00
                          James M. Alexander               $  250,000.00
                          Bruce E. Edgington               $  125,000.00

         4.03.  LETTERS OF CREDIT.  To provide  support  for their  performances
under the  Guaranty  Agreements,  each of the  Guarantors  other  than WPL shall
provide to the Bank a letter of  credit,  of even date  herewith,  each of which
shall  cover,  at a minimum,  at least  one-half  of the amount  covered by each
Guaranty Agreement (collectively, the "LETTERS OF CREDIT").


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                                    ARTICLE V
                                  THE ADVANCES

         5.01. LOAN LIMITATIONS.  Notwithstanding  anything stated herein to the
contrary,  in no event shall Bank be obligated to advance to Borrower  hereunder
or under the Loan Documents any amounts in excess of the lesser of:

                           a.       The Loan Amount; or

                           b.       The  maximum  amount Bank may advance to any
                                    borrower   under   applicable    regulations
                                    governing Bank.

         5.02. CONDITIONS PRECEDENT. The obligation of Bank to make each Advance
hereunder,  including  the  Initial  Advance,  shall be  subject to the prior or
simultaneous occurrence or satisfaction of each of the following conditions:

                           a.       Bank shall have  received  from Borrower all
                                    of  the  Loan  Documents  duly  executed  by
                                    Borrower,   and  the  Loan  Documents  shall
                                    remain   outstanding   and   enforceable  in
                                    accordance with their terms, all as required
                                    hereunder.

                           b.       The  representations  and warranties made by
                                    Borrower, which are set forth in Article VI,
                                    shall be true and correct in every  material
                                    respect as of the date of each Advance,  and
                                    if requested by Bank,  Borrower shall give a
                                    certificate to Bank to that effect.

                           c.       The  covenants  made by  Borrower  to  Bank,
                                    which are set forth in Article  VII  hereof,
                                    shall have been fully complied with,  except
                                    as such  compliance  may be  limited  by the
                                    passage of time.

                           d.       No Event of Default under the Loan Documents
                                    shall currently exist.

                           e.       If required by the Bank, Borrower shall have
                                    furnished  to  Bank   certified   copies  of
                                    resolutions    of    Borrower    authorizing
                                    execution,  delivery, and performance of all
                                    of the Loan  Documents and  authorizing  the
                                    borrowing hereunder,  along with, regardless
                                    of the nature of the borrowing entity,  such
                                    certificates  of existence,  certificates of
                                    good  standing,  and other  certificates  or
                                    documents a Bank may  reasonably  require to
                                    evidence Borrower's authority.

                           f.       If  requested by Bank,  Borrower  shall have
                                    furnished  to Bank an opinion of counsel for
                                    Borrower to the effect that:

                                    i.       The Borrower and the Subsidiary are
                                             duly organized and validly existing
                                             in good standing  under the laws of
                                             the  State  of  Delaware.  Borrower
                                             possesses  full power and authority
                                             to perform  Borrower's  obligations
                                             hereunder;

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<PAGE>

                                    ii.      The Loan  Documents  have been duly
                                             authorized, executed, and delivered
                                             by  Borrower  and   constitute  the
                                             valid and  binding  obligations  of
                                             Borrower,   not   subject   to  any
                                             defense based upon usury,  capacity
                                             of the Borrower, or otherwise;

                                    iii.     the Loan Documents are  enforceable
                                             in accordance with their respective
                                             terms,   except   as   limited   by
                                             Bankruptcy,  insolvency,  and other
                                             laws  affecting  creditors'  rights
                                             generally,  and except that certain
                                             remedial  provisions thereof may be
                                             limited by the laws of the State of
                                             Texas;

                                    iv.      such  counsel is  neither  handling
                                             nor  has   knowledge   of  actions,
                                             suits,  or  proceedings  pending or
                                             threatened   against  or  affecting
                                             Borrower or involving the priority,
                                             validity,  or enforceability of the
                                             liens or security interests arising
                                             out of the Loan Documents;

                                    v.       to the  knowledge of such  counsel,
                                             after reasonable inquiry,  Borrower
                                             is not in default  with  respect to
                                             any order, writ, injunction, decree
                                             or  demand  of  any  court  of  any
                                             Governmental Authority;

                                    vi.      to the  knowledge of such  counsel,
                                             after   reasonable   inquiry,   the
                                             consummation  of  the  transactions
                                             hereby    contemplated    and   the
                                             performance  of this Agreement will
                                             not  violate  or   contravene   any
                                             provision of the agreement creating
                                             or    governing     the    business
                                             operations of Borrower and will not
                                             result   in  any   breach   of,  or
                                             constitute  a  default  under,  any
                                             mortgage,  deed  of  trust,  lease,
                                             Bank loan, or credit agreement,  or
                                             other   instrument   to  which  the
                                             Borrower is a party or by which the
                                             Borrower  may be bound or affected;
                                             and

                                    vii.     such  other  matters  as  Bank  may
                                             reasonably request.

                           g.       Bank shall have  received  from the Borrower
                                    such  other   instruments,   evidence,   and
                                    certificates as it may reasonably require.

                                   ARTICLE VI
                   REPRESENTATIONS AND WARRANTIES OF BORROWER

         Borrower and Guarantors jointly and severally  represent and warrant to
Western that:

         6.01. LEGAL  COMPLIANCE.  Borrower has no knowledge of any violation of
any law,  ordinance,  order,  rule, or regulation of any Governmental  Authority
that exists with respect to any real  property  leased or owned by the Borrower;
the use thereof complies with all applicable zoning ordinances, regulations, and
restrictive   covenants  affecting  the  that  real  property;   and  all  laws,
ordinances,  orders,  rules and regulations of all Governmental  Authorities for
such use have been or will be satisfied.

                                       10
<PAGE>

         6.02.  FINANCIAL  STATEMENTS.  The financial statements and information
regarding  the  financial  condition of the Borrower and  Guarantors  heretofore
delivered  to Bank are true and correct in all  material  respects,  having been
prepared  for federal  income tax  purposes  with  respect to the  Borrower  and
Guarantors,  and fairly and  accurately  present the financial  condition of the
Borrower and Guarantors as of the date thereof;  no Material  Adverse Change has
occurred in the  financial  condition of the Borrower and  Guarantors  reflected
therein  since the date thereof;  and no  additional  borrowing has been made or
committed to by the Borrower and  Guarantors  since the date thereof  other than
the borrowing contemplated hereby.

         6.03. PENDING LITIGATION.  No actions, suits or proceedings are pending
or, to the  knowledge  of the  Borrower,  threatened  against or  affecting  the
Borrower,  or the priority of the liens thereof,  at law or in equity, or before
or by any Governmental  Authority,  except actions,  suits and proceedings fully
covered by insurance,  or which, if adversely  determined,  would not impair the
ability of the Borrower to pay when due any amounts included in the Obligation.

         6.04. ABSENCE OF GOVERNMENTAL  DEFAULT.  The Borrower is not in default
with respect to any order writ, injunction, decree or demand of any court of any
Governmental Authority.

         6.05.  ABSENCE OF EVENT OF DEFAULT.  No Event of Default (as defined in
Article VIII hereof) has occurred and is  continuing,  and no event has occurred
and is  continuing  which  with  notice  or the  passage  of time or both  would
constitute  an Event  of  Default  hereunder,  which  has not been  cured to the
satisfaction of Bank.

         6.06. ORGANIZATION. The Borrower is duly organized and validly existing
in good standing under the laws of the state of its  organization and is in good
standing under the laws of the states in which qualification is necessary for it
to transact  business.  The Borrower has full power and  authority to enter into
and perform  Borrower's  obligations  under the Loan  Documents,  including  the
making of the borrowing contemplated hereby; and the Loan Documents to which the
Borrower is a party, when executed,  will have been, and shall continue to be as
long as the Loan is outstanding, duly authorized,  executed and delivered by the
Borrower and constitute  Borrower's valid and binding  obligations,  enforceable
against  Borrower in accordance  with its respective  terms,  not subject to any
defense based upon usury, capacity of the Borrower, or otherwise.

         6.07.  ABSENCE OF DEFAULT UNDER OTHER  AGREEMENTS.  The consummation of
the transactions contemplated by, and the performance of, this Agreement and the
Loan  Documents  will not violate or contravene  any provision of any instrument
creating or  governing  the  business  operations  of the  Borrower and will not
result in a breach of, or  constitute a default  under,  any  mortgage,  deed of
trust,  lease,  Bank loan or credit  agreement or other  instrument to which the
Borrower is a party or by which the Borrower may be bound or affected.

         6.08.  NO  CONSENT  NECESSARY.  No  consent  of any other  party and no
consent,  license,  approval or authorization of, or registration or declaration
with, any  Governmental  Authority is required in connection with the execution,
delivery,   performance,   validity  or   enforceability   of  the  transactions
contemplated  by  this  Agreement  or the  instruments  executed  in  connection
herewith which have not previously been obtained.

                                       11
<PAGE>

         6.09.  USE OF PROCEEDS.  The  Borrower has entered into this  Agreement
consistent  with its duly  authorized  purposes and will use the proceeds of the
Loan made pursuant to this Agreement as provided herein as principal for its own
account and for business and  commercial  purposes as such terms are used in the
Consumer  Credit  Protection  Act (and the Truth in Lending  Act  forming a part
thereof).

                                   ARTICLE VII
                            COVENANTS OF LOAN PARTIES

         7.01.  LOAN PARTIES'  AFFIRMATIVE  COVENANTS.  Until the Note and other
liabilities of the Borrower and the  Guarantors  hereunder are paid in full, the
Borrower and Guarantors agree that they shall fulfill the following covenants:

         a.       The Borrower shall furnish to Western,  within one hundred and
                  twenty  (120)  days  after  the  close  of each  fiscal  year,
                  beginning  with the fiscal  year  ending  December  31,  2004,
                  copies of consolidated financial statements which will include
                  a balance sheet and statements of operations setting forth the
                  financial position of the Borrower, the Subsidiary, and all of
                  their affiliates and subsidiaries as of the end of such fiscal
                  year and all of the debts,  liabilities and obligations  owing
                  by the Borrower and the Subsidiary  during such period,  which
                  shall  have  been  audited  by  independent  certified  public
                  accountants  selected by the  Borrower  satisfactory  to Bank,
                  said   statements  to  be  accompanied  by   certificates   of
                  compliance  executed  by  the  President  or  Chief  Financial
                  Officer of the Borrower;

         b.       The Borrower shall furnish to Western,  within forty-five (45)
                  days of the end of each fiscal quarter, with the first quarter
                  ending on March 31,  2005,  copies of  consolidated  financial
                  statements  which will include a balance sheet and  statements
                  of  operations  setting  forth the  financial  position of the
                  Borrower,  the  Subsidiary,  and all of their  affiliates  and
                  subsidiaries  as of the end of such fiscal year and all of the
                  debts,  liabilities and obligations  owing by the Borrower and
                  the  Subsidiary  during  such  period,  which  shall have been
                  audited by independent  certified public accountants  selected
                  by the Borrower  satisfactory  to Bank,  said statements to be
                  accompanied  by  certificates  of  compliance  executed by the
                  President or Chief Financial Officer of the Borrower;

         c.       The Subsidiary of shall furnish to Western, within thirty (30)
                  days  after  the end of each  calendar  month,  with the first
                  month ending on March 31, 2005, copies of internally  prepared
                  financial  statements  to consist of a balance  sheet,  income
                  statement,  accounts  receivable  and accounts  payable  aging
                  reports;

                                    12
<PAGE>

         d.       The Borrower and the Subsidiary shall furnish to Bank,  within
                  thirty (30) days of the end of each calendar  month,  with the
                  first to be due for the  month  ending  March  31,  2005,  the
                  Borrowing Base  Certificate  described in Article III, Section
                  3.05 above,  which Borrowing Base Certificate shall include an
                  aging report on all Eligible Accounts;

         e.       The Borrower shall furnish to Western, within thirty (30) days
                  of transmitting any tax return to any governmental  authority,
                  beginning December 31, 2005, a copy of that tax return;

         f.       Beginning on December 31, 2005,  the Borrower shall maintain a
                  consolidated  Debt Service  Coverage  Ratio of at least 1.1 to
                  1.0, measured annually;

         g.       The Borrower and the  Subsidiary  shall  maintain all of their
                  primary deposit accounts with the Bank;

         h.       Each of the  Guarantors  shall  provide to Western a letter of
                  credit in an amount  sufficient  to support  one-half of their
                  respective  Guaranty  Agreement with a minimum maturity of one
                  year, to be renewed annually and to remain in full force until
                  the maturity date of this Agreement.

         i.       The Borrower shall pay all  reasonable  legal fees incurred by
                  the Bank in connection with the preparation of this Agreement,
                  the Note, and all other agreements and documents  contemplated
                  hereby  or  thereby.  The Loan  Parties  will,  upon  request,
                  promptly reimburse the Bank for all amounts expended, advanced
                  or incurred by the Bank to satisfy any  obligation of the Loan
                  Parties  under this  Agreement  or the Note.  The Loan Parties
                  shall pay all  reasonable  legal fees  incurred by the Bank to
                  collect  the Note or to  enforce  the rights of the Bank under
                  this  Agreement  or  any  other  instruments  referred  to  or
                  mentioned herein or therein or executed in connection herewith
                  or  therewith,  which  amounts  will  include all court costs,
                  attorneys'  fees,  fees  of  auditors  and  accountants,   and
                  investigation  expenses  reasonably  incurred by the Bank from
                  third  parties in connection  with any such matters,  together
                  with  interest at the Highest  Lawful Rate on each such amount
                  from the date that the same is expended,  advanced or incurred
                  by the Bank until the date it is repaid to the Bank;

                                       13
<PAGE>

         j.       The Borrower  shall observe and comply with all laws statutes,
                  codes,   acts,   ordinances,   orders,   judgments,   decrees,
                  injunctions,   certificates,  franchises,  permits,  licenses,
                  authorizations,    rules,    regulations,    directions    and
                  requirements  of all federal,  state,  county,  municipal  and
                  other governments,  departments,  commissions, boards, courts,
                  authorities, officials and officers, domestic and foreign. The
                  Loan  Parties  reserve the right to contest in good faith,  by
                  appropriate  proceedings  diligently  conducted,  any  of  the
                  foregoing; and

         k.       The Borrower  shall promptly cure any defects in the execution
                  and  delivery  of  this  Agreement,  the  Note,  or any  other
                  instrument or instruments  referred to or mentioned  herein or
                  therein.   The  Loan  Parties  will  immediately  execute  and
                  deliver,  upon request of the Bank, all such further documents
                  or  agreements   or   instruments   in   compliance   with  or
                  accomplishment  of the  covenants  and  agreements of the Loan
                  Parties in this Agreement.

         7.02.  LOAN  PARTIES'  NEGATIVE  COVENANTS.  Until  the  expiration  or
termination of the credit extended hereunder,  and thereafter until the Note and
other  liabilities  of Borrower  and  Guarantors  hereunder  are paid in full or
unless the Bank shall otherwise consent in writing, the Loan Parties agree that:

         a.       Neither the Borrower nor the Subsidiary  shall incur,  create,
                  assume or suffer to exist any debts,  liens,  or  encumbrances
                  without first obtaining the prior written consent of the Bank,
                  not to be unreasonably withheld.

         b.       Neither Borrower nor the Subsidiary shall guarantee,  endorse,
                  or otherwise  become liable upon any material  obligations  of
                  any other person, by the endorsement of negotiable  instrument
                  for deposit or collection,  other than the Obligations imposed
                  under this Agreement.

         c.       Without first  obtaining the written  consent of the Bank, not
                  to be  unreasonably  withheld,  neither the  Borrower  nor the
                  Subsidiary  shall make a conveyance of any substantial  assets
                  to any third party,  save and except for any assets of nominal
                  value no  longer  needed in their  business,  and  except  for
                  conveyances  made for  adequate  consideration  in the  normal
                  course of business.

         d.       Neither the Borrower nor the  Subsidiary  shall enter into any
                  transaction,  including,  without  limitation,  any  purchase,
                  sale,  lease or exchange of property or the  rendering  of any
                  service,  with any  affiliate  or related  entity  unless such
                  transaction is otherwise  permitted under this Agreement or is
                  in the ordinary  course of their business and is upon fair and
                  reasonable  terms no less  favorable  to them than they  would
                  obtain in a comparable arm's length transaction with an entity
                  not affiliated or related.

         e.       Neither  Borrower nor the Subsidiary  shall declare or pay any
                  dividend, purchase, redeem, or otherwise acquire for value any
                  of the stock or partnership interests of any of the Guarantors
                  now or  hereafter  outstanding,  return  any  capital to their
                  shareholders  or partners,  or make any  distribution of their
                  assets to their  shareholders  or partners as such,  or permit
                  any subsidiary to purchase or otherwise  acquire for value any
                  stock or partnership interests of the Guarantors.

         f.       Neither  Borrower nor the  Subsidiary  shall  discount or sell
                  with  recourse,  or sell for less than the greater of the face
                  or market value thereof, any notes or accounts receivable.

         g.       Neither Borrower nor the Subsidiary shall create any new class
                  of  stock,   whether  common  or  preferred,   nor  issue  any
                  additional  common  or  preferred  stock,  nor grant any stock
                  options covering any stock of the Guarantors.

                                       14
<PAGE>

                                  ARTICLE VIII
                                EVENTS OF DEFAULT

         8.01.    DEFINITION. The following shall constitute "Events of Default"
                  hereunder:

         a.       If  either  the  Borrower  or any of the  Guarantors  fails to
                  timely  pay,  within  three  (3)  days  of its due  date,  any
                  installment  of  principal or interest on the Note when due or
                  shall fail to timely pay any other indebtedness secured by the
                  Loan Documents when due;

         b.       If  either  the  Borrower  or any of the  Guarantors  fails to
                  fulfill any of the terms,  provisions,  or requirements of any
                  Material Agreement;

         c.       If  either  the  Borrower  or any of the  Guarantors  fails to
                  comply with any of the  covenants,  duties,  or obligations of
                  Borrower or such  Guarantors,  and such failure  continues for
                  thirty (30) days after the  delivery of written  notice to the
                  relevant Borrower or Guarantor;

         d.       If a default,  including the passage of any applicable  notice
                  and cure periods, occurs under any of the Loan Documents;

         e.       If at any time any  representation  or warranty made by any of
                  the Loan Parties is materially incorrect;

         f.       If either the Borrower or any of the Guarantors:

                   i.      applies  for  or  consents  to the  appointment  of a
                           receiver, trustee, or liquidator,

                  ii.      is unable or admits in writing its  inability  to pay
                           its debts as they mature,

                 iii.      makes  a  general   assignment  for  the  benefit  of
                           creditors,

                  iv.      is adjudicated bankrupt or insolvent, or

                   v.      files a voluntary  petition in  bankruptcy  or file a
                           petition  or  answer  seeking  reorganization  or  an
                           arrangement  with  creditors or take advantage of any
                           insolvency  law or  files  an  answer  admitting  the
                           material  allegations  of a petition filed against it
                           in any  bankruptcy or insolvency  proceeding,  or any
                           action  shall be taken by either  Borrower  or any of
                           the  Guarantors  for the purpose of effecting  any of
                           the foregoing;

         g.       If an order, judgment or decree shall be entered,  without the
                  application, approval, or consent of either Borrower or any of
                  the  Guarantors  by  any  court  of  competent   jurisdiction,
                  appointing a receiver,  trustee or  liquidator of the Borrower
                  or any of the  Guarantors or of all or a  substantial  part of
                  the  assets  of any of  the  Loan  Parties,  and  such  order,
                  judgment,  or decree shall continue unstayed and in effect for
                  any period of sixty (60) consecutive days;

                                       15
<PAGE>

         h.       If any  Loan  Party  executes  any  conditional  bill of sale,
                  chattel mortgage,  or other security  instrument  covering any
                  materials,  fixtures,  or articles intended to be incorporated
                  in the  Premises  or the  appurtenances  thereto,  or covering
                  articles of personal property placed in the Premises, or files
                  a  financial  statement  publishing  notice  of such  security
                  instrument, or if any of such materials, fixtures, or articles
                  be not  purchased  so that the  ownership  thereof  will  vest
                  unconditionally   in  the  relevant  Loan  Party,   free  from
                  encumbrances,  on delivery at the  Premises and payment of the
                  purchase price upon customary terms (not more than thirty (30)
                  days),  or if a Loan  Party  does  not  produce  to Bank  upon
                  reasonable  demand true and correct  copies of the  contracts,
                  bills of sale, statements,  receipted vouchers, or agreements,
                  or any of them,  under which that Loan Party  claims  title to
                  such materials, fixtures, and articles;

         i.       If any Loan  Party  defaults  under any other  loan  documents
                  representing,  evidencing,  or securing any other loan made to
                  that Loan Party; or

         j.       If a Loan Party  fails to comply with any  requirement  of any
                  Governmental Authority within thirty (30) days after notice in
                  writing of such  requirement  shall have been received by that
                  Loan Party.

         8.02.  REMEDIES.  Upon the occurrence of any Event of Default described
in Section  8.01,  the  lending  obligations,  if any, of Bank  hereunder  shall
immediately  terminate,  and the  entire  principal  amount  of all  Obligations
outstanding  together with interest then accrued and unpaid thereon shall become
immediately  due and payable,  all without demand and  presentment  for payment,
notice of nonpayment,  protest, notice of protest, notice of dishonor, notice of
intention to accelerate  maturity or notice of acceleration of maturity,  or any
other notice of default of any kind, all of which are hereby expressly waived by
the Loan Parties.

         8.03.  NON-COMPLIANCE.  Should  Borrower  be in default  of, or fail to
comply with any covenant contained in this Loan Agreement, and if Borrower shall
fail to cure such  default or failure to comply with such  covenant,  within ten
(10) days  after the  receipt of  written  notice of such  default or failure to
comply, then, Bank may at Bank's option, increase the interest rate provided for
in the Note to reflect the increased  monitoring  by Bank and increased  risk to
Bank of  Borrower's  non-compliance.  Bank may  increase  the  interest  rate an
additional  one  percent  for  failure  to comply  with  reporting  requirements
regarding  Financial  Statement  and Other  Information  as required by the Loan
Agreement,  and an additional  one percent for  Borrower's  non-compliance  with
performance  standards detailed in the Financial Covenants contained in the Loan
Agreement.  Nothing in this paragraph shall require or obligate Bank to exercise
this  option  to  increase  the  interest  rate on the Note in lieu of any other
remedy  available to Bank,  including that of  acceleration  of the Note. If the
interest  rate on the Note is increased as provided for in this  paragraph,  and
thereafter  Borrower achieves  compliance with all of its covenants contained in
this Loan Agreement,  then Bank, upon Borrower's written request, will reinstate
the interest rate provided for in the Note.

                                       16
<PAGE>

         8.04.  RIGHT OF SETOFF.  Upon the occurrence and during the continuance
of any  Event  of  Default,  or if any Loan  Party  becomes  insolvent,  however
evidenced,  Bank is hereby authorized at any time and from time to time, without
prior  notice to any Loan Party (any such notice being  expressly  waived by the
Loan  Parties),  to set off and apply any and all deposits  (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by Bank to or for the credit or the  account of the Loan  Parties
against  any and all of the  Obligations,  irrespective  of  whether or not Bank
shall have made any demand under this  Agreement  or the Note and although  such
Obligations  may be unmatured.  Bank agrees promptly to notify the affected Loan
Parties after any such setoff and application, provided that the failure to give
such notice  shall not affect the validity of such setoff and  application.  The
rights of Bank under  this  Section  8.03 are in  addition  to other  rights and
remedies (including,  without limitation, other rights of setoff) which Bank may
have.

         8.05.  DELEGATION  OF DUTIES AND  RIGHTS.  Bank may  perform any of its
duties or  exercise  any of its Rights  under the Loan  Papers by or through its
officers, directors, employees, attorneys, agents or other representatives.

         8.06.  BANK NOT IN CONTROL.  None of the covenants or other  provisions
contained in this  Agreement or the other Loan Papers shall,  or shall be deemed
to, give Bank the Right to exercise  control over the affairs or  management  of
any of the Loan Parties.

         8.07.  WAIVERS BY BANK.  The Loan Parties  specifically  recognize  and
agree  that the  acceptance  by Bank at any  time and from  time to time of part
payment  on the  Obligation  shall  not be deemed to be a waiver of any Event of
Default then existing. No waiver by Bank of any Event of Default shall be deemed
to be a waiver of any other  then-existing  or subsequent  Event of Default.  No
delay or omission by Bank in exercising any right under this Agreement or any of
the other Loan  Documents  shall  impair such Right or be  construed as a waiver
thereof or any acquiescence therein.

         8.08.  CUMULATIVE  RIGHTS.  All  rights  available  to Bank  under this
Agreement and the other Loan  Documents are  cumulative  of, and in addition to,
all other rights available to Bank at law or in equity.  The exercise or partial
exercise of any such right shall not  preclude  the  exercise of any other right
under the Loan Documents or otherwise.

         8.09.  EXPENDITURES  BY BANK.  All court costs,  reasonable  attorneys'
fees,  other costs of  collection,  and other sums spent by Bank pursuant to the
exercise of any right provided herein shall be payable to Bank on demand,  shall
become part of the  Obligation,  and shall bear  interest at the Highest  Lawful
Rate per annum on each such amount commencing on the date notice of such claims,
judgments,  costs, charges or attorneys' fees is given to Borrower by Bank until
the date paid by Borrower.

                                       17
<PAGE>

                                   ARTICLE IX
                   BANK'S DISCLAIMERS - BORROWER'S INDEMNITIES

         9.01. LIMITATION ON INTEREST. All agreements between Borrower and Bank,
whether now existing or hereby  arising and whether  written or oral, are hereby
expressly  limited so that in no  contingency  or event  whatsoever,  whether by
reason of  acceleration  of the  maturity  of the Loan or  otherwise,  shall the
amount paid, or agreed to be paid, to Bank for the use, forbearance or detention
of the  money  to be  loaned  hereunder  or  otherwise,  or for the  payment  or
performance of any covenant or obligation contained herein or in the Note, or in
any  other  Loan  Documents,  exceed  the  Highest  Lawful  Rate.  If under  any
circumstance  whatsoever  fulfillment of any provision hereof or of the Note, or
other Loan  Documents,  at the time  performance of such provision shall be due,
shall  involve  transcending  the Highest  Lawful Rate,  then,  ipso facto,  the
obligation to be fulfilled  shall be reduced to the limit of such validity;  and
if under any  circumstance  Bank shall ever  receive as interest or otherwise an
amount which would exceed the Highest  Lawful Rate,  the amount,  if any,  which
would  exceed the Highest  Lawful Rate shall be applied to the  reduction of the
principal  amount  owing on  account  of the  Loan or on  account  of any  other
principal  indebtedness of Borrower to Bank, and not to the payment of interest,
or, if such excessive  interest  exceeds the unpaid balance of principal  hereof
and such other indebtedness,  the amount of such excessive interest that exceeds
the unpaid  balance of  principal  hereof and such other  indebtedness  shall be
refunded  to  Borrower.  All sums paid or agreed to be paid to Bank for the use,
forbearance,  or  detention  of the  indebtedness  of  Borrower to Bank shall be
amortized,  prorated,  allocated,  and spread  throughout  the full term of such
indebtedness  until  payment  in full so that the  actual  rate of  interest  on
account of such  indebtedness  is uniform  throughout  the term  thereof and, in
conjunction  therewith,  if the Loan  should ever be deemed to consist of two or
more  loans,  then  any sum  paid or  agreed  to be  paid to Bank  for the  use,
forbearance,  or  detention  of the  indebtedness  of  Borrower to Bank which is
deemed to be excessive  interest with respect to one or more of such loans shall
be allocated to the loan or loans for which the Highest Lawful Rate has not been
contracted  for,  charged,  or received or for which no maximum rate of interest
exists.

         9.02. BORROWER'S MANAGEMENT. Any term or condition hereof, or of any of
the Loan Documents to the contrary notwithstanding,  Bank shall not have, and by
its execution and acceptance of this Agreement hereby expressly  disclaims,  any
obligation or  responsibility  for the  management,  conduct or operation of the
business and affairs of the Borrower;  and any term or condition  hereof,  or of
any of the Loan Documents,  permitting Bank to disburse funds,  whether from the
proceeds of the Loan or otherwise,  or to take or refrain from taking any action
with respect to either  Borrower,  the  Improvements or any other collateral for
repayment of the Loan,  shall be deemed to be solely to permit Bank to audit and
review the  management,  operation,  and conduct of the  business and affairs of
either  Borrower,  and to maintain and  preserve  the  security  given by either
Borrower to Bank for the Loan,  and may not be relied upon by any other  person.
Further,  Bank  shall  not  have,  has not  assumed,  and by its  execution  and
acceptance  of this  Agreement  hereby  expressly  disclaims  any  liability  or
responsibility  for the payment or performance of any indebtedness or obligation
of  either  Borrower,  and no term or  condition  hereof,  or of any of the Loan
Documents, shall be construed otherwise.  Borrower hereby expressly acknowledges
that no term or  condition  hereof,  or of any of the Loan  Documents,  shall be
construed so as to deem the  relationship  between Borrower and Bank to be other
than that of borrower and lender. Borrower shall at all times represent that the
relationship  between  Borrower  and Bank is solely that of borrower and lender.
Borrower  hereby  indemnifies  and agrees to hold Bank harmless from and against
any cost,  expense, or liability incurred or suffered by Bank as a result of any
assertion  or  claim  of any  obligation  or  responsibility  of  Bank  for  the
management,  operation,  and conduct of business and affairs of the Borrower, or
as a result of any assertion or claim of any liability or responsibility of Bank
for  the  payment  or  performance  of any  indebtedness  or  obligation  of the
Borrower.

                                       18
<PAGE>

         9.03.  INDEMNIFICATION OF BANK. Borrower hereby expressly  acknowledges
and recognizes  Borrower's  responsibility  for and agrees to indemnify and hold
Bank and its  successors  and assigns  absolutely  harmless from and against all
costs,  expenses,  liabilities,  losses,  damages, or obligations incurred by or
imposed  upon or alleged to be due from Bank or its  successors  and  assigns in
connection with the assertion of:

         a.       Any  claim  for   brokerage,   agency  or  finder's   fees  or
                  commissions in connection with the Loans; or

         b.       any  claim  for  attorneys',   appraisal,   title   insurance,
                  inspection,  or other fees,  costs,  and expenses  incurred in
                  connection  with  the  negotiation,  closing,  administration,
                  collection  or  refinancing  of the  Loans,  which  arise  by,
                  through,  or on  behalf  of  the  Borrower  or  any  agent  or
                  representative of them.

Without  intending to limit the  remedies  available to Bank with respect to the
enforcement of its  indemnification  rights as stated herein or as stated in any
Loan Document,  in the event any claim or demand is made or any other fact comes
to the  attention of Bank in  connection  with,  relating or  pertaining  to, or
arising  out of the  transactions  contemplated  by this  Agreement,  which Bank
reasonably  believes might involve or lead to some  liability of Bank,  Borrower
shall,  immediately  upon receipt of written  notification  of any such claim or
demand,  assume in full the personal  responsibility  for and the defense of any
such  claim  or  demand  and  pay in  connection  therewith  any  loss,  damage,
deficiency,  liability, or obligation, including, without limitation, legal fees
and court costs incurred in connection  therewith.  In the event of court action
in connection  with any such claim or demand,  Borrower shall assume in full the
responsibility for the defense of any such action and shall immediately  satisfy
and discharge any final decree or judgment  rendered  therein.  Bank may, in its
sole and absolute discretion,  make any payments sustained or incurred by reason
of any of the foregoing;  and Borrower shall  immediately  repay to Bank in cash
the  amount of such  payment,  with  interest  thereon  at the  maximum  rate of
interest  permitted by applicable  law from the date of such payment,  or in the
event no such  maximum  rate  exists,  then at a rate equal to two percent  (2%)
above the prime rate  established  on a daily basis by THE WALL STREET  JOURNAL.
Bank shall have the right to implead  Borrower as party  defendants in any legal
action  brought  against Bank, and Borrower  hereby  consents to the entry of an
order making the Borrower a party defendant to any such action.

         9.04. AGENCY DISCLAIMER. Nothing herein shall be construed as making or
constituting  Bank as the agent of the Borrower in making  payments  pursuant to
any  construction  contracts  or  subcontracts  entered into by the Borrower for
development  of the Premises or otherwise,  the purpose of all  requirements  of
Bank  hereunder  being  solely to allow Bank to check and require  documentation
(including, but not limited to, lien waivers) sufficient to protect Bank and the
Loan contemplated hereby. Borrower shall have no right to rely on any procedures
required by Bank, Borrower hereby acknowledges that:


                                       19
<PAGE>

         a.       Borrower  has  sole  responsibility  for  development  of  the
                  Premises; and

         b.       Borrower  has  solely on  Borrower's  own behalf  selected  or
                  approved  each  contractor,   each  subcontractor,   and  each
                  materialman, Bank having no responsibility for such persons or
                  entities or for the quality of their  materials or workmanship
                  and development of the Premises.

         9.05.  ADDITIONAL  DISCLAIMERS.  In  addition  to the  disclaimers  and
indemnities  set forth above,  the parties agree that the  following  provisions
shall govern:

         a.       Borrower  agrees to indemnify  and hold the Bank (for purposes
                  of this  paragraph,  the term the  "Bank"  shall  include  the
                  directors,  officers,  partners,  employees, and agents of the
                  Bank,  and any persons or  entities  owned or  controlled  by,
                  owning or  controlling,  or under common control or affiliated
                  with the Bank) harmless from and against, and to reimburse the
                  Bank with  respect  to, any and all claims,  demands,  losses,
                  damages (including consequential damages), liabilities, causes
                  of  action,   judgments,   penalties,   costs,   and  expenses
                  (including  attorneys'  fees and court costs) of any and every
                  kind or  character,  known or  unknown,  fixed or  contingent,
                  imposed on, asserted  against,  or incurred by the Bank at any
                  time and from time to time by reason of, in  connection  with,
                  or arising out of:

                  i.       the  breach  of any  representation  or  warranty  of
                           Borrower  as set  forth  herein  regarding  asbestos,
                           material   containing    asbestos,    or   Applicable
                           Environmental  Laws (defined  hereinabove  in Section
                           6.11(b));

                 ii.       the failure of  Borrower  to perform  any  obligation
                           herein required to be performed by Borrower regarding
                           asbestos, material containing asbestos, or Applicable
                           Environmental Laws;

                iii.       any  violation on or before the maturity  date of the
                           Note  (as  hereinafter  defined)  of  any  Applicable
                           Environmental Law in effect on or before the maturity
                           date of the Note;

                 iv.       the removal of hazardous  substances  or solid wastes
                           from the  Premises  (or if removal is  prohibited  by
                           law,  the taking of  whatever  action is  required by
                           law);

                  v.       the  removal  of  asbestos  or  material   containing
                           asbestos   from  the   Premises  (or  if  removal  is
                           prohibited  by law, the taking of whatever  action is
                           required  by law  including  without  limitation  the
                           implementation   of  any   required   operation   and
                           maintenance program);

                 vi.       any act, omission, event, or circumstance existing or
                           occurring  on or  prior to the  maturity  date of the
                           Note  (including  without  limitation the presence on
                           the   Premises  or  release   from  the  Premises  of
                           hazardous  substances or solid wastes  disposed of or
                           otherwise  released on or prior to the maturity  date
                           of the Note),  resulting  from or in connection  with
                           the ownership,  construction,  occupancy,  operation,
                           use or  maintenance  of the  Premises,  regardless of
                           whether the act,  omission,  event,  or  circumstance
                           constitutes    a   violation   of   any    Applicable
                           Environmental  Law at the  time of its  existence  or
                           occurrence; and

                                       20
<PAGE>

                vii.       any and all claims or proceedings (whether brought by
                           a private party or Governmental Authority) for bodily
                           injury,  property damage,  abatement, or remediation,
                           environmental  damage,  or  impairment,  or any other
                           injury or damage  resulting  from, or relating to any
                           hazardous  substance  or solid waste  located upon or
                           migrating   into,   from,  or  through  the  Premises
                           (whether  or not  any or  all  of the  foregoing  was
                           caused by the Borrower or its  successors or assigns,
                           or a prior  owner of the  Premises or  successors  or
                           assigns,  or any third  party and  whether or not the
                           alleged  liability is  attributable  to the handling,
                           storage, generation,  transportation,  or disposal of
                           such  substance or waste or the mere presence of such
                           substance   or  waste  on  the   Premises).   Without
                           limitation,  the foregoing indemnities shall apply to
                           each  indemnified   party  with  respect  to  claims,
                           demands,  losses,  damages  (including  consequential
                           damages),  liabilities,  causes of action, judgments,
                           penalties,  costs, and expenses (including attorneys'
                           fees and court  costs)  which in whole or in part are
                           caused by or arise out of the  negligence of such (or
                           any   other)   indemnified   party.   However,   such
                           indemnities  shall not apply to any indemnified party
                           to the extent the subject of the  indemnification  is
                           caused by or arises  out of the gross  negligence  or
                           willful  misconduct of such  indemnified  party.  The
                           "maturity date of the Note" as used herein shall mean
                           the earlier of the following two dates:

                           a.       The  date  on  which  the  indebtedness  and
                                    obligations  secured  hereby  have been paid
                                    and  performed  in full and the  obligations
                                    under this Agreement  have been  discharged;
                                    or

                           b.       the date on which  the lien of any  Security
                                    Agreement is  foreclosed  or a conveyance by
                                    deed in lieu of such  foreclosure  is  fully
                                    effective;   provided,   if  such   payment,
                                    performance,    release,   foreclosure,   or
                                    conveyance  is  challenged,   in  bankruptcy
                                    proceedings or otherwise,  the maturity date
                                    of the  Note  shall  be  deemed  not to have
                                    occurred  until such  challenge is rejected,
                                    dismissed, or withdrawn with prejudice.

         The foregoing indemnities shall not terminate upon the maturity date of
         the Note or upon the release, foreclosure, or other termination of this
         Agreement but will survive the maturity  date, or conveyance in lieu of
         foreclosure,  and the  repayment  of the secured  indebtedness  and the
         discharge and release of this  Agreement  and the other Loan  Documents
         evidencing or securing the secured indebtedness.  Any amount to be paid
         hereunder by Borrower to the Bank shall be a demand obligation owing by
         Borrower  to the Bank.  Nothing in this  paragraph,  elsewhere  in this
         Agreement,  or in any other document evidencing,  securing, or relating
         to the indebtedness  secured hereby shall limit or impair any rights or
         remedies  of the Bank  against  the  Borrower  or any third party under
         Applicable  Environmental Laws, including without limitation any rights
         of  contribution or indemnification available thereunder.

                                       21
<PAGE>

                                    ARTICLE X
                    ORGANIZATIONAL CHANGES AND DISTRIBUTIONS

         Without the consent of the Bank, not to be unreasonably  withheld,  the
Loan Parties shall not make  distributions to their  shareholders,  members,  or
partners, increase the salaries of any of those parties, or otherwise effect any
change in their structure or capitalization.

                                   ARTICLE XI
                                   SUPERSEDEAS

         In the event of a conflict  between  the terms and  conditions  of this
Agreement and the terms and conditions of any other Loan Document, the terms and
conditions of this Agreement shall control.

                                   ARTICLE XII
                                  MISCELLANEOUS

         12.01. INUREMENT. This Agreement shall be binding upon, and shall inure
to the benefit of the Loan  Parties and the Bank,  and their  respective  heirs,
legal representatives,  successors and assigns;  provided that no Loan Party may
assign any rights or obligations  under this Agreement without the prior written
consent of Bank;  and  provided  further  that Bank  specifically,  but  without
limitation,  has the right to  transfer or assign all or any part of its rights,
duties, and obligations under and pursuant to the Loan Documents, and commencing
at the time of and following any such transfer or assignment, Bank shall have no
liability or obligation with respect to such rights,  duties, and obligations so
transferred or assigned.

         12.02.  SURVIVAL.  The provisions hereof shall survive the execution of
all instruments herein mentioned,  shall continue in full force and effect until
the Loan has been paid in full,  and shall not be affected by any  investigation
made by any party.  This  instrument  may be amended  only by an  instrument  in
writing executed by the parties hereto.

         12.03.  NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and shall be  considered  properly  given if mailed by first
class United States mail,  postage prepaid,  registered or certified with return
receipt requested,  or by delivering same in person to the intended addressee or
by prepaid  telegram.  Notice so mailed shall be effective upon its deposit in a
Post Office or other  depository  under the care or custody of the United States
Postal Service.  Notice given in any other manner shall be effective only if and
when  received by the  addressee.  For purposes of notice,  the addresses of the
parties  shall be as set forth below;  provided,  however,  that any party shall
have the right to change such party's address for notice  hereunder to any other
location within the continental United States by the giving of thirty (30) days'
notice to all other parties in the manner set forth hereinabove:

                                       22
<PAGE>

                      If to Borrower: AMEN Properties, Inc.
                                    303 West Wall, Suite 2300
                                    Midland, Texas 79701

                                    If to Guarantors:McGraw Brothers Investments

                                    Moriah Investment Partners

                                    LCM Partnership

                                    W Power and Light, LP
                                    310 West Wall, Suite 100
                                    Midland, Texas 79701

                                    James M. Alexaner

                                    Jon M. Morgan

                                    Eric Oliver

                                    Forrest Gilliam, Jr.

                                    John Bergman

                                    John Norwood

                                    Bruce E. Edgington

         If to Bank:                Western National Bank
                                    508 West Wall, Suite 1100
                                    Midland, Texas  79701
                                    Attn:  Mr. Wesley D. Bownds

                                       23
<PAGE>

         12.04. SEVERANCE. Bank is relying and is entitled to rely upon each and
all of the provisions of this Agreement;  and  accordingly,  if any provision or
provisions of this Agreement  should be held to be invalid or ineffective,  then
all  other   provisions   hereof  shall   continue  in  full  force  and  effect
notwithstanding.

         12.05.   ENTIRETIES.   THIS  AGREEMENT,  THE  NOTE,  ANY  CONTRACTS  OR
INSTRUMENTS  RELATING  THERETO,  REPRESENT  THE  ENTIRE  AGREEMENT  BETWEEN  THE
PARTIES,  AND  IT IS  EXPRESSLY  UNDERSTOOD  THAT  ALL  PRIOR  CONVERSATIONS  OR
MEMORANDA  BETWEEN THE PARTIES  REGARDING THE TERMS OF THIS  AGREEMENT  SHALL BE
SUPERSEDED BY THIS AGREEMENT.  ANY AMENDMENT,  APPROVAL, OR WAIVER BY WESTERN OF
THE TERMS OF THIS AGREEMENT,  THE NOTE AND ANY CONTRACTS OR INSTRUMENTS RELATING
THERETO, MUST BE IN WRITING OR CONFIRMED WRITING, AND SHALL BE EFFECTIVE ONLY TO
THE  EXTENT  SPECIFICALLY  SET  FORTH  IN  SUCH  WRITING.  THIS  AGREEMENT,   IN
CONJUNCTION  WITH THE NOTE AND ANY CONTRACTS OR  INSTRUMENTS  RELATING  THERETO,
SHALL SERVE TO EVIDENCE THE TERMS OF THE ENTIRE AGREEMENT BETWEEN THE PARTIES.


                                       24
<PAGE>

         IN WITNESS  HEREOF,  the parties hereto have executed this Agreement in
one or more  counterparts,  each of which shall be deemed an original and all of
which together shall constitute one and the same instrument, effective as of the
day and year first above written.






                                     BORROWER:

                                     AMEN PROPERTIES, INC.



                                     BY: /s/ JON M. MORGAN
                                     ----------------------------------
                                     JON M. MORGAN, PRESIDENT


                                     GUARANTORS:

                                     MCGRAW BROTHERS INVESTMENTS




                                     BY: /s/ KYLE A. MCGRAW
                                     -----------------------------------
                                     KYLE A. MCGRAW


                                     MORIAH INVESTMENT PARTNERS



                                     BY: /s/ DALE A. BROWN
                                     -----------------------------------
                                     DALE A. BROWN, PARTNER



                                     BY: /s/ CARY BROWN
                                     -----------------------------------
                                     CARY BROWN, PARTNER


                                     LCM PARTNERSHIP


                                     BY: /s/ JAMES M. ALEXANDER
                                     -----------------------------------
                                     JAMES M. ALEXANDER, PARTNER


                                     BY: LAURA ALEXANDER EAGLE
                                     -----------------------------------
                                     LAURA ALEXANDER EAGLE, PARTNER


                                     BY: /s/ CATHEY ALEXANDER WEATHERL
                                     -----------------------------------
                                     CATHEY ALEXANDER WEATHERL, PARTNER

                                     W POWER AND LIGHT, LP



                                       25
<PAGE>

                                     BY: AMEN PROPERTIES, INC., ITS
                                     GENERAL PARTNER


                                     BY: /s/ JON M. MORGAN
                                     -----------------------------------
                                     JON M. MORGAN, PRESIDENT




                                     BY: /s/ JAMES A. ALEXANDER
                                     -----------------------------------
                                     JAMES A. ALEXANDER, INDIVIDUALLY

                                     /s/ JON M. MORGAN
                                     ----------------------------------
                                     JON M. MORGAN, INDIVIDUALLY

                                     /s/ ERIC OLIVER
                                     ----------------------------------
                                     ERIC OLIVER, INDIVIDUALLY

                                     /s/ FORREST GILLIAM, JR.
                                     ----------------------------------
                                     FORREST GILLIAM, JR., INDIVIDUALLY

                                     /s/ JOHN BERGMAN
                                     ----------------------------------
                                     JOHN BERGMAN, INDIVIDUALLY

                                     /s/ JOHN NORWOOD
                                     ----------------------------------
                                     JOHN NORWOOD, INDIVIDUALLY


                                     ----------------------------------
                                     BRUCE E. EDGINGTON, INDIVIDUALLY



                                       26
<PAGE>




                                      BANK:

                                      WESTERN NATIONAL BANK


                                      BY:   WESLEY D. BOWNDS, PRESIDENT

                                       27
<PAGE>


                                  SCHEDULE 6.03

                               PENDING LITIGATION

                                      NONE.


                                       28
<PAGE>




                                   EXHIBIT "A"

                       FORM OF BORROWING BASE CERTIFICATE


                              W POWER AND LIGHT, LP

                              BORROWING BASE REPORT




ACCOUNTS RECEIVABLES:

Eligible Accounts Receivable as of ------------------------------- $ ----------

Multiplier                                                             x 75%

Receivables portion of Borrowing Base                              $-----------

Plus $500,000.00 availability for issuance of Letters of Credit    $-----------

Borrowing Base:                                                    $-----------

Less issued and outstanding Letters of Credit                      $-----------

Less amount advanced under line of credit                          $-----------

Amount available (or required paydown) on line of credit           $-----------

Submitted By: AMEN Properties, Inc. and W Power and Light, LP


-----------------------------------
    Jon M. Morgan, President

-----------------------------------
         Date

                                       29



<PAGE>





                                                                       EXHIBIT B
                             COMPLIANCE CERTIFICATE

         Reference is made to that certain Loan  Agreement  dated as of February
25,  2005,  among  AMEN  PROPERTIES,  INC.  (the  "BORROWER");  MCGRAW  BROTHERS
INVESTMENTS, MORIAH INVESTMENT PARTNERS, LCM PARTNERSHIP, W POWER AND LIGHT, LP,
JAMES M.  ALEXANDER,  JON M. MORGAN,  ERIC OLIVER,  FORREST  GILLIAM,  JR., JOHN
BERGMAN, JOHN NORWOOD AND BRUCE EDGINGTON (collectively,  the "GUARANTORS"); and
WESTERN NATIONAL BANK ("BANK") (as so restated, the "LOAN AGREEMENT").

         1. Pursuant to the provisions of the Loan  Agreement,  the  undersigned
hereby  certifies,  represents  and warrants to Bank that,  to the best of their
knowledge,  except as set forth  below,  (I) during  the period  covered by this
certificate, no Event of Default has occurred; (ii) there exists no condition or
event that, with the giving of notice or lapse of time or both, would constitute
an Event of Default;  and (iii) during the period  covered by this  certificate,
Borrower has observed,  performed and complied in all material respects with all
covenants, agreements, duties and obligations contained in the Loan Papers.

         Exceptions  to the above  certification:  [State  "none" or specify the
nature and period of existence thereof and the action that Borrower is taking or
proposed to take with respect thereto.]

         2. The Borrower's Debt Service Coverage Ratio is ___ to 1.0.

         3. To the best  knowledge of the  undersigned,  the attached  financial
statements  are true and correct and correctly set forth the financial  position
and  results of  operations  at the date(s) and for the  period(s)  stated.  The
attached financial  statements include all contingent  liabilities and cash flow
information of Borrower.

         4. Period  covered:  [Year,  Quarter,  or Month] ended  ______________,
20___.

         5.  Capitalized  terms  used  but not  defined  herein  shall  have the
respective meanings ascribed thereto in the Loan Agreement.

Dated: __________________________


                                          W POWER & LIGHT, LP

                                          BY: AMEN PROPERTIES, INC.,
                                                   ITS GENERAL PARTNER



                                          By: /s/  JON M. MORGAN
                                          ---------------------------------
                                                   JON M. MORGAN, PRESIDENT
                                       1