Document:

Exhibit 10.14

                                 LEASE AGREEMENT

STATE OF TEXAS

COUNTY OF BOWIE                KNOW ALL MEN BY THESE PRESENTS:

Alexander-Felty INVESTMENTS,  L.L.C., hereinafter called Landlord and Safescript
Pharmacies  Inc.  hereinafter  called  Tenant,  have entered into the  following
covenant and agreement of Lease, to-wit:

1.  LEASED  PREMISES:  Landlord,  in  consideration  of the rents and  covenants
hereinafter  stated to be paid and performed by the Tenant,  hereby  demises and
leases unto the Tenant and Tenant  leases from Landlord  those certain  premises
located in Texarkana,  Bowie County,  Texas, at 3501 Sowell Lane (Portion of Lot
6, all of Lots 7 through  11,  and part of Lot 12,  Block 4 of Sparks  Addition)
which consists of a building containing 1458 square feet which is constructed on
the area  outlined in red on the site plan of the shopping  center of which said
building is a part of being shown on Exhibit  "A"  attached  hereto and which is
incorporated  herein for a full and complete  description  of the property being
leased.  The use and occupancy of the Tenant of the leased premises will include
the use in common with others entitled  thereto of the common areas,  employee's
parking  areas,  service  roads,  loading  facilities,  sidewalks,  customer car
parking areas and other  facilities of said shopping center as may be designated
from  time  to  time  by the  Landlord;  subject,  however,  to the  terms  and,
conditions of this Agreement.

2. TERM OF LEASE:  The primary  term of this Lease shall be for a period of five
(S) years  commencing  on May 1, 2002,  and  ending on the May 1, 2007,  and the
first rental  installment  due and payable on the signing of the  contract  (May
1,2002) and the last rental  installment  due on June 1, 2002 and thereafter all
rental installments shall be due and payable in advance on the first day of each
succeeding month during the term of this Lease or any extension thereof.  Tenant
has made the first rental  installment  simultaneous  with the execution of this
Lease Agreement, the receipt of which is hereby acknowledged by Landlord. Tenant
shall pay to the Landlord, initially, monthly rental as follows:

BASE RENT                                    $    764.00
PROPERTY TAX                                 $    135.50
INSURANCE                                    $     17.50
COMMON AREA MAINTENANCE                      $     83.00
                                             -----------
TOTAL MONTHLY RENTAL                         $   1000.00

The total monthly rental installment hereunder in the amount of 1000.00 shall be
subject to change  each  January 1'` during the term of this lease due to change
in the  amount  of  the  contribution  for  insurance,  taxes  and  common  area
maintenance  hereinafter defined. Each such installment shall be due and payable
in  advance  on the first day of each  calendar  month  during  the term of this
Lease.  Tenant shall punctually pay the rentals to Alexander-Felty  INVESTMENTS,
L.L.C. at Alexander's Jewelers, 3301 Sowell Lane, Texarkana,  Texas 75501, or at
such other :place Landlord may designate to Tenant in writing.

3. COMMON  AREA  MAINTENANCE:  The  Landlord  shall  maintain  the parking  area
substantially  as shown on "Exhibit  A." The  purpose of the site plan  attached
hereto as "Exhibit  A" is to show the  approximated  location of the  buildings,
parking area and other common areas. The Landlord reserves the right at any time
to relocate any building,  parking area or common areas shown on said site plan.
The  Landlord  also  reserves  the  right  to  construct   other   buildings  or
improvements  in the shopping  center from time to time and to make  alterations
thereof or additions thereto and to build additional  stories on any building in

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the  shopping  center  provided  the number of parking  spaces from the shopping
center shall not be reduced to less than  thirty-five  (35) parking spaces,  and
further   provided  that  such  changes,   additions  or   alterations   do  not
substantially  alter the traffic  pattern of the shopping  center nor lessen the
exposure of Tenant's building as viewed from the public street.

         All Automobile parking areas,  driveways,  entrances and exits thereto,
and other  facilities  furnished  by  Landlord in or near the  shopping  center,
including sidewalks and ramps, landscaped areas and other areas and improvements
provided by Landlord for the general use, in common, of Tenants, their officers,
agents, employees, and customers, shall at all times be subject to the exclusive
control and  management of Landlord and Landlord  shall have the right from time
to time to establish,  modify and enforce  reasonable rules and regulations with
respect to all facilities and areas  mentioned iii this article.  Landlord shall
have the right to  construct,  maintain and operate  lighting  facilities on all
said areas and improvements; to police the same; from time to tune to change the
area,  level  locations and  arrangement of parking areas acid other  facilities
hereinabove referred to; to close all or any portion of said areas or facilities
to such  extent  as may,  in the  opinion  of  Landlord's  counsel,  be  legally
sufficient  to prevent a dedication  thereof or the accrual of any rights to any
person or the public  therein;  to close  temporarily  all or any portion of the
parking areas or facilities;  to discourage  non-customer parking; and to do and
perform such other acts in and to said areas and  improvements as, in the use of
good business judgment, the Landlord shall determine to be advisable with a view
to the  improvement  of the  convenience  and  use  thereof  by  Tenants,  their
officers,  agents, employees and customers.  Landlord will operate and maintain,
at Landlord's sole cost and expense,  the common facilities referred to above in
such manner, as Landlord,  in its sole discretion,  shall determine from time to
time.  Without  limiting the scope of such  discretion,  Landlord shall have the
full  right and  authority  to employ  all  personnel  and to make all rules and
regulations pertaining to and necessary for the proper operation and maintenance
of the common areas and  facilities.  Not  withstanding  anything  herein to the
contrary,  Landlord  shall keep the  parking  area  properly  cleaned,  striped,
lighted and repaired during the term of this lease and any option periods.

         Tenant and its employees  shall park their cars only in those  portions
of the parking area designated for that purpose by Landlord.

         Tenant and Landlord  agree that Landlord  shall  determine on an annual
basis the expenses necessary to operate the common areas of the shopping center,
including  the  expenses  of  providing  refuse  service   thereto.   Upon  such
calculation, Landlord shall notify Tenant, in writing, of Tenant's prorata share
of the cost and  expenses,  which shall be paid in monthly  installments  on the
first  day of each  and  every  calendar  month  simultaneous  with  the  rental
payments.

4. COVENANT OF PEACEFUL  POSSESSION:  Landlord covenants that it is the owner of
the property  herein leased and that Tenant shall have the right to peaceful and
uninterrupted  possession  of the leased  premises  throughout  the primary term
hereof and any extension thereof.

5. USE Of LEASED  PREMISES:  The premises  leased under this Agreement are to be
used for office space. Tenant covenants that it will not use the leased premises
for any other propose -without the prior written consent of Landlord.

6. REPAIR AND MAINTENANCE: Tenant agrees to use the leased premises as a prudent
administrator  would do and to return the same to Landlord upon the  termination
hereof  in the same  condition  as that when  received,  damage by fire or other
casualty and ordinary wear and tear  incident to the use of the leased  premises
being  excepted.  Tenant  shall  keep the  interior  improvements  in the leased
premises in good  repair and  including,  but not  limited to, the plate  glass,

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storefront and doors,  interior plumbing and electrical systems and the interior
of  the  building  generally,  except  for  structural  defects  due  to  faulty
construction  which may exist at the time Tenant takes  possession-of the leased
premises.

         Landlord shall keep the roof,  exterior  walls,  (excluding all windows
and doors),  foundations,  and structural  components of the leased  premises in
good repair and shall also keep in good repair the utility  lines  extending  to
the  service  connections  for  the  leased  premises.  The  landlord  shall  be
responsible far maintaining the air conditioners  and heating systems  servicing
the demised premises, and the tenant shall maintain the changing the filters.

7.  IMPROVEMENTS  AND  FIXTURES:  All  improvements  and additions to the leased
premises  shall  adhere to the leased  premises  and become the  property of the
Landlord,  with the exception of such  additions made by Tenant that are usually
classed as furniture and trade  fixtures;  said furniture and trade fixtures are
to remain the  property  of the  Tenant  and may be  removed by the Tenant  upon
expiration of this Lease,  provided all terms,  conditions and covenants of this
contract  have been  complied  with by Tenant and Tenant shall repair any damage
caused to the building by the removal of said furniture and trade fixtures.

Any  construction or remodeling to demised  premises after the lease  commences,
shall be at the sole cost and expense of Tenant. Tenant shall be responsible for
any damages done to premises,  plumbing or electrical  in  remodeling  and shall
clean up any area affected by remodeling.

8. RESPONSIBILITY TO THIRD PARTIES:  Tenant shall assume full responsibility for
the condition of the premises and Landlord shall not be liable for injury caused
by other than latent defects  therein to the Tenant or to anyone on the premises
who derives his right to be thereon from the Tenant.

         Tenant  agrees to carry at all times  during  the term of this Lease at
its sole  expense and as a part of the  consideration  for this  Lease,  for the
benefit of Landlord,  its  successors  and  assigns,  general  public  liability
insurance  against claims for bodily injury,  death or property damage occurring
upon, in or about the leased  premises,  such insurance to afford  protection to
the limits of not less than:

Five Hundred Thousand and no/100 Dollars ($500,000.00) for airy one (1) person.

One Million and no/100 Dollars  ($1,000,000.00)  for more than one (1) person in
any one (1) accident; and

Three Hundred  Thousand and no/100  ($300,000.00)  for property  damage.  Tenant
shall  cause  Landlord  to be named as an  additional  insured  upon the general
public  liability  insurance policy required to be obtained by Tenant under this
Lease  Agreement.  Tenant shall obtain a written  obligation on the part of each
insurance   company  to  notify  Landlord  at  least  ten  (10)  days  prior  to
cancellation of such insurance.  Such plicies for fully executed certificates of
insurance  shall be promptly  delivered  to  Landlord  and  renewals  thereof as
required  shall be  delivered to Landlord at least thirty (30) days prior to the
expiration of the respective  policy terms.  Tenant's failure to comply with the
foregoing  requirement relating to insurance shall consitute an event of default
hereunder. In addition to the remedies provided herein, Landlord may, but is not
obligated to, obtain such insurance and Tenant shall pay to Landlord upon demand
as additional rental the premium cost thereof.

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9. PAINTING,  DECORATION AND DISPLAYS: Tenant will not paint, decorate or change
the  architectural  treatment of any part of the exterior of the leased premises
without first obtaining  Landlord's written approval.  Tenant agrees to promptly
remove any such paint or decoration, which has been applied or installed without
Landlord's prior written approval upon the order of Landlord.

10.  PAYMENT  FOR  UTILITIES:  Landlord  agrees  to  cause  to be  provided  and
maintained  the  necessary  mains,  conduits and other  facilities  necessary to
supply water, electricity, telephone service and sewerage service to the demised
premises.  In the  event  any  repair,  maintenance  or  replacements  are  made
necessary by the negligent  act or omission of Tenant,  its agents or employees,
such repairs, maintenance or replacement shall be at Tenant's expense.

         Tenant shall promptly pay all charges for electricity,  gas,  telephone
service,  sewerage  service  and other  charges  for  public  utilities  used or
consumed by Tenant on the leased  premises.  The refuse service is a part of the
amount for common area maintenance.  This arrangement shall be subject to change
at any time if deemed necessary by landlord.

11. RECIPROCAL WAIVER OF SUBROGATION:  Landlord hereby waives any and all rights
of  recovery  against  Tenant for any loss by  insured  peril  occurring  to the
building or other improvements situated on the leased premises and hereby agrees
not to assign to any insurer any right or cause of action for any insured damage
which may occur during the term of this Lease.  Tenant hereby waives any and all
rights  of  recovery  against  Landlord  for  loss  by  peril  occurring  to any
furniture,  fixtures  or  other  leasehold  improvements  of  Tenant  or to  the
merchandise  or stock of goods of Tenant  situated  on the leased  premises  and
hereby  agrees not to assign to any insurer any right or cause of action for any
insured  damage to said property  which may occur during the term of this Lease.
Notwithstanding  the foregoing,  any waiver of subrogation  shall be void to the
extent that it impairs any insurance coverage.

12. INSOLVENCY,  BANKRUPTCY OR DEBTOR'S  ARRANGEMENT OR  REORGANIZATION:  Should
Tenant become  insolvent or should it apply to a Bankruptcy Court to be adjudged
a voluntary  bankrupt,  or if it should be  adjudged a bankrupt  in  involuntary
proceedings,  or if a receiver  be  appointed  for  Tenant's  business or if any
proceedings be undertaken by Tenant for a respite, arrangement or reorganization
under  the  Bankruptcy  Code or the laws of the State of  Texas,  then,  in such
event, Landlord may, at its option, terminate this contract as may be allowed by
law and Tenant shall remain  liable for all rental  payments  until such time as
Landlord is able to re-lease the premises.

         Should the Landlord become insolvent or should it apply to a Bankruptcy
Court to be adjudged a voluntary bankrupt,  or if it should be adjudged bankrupt
in  involuntary  proceedings,  or if a  receiver  be  appointed  for  Landlord's
business,  or if any  proceedings  be  undertaken  by  Landlord  for a  respite,
arrangement or reorganization under the Bankruptcy Code or the laws of the State
of Texas,  then,  in such  event,  Tenant may,  at its  option,  terminate  this
contract of lease as may be allowed by law.

13. FIRE CLAUSE AND INSURANCE:  Tenant agrees to pay its proportionate  share of
Landlord's cost of carrying fire and extended coverage insurance,  liability and
other  coverage  carried by Landlord on the  Shopping  Center and its  operation
("Insurance").  During each month of the term of this Lease,  Tenant  shall make
monthly payments of one-twelfth  (1112th) of the cost of such insurance incurred

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for that period, due on the 1 st of the month with the rental payments. Tenant's
proportionate  share of the cost of Insurance  on the  Shopping  Center shall be
computed by  multiplying  the cost of Insurance by a fraction,  the numerator of
which shall be the number of square feet of floor space in the Demised  Premises
and the  denominator  of  which  shall  be the  numbers  of  square  feet of all
buildings  in the Shopping  Center.  The amount to be paid by Tenant to Landlord
order this paragraph shall be calculated on an annual basis on each  anniversary
date of the insurance policy carried by Landlord on the shopping center.

         The Tenant shall carry any fire and extended coverage insurance carried
upon the  contents  and  fixtures  placed in the leased  premises  by Tenant and
Landlord shall have no responsibility therefore.

14.  CONDEMNATION:  If any portion of the building  upon the leased  premises or
more than twenty  percent (20%) of the parking area or common areas  embraced in
the shopping  center shall be taken in any  proceeding by public  authorities by
condemnation or otherwise,  or be acquired for public or quasi-public  purposes,
Tenant  shall  have the  option of  terminating  this  Lease,  in which case any
unearned rent, assessments or other charges paid in advance shall be refunded to
Tenant.  In the event that twenty  percent (20%) or less of the parking areas or
common  areas  embraced  in the  shopping  center  shall  be  taken  in any such
condemnation or other proceeding,  or in the event Tenant shall not exercise its
option to terminate  the Lease  because of a taking of a part of the building or
more than twenty  percent  (20%) of the parking area or common areas in any such
condemnation,  then the rent shall be reduced as follows:  If any portion of the
parking  area or common  areas of the  shopping  center  is taken  then the rent
calculated  shall be reduced  by an amount  that is in the same ratio to minimum
monthly  rental as the value of the parking  area or common areas taken bears to
the total value of the parking area and common areas immediately before the date
of the taking.  If any  portion of the  building  is taken then  Landlord  shall
promptly  repair said building and the rent  calculated  shall be reduced in the
same  proportion  that said  building is reduced by such  condemnation  or other
proceeding.  In any such  proceeding  whereby all or a part of said premises are
taken,  either Landlord or Tenant shall be free to participate in and make claim
against the condemning  party for the amount of the actual  provable damage done
to each of them by such condemnation.

15.  COMPLIANCE  WITH  ORDINANCES,   ETC:  Tenant  agrees  to  comply  with  all
ordinances,  rules, regulations,  orders and requirements of the Federal, State,
County  and City  Governments  and of my and all of their  agencies,  boards  or
departments in the operation of the business to be conducted on the premises and
for the  correction,  prevention and abatement of nuisances or other  grievances
i11, upon or connected with said premises, all at Tenant's expense,  except that
Tenant will not be responsible  for  structural  changes that may be required by
any law or agency or government.

16. LANDLORD'S ACCESS: Tenant shall permit Landlord, or its employees or agents,
at any reasonable  time to enter the leased  premises to make  inspections or to
provide required services in or to the leased premises with an employee or agent
of Tenant being present. In the event of any emergency,  Tenant will immediately
permit  Landlord  to perform  any acts  related to the  safely,  protection  and
preservation  of the leased  premises.  It is understood,  however that Landlord
will contact Tenant  reasonably in advance of Landlord's  entry upon the demised
premises and advise  Tenant of  Landlord's  desire to inspect and enter upon the
demised premises.

17.  MECHANIC'S LIEN  INDEMNITY:  Tenant agrees to keep the leased premises free
from  any  liens  arising  out of any work  performed,  materials  furnished  or
obligations  incurred by Tenant and to indemnify and save Landlord harmless from
and against any such liens. If any such liens shall at any tune be filed against
the leased  premises  or any part  thereof  as a  consequence  of an  obligation
incurred by Tenant then Tenant shall cause the same to be  discharged  of record

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within twenty (20) days of the date of filing of such lien;  provided,  however,
that Tenant  shall have the right to contest the  validity or amount of any such
lien if such contest shall act to stay the  enforcement of such lien against the
leased premises.

18. SUBORDINATION AND MORTGAGEE'S REQUIREMENTS: This Lease is hereby declared to
be  subordinate  to any mortgage  now in existence or hereafter  placed upon the
leased  premises by  Landlord  and Tenant  agrees  upon  demand to execute  such
further instruments  subordinating this Lease as Landlord may request,  provided
such subordination  shall be upon the express condition that this Lease shall be
recognized  by the  mortgagee and successor to the mortgagee and that the rights
of Tenant shall remain in full force and effect during the term of this Lease so
long as Tenant shall  continue to perform all the  covenants  and  conditions of
this Lease.

         In the event a mortgagee or  prospective  mortgagee  should so require,
Tenant  shall  deliver to  Landlord,  from time to time,  for  delivery  to such
mortgagee the following, to-wit:

         (a) An  acknowledgment  of the assignment of rentals and other sums due
         hereunder to mortgagee.

         (b) An agreement  requiring Tenant to advise the mortgagee of damage to
         or  destruction  of the  demised  premises  by fire or  other  casualty
         requiring its reconstruction and requiring Tenant to give the mortgagee
         written notice of Landlord's default hereunder and to permit the lender
         to cure such default within a reasonable  time after such notice before
         exercising any remedy Tenant might possess as a result of such default.

         (c) An  acceptance or estoppels  letter,  to be executed only after the
         commencement of the lease term,  accepting the premises as completed in
         accordance with the Lease and containing  such other  information as is
         customarily contained in such acceptance or estoppels letter.

         In the event  Landlord  should so  request,  Tenant  shall  deliver  to
Landlord, from time to time, a statement in record able form certifying that the
Lease  is  unmodified  and in full  force  and  effect  (or if there  have  been
modifications,  that the same is in full  force and effect as so  modified)  and
further stating the date to which rent and other charges payable under the Lease
have been paid and setting  forth the nature of  defenses  or offsets,  if airy,
claimed by Tenant.

19. PARTIAL INVALIDITY:  If any term,  covenant,  condition or provision of this
Lease is held by a court of  competent  jurisdiction  to be  invalid,  void,  or
unenforceable, the remainder of the provisions hereof shall remain in full force
and effect and shall in no way be affected, impaired or invalidated thereby.

20. COVENANTS  BINDING:  The covenants,  conditions and agreements  contained in
this Lease shall be binding upon Landlord and Tenant and their heirs, successors
and assigns.

         If Tenant holds over and continues in possession of the leased premises
after expiration of the tern of this lease or any extension of that term, Tenant
will be deemed to be  occupying  the  premises on the basis of a  month-to-month
tenancy, subject to all of the terms and conditions of this lease.

21.  SHOPPING  CENTER  SIGNS:  Landlord  and Tenant agree that all signage to be
erected  by  Tenant  shall  comply  with the terms  and  provisions  of the sign
agreement  attached hereto as Exhibit "B" and made a part hereof by reference to
the same extent as if copied herein verbatim.  Tenant shall comply with all city
and state ordinances.

                                Page 6 of 9 Pages
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22. EXCUSE OF LANDLORD'S PERFORMANCE: Anything in this Agreement to the contrary
notwithstanding, providing such cause is not due to the willful act or neglect
of the Landlord, the Landlord shall not be deemed in default with respect to the
performance of any of the terms, covenants and conditions of this Lease if same
shall be due to any strike, lockout, civil commotion, invasion, rebellion,
hostilities, military or usurped power, sabotage, government regulations or
controls, inability to obtain any material, through act of God or other cause
beyond the control of the Landlord.

         Tenant  may, at its option,  cure at any time after  fifteen  (15) days
written notice to Landlord by certified mail,  return receipt  requested (unless
the nature of the defect necessitates immediate cure without notice) any default
by  Landlord  under this Lease,  and  whenever  Tenant so elects,  all costs and
expenses incurred by Tenant in curing such defect, together with interest at the
prime rate,  which shall be paid by Landlord to Tenant on demand.  .In the event
that Landlord  fails to make such payment on demand,  Tenant may, at its option,
deduct  such costs or expenses  or any part  thereof  from future rent and other
charges  payable from Tenant to Landlord,  however,  Tenant's  right to withhold
such costs or expenses  shall be limited so as to prohibit any rent abatement by
Tenant below one-half the monthly rental amount.

23. NOTICES: All notices or notifications required or permitted under this Lease
shall be given or exercised in writing and shall be deemed to have been properly
served  when  deposited  iii the  United  States  Mail,  certified  or the  then
equivalent, postage prepaid, return receipt requested, and addressed to Landlord
at 3301 Sowell Lane,  Texarkana,  Texas,  75501, and addressed to Tenant at 3501
Sowell  Lane  Texarkana,  TX 75503.  Either  party may change the person and the
place to which notices are to be mailed by notice to the other.  Should Landlord
executed .an  assignment of the rental due raider this Lease and furnish  Tenant
written notice  thereof and the name and address of such assignee,  then so long
as said  assignment is effective,  Tenant shall serve upon  Landlord's  assignee
duplicate originals of all notices given to Landlord under this Lease.

24.  DEFAULT:  h1 the event Tenant shall fail to pay any monthly  rental  within
five (5) days from the date payment  becomes  due,  then  Landlord  shall notify
Tenant in writing,  by certified mail, return receipt requested,  of the default
in making said  payment.  Any rental  payment  received  more than five (5) days
after its due date will be  assessed a late  charge of $25.00  per day.  If such
default is not cleared by Tenant within ten (10) days from the date said written
notice is received,  then Landlord  shall have the right to  immediately  cancel
this lease and pursue any remedy or remedies which may be available at law or in
equity.  In case of default by the Tenant in the rental  covenant  or any of the
covenants  contained  herein,  the Landlord may enforce the  performance of this
Lease as  follows:  (a) this Lease may be  forfeited  at  Landlord's  option and
discretion if any such default  continues for a period of thirty (30) days after
the Landlord  notifies  the Tenant of such default and its  intention to declare
the Lease  forfeited,  such notice to be sent to the Tenant by  certified  mail,
return receipt requested, and unless the Tenant shall have completely removed or
cured such default or is engaged in removing or curing such default prior to the
expiration of said thirty (30) day period, this Lease shall cease and come to an
end as if it were the day originally fixed herein for the expiration of the term
hereof, and the Landlord,  its agent or attorney,  shall have the right, without
further  notice or demand to enter and remove the Tenant without being guilty of
any manner of trespassing  and without  prejudice to any remedies for arrears of
rent or breach or covenant, and the Landlord, its agent, or attorney, may resume
possession  of the premises  and rent the same for the  remainder of the term of
this Lease for the best rent the  Landlord,  its agent or attorney,  may obtain,
for the account of the Tenant, and the Tenant shall make good any deficiency; or
(b) Landlord may take  possession of the leased premises and collect from Tenant
all damages  sustained by reason of such breach;  or (c) Landlord may pursue any
remedy or remedies which may be available at law or in equity.

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         In the event of  default by Tenant as  aforesaid,  and in the event the
enforcement  thereof is placed in the hands of an  attorney  by  Landlord,  then
Tenant  agrees to pay all  reasonable  attorney's  fees as may be allowed by law
incurred  by  Landlord.  In the  event  of  default  by  Landlord  of my term or
condition of this Lease,  then Landlord agrees to pay all attorney's fees as may
be allowed by law incurred by Tenant in enforcing its rights or  protection  its
interest.

25. TAXES:  Landlord  will pay all real  property  taxes and general and special
assessments (hereinafter called real property taxes) which shall during the term
hereof be levied, assessed, imposed or become due and payable in connection with
the  property  and  improvements  herein  leased  and  all  other  property  and
improvements  in the  shopping  center.  Tenant  shall  reimburse  Landlord  its
proportionate  share of such real property taxes paid by Landlord concerning the
shopping center.  Tenant shall make monthly payments of one-twelfth  (1/12th) of
the cost of such real property taxes incurred for that assessment period, due on
the lst of the month with the rental payment.  The  proportionate  share of such
real property  taxes to be paid by Tenant shall be computed by  multiplying  the
cost of real property  taxes by a fraction,  the numerator of which shall be the
number of square feet of floor space in the Demises Premises and the denominator
of which shall be the number of square  feet of all  buildings  in the  Shopping
Center. A copy of all tax statements and other instruments  received by Landlord
in  connection  with  the  computation  of said  real  property  taxes  shall be
furnished by Landlord to Tenant, at Tenant's  request.  The amount to be paid by
Tenant to Landlord  under this section shall be calculated  annually at the time
each the  appropriate  taxing  authorities  issue  assessment  for real property
taxes.

         Tenant  will pay all taxes,  assessments  and charges of every type and
nature  whatsoever  which  shall  during the term  hereof be  levied,  assessed;
imposed or become due and payable in  connection  with any  fixtures,  equipment
inventory or other personal property place upon the leased premises by Tenant.

26. ASSIGNMENT OR SUB-LETTING PROHIBITED: The Tenant shall not have the right to
assign this Lease or to sublet airy part of the  premises at any time during the
term of this Lease,  or during any  extended  term,  without  the prior  written
consent of Landlord, which written consent will not be unreasonable withheld. It
is  understood  and  agreed  that the  assigning  of said Lease by Tenant or the
subletting  of die premises by the Tenant,  after  securing  written  consent of
Landlord,  shall not relieve  Tenant's  assignees or sub lessees from  complying
with all the terms of this  Lease and shall not  change the type of use that can
be made of die premises.

27. ALTERATIONS: The Tenant shall not make any major alterations or additions to
the building  herein leased  without the prior written  consent of the Landlord,
which written consent will not be unreasonably withheld.

28. AMENDMENTS: No amendment,  modification, or alterations of the teams of this
agreement shall be binding unless it is in writing, dated subsequent to the date
of this agreement, and duly executed by the parties to this agreement.

29. TERMINATION OF PRIOR AGREEMENTS: All prior Lease Agreements between Landlord
and Tenant  respecting the property covered herein are hereby  terminated.  This
agreement  supersedes  and  takes  the place of any such  prior  agreements  and
constitutes the entire agreement between the parties.

30.  TEXAS LAVA TO APPLY:  This  agreement  shall be  construed  under,  and ill
accordance  with the laws of the  State of  Texas,  and all  obligations  of the
parties created by this Lease are performable in Bowie County, Texas.

                                Page 8 of 9 Pages
<PAGE>

31.  ATTORNEY'S FEES AND COSTS: If, as a result of a breach of this agreement by
either  party,  the other party  employs an attorney or attorneys to enforce its
rights under this Lease,  then the breaching party agrees to pay the other party
the reasonable attorney's fees and costs incurred to enforce the Lease.

32. FORCE MAJEURE:  Neither Landlord nor Tenant shall be required to perform any
term, condition,  or covenant in this Lease so long as performance is delayed or
prevented by force  majeure,  which shall mean acts of God,  strikes,  lockouts,
material or labor  restrictions  by any  governmental  authority,  civil  riots,
floods,  and any other  cause not  reasonably  within the control of Landlord or
Tenant and which by the exercise of due diligence  either  Landlord or Tenant is
unable holly or in part, to prevent or overcome.

33. TIME OF ESSENCE: Time is of the essence of this agreement.

34.  OPTION TO RENEW LEASE:  Landlord  hereby  grants unto Tenant the  exclusive
right and  option of  extending  the term of this  Lease for two (2)  additional
terms of five (5) years each commencing on May 1, 2007 and terminating on May 1,
2012, and commencing on May 1, 2017 and terminating on May 1, 2022 provided that
Tenant is not in default in the terms of this Lease.  In order to exercise  such
extension;  Tenant shall serve written  notice upon Landlord by certified  mail,
return  receipt  requested,  at least  ninety  (90) days prior to the end of the
primary term of this Lease.  In the event Tenant  exercises its option to extend
such Lease far such  additional  term, the base rent for such  additional  terms
shall be  855.68  for the  first  additional  term  and  958.36  for the  second
additional term (same  representing a twelve and one-half  percent increase over
the base rent for the primary term and the secondary term respectably).

         EXECUTED in multiple counterparts by Landlord and Tenant, each of which
shall  have the frill  force and effect of an  original,  this 29th day of April
2002 , but effective as of the 1st day of May 2002.

---------------------------------              ---------------------------------
Landlord                                       Witnessed

---------------------------------
Safescript Pharmacies Inc.

---------------------------------
President, Curtis Swanson

                                Page 9 of 9 Pages

<PAGE>

                                   EXHIBIT "A"

LEGAL DESCRIPTION OF REAL PROPERTY:

All  that  certain  tract or  parcel  of land  situated  in the  George  Brinlee
Headright  Survey,  Texarkana,  Bowie  County,  Texas,  being a portion of Ennis
Street,  all of Lots 1 & 2 and a  portion  of Lot No. 3,  Block  No.  4,  Sparks
Addition to the City of Texarkana,  Bowie County,  Texas,  according to the plat
thereof  recorded in Volume 244,  Page 323 of the Plat Records of Bowie  County,
Texas, and being more particularly described by metes and bounds as follows:

BEGINNING at an iron pipe for corner at the Southwest  corner of said Lot No. 1,
said point being in the East right-of-way line of Lovett Street;
THENCE North 88 deg. 36 min.  East,  with the South lines of said Lot No. 1, 2 &
3, 145.08 feet to an iron pipe for corner;
THENCE North 01 deg. 06 min. West, 197.86 feet to an iron pipe for corner on the
North right-of-way line of said Ennis Street,  same being the South right-of-way
line of Interstate  Highway No. 30; THENCE South 88 deg. 54 min. West,  with the
North right-of-way line of said Ennis Street,  same being the South right-of-way
line  of said  I-30,  145.00  feet  to an  iron  pipe  for  corner  on the  East
right-of-way line of said Lovette Street;
THENCE  South 01 deg.  06 min.  East,  with the East  right-of-way  line of said
Lovett Street,  198,62 feet to the Point of Beginning and containing 0.6599 acre
of land, more or less.

<PAGE>

                                   EXHIBIT "B"

1. All  exterior  signs which shall be erected by Tenant  shall be placed  flush
with the wall of the  leased  building,  and may not  extend  above or below the
front of the building,

2. The design,  type, anal location of all signs to be erected by Tenant must be
approved in writing by Landlord.

3. Landlord will not approve any flashing,  neon type signs, nor any signs which
are lighted by separate exterior lights.

4. Tenant may display the signage and lettering on the front door of the demised
premise, relevant to Tenant's business.

5. All  interior  signs that may be placed in a window  with the intent of being
viewed from outside shall be subject to the above conditions. ,EXHIBIT 10.1
                           LOAN AND SECURITY AGREEMENT

         This Loan and Security  Agreement (this "Agreement") is executed by and
between First  American  Bank,  SSB, a state savings bank  ("Lender"),  and DGSE
Companies,  Inc., a Nevada  corporation  ("Borrower"),  as of November 22, 2002.
Lender and Borrower hereby agree as follows:

                            ARTICLE I - DEFINITIONS

         Section 1.1 Definitions.  When used in this Agreement,  the capitalized
terms set forth below shall have the definitions assigned to such terms below:

         "Account Debtor" means a Person who is obligated on an account.

         "Affiliate"  of any Person  means any other Person  which,  directly or
indirectly,  controls,  is controlled by, or is under common control with,  such
Person.  For  the  purposes  of  this  definition,  "control"  (including,  with
correlative  meanings,  the terms  "controlled  by" and  "under  common  control
with"),  as used with respect to any Person,  means the possession,  directly or
indirectly,  of the power to direct or cause the direction of the management and
policies  of a  Person,  whether  through  ownership  of  voting  securities  or
partnership or other interests, by contract or otherwise.

         "Borrowing  Base" means, as of any date, an amount equal to the sum of:
(a) 60.0% of  Eligible  Accounts  on such  date,  plus (b) 45.0% of the value of
Eligible   Inventory   (based   upon   the   lower  of  cost   (computed   on  a
first-in-first-out  basis),  fair market value or orderly  liquidation  value as
determined by Lender.

         "Borrowing Base Certificate" means a certificate in the form of Exhibit
A attached hereto.

         "Capitalized  Lease"  means a lease that is required to be  capitalized
for financial reporting purposes in accordance with GAAP.

         "Capitalized  Lease  Obligation"  means  Indebtedness   represented  by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the  capitalized  amount of such  obligations  determined in accordance  with
GAAP.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Collateral"  means  and  includes  all  of  Borrower's  now  owned  or
hereafter acquired assets consisting of personal  property,  whether tangible or
intangible,  including  without  limitation all of Borrower's  right,  title and
interest  in and to each of the  following,  wherever  located  and  whether now
existing or hereafter  arising:  (a) all accounts,  (b) all  inventory,  (c) all
equipment,  (d) all  contract  rights,  (e) all general  intangibles,  including

LOAN AND SECURITY AGREEMENT - Page 1
---------------------------

<PAGE>

without  limitation  payment  intangibles  and  software,  (f) all  Intellectual
Property,  (g) all  deposit  accounts,  (h)  all  investment  property,  (i) all
instruments,  (j) all chattel paper,  including without  limitation,  electronic
chattel paper, (k) all goods and all accessions thereto, (l) all documents,  (m)
all insurance and  certificates of insurance  pertaining to any and all items of
Collateral, (n) all books and records, (o) all files,  correspondence,  computer
programs,  tapes,  disks and related  data  processing  software  which  contain
information  identifying  or pertaining to any of the  Collateral or any Account
Debtor or showing the amounts thereof or payments thereon or otherwise necessary
or helpful in the realization  thereon or the collection  thereof,  (p) all cash
deposited  with  Lender,  and (q) any and all  products  and cash  and  non-cash
proceeds  of the  foregoing  (including,  but not  limited to, any claims to any
items  referred to in this  definition  and any claims against third parties for
loss  of,  damage  to or  destruction  of any or  all of the  Collateral  or for
proceeds  payable  under or  unearned  premiums  with  respect  to  policies  of
insurance) in whatever form.

         "Committed   Sum",   with  respect  to  the   Revolving   Loan,   means
$3,000,000.00.

         "Contract  Rate" means the sum of the Prime Rate in effect from time to
time plus one and one-half  percent  (1.50%).  Any change in the  Contract  Rate
resulting from a change in the Prime Rate shall become  effective on the date of
such change in the Prime Rate as published in the Wall Street Journal.

         "Corporate Guarantors" means DGSE Corp.,  Silverman Consultants,  Inc.,
Charleston Gold and Diamond  Exchange,  Inc., DLS Financial  Services,  Inc. and
National  Jewelry  Exchange,  Inc. and  "Corporate  Guarantor"  means any of the
foregoing.

         "Debt Service Coverage Ratio" means,  for any period,  the ratio of (i)
consolidated Net Income of Borrower before interest expense and depreciation and
amortization  expenses for such period, to (ii) required  principal  payments on
Indebtedness for Money Borrowed for such period (but excluding  payments made on
the  Revolving  Loan),  plus  interest  expense  for  such  period  deducted  in
calculating Net Income.

         "Default" means any of the events specified in Section 10.1 which, with
the passage of time or giving of notice or both,  would  constitute  an Event of
Default.

         "Default Rate" means the Contract Rate plus five percent (5.0%)

         "Eligible  Accounts"  means all accounts of Borrower that are deemed by
Lender in the  exercise of its sole and absolute  discretion  to be eligible for
inclusion in the  calculation of the Borrowing Base net of any and all interest,
finance charges, sales tax, fees, returns, discounts,  claims, credits, charges,
contra accounts,  exchange contracts or other allowances,  offsets and rights of
offset,  deductions,  counterclaims,  disputes,  rejections,  shortages or other
defenses  and all credits  owed or allowed by Borrower  upon any of its accounts
and  further  reduced  by the  aggregate  amount  of all  reserves,  limits  and
deductions  provided for in this  definition  and  elsewhere in this  Agreement.
Eligible Accounts shall not include the following:

LOAN AND SECURITY AGREEMENT - Page 2
---------------------------

<PAGE>

         (a) accounts  which remain  unpaid more than sixty (60) days past their
invoice dates;

         (b)  accounts  which are not due and  payable  within  thirty (30) days
after their invoice dates;

         (c) accounts  owing by a single  Account Debtor if twenty percent (20%)
or more of the  aggregate  balance  owing by said Account  Debtor is  ineligible
pursuant to clauses (a) or (b) above;

         (d) accounts  with respect to which the Account  Debtor is an Affiliate
of Borrower;

         (e)  accounts  with respect to which the  obligation  of payment by the
Account Debtor is or may be  conditional  for any reason  whatsoever  including,
without  limitation,  accounts  arising  with respect to goods that were (i) not
sold on an absolute basis,  (ii) sold on a bill and hold sale basis,  (iii) sold
on a consignment sale basis, (iv) sold on a guaranteed sale basis, (v) sold on a
sale  or  return  basis,  or  (vi)  sold  on  the  basis  of any  other  similar
understanding;

         (f) accounts with respect to which the Account Debtor is not a resident
or citizen  of, or  otherwise  located  in,  the  continental  United  States of
America,  or with respect to which the Account  Debtor is not subject to service
of process in the continental United States of America, unless such accounts are
backed  in full by  irrevocable  letters  of  credit  or  insurance  in form and
substance  satisfactory  to Lender issued or confirmed by a domestic  commercial
bank acceptable to Lender;

         (g)  accounts  with  respect to which the Account  Debtor is the United
States of America or any other  federal  governmental  body unless such accounts
are duly  assigned  to Lender in  compliance  with all  applicable  governmental
requirements  (including,  without limitation,  the Federal Assignment of Claims
Act of 1940, as amended, if applicable);

         (h) accounts with respect to which  Borrower is or may be liable to the
Account Debtor for goods sold or services  rendered by such Account Debtor,  but
only to the extent of such liability to such Account Debtor;

         (i)  accounts  with respect to which the goods giving rise thereto have
not been shipped and delivered to and accepted as satisfactory by the applicable
Account  Debtor or with  respect to which the  services  performed  giving  rise
thereto  have not been  completed  and accepted as  satisfactory  by the Account
Debtor thereon;

         (j) accounts  which are not invoiced  within thirty (30) days after the
shipment and  delivery to and  acceptance  by said  Account  Debtor of the goods
giving rise thereto or the performance of the services giving rise thereto;

         (k)  accounts  which  are not  subject  to a first  priority  perfected
security interest in favor of Lender;

LOAN AND SECURITY AGREEMENT - Page 3
---------------------------

<PAGE>

         (1) that portion of an account  balance owed by a single Account Debtor
which exceeds fifteen percent (15%) of total accounts  otherwise deemed eligible
hereunder;

         (m) accounts with respect to which the Account Debtor is located in any
state requiring the filing of a Notice of Business  Activities Report or similar
report in order to permit Borrower to seek judicial enforcement in such state of
payment of such  account,  unless  Borrower has qualified to do business in such
state or has filed a Notice of Business  Activities  Report or equivalent report
for the then current year; and

         (n) accounts that Lender, in its sole discretion,  has determined to be
ineligible.

         "Eligible  Inventory"  means,  as at any  date  of  determination,  all
inventory  owned by and in the  possession of Borrower and located in the United
States of America that Lender, in its sole and absolute discretion,  deems to be
eligible  for  borrowing  purposes.  Without  limiting  the  generality  of  the
foregoing,  unless  otherwise  agreed by Lender,  the  following is not Eligible
Inventory:

         (a) work-in-process;

         (b) finished goods which do not meet the specifications of the purchase
order for such goods;

         (c)  inventory  which  Lender  determines,  in its  sole  and  absolute
discretion, to be unacceptable for borrowing purposes;

         (d) inventory with respect to which Lender does not have a valid, first
priority and fully perfected security interest;

         (e)  inventory  with respect to which there exists any Lien in favor of
any Person other than Lender;

         (f) packaging and shipping materials, products and labels;

         (g) inventory that is obsolete or returned or repossessed or used goods
taken in trade;

         (h) inventory produced in violation of the Fair Labor Standards Act, in
particular provisions contained in Title 29 U.S.C. 215 (a)(i);

         (i)  inventory  located at a location  for which Lender does not have a
valid  landlord's  or  warehouseman's  waiver  or  subordination  on  terms  and
conditions  acceptable to Lender in its sole discretion and inventory located at
any location other than those listed on Schedule 5.1(q).

LOAN AND SECURITY AGREEMENT - Page 4
---------------------------

<PAGE>

         "Environmental  Laws" means all federal,  state, local and foreign laws
now  or  hereafter  in  effect  relating  to  pollution  or  protection  of  the
environment,  including  laws  relating to  emissions,  discharges,  releases or
threatened releases of pollutants,  contaminants, chemicals or industrial, toxic
or  hazardous  substances  or wastes into the  environment  (including,  without
limitation,  ambient  air,  surface  water,  ground  water or land) or otherwise
relating to the manufacture,  processing, distribution, use, treatment, storage,
disposal, removal, transport or handling of pollutants,  contaminants, chemicals
or  industrial,  toxic  or  hazardous  substances  or  wastes,  and  any and all
regulations,  notices or demand letters issued, entered, promulgated or approved
thereunder.

         "Event of Default" means any of the events specified in Section 10.1.

         "Funded  Indebtedness"  means, as of any date, the sum of the following
(without duplication):  (i) the aggregate of all Indebtedness for Money Borrowed
of  Borrower  as  of  such  date,  other  than  current  liabilities,  (ii)  all
indebtedness  which would be classified as "funded  indebtedness"  or "long-term
indebtedness" (or other similar  classification) on a consolidated balance sheet
of  Borrower  prepared  as of such  date in  accordance  with  GAAP,  (iii)  the
aggregate of all indebtedness of Borrower outstanding under any revolving credit
or similar  agreement  providing  for  borrowing  (and  renewals and  extensions
thereof) over a period of more than one year,  notwithstanding the fact that any
such  indebtedness  is  created  within  one  year  of the  expiration  of  such
agreement, and (iv) the amount of all Capitalized Lease Obligations.

         "GAAP" means  generally  accepted  accounting  principles and practices
consistently applied.

         "Guarantors"  mean Dr. L. S. Smith and the  Corporate  Guarantors;  and
"Guarantor" means any of the Guarantors.

         "Indebtedness"   means  with   respect   to  any  Person  and   without
duplication,  (a) all Liabilities, (b) all obligations for money borrowed or for
the  deferred   purchase  price  of  property  or  services  or  in  respect  of
reimbursement   obligations  under  letters  of  credit,   (c)  all  obligations
represented  by bonds,  debentures,  notes and  accepted  drafts that  represent
extensions of credit,  (d) Capitalized  Lease  Obligations,  (e) all obligations
(including, during the noncancellable term of any lease in the nature of a title
retention agreement,  all future payment obligations under such lease discounted
to their present value in accordance with GAAP) secured by any Lien to which any
property or asset  owned or held by such  Person is subject,  whether or not the
obligation  secured  thereby  shall have been  assumed by such  Person,  (f) all
obligations of other Persons which such Person has  guaranteed,  including,  but
not limited to, all obligations of such Person consisting of recourse  liability
with respect to accounts sold or otherwise  disposed of by such Person,  and (g)
in the case of Borrower, the Revolving Loan (without duplication).

         "Intellectual  Property" means, as to any Person,  all of such Person's
then owned and existing and future acquired or arising  patents,  patent rights,
copyrights,  works  which are the  subject of  copyrights,  trademarks,  service

LOAN AND SECURITY AGREEMENT - Page 5
---------------------------

<PAGE>

marks,   trade  names,  trade  styles,   patent,   trademark  and  service  mark
applications,  and all licenses and rights related to any of the foregoing,  and
all  rights to sue for past,  present  and  future  infringements  of any of the
foregoing.

         "Investment" means any investment,  whether by means of share purchase,
loan, advance, purchase of debt instrument,  extension of credit (other than (i)
accounts  receivable  arising from the sale of goods or services in the ordinary
course of business, and (ii) notes, accepted in the ordinary course of business,
evidencing  overdue  accounts  receivable  arising  in the  ordinary  course  of
business),  capital contribution or otherwise, in or to any Person, the guaranty
of any Indebtedness of any Person or the  subordination of any claim against any
Person to other indebtedness of such Person.

         "Lender's  Office"  means the office of Lender  located at One  Lincoln
Park,  8401 North Central  Expressway,  Suite 500,  Dallas,  Texas 75225 or such
other office as Lender may designate from time to time.

         "Liabilities"   means  all  liabilities  of  a  Person   determined  in
accordance with GAAP.

         "Lien",  with  respect  to any  Person,  means any  security  interest,
chattel mortgage,  charge,  mortgage,  deed to secure debt, deed of trust, lien,
pledge,  Capitalized Lease, conditional sale or other title retention agreement,
or other security interest or encumbrance of any kind in respect of any property
of such Person or upon the income or profits therefrom.

         "Loan  Documents"  means,  this  Agreement,  the Revolving  Note,  each
writing now or  hereafter  executed  and  delivered by any Person to evidence or
secure the Obligations and each other instrument,  agreement and document now or
hereafter executed and delivered in connection with this Agreement.

         "Maximum  Rate"  shall have the  meaning  assigned  to such term in the
Revolving Note.

         "Material Adverse Change" means any act, omission, event or undertaking
which would,  singly or in the aggregate,  have a materially adverse effect upon
(a) the  business,  assets,  properties,  liabilities,  condition  (financial or
otherwise),  results of operations  or business  prospects of Borrower or any of
its subsidiaries, (b) upon the ability of Borrower or any of its subsidiaries to
perform any obligations under this Agreement or any other Loan Document to which
it is a party, or (c) the legality, validity, binding effect,  enforceability or
admissibility  into  evidence  of any Loan  Document or the ability of Lender to
enforce any rights or remedies under or in connection with any Loan Document.

         "Money  Borrowed" means  Indebtedness  (i) that is represented by notes
payable,  drafts  accepted,   bonds,  debentures  or  similar  instruments  that
represent extensions of credit, (ii) upon which interest charges are customarily
paid (other than trade  Indebtedness),  (iii) that was issued or assumed as full
or partial payment for property, (iv) that is evidenced by a guarantee (but only
if the obligations guaranteed would otherwise qualify as Money Borrowed), or (v)
that constitutes a Capitalized Lease Obligation.

LOAN AND SECURITY AGREEMENT - Page 6
---------------------------

<PAGE>

         "Net Income" means, with respect to any Person,  the net income of such
Person for the period in question (after provision for income taxes)  determined
in accordance with GAAP,  provided that the impact of any  extraordinary  gains,
determined in accordance with GAAP, shall be excluded from the  determination of
"Net Income".

         "Net  Worth"  of  any  Person  means  the  total  shareholders'  equity
(including  capital stock,  additional  paid-in  capital and retained  earnings,
after deducting treasury stock) which would appear as such on a balance sheet of
such Person prepared in accordance with GAAP.

         "Obligations"  shall mean (i) the Revolving  Loan or all other advances
made by Lender to Borrower  pursuant to this  Agreement or  otherwise,  (ii) all
future  advances or other value, of whatever class or for whatever  purpose,  at
any time  hereafter  made or given by Lender  to  Borrower,  whether  or not the
advances or value are given pursuant to a commitment and whether or not Borrower
is  indebted  to  Lender  at the time of such  advance;  (iii) any and all other
debts, liabilities and duties of every kind and character of Borrower to Lender,
whether now or hereafter  existing,  and  regardless  of whether such present or
future  debts,  liabilities  or  duties  are  direct  or  indirect,  primary  or
secondary,  joint,  several,  or joint and  several,  fixed or  contingent,  and
regardless of whether such present or future debts,  liabilities  or duties may,
prior to their  acquisition by Lender, be or have been payable to, or be or have
been in favor  of,  some  other  Person  or have  been  acquired  by Lender in a
transaction with one other than Borrower (it being  contemplated that Lender may
make such acquisitions from others),  howsoever such Indebtedness shall arise or
be incurred or  evidenced;  (iv) interest on all of the debts,  liabilities  and
duties set forth above; (v) all costs,  fees and expenses payable by Borrower to
Lender  pursuant to any of the Loan  Documents,  and (vi) any and all  renewals,
extensions, modifications and increases of the debts, liabilities and duties set
forth above, or any part thereof.

         "Permitted  Indebtedness"  means the Indebtedness of Borrower described
on Schedule 5.1(h).

         "Permitted   Investments"   means   Investments  of  Borrower  in:  (a)
negotiable  certificates  of  deposit  issued  by  Lender,  and (b)  any  direct
obligation  of the United  States of  America  or any agency or  instrumentality
thereof which has a remaining  maturity at the time of purchase of not more than
one year and repurchase agreements relating to the same.

         "Permitted  Liens" means:  (a) Liens securing  taxes,  assessments  and
other  governmental  charges or levies or the claims of materialmen,  mechanics,
carriers,  warehousemen or landlords for labor,  materials,  supplies or rentals
incurred  in the  ordinary  course of  business,  but (i) in all cases,  only if
payment shall not at the time be required to be made in accordance  with Section
7.4, and (ii) in the case of  warehousemen  or landlords  controlling  locations
where inventory is located,  only if such liens have been waived or subordinated
to the security interest of Lender in a manner  satisfactory to Lender;  and (b)
Liens in favor of Lender.

         "Person" means an individual,  corporation,  limited liability company,
partnership, joint venture, association, trust or unincorporated organization or

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a government or any agency or political subdivision thereof.

         "Prime Rate" means a rate per annum equal to the prime rate of interest
published from time to time in the Wall Street Journal (which is not necessarily
the lowest rate  charged to any customer of Lender),  changing  when and as said
prime rate changes.

         "Prohibited  Distribution"  by any  Person  means  (a) the  retirement,
redemption,  purchase,  or other  acquisition  for value of any capital stock or
other equity securities or partnership  interests issued by such Person, (b) the
declaration or payment of any dividend or distribution on or with respect to any
such securities  (excluding  distributions made solely in shares of stock of the
same class) or partnership interests, (c) any loan or advance by such Person to,
or other  investment  by such  Person  in, any other  Person,  and (d) any other
payment by such Person in respect of such securities or partnership interests.

         "Prohibited Payment" means (a) any redemption, repurchase or prepayment
or other  retirement,  prior to the stated maturity  thereof or prior to the due
date of any regularly scheduled installment or amortization payment with respect
thereto, of any Indebtedness of a Person (other than the Obligations,  Permitted
Indebtedness,  and  trade  debt),  and  (b) the  payment  by any  Person  of the
principal  amount of or  interest  on any  Indebtedness  (other  than  Permitted
Indebtedness or trade debt) owing to an Affiliate of such Person.

         "Revolving  Loan"  means the  advances  made to  Borrower  pursuant  to
Section 2.1.

         "Revolving  Note"  means  the  Promissory  Note  executed  by  Borrower
evidencing  the  Revolving  Loan  (and  any  renewal,  extension,  increase,  or
modification thereof).

         "Schedule of Accounts" means a schedule delivered by Borrower to Lender
pursuant to the provisions of Section 8.3(a).

         "Schedule  of  Inventory"  means a schedule  delivered  by  Borrower to
Lender pursuant to the provisions of Section 8.3(b).

         "Tangible Net Worth" means, as applied to any Person,  the Net Worth of
such Person at the time in question, after deducting therefrom the amount of all
intangible  items,  amounts due from Affiliates,  employees and shareholders and
all other items which should  properly be treated as  intangibles  in accordance
with GAAP.

         "Termination  Date" means,  with respect to the Revolving  Loan and the
Revolving Note, January 10, 2004.

         "UCC" means the Uniform  Commercial Code as in effect from time to time
in the State of Texas,  including  without  limitation,  any amendments  thereto
which are effective after the date hereof.

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         Section  1.2 UCC  Terms.  Terms  defined  in the UCC (such as,  but not
limited  to,  accounts,   chattel  paper,  contract  rights,   deposit  account,
documents, equipment, financial assets, general intangibles, goods, instruments,
investment  property,  inventory and proceeds),  as and when used (without being
capitalized)  in this Agreement or the Loan  Documents,  shall have the meanings
given to such terms in the UCC.

         Section  1.3  Accounting  Terms and  Determinations.  Unless  otherwise
specified  herein,  all accounting  terms used herein shall be interpreted,  all
determinations  with respect to accounting  matters hereunder shall be made, and
all financial  statements and certificates  and reports as to financial  matters
required  to be  furnished  to  the  Lender  hereunder  shall  be  prepared,  in
accordance with GAAP,  applied on a basis consistent with the audited  financial
statements of the Borrower referenced in Section 5.1(k).

                     ARTICLE II - REVOLVING CREDIT FACILITY

         Section 2.1 Revolving Loan. Subject to the terms and conditions of this
Agreement,  prior to the Termination Date Lender shall make advances to Borrower
under the Revolving Loan in an amount not to exceed  outstanding at any time the
lesser of (a) the Committed Sum, or (b) the Borrowing Base. Borrower may borrow,
repay and reborrow the  principal of the Revolving  Loan in accordance  with the
terms of this Agreement.

         Section 2.2 Advances Under the Revolving Loan. A request for an advance
under the  Revolving  Loan shall be made,  or shall be deemed to be made, in the
following manner:

                  (i) Borrower may request an advance under the  Revolving  Loan
         by  notifying  the Lender (a "Notice of  Borrowing"),  before 1:00 p.m.
         (Central time) on the proposed borrowing date, of Borrower's  intention
         to borrow and specifying the effective date and amount of the requested
         advance. Any Notice of Borrowing may be made by telephone and confirmed
         in writing (including facsimile),  provided that the failure to provide
         written  confirmation shall not invalidate any telephonic notice and if
         such written  confirmation differs in any respect from the action taken
         by the Lender,  the records of the Lender shall control absent manifest
         error.

                  (ii)  Unless  payment  is  otherwise  made  by  Borrower,  the
         becoming due of any amount  required to be paid under any Loan Document
         or of any  Obligation  shall be deemed to be a request  for an  advance
         under the Revolving Loan on the due date in the amount  required to pay
         such amount, and such request shall be irrevocable.

         Section 2.3 Repayment of the Revolving  Loan.  The Revolving Loan shall
be repaid as follows:  (a) the outstanding  principal amount of, and all accrued
and unpaid interest on, the Revolving Loan is due and payable on the Termination
Date; (b) if at any time the principal of, and interest upon, the Revolving Loan
exceeds  the  lesser  of (i) the  Committed  Sum,  or (ii) the  Borrowing  Base,
Borrower shall repay the Revolving Loan in the amount of such excess.

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         Section 2.4 Disbursement of Revolving Loan. Borrower hereby irrevocably
authorizes  Lender to disburse the proceeds of the Revolving Loan requested,  or
deemed to be requested,  pursuant to this Article II to such account of Borrower
maintained with Lender as may be agreed upon by Borrower and Lender from time to
time;  provided,  however,  that the  proceeds of each advance  requested  under
Section 2.2(ii) shall be disbursed by the Lender by way of direct payment of the
relevant Obligation.

            ARTICLE III - GENERAL LOAN PROVISIONS; FEES AND EXPENSES

         Section 3.1 Interest.

         (a) Revolving Loan. Borrower shall pay interest on the unpaid principal
amount of the Revolving Loan at the rates per annum,  and in accordance with the
terms of, the Revolving Note.

         (b) Default Rate. From and after the occurrence of an Event of Default,
at the option of Lender exercised by notice to Borrower,  the Borrower shall pay
interest on the unpaid  principal  amount of the Obligations  until paid in full
(or,  if  earlier,  until such Event of Default is cured or waived in writing by
Lender) at a rate per annum equal to the lesser of (A) the Maximum  Rate, or (B)
the Default Rate, payable on demand.

         Section 3.2 Commitment  Fee. On the date hereof,  Borrower shall pay to
Lender a  commitment  fee in the  amount  of  $15,000.00  in  consideration  for
Lender's  agreement to make the Revolving  Loan in accordance  with the terms of
this Agreement and in order to compensate  Lender for the costs  associated with
the  Revolving  Loan.  Such fee is in addition to the expenses that the Borrower
has agreed to pay elsewhere in this Agreement. Such fee shall in all respects be
limited so that interest on the  Obligations  is at all times less than interest
calculated  at the  Maximum  Rate.  Lender  acknowledges  the prior  receipt  of
one-half  (1/2) of such fee  ($7,500)  paid by Borrower  upon its  execution  of
Lender's proposal letter dated August 30, 2002.

         Section 3.3 Charging Accounts.  Borrower hereby irrevocably  authorizes
Lender to charge any  account  of  Borrower  maintained  with  Lender  with such
amounts as may be necessary from time to time to pay any  Obligations  which are
not paid when due.

         Section 3.4 Termination of Agreement.  On the Termination Date and upon
any early  termination of this  Agreement,  Borrower shall pay to Lender (i) the
principal of, and accrued and unpaid interest on, the Revolving Loan outstanding
on such date,  (ii) all fees  accrued and unpaid,  (iii) any amounts  payable to
Lender  pursuant to the other  provisions  of this  Agreement,  (iv) any and all
other Obligations then outstanding.

                         ARTICLE IV CONDITIONS PRECEDENT

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         Section 4.1 Conditions Precedent.  The obligation of Lender to make the
initial advance under the Revolving Loan is subject to (i) the receipt by Lender
of  each  of the  items  described  on  Schedule  4.1,  all  of  which  must  be
satisfactory  in form and  substance  to Lender  and its  counsel,  and (ii) the
fulfillment of the conditions precedent described in Section 4.2.

         Section 4.2 Conditions to Subsequent Advances. The obligation of Lender
to make each  advance  under the  Revolving  Loan after the  initial  advance is
subject to the following conditions precedent:

                  (a)  Conditions  to  First  Advance.  All  of  the  conditions
         precedent set forth in Section 4.1 were  satisfied  prior to the making
         of the initial advance.

                  (b)  Borrowing  Base  Certificate.  Lender shall have received
         from  Borrower  a  Borrowing  Base  Certificate  executed  by  Borrower
         prepared as of a date not more than thirty (30)  business days prior to
         the date of the requested advance.

                  (c)  Representations  and  Warranties.  As of the  date of the
         requested advance, the representations and warranties contained in each
         of the Loan Documents  shall be true in all material  respects with the
         same force and effect as though made on and as of such date.

                  (d)  Defaults  and Events of  Default.  No Default or Event of
         Default shall have occurred and be continuing.

                  (e) Adverse  Change.  No Material  Adverse Change (or event or
         condition that could reasonably be expected to cause or have a Material
         Adverse Change) has occurred since the date of the financial statements
         referenced in Section 5.1(k).

             ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BORROWER

         Section 5.1  Representations  and Warranties.  Borrower  represents and
warrants to Lender as follows:

                  (a)  Organization;   Power;   Qualification.   Borrower  is  a
         corporation duly organized, validly existing and in good standing under
         the laws of the State of Nevada and is  authorized  to do  business  in
         each  other  state  in  which  the  nature  of  its  properties  or its
         activities requires such  authorization.  Each Corporate Guarantor is a
         corporation duly organized, validly existing and in good standing under
         the laws of the state of its formation and is authorized to do business
         in each  other  state in which  the  nature  of its  properties  or its
         activities requires such authorization.

                  (b) Authorization;  Enforceability. Borrower has the corporate
         power and authority to, and is duly  authorized to, execute and deliver
         the  Loan  Documents  to be  executed  by  Borrower.  All of  the  Loan
         Documents to which Borrower is a party, constitute the legal, valid and

LOAN AND SECURITY AGREEMENT - Page 11
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<PAGE>

         binding  obligations of Borrower,  enforceable in accordance with their
         terms,  except as limited by bankruptcy,  insolvency or similar laws of
         general  application  relating to the enforcement of creditors'  rights
         generally.  Each  Corporate  Guarantor  has  the  corporate  power  and
         authority to, and is duly  authorized  to, execute and deliver the Loan
         Documents  to be executed by it. All of the Loan  Documents  to which a
         Corporate Guarantor is a party, constitute the legal, valid and binding
         obligations of such Corporate Guarantor, enforceable in accordance with
         their terms,  except as limited by  bankruptcy,  insolvency  or similar
         laws of general  application  relating to the enforcement of creditors'
         rights generally.

                  (c) Subsidiaries;  Ownership. Except as shown Schedule 5.1(c),
         Borrower  does not  have any  subsidiaries.  The  outstanding  stock of
         Borrower  has  been  duly and  validly  issued  and is  fully  paid and
         nonassessable and the number and owners of such shares of capital stock
         are set forth on Schedule 5.1(c).

                  (d) Conflicts.  Neither the execution and delivery of the Loan
         Documents,   nor  consummation  of  any  of  the  transactions  therein
         contemplated nor compliance with the terms and provisions thereof, will
         contravene any provision of law or any judgment, decree, license, order
         or permit  applicable to Borrower or will conflict with, or will result
         in any breach of any agreement to which Borrower is a party or by which
         Borrower  may be bound or  subject,  or violate  any  provision  of the
         Articles of Incorporation or bylaws of Borrower.

                  (e) Consents,  Governmental  Approvals,  Etc. No  governmental
         approval  nor any consent or approval of any third  Person  (other than
         those which have been obtained prior to the date hereof) is required in
         connection with the execution,  delivery and performance by Borrower of
         the Loan  Documents.  Borrower  is in  compliance  with all  applicable
         governmental approvals and all applicable laws.

                  (f) Business. Borrower is engaged principally in the wholesale
         and retail jewelry business.

                  (g) Title;  Liens.  Except  for items  described  in  Schedule
         5.1(g) and for Permitted  Liens,  all of the  properties  and assets of
         Borrower  are free and clear of all Liens,  and  Borrower  has good and
         marketable title to such properties and assets.  Except as disclosed on
         Schedule  5.1(g),  each Lien  granted,  or intended  to be granted,  to
         Lender  pursuant  to  the  Loan  Documents  is  a  valid,  enforceable,
         perfected, first priority Lien and security interest.

                  (h) Indebtedness and Guaranties.  Set forth on Schedule 5.1(h)
         is a complete and correct listing of all of Borrower's (i) Indebtedness
         for  Money  Borrowed,   and  (ii)   guaranties  and  other   contingent
         obligations.

                  (i) Suits,  Actions,  Etc. Except as disclosed on Schedule 5.1

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

<PAGE>

         (i), there are no actions,  suits,  or  proceedings  pending or, to the
         knowledge of Borrower,  threatened against or affecting Borrower or any
         of the Collateral.

                  (j) Tax Returns and Payments.  All tax returns  required to be
         filed by  Borrower  in any  jurisdiction  have been filed and all taxes
         (including  property  taxes) have been paid prior to the time that such
         taxes could give rise to a lien thereon, except for any such nonpayment
         which is at the time permitted under Section 7.4.

                  (k)  Financial  Condition.  Borrower  has  delivered to Lender
         copies of (i) the consolidated balance sheet of Borrower for its fiscal
         year ending,  December 31, 2001,  and the related  statements of income
         and  retained  earnings  for the year  ended on such  date,  audited by
         independent public accountants, and (ii) its unaudited balance sheet as
         of June 30, 2002, and the related statement of income and cash flow for
         the monthly period then ended. Such financial statements fairly present
         the  financial  condition  of  Borrower  as of such  date and have been
         prepared in accordance with GAAP.  There is no Indebtedness of Borrower
         which are not reflected in such  financial  statements  and no event or
         circumstance  has occurred since the date of such financial  statements
         which has had or could have or result in a Material Adverse Change.

                  (l) Defaults.  No Default or Event of Default has occurred and
         is continuing.

                  (m)  Borrowing  Base  Reports.   All  accounts  and  inventory
         included in any Borrowing Base Certificate constitute Eligible Accounts
         or Eligible  Inventory,  as  appropriate,  except as  disclosed in such
         Borrowing Base Certificate.

                  (n) Location of Inventory. Set forth on Schedule 5.1(n) is (i)
         the location and address  where all  inventory is located,  and (ii) if
         the  facility  is leased or is a third  party  warehouse  or  processor
         location,  the name of the landlord or such third party warehouseman or
         processor.

                  (o) Place of  Business.  The place of business of Borrower (or
         if Borrower  has more than one place of business,  its chief  executive
         office) is at the address or  addresses  set forth on Schedule  5.1 (o)
         and the books and records  relating to the  accounts are located at the
         address or addresses set forth on Schedule 5.1(o).

                  (p) Corporate and  Fictitious  Names;  Trade Names.  Except as
         disclosed on Schedule  5.1(p),  Borrower has not,  during the preceding
         three  (3)  years,  (i)  been  known as or used  any  other  corporate,
         fictitious  or trade names,  (ii) been the surviving  corporation  of a
         merger or consolidation,  or (iii) acquired all or substantially all of
         the assets of any Person.

                  (q)  Intellectual  Property.  Borrower  owns or possesses  all
         Intellectual  Property  required  to conduct  its  business  as now and
         presently planned to be conducted without,  to its knowledge,  conflict
         with the rights of others.

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                  (r) Payroll Taxes.  Borrower has made all payroll tax deposits
         for all of its  employees on or before the date when due.  Each advance
         for payroll was for the gross  payroll and  included  the amount of all
         necessary or appropriate tax deposits.

         Section  5.2  Survival  of  Representations.  All  representations  and
warranties  by  Borrower  herein  shall be  deemed to have been made on the date
hereof and the date of each advance.

             ARTICLE VI - SECURITY INTEREST AND COLLATERAL COVENANTS

         Section 6.1 Security Interest. To secure the payment and performance of
the Obligations,  Borrower hereby mortgages,  pledges and assigns to Lender, all
of the  Collateral,  and  grants to Lender a security  interest  and Lien in and
upon, all of the Collateral.

         Section 6.2 Verification and Notification.  Lender shall have the right
at any time at Borrower's  expense to verify the  validity,  amount or any other
matter relating to any accounts.

         Section 6.3  Ownership;  Defense of Title.  Borrower  shall  defend its
title in and to the Collateral and shall defend the security  interest of Lender
in the Collateral against the claims and demands of all Persons.

         Section  6.4  Location of Offices and  Collateral.  Borrower  shall not
change the location of its place of business  (or, if it has more than one place
of business,  its chief executive  office) or the place where it keeps its books
and records relating to the Collateral or change its name, identity or corporate
structure  without giving Lender at least thirty (30) days' prior written notice
thereof.  All  inventory,  other than inventory in transit to any such location,
and all  equipment,  other  than motor  vehicles,  shall at all times be kept by
Borrower at one of the locations set forth in Schedules 5.1(n) and (o).

         Section 6.5  Inspection.  Lender (by any of its officers,  employees or
agents)  shall  have the right at any time or times to visit the  properties  of
Borrower,  inspect the  Collateral  and the other assets of Borrower and inspect
and make extracts from the books and records of Borrower,  all during  customary
business hours

         Section 6.6 Power of Attorney.  Borrower  hereby appoints Lender as its
attorney,  with power,  after the occurrence and during the  continuation  of an
Event of Default  (a) to endorse  the name of  Borrower  on any  checks,  notes,
acceptances, money orders, drafts or other forms of payment or security that may
come  into  Lender's  possession,  and (b) to sign the name of  Borrower  on any
invoice  or  bill  of  lading  relating  to any  accounts,  inventory  or  other
Collateral.

         Section 6.7 Financing  Statements.  Borrower  authorizes Lender to file
financing statements,  without Borrower's signature,  covering all or any of the
Collateral in such jurisdictions as Lender shall determine to be advisable.

LOAN AND SECURITY AGREEMENT - Page 14
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                       ARTICLE VII - AFFIRMATIVE COVENANTS

         So long as this Agreement  shall be in effect or any of the Obligations
shall be outstanding, Borrower covenants and agrees as follows:

         Section 7.1  Preservation of Corporate  Existence and Similar  Matters.
Borrower  shall  preserve and maintain its  corporate  existence and qualify and
remain qualified as a foreign  corporation and authorized to do business in each
jurisdiction  in which the  character  of its  properties  or the  nature of its
business requires such qualification or authorization.

         Section 7.2 Compliance with Applicable Law.  Borrower shall comply with
all applicable laws.

         Section  7.3  Conduct  of  Business.  Borrower  shall  engage  only  in
substantially the same businesses conducted by Borrower on the date hereof.

         Section  7.4  Payment  of  Taxes  and  Claims.  Borrower  shall  pay or
discharge when due (a) all taxes,  assessments and governmental  charges imposed
upon it or its  properties,  and (b) all lawful claims which,  if unpaid,  might
become a Lien on any properties of Borrower,  except that this Section 7.4 shall
not require the payment or discharge of any such tax,  assessment,  charge, levy
or claim which is being  contested in good faith by appropriate  proceedings and
for which adequate  reserves have been  established on the appropriate  books of
Borrower.

         Section 7.5 Accounting  Methods and Financial  Records.  Borrower shall
maintain a system of  accounting,  and keep such  books,  records  and  accounts
(which shall be true and complete), as may be required or as may be necessary to
permit  the  preparation  of  financial   statements  in  accordance  with  GAAP
consistently applied.

         Section 7.6 Use of Proceeds. Borrower shall (a) use the proceeds of (i)
the first  advance  under the  Revolving  Loan to pay the amounts  indicated  in
Schedule 7.6 to the Persons indicated therein,  and (ii) all subsequent advances
under the Revolving Loan only for working capital and general business purposes,
and (b) not use any part of such proceeds to purchase or carry,  or to reduce or
retire or refinance any credit  incurred to purchase or carry,  any margin stock
(within the meaning of  Regulation  U of the Board of  Governors  of the Federal
Reserve System) or for any other purpose which would involve a violation of such
Regulation  U or  Regulation  T or X of such Board of Governors or for any other
purpose prohibited by law or by the terms and conditions of this Agreement.

         Section 7.7 Hazardous Waste and Substances; Environmental Requirements.
Borrower  shall  comply  with  all  occupational  health  and  safety  laws  and
Environmental Laws.

         Section 7.8 Accuracy of Information. All written information,  reports,
statements  and other papers and data  furnished to Lender by Borrower shall be,
at the time the same is so  furnished,  complete  and  correct  in all  material
respects.

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         Section  7.9  Revisions  or  Updates  to  Schedules.  Should any of the
information  or  disclosures  provided on any of the Schedules  attached  hereto
become  outdated or incorrect in any material  respect,  Borrower  shall provide
promptly  to Lender  such  revisions  or updates to such  Schedule(s)  as may be
necessary  or  appropriate  to update or correct  and update  such  Schedule(s).
Notwithstanding  the  foregoing,  the delivery to Lender of a revised or updated
schedule  shall not  constitute a waiver of, or consent to, any Default or Event
of  Default  arising  as a result  of any  erroneous  or  incorrect  information
provided in any schedule previously delivered to Lender.

         Section  7.10  Insurance.  Borrower  shall  keep  or  cause  to be kept
adequately  insured  by  financially  sound and  reputable  insurers  all of its
property  usually insured by persons or entities  engaged in the same or similar
businesses  including,  without limitation,  insurance on Borrower's  inventory.
Without  limiting the foregoing,  Borrower  shall insure the Collateral  against
loss or damage by fire, theft, burglary,  pilferage,  loss in transit,  business
interruption  and such other  hazards as are usual and  customary in  Borrower's
industry  or as Lender may  specify in amounts  and under  policies  by insurers
acceptable  to Lender,  and all premiums  thereon  shall be paid by Borrower and
copies of the policies  delivered to Lender.  If Borrower fails to do so, Lender
may procure  such  insurance  and charge the cost to  Borrower's  account.  Each
policy of insurance covering the Collateral shall provide that at least ten (10)
days prior written  notice of  cancellation  or notice of lapse must be given to
Lender by the insurer.  All insurance  policies required under this Section 7.10
shall name Lender as an additional  named insured and shall contain loss payable
endorsements in a form acceptable to Lender.  Any proceeds of insurance referred
to in this  Section  7.10  which are paid to Lender  shall be, at the  option of
Lender in its sole discretion, either (i) applied to rebuild, restore or replace
the damaged or destroyed property,  or (ii) applied to the payment or prepayment
of the Obligations.

         Section  7.11  Notice of Certain  Matters.  Borrower  shall  provide to
Lender prompt notice of (a) the commencement, to the extent Borrower is aware of
the same, of all actions and proceedings in any court against Borrower or any of
the Collateral, (b) any amendment of the articles of incorporation or by-laws of
Borrower, (c) any material negative change in the business, financial condition,
results of  operations  or business  prospects of Borrower and any change in the
executive officers of Borrower,  and (d) any (i) Default or Event of Default, or
(ii) event that would constitute a default or event of default by Borrower under
any material agreement (other than this Agreement) to which Borrower is a party.

         Section  7.12  Mandatory   Periodic  $0  Balance.   During  the  period
commencing on the date hereof and ending on the first  anniversary of such date,
and during each twelve month period thereafter, Borrower shall pay the Revolving
Loan  to down to $0 and  maintain  such $0  balance  for at  least  thirty  (30)
consecutive days.

                ARTICLE VIII - FINANCIAL AND COLLATERAL REPORTING

         So long as this Agreement  shall be in effect or any of the Obligations
shall be outstanding, Borrower covenants and agrees as follows:

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         Section 8.1 Financial Statements.

                  (a) Audited Year-End Statements.  As soon as available, but in
         any event within  ninety (90) days after the end of each fiscal year of
         Borrower,  Borrower  shall  furnish  to Lender  copies  of the  audited
         consolidated  balance  sheet of  Borrower  as of the end of such fiscal
         year  and  the  related  audited  consolidated  statements  of  income,
         shareholders'  equity and cash flow for such fiscal year,  in each case
         setting forth in comparative  form the figures for the previous year of
         Borrower and  certified by  independent  certified  public  accountants
         selected by Borrower  and  acceptable  to Lender.  In  addition,  on or
         before  such date  Borrower  shall  provide  Lender  with copies of all
         management reports received from its certified public accountants.

                  (b) Monthly Financial Statements. As soon as available, but in
         any event within thirty (30) days after the end of each month, Borrower
         shall furnish to Lender copies of the  unaudited  consolidated  balance
         sheet of Borrower as of the end of such month and the related unaudited
         consolidated  income  statement  and statement of cash flow of Borrower
         for such  month and for the  portion  of the  fiscal  year of  Borrower
         through  such  month,  certified  by the  chief  financial  officer  of
         Borrower as presenting  fairly the  financial  condition and results of
         operations of Borrower as of the date thereof and for the periods ended
         on the last day of such month, subject to normal year end adjustments.

         All such  financial  statements  shall be  complete  and correct in all
material respects and prepared in accordance with GAAP (except,  with respect to
interim   financial   statements,   for  the  omission  of  footnotes)   applied
consistently  throughout  the  periods  reflected  therein.  Further,  all  such
financial statements shall be in a form acceptable to Lender.

         Section 8.2 10Q and Quarterly Compliance Certificates. As soon as
available, but in any event within forty-five (45) days after the end of each
fiscal quarter of Borrower, Borrower shall furnish to Lender (i) a certificate
of Borrower's president or chief financial officer in the form of Exhibit B for
such fiscal quarter, and (ii) a copy of Borrower's 10Q filed with the Securities
and Exchange Commission.

         Section 8.3 Collateral Information and Reports.

                  (a)  Schedules of Accounts.  Within thirty (30) days after the
         end of each  month,  Borrower  shall  furnish to Lender a  Schedule  of
         Accounts  listing all accounts of Borrower as of the last  business day
         of such  month  setting  forth  (A) the  name  of each  Account  Debtor
         together with account balances detailed by invoice number,  amount (and
         any applicable  rebate or discount),  invoice date and terms, (B) aging
         of all  accounts  setting  forth  accounts  thirty  (30)  days past the
         invoice date or less,  accounts  over thirty (30) days past the invoice
         date but less than sixty-one (61) days past the invoice date,  accounts

LOAN AND SECURITY AGREEMENT - Page 17
---------------------------

<PAGE>

         over sixty  (60) days past the  invoice  date but less than  ninety-one
         (91) days past the invoice  date,  accounts  over ninety (90) days past
         the invoice date and less than one hundred  twenty-one  (121) days past
         the invoice date and accounts  over one hundred  twenty (120) days past
         the invoice date, and (C) a reconciliation  of the Schedule of Accounts
         to the Borrowing  Base  Certificate as of the most recent month end and
         Borrower's general ledger as of such month end.

                  (b) Schedule of  Inventory.  Within thirty (30) days after the
         end of each month,  Borrower shall furnish to Lender (A) (i) a Schedule
         of Inventory, based upon Borrower's perpetual inventory, as of the last
         business day of such month  itemizing and  describing  the kind,  type,
         quantity and location of all inventory of Borrower and the cost thereof
         with a summary of inventory by category,  (ii) a detailed  statement of
         all inventory that is not located on the premises described on Schedule
         5.1(n),  and (iii) an inventory  turnover report, in form and substance
         acceptable  to Lender,  and (B) a  reconciliation  of the  Schedule  of
         Inventory to the Borrowing Base Certificate as of the most recent month
         end and Borrower's general ledger as of such month end.

                  (c) Borrowing Base Certificate.  Within thirty (30) days after
         the end of each  month,  Borrower  shall  furnish to Lender a Borrowing
         Base  Certificate  prepared  as of the  close of  business  on the last
         business day of such month,  along with  supporting  documentation,  in
         form and substance satisfactory to Lender.

                  (d)  Certification.  Each of the  schedules  and  certificates
         delivered  to Lender by Borrower  pursuant to this Section 8.3 shall be
         in a form acceptable to Lender and shall be signed and certified by the
         president, chief financial officer or treasurer of Borrower to be true,
         correct and complete as of the date indicated thereon. In the event any
         of such  schedules or  certificates  are  delivered  electronically  or
         without signature,  such schedules and/or certificates shall, by virtue
         of their  delivery,  be deemed to have been signed and certified by the
         president  of Borrower to be true,  correct and complete as of the date
         indicated thereon.

                  (e) Other  Information.  Lender may,  in its sole  discretion,
         from  time to time  require  Borrower  to  deliver  the  schedules  and
         certificates  described  in  Section  8.3  more  or less  often  and on
         different schedules than specified in such Section. Borrower shall also
         furnish to Lender such other additional  information as Lender may from
         time to time request.

         Section 8.4 Guarantor  Financial  Statements;  Tax Returns.  As soon as
available,  but in any  event  within  ninety  (90)  days  after the end of each
calendar year, each Guarantor shall provide to Lender such Guarantor's financial
statement in such form as Lender may require.  Further, as soon as available but
in any event  within  sixty (60) days after such  returns  are  provided  to the
Internal  Revenue  Service,  each  Guarantor  shall  provide  Lender  with  such
Guarantor's tax return and all schedules thereto.

LOAN AND SECURITY AGREEMENT - Page 18
---------------------------

<PAGE>

                         ARTICLE IX - NEGATIVE COVENANTS

         So long as this Agreement  shall be in effect or any of the Obligations
shall be outstanding, Borrower covenants and agrees as follows:

         Section 9.1 Financial Covenants.

                  (a) Minimum Tangible Net Worth.  Borrower shall not permit the
         consolidated  Tangible Net Worth of Borrower at any fiscal  quarter end
         to be less than the sum of (i) $3,000,000.00.

                  (b) Maximum Liabilities to Tangible Net Worth.  Borrower shall
         not permit the ratio of Borrower's  total  Liabilities  to its Tangible
         Net Worth at any quarter end to be greater than 3.0 to 1.

                  (c) Minimum Debt Service Coverage.  Borrower shall not permit,
         as of the last day of any fiscal  quarter of Borrower,  the  Borrower's
         Debt Service  Coverage Ratio for the twelve  consecutive  months ending
         with such quarter end, to be less 1.25 to 1.0.

         Section 9.2 Prohibited  Distributions and Payments, Etc. Borrower shall
not,  directly or  indirectly  declare or make any  Prohibited  Distribution  or
Prohibited Payment.

         Section 9.3  Indebtedness.  Except as  disclosed  on  Schedule  5.1(h),
Borrower shall not, directly or indirectly  create,  assume, or otherwise become
or  remain  obligated  in  respect  of,  or  permit  or suffer to exist or to be
created,  assumed or incurred or to be outstanding any Indebtedness,  except for
Permitted Indebtedness.

         Section 9.4 Liens.  Borrower shall not, directly or indirectly  create,
assume or permit or suffer to exist or to be created or assumed  any Lien on any
of the  property or assets of  Borrower,  real,  personal or mixed,  tangible or
intangible,  except for  Permitted  Liens or the liens  identified  on  Schedule
5.1(g).

         Section  9.5  Merger,  Consolidation,  Sale  of  Assets,  Acquisitions.
Borrower shall not,  directly or indirectly  merge or consolidate with any other
Person or sell,  lease or  transfer  or  otherwise  dispose of any assets to any
Person  (other than sales of used and worn out  equipment and sales of inventory
in the ordinary course of business) or acquire all or  substantially  all of the
assets of any Person or the assets  constituting  the  business or a division or
operating unit of any Person.

         Section 9.6 Transactions with Affiliates.  Borrower shall not, directly
or  indirectly  effect  any  transaction  with  any  Affiliate  on a basis  less
favorable  to  Borrower  than  would  be the case if such  transaction  had been
effected with a Person not an Affiliate; provided, that Borrower shall not enter
into any lease with any Affiliate.

LOAN AND SECURITY AGREEMENT - Page 19
---------------------------

<PAGE>

         Section 9.7  Guaranties.  Borrower  shall not,  directly or  indirectly
become or remain  liable with respect to any guaranty of any  obligation  of any
other Person.

         Section  9.8 Sales and  Leasebacks.  Borrower  shall not,  directly  or
indirectly  enter into any arrangement with any Person providing for the leasing
from such Person of real or personal property which has been or is to be sold or
transferred, directly or indirectly, by Borrower to such Person.

         Section 9.9  Investments.  Borrower  shall not,  directly or indirectly
make or acquire any Investment;  provided,  however, Borrower may make Permitted
Investments.

                               ARTICLE X - DEFAULT

         Section  10.1 Events of Default.  Each of the  following  events  shall
constitute an Event of Default:

                  (a) The  failure or refusal of Borrower to make any payment of
         the Obligations when due;

                  (b) The failure of Borrower to properly  perform any  covenant
         in this Agreement or in any of the other Loan Documents;

                  (c) The  occurrence  of any default or event of default  under
         any of the other Loan Documents;

                  (d) Any  representation  contained  herein,  in any Compliance
         Certificate or Borrowing  Base  Certificate or in any of the other Loan
         Documents is false or misleading in any material respect;

                  (e) Borrower or any  Guarantor  shall (i) apply for or consent
         to the  appointment of a receiver,  trustee,  custodian,  intervenor or
         liquidator  of  such  Person  or of all or a  substantial  part of such
         Person's assets,  (ii) file a voluntary  petition in bankruptcy,  (iii)
         admit in writing that such Person is unable to pay such Person's  debts
         as they become due, (iv) make a general  assignment  for the benefit of
         creditors,  (v) file a petition or answer seeking  reorganization or an
         arrangement  with  creditors or to take  advantage of any bankruptcy or
         insolvency  proceeding,  or (vii) take corporate or partnership  action
         for the purpose of effecting any of the foregoing;

                  (f) An  involuntary  petition  or  complaint  shall  be  filed
         against Borrower or any Guarantor seeking  bankruptcy or reorganization
         of such Person or the  appointment of a receiver,  custodian,  trustee,
         intervenor or liquidator of such Person, or of all or substantially all
         of such Person's assets,  and such petition or complaint shall not have
         been  dismissed  within  sixty (60) days of the filing  thereof;  or an
         order,  order for relief,  judgment  or decree  shall be entered by any
         court of competent  jurisdiction or other competent authority approving

LOAN AND SECURITY AGREEMENT - Page 20
---------------------------

<PAGE>

         a  petition  or  complaint  seeking  reorganization  of such  Person or
         appointing an  intervenor  or  liquidator of such Person,  or of all or
         substantially all of such Person's assets;

                  (g) Any money  judgment is rendered  against  Borrower that is
         not paid within  thirty (30) days,  or the failure,  within a period of
         ten (10) days after the  commencement  thereof,  to have discharged any
         attachment,  sequestration,  or similar  proceedings against Borrower's
         assets;

                  (h) The  occurrence of a default or event of default under any
         other Indebtedness of Borrower which Indebtedness exceeds $10,000;

                  (i) Lender  shall cease to have a valid,  perfected  and first
         priority Lien on any of the Collateral,  except as otherwise  expressly
         permitted herein or consented to in writing by Lender;

                  (j) Dr. L. S. Smith  shall cease to own,  beneficially  and of
         record,  thirty percent (30%)of the outstanding voting capital stock of
         Borrower; or

                  (k) Any  guarantor  of the  Obligations,  or such  guarantor's
         heirs or personal representatives,  shall (i) repudiate his obligations
         under,  or commit an  anticipatory  breach of, his  unlimited  guaranty
         executed for the benefit of Lender or (ii)  attempt to  terminate  such
         guaranty or (iii)  commence any legal  proceeding  to terminate or hold
         invalid in any respect such guaranty.

         Section 10.2 Remedies.

                  (a) Automatic Acceleration and Termination of Facilities. Upon
         the occurrence of an Event of Default  specified in Section 10.1 (e) or
         (f), (i) the  principal of and the interest on the  Revolving  Loan and
         the Revolving Note at the time outstanding,  and all other amounts owed
         to Lender  under this  Agreement or any of the Loan  Documents  and all
         other  Obligations,  shall  thereupon  become due and  payable  without
         presentment, demand, protest, notice of protest and non-payment, notice
         of default, notice of acceleration or intention to accelerate, or other
         notice of any kind, all of which are expressly waived, anything in this
         Agreement or any of the Loan Documents to the contrary notwithstanding,
         and (ii) the  commitment  of Lender to make  advances  hereunder  shall
         immediately terminate.

                  (b) Other Remedies. Without limiting the terms of Section 10.2
         (a)  above,  if  any  Event  of  Default  shall  have  occurred  and be
         continuing,  Lender,  in its  sole  and  absolute  discretion,  may (i)
         declare the  principal  of and interest on the  Revolving  Loan and the
         Revolving Note at the time  outstanding,  and all other amounts owed to
         Lender under this  Agreement or any of the Loan Documents and all other
         Obligations,  to be forthwith due and payable, whereupon the same shall
         immediately  become  due  and  payable  without  presentment,   demand,
         protest,  notice of protest and non-payment,  notice of default, notice
         of  acceleration  or  intention to  accelerate,  or other notice of any

LOAN AND SECURITY AGREEMENT - Page 21
---------------------------

<PAGE>

         kind, all of which are expressly waived,  anything in this Agreement or
         the Loan Documents to the contrary notwithstanding;  (ii) terminate any
         commitment of Lender to make advances hereunder; and (iii) exercise any
         or all rights and remedies  available under the Loan Documents,  at law
         and/or in equity including, without limitation, the rights and remedies
         of a secured  party after default under the UCC (whether or not the UCC
         is  applicable).  Borrower  agrees that,  to the extent  notice of sale
         shall be required  by law, at least 10 days'  notice to Borrower of the
         time and place of any public  sale or the time after  which any private
         sale is to be made shall constitute reasonable notice, but notice given
         in any other  reasonable  manner or at any other  reasonable time shall
         also constitute reasonable notification.

         Section 10.3  Application of Proceeds.  All proceeds from each sale of,
or other realization upon, all or any part of the Collateral  following an Event
of Default  shall be applied to the payment of the  Obligations  (with  Borrower
remaining  liable for any  deficiency)  in any order which Lender may elect with
the balance (if any) paid to Borrower or to whomsoever is entitled thereto.

         Section 10.4 Rights Cumulative. The rights and remedies of Lender under
the Loan  Documents  shall be  cumulative  and not  exclusive  of any  rights or
remedies which it would  otherwise have. In exercising such rights and remedies,
Lender may be  selective  and no failure  or delay by Lender in  exercising  any
right  shall  operate  as a waiver of such right nor shall any single or partial
exercise  of any power or right  preclude  its other or further  exercise or the
exercise of any other power or right.

                           ARTICLE XI - MISCELLANEOUS

         Section 11.1 Notices. All notices and the communications  hereunder and
thereunder shall be in writing. Notices in writing shall be delivered personally
or sent by overnight courier service,  by certified or registered mail,  postage
pre-paid, or by facsimile transmission and shall be deemed received, in the case
of personal delivery,  when delivered, in the case of overnight courier service,
on the next business day after delivery to such service, in the case of mailing,
on the third day after mailing (or, if such day is a day on which  deliveries of
mail are not made, on the next  succeeding  day on which  deliveries of mail are
made) and, in the case of facsimile transmission,  upon transmittal.  Notices to
any party shall be sent to such party at the following  addresses,  or any other
address of which all the other parties are notified in writing.

         If to Borrower:       DGSE Companies, Inc.
                               2817 Forest Lane
                               Dallas, Texas 75234
                               Attention: John Benson
                               Facsimile No.: (972) 241-0646

LOAN AND SECURITY AGREEMENT - Page 22
---------------------------

<PAGE>

         If to Lender:         8401 North Central Expressway, Suite 500
                               Lockbox 36
                               Dallas, Texas 75225
                               Attention: Middle Market Lending
                               Facsimile No.:  (972) 419-3589

         Section 11.2 Expenses.  Within ten (10) days after  presentation  of an
invoice for such costs and expenses,  outlining such items in reasonable detail,
Borrower  agrees to pay or reimburse  all costs and expenses  incurred by Lender
arising out of or in  connection  with this  Agreement  and the  Revolving  Loan
including,  without  limitation,  (a) the reasonable  fees and expenses of legal
counsel  to Lender  arising in  connection  with the  negotiation,  preparation,
execution,  delivery,  enforcement and termination of this Agreement and each of
the  other  Loan  Documents  and  the  collection  of the  Obligations,  (b) the
out-of-pocket  costs and  expenses  of Lender  incurred in  connection  with the
administration of this Agreement and the other Loan Documents, (c) the costs and
expenses of  appraisals  of the  Collateral,  (d) the costs and expenses of lien
searches,  (e)  all  fees or  charges  related  to the  Collateral  and  charges
(including  and taxes) of filing  financing  statements and  continuations;  (f)
costs and expenses  related to the  preparation,  execution  and delivery of any
waiver, amendment, supplement or consent by Lender relating to this Agreement or
any of the Loan Documents;  (g) sums paid or obligations  incurred in connection
with the payment of any amount or taking any action  required of Borrower  under
the Loan  Documents  that  Borrower  fails to pay or take;  (h) costs of audits,
inspections and  verifications  of the Collateral (not to exceed four audits per
year)  and  Borrower's  operations  and books and  records,  including,  without
limitation,  a fee per diem per examiner at the rate  established by Lender from
time to time plus out of pocket  expenses for travel,  lodging,  and meals;  (i)
costs and expenses of  forwarding  loan  proceeds,  collecting  checks and other
items of payment,  and  establishing  and  maintaining  each account of Borrower
maintained with Lender;  (j) costs and expenses of preserving and protecting the
Collateral;  (k) costs and  expenses  paid or incurred to obtain  payment of the
Obligations,  enforce the security interest of Lender, sell or otherwise realize
upon the Collateral, and otherwise enforce the provisions of the Loan Documents,
or to  prosecute  or defend any claim in any way arising  out of,  related to or
connected  with,  this  Agreement or any of the Loan  Documents,  which expenses
shall include the reasonable  fees and  disbursements  of counsel and of experts
and other consultants  retained by Lender.  Borrower hereby authorizes Lender to
debit  Borrower's  loan  account  (by  increasing  the  principal  amount of the
Revolving Loan), or deduct from Borrower's  accounts maintained with Bank or any
Affiliate of Bank,  the amount of any costs,  fees and expenses owed by Borrower
when due.

         Section 11.3 Setoff. In addition to any rights now or hereafter granted
under applicable law, and not by way of limitation of any such rights, after the
occurrence and during the continuation of any Event of Default, Lender is hereby
authorized  by  Borrower  at any  time or from  time to  time,  with  notice  to
Borrower, to set off and apply any and all deposits (general or special, time or
demand, including, but not limited to, indebtedness evidenced by certificates of
deposit,  whether  matured or unmatured) and any other  indebtedness at any time
held or owing by Lender to or for the account of Borrower against and on account
of the Obligations.

LOAN AND SECURITY AGREEMENT - Page 23
---------------------------

<PAGE>

         Section 11.4 Amendments. Any term, covenant,  agreement or condition of
this  Agreement or any of the other Loan  Documents may be amended or waived and
any  departure  therefrom  may be consented to if, but only if, such  amendment,
waiver  or  consent  is in  writing  signed  by  Lender  and,  in the case of an
amendment, by Borrower.

         Section 11.5 Governing Law. This Agreement and the Revolving Note shall
be construed in accordance with and governed by the law of the State of Texas.

         Section 11.6 Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate  counterparts,  each
of which when so executed shall be deemed to be an original and shall be binding
upon all parties,  their successors and assigns, and all of which taken together
shall constitute one and the same agreement.

                THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL
          AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY

LOAN AND SECURITY AGREEMENT - Page 24
---------------------------

<PAGE>

         EVIDENCE OF PRIOR,  CONTEMPORANEOUS,  OR SUBSEQUENT  ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                                    BORROWER:

                                    DGSE Companies, Inc.

                                    By:
                                       -----------------------------------------
                                       William Oyster, President

                                     LENDER:

                                     FIRST AMERICAN BANK, SSB

                                     By:
                                        ----------------------------------------
                                        Matthew J. Malone, Vice President

LOAN AND SECURITY AGREEMENT - Page 25
---------------------------

<PAGE>

                             EXHIBITS AND SCHEDULES

EXHIBIT A               FORM OF BORROWING BASE CERTIFICATE
EXHIBIT B               FORM OF COMPLIANCE CERTIFICATE

SCHEDULE 4.2            Conditions precedent; items to be delivered
SCHEDULE 5.1 (c)        Capital Stock and Subsidiaries
SCHEDULE 5.1 (g)        Liens
SCHEDULE 5.1 (h)        Indebtedness for Money Borrowed and Guaranties
SCHEDULE 5.1(i)         Litigation
SCHEDULE 5.1 (n)        Locations of inventory
SCHEDULE 5.1 (o)        Location of Chief  Executive  Office
SCHEDULE 5.1 (p)        Corporate and Fictitious Names
SCHEDULE 7.6            Use of Proceeds

LOAN AND SECURITY AGREEMENT - Page 26
---------------------------

<PAGE>

                                    Exhibit A
                           Borrowing Base Certificate

EXHIBIT A- Page 1

<PAGE>

                                    Exhibit B
                             Compliance Certificate

EXHIBIT B- Page 1

<PAGE>

                                  Schedule 4.1
                              Conditions Precedent

(1)      This Agreement;

(2)      The Revolving Note;

(3)      A certified copy of the articles of  incorporation,  and all amendments
         thereto, of Borrower,  issued by the Secretary of State of the state of
         Borrower's  incorporation  together with a certificate of existence and
         good standing for Borrower issued by the such Secretary of State or the
         Comptroller of such State, as appropriate;

(4)      A copy of the bylaws, and all amendments thereto, of Borrower;

(5)      Certification of incumbency of all officers of Borrower, certifying the
         name and signature of each such officer;

(6)      Corporate  resolutions of Borrower duly adopted by Borrower's  Board of
         Directors;

(7)      Certification  by each  jurisdiction in which Borrower is qualified (or
         is  required  to be  qualified)  as a foreign  corporation  to transact
         business,  to the effect that Borrower is in good standing with respect
         to payment of franchise and similar taxes in such states;

(8)      All  financing   statements  required  by  Lender  in  connection  with
         perfection of Lender's  security  interests in the  Collateral  and all
         termination  statements  and other  amendments to financing  statements
         required by Lender to make Lender's security interest in the Collateral
         a first priority (and only) security interest therein subject, however,
         to the Permitted Liens;

(9)      Evidence of  insurance  in  compliance  with the  requirements  of this
         Agreement  and such loss  payable  endorsements  as may be  required by
         Lender  including,  without  limitation,  and endorsement to Borrower's
         inventory insurance naming Lender as loss payee;

(10)     Executed  landlord's  waivers and consents for each location  leased by
         Borrower and a mortgagee's waiver for each location owned by Borrower;

(11)     Evidence  that  Borrower  has  implemented   administrative  procedures
         reasonably  satisfactory  to Lender,  including,  but not  limited  to,
         matters relating to financial statements,  receivable agings, inventory
         summaries,  collections,  borrowing base  reporting,  projections,  and
         eligibility determination;

(12)     A Schedule of Inventory and a Schedule of Accounts, each prepared as of
         a recent date;

(13)     A  Borrowing  Base  Certificate  prepared  as of the date  hereof  duly
         executed and delivered by the chief financial officer of the Borrower;

SCHEDULE 4.2 - Page 1

<PAGE>

(14)     Copies of all the financial  statements  referred to in Section 5.1 (k)
         and meeting the requirements thereof;

(15)     A  signed  opinion  of  ___________________________,  counsel  for  the
         Borrower,  and such local counsel as the Lender shall deem necessary or
         desirable containing a waiver of any lack of privity between Lender and
         such counsel;

(16)     Each of the other Loan Documents duly executed by the parties thereto;

(17)     An unconditional  guarantee of each Guarantor;  provided,  however, the
         guarantee   executed   by  Dr.  L.  S.   Smith   shall  be  limited  to
         $1,500,000.00;

(18)     A  Subordination  Agreement  from  each of the  Persons  identified  on
         Schedule 5.1(h) excluding,  however, the holder of the mortgage note on
         Borrower's  owned facility located at 2817 Forest Lane,  Dallas,  Texas
         75234;

(19)     A security agreement executed by each Corporate  Guarantor securing its
         obligations  under the unconditional  guarantee  executed by it and the
         repayment of the Obligations;

(20)     An assignment  of  $1,000,000 in key-man life  insurance on the life of
         William Oyster, duly acknowledged and accepted by the insurance company
         that issued such insurance; and

(21)     Such  other  agreements,  documents,   instruments,   certificates  and
         financing statements as Lender may require.

SCHEDULE 4.2 - Page 2

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