Document:

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                                                                    Exhibit 10.1

                   TERMINATION AND CUSTOMER SUPPORT AGREEMENT

This Agreement (the "Agreement"), effective as of August 1, 2002 (the "Effective
Date"), by and between NEON Systems, Inc., a Delaware corporation ("NEON") with
offices at 14100 Southwest Freeway, Suite 500, Sugar Land, Texas 77478, and
Peregrine/Bridge Transfer Corporation, a Delaware corporation ("PBTC"), with
offices at 12680 High Bluff Dr. Suite 200, San Diego, CA 92130, collectively,
the "Parties."

                                    RECITALS

Whereas, on or about January 1, 1996, PBTC and NEON entered into that certain
Distributor Agreement, which was amended effective as of January 1, 1999 by the
First Amendment to Distributor Agreement, collectively, hereafter the
"Distributor Agreement," which Distributor Agreement provided that NEON would
distribute certain software products created and licensed from PBTC as
identified in Schedule 1 (the "PBTC Products");

Whereas, pursuant to the terms of the Distributor Agreement, NEON has paid to
PBTC Royalty Advances (as defined below) against actual royalties for licenses
of PBTC software, resulting in an unearned advance payments balance of
$3,884,028 dollars as of July 31, 2002;

Whereas, pursuant to the terms of the Distributor Agreement, NEON is obligated
to pay an additional $7.00 million in Royalty Advances through March 31, 2004;

Whereas, on December 18, 1998, NEON and PBTC entered into a Services Agreement
(the "Services Agreement") whereby NEON has provided certain accounting, legal,
marketing and administrative services to PBTC;

Whereas, on January 25, 2000, NEON and PBTC entered into a Remarketing Agreement
(the "Remarketing Agreement") whereby PBTC was granted a license to use certain
NEON software products to create OEM Products for distribution by NEON under the
Distributor Agreement, resulting in the creation and marketing of the software
product branded "NEON 24x7" (the "OEM Product");.

Whereas, the Distributor Agreement, the Services Agreement and the Remarketing
Agreement are collectively referred to herein as the "PBTC Agreements."

Whereas, the Parties now wish to (i) terminate, replace and supercede the PBTC
Agreements; and (ii) provide for the continued technical support of NEON's
customers who have purchased the PBTC Products and the OEM Product and have
contracted with NEON for the support of such software. Additionally, the Parties
wish to specify the terms of such termination and the other covenants, promises
and commitments set forth herein.

                                    AGREEMENT

1. DEFINITIONS. The terms "Customer," "Licensed Product" and "Royalty Advance"
shall have the meanings ascribed to them in the Distributor Agreement. The term
"OEM Product" shall have the meaning ascribed to above.

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2. CONSIDERATION. In consideration of the payments, transfers, assignments,
promissory notes, and mutual promises contained in this Agreement, and for other
good and valuable consideration, the Parties agree to the terms and conditions
herein.

3. TERMINATION OF PBTC AGREEMENTS. The Parties mutually agree to terminate the
PBTC Agreements effective as of the Effective Date on the following terms and
conditions. Notwithstanding the foregoing, this Agreement may expressly provide
that certain terms of the Distributor Agreement shall be continued and
terminated effective as of another date. As provided in Section 5.4(d) of the
Services Agreement, Section 5.4 of the Services Agreement shall survive
termination. Notwithstanding the provisions of Section 9.3 of the OEM Agreement,
Sections 5 and 11 of the OEM Agreement shall not survive termination.

     3.1  NEON Consideration to PBTC. NEON hereby agrees to provide the
          following consideration to PBTC at the closing of the transaction on
          August 14, 2002 or such other mutually agreeable date set by the
          parties in writing (the "Closing"):

          (a)  NEON will pay PBTC a cash advance of $2,200,000, which aggregate
               amount represents a $829,538 loan and the cash value of the
               unamortized deferred maintenance, deferred net license revenue
               and accounts receivable related to the distribution of the PBTC
               Products to be retained by NEON as identified on Schedule 2(a).

          (b)  NEON will assign to PBTC pursuant to an assignment agreement in
               the form attached hereto as Exhibit 1 (the "Assignment
               Agreement") all of its rights and obligations under all license
               and maintenance agreements related to the PBTC Products and the
               OEM Product, including the right to receive certain license and
               maintenance revenues, as identified on Schedule 2(b) attached
               hereto, and maintenance renewal revenue to be invoiced subsequent
               to the Closing.

          (c)  NEON will grant to PBTC a license to use the "NEON" trademark in
               connection with the marketing of the PBTC Products and the OEM
               Product under the terms of a trademark license agreement, a form
               of which is attached hereto as Exhibit 2 (the "Trademark
               License"), which Trademark License includes an option/right of
               first refusal to acquire the NEON trademark at no additional cost
               in the event that NEON discontinues to market products under the
               NEON name or if NEON changes its name.

          (d)  As of the Effective Date, NEON and PBTC will enter into an
               administrative services agreement, a form of which is attached
               hereto as Exhibit 3 (the "New Services Agreement") to provide
               that NEON will provide PBTC with the following administrative
               services for a period of twelve months beginning August 1, 2002:
               office space for its Houston-based employees (up to a maximum of
               the square feet of office space that NEON's IMS Division occupies
               at Closing), accounting, payroll, benefit administration,
               invoicing, accounts receivable collection, contract review,
               insurance administration and IT support. The New Services
               Agreement will further provide that at the end of such
               twelve-month period, PBTC may elect for NEON to continue
               providing such administrative services for a fee of $10,000 per
               month for an additional 12 month period. At the end of such
               period, NEON shall have no further obligation to provide such
               services.

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          (e)  NEON will grant to PBTC the right to sublicense and distribute
               the OEM Product pursuant to the terms and conditions of the
               License and Distribution Agreement attached hereto as Exhibit 4
               (the "New OEM Agreement").

     3.2  PBTC Consideration to NEON PBTC hereby agrees to provide the following
          consideration to NEON at the Closing:

          (a)  PBTC shall secure the outstanding unearned Royalty Advance
               balance at July 31, 2002 of $3,884,029 (the "Advance Royalty
               Balance") as follows:

                    (1)  PBTC will execute a convertible promissory note, a form
                         of which is attached hereto as Exhibit 5 (the
                         "Convertible Note"), with NEON as Payee, in the amount
                         of $3,000,000 at no interest to its due date of March
                         31, 2005, which note is convertible at NEON's option
                         into equity of PBTC at a $30,000,000 pre-cash valuation
                         anytime prior to March 31, 2005. Such Convertible Note
                         will be senior to all other non-NEON debt of PBTC
                         (including existing convertible debt) and secured by
                         the intellectual property of PBTC pursuant to a
                         security agreement, a form of which is attached hereto
                         as Exhibit 6 (the "Security Agreement").

                    (2)  PBTC shall execute a promissory note, a form of which
                         is attached hereto as Exhibit 7 (the "Consolidated
                         Note"), with NEON as Payee, in the amount of $3,584,028
                         at no interest to its due date of March 31, 2005,
                         representing the following principal amounts: (i) the
                         $884,029 remaining balance of the outstanding Advance
                         Royalty Balance; (ii) $2,200,000 in consideration of
                         the cash advance by NEON described in Section 3.1(a)
                         above; and (iii) $500,000 in consideration of the
                         assignments, grants and agreements set forth in Section
                         3.1(b) - (d) above. Such Consolidated Note will also be
                         senior to all other non-NEON debt of PBTC (except as
                         provided in 3.2(b) below) and secured by the
                         intellectual property of PBTC pursuant to the Security
                         Agreement.

          (b)  Except as otherwise provided in Section 3.2(c) below, the
               Consolidated Note and the Convertible Note issued pursuant to the
               terms of this Section 3.2 will be senior to all other non-NEON
               indebtedness of PBTC. As a condition to Closing, Skunkware, Inc.
               ("Skunkware"), PBTC's sole shareholder, will agree to subordinate
               its loans to PBTC to the Convertible Note and the Consolidated
               Note pursuant to the terms of a subordination agreement between
               PBTC and Skunkware, a form of which is attached hereto as Exhibit
               8 (the "Subordination Agreement"). The terms of the Subordination
               Agreement further provide that in the period from the Closing to
               March 31, 2005, PBTC will not, without the written consent of
               NEON, enter into any agreement that would (i) create a debt
               senior to any of the Convertible Note and the Consolidated Note
               or (ii) encumber the intellectual property of PBTC.

          (c)  NEON acknowledges and agrees that Skunkware, Inc. has entered
               into a mainframe lease agreement with IBM, in the form attached
               hereto as Exhibit 9 (the "Mainframe Lease"), for the use of PBTC.
               NEON acknowledges and agrees that so long as such Mainframe Lease
               is use in the ordinary course of PBTC's business, that prior to
               the due date of the Convertible Note and the Consolidated Note,
               such Mainframe Lease will not be subject to subordination under
               the terms of Section 3.2(b). NEON acknowledges and agrees that
               any lease payments made by PBTC to Skunkware pursuant to the
               Mainframe Lease will not constitute a breach

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               or default under the Convertible Note, the Consolidated Note, the
               Security Agrteement or the Subordination Agreement or under this
               Agreement.

     3.3. Personnel Issues. PBTC and NEON hereby agree as follows:

          (a)  As a condition to the Closing and effective as of August 1, 2002,
               Wayne Webb will resign as an employee of NEON, including his
               positions as Senior Vice President and General Counsel.

          (b)  In consideration of the parties' performance under this
               Agreement, PBTC acknowledges and agrees that it will offer to
               hire those individuals identified in Schedule 3 (the "PBTC
               Employees"), to be compensated according to the compensation
               schedule included therein effective as of August 1, 2002. NEON
               will facilitate the transfer of the employees chosen by PBTC upon
               their acceptance of an offer of employment from PBTC. NEON will
               use its reasonable efforts to have the Compensation Committee of
               NEON's Board of Directors approve an extension of the exercise
               period of the vested NEON stock options held by the PBTC
               Employees until March 31, 2005. PBTC shall indemnify NEON for any
               damages incurred by NEON, including reasonable attorneys fees and
               costs, for any employment law claims or claims for severance
               brought against NEON by any of the PBTC Employees.

          (c)  Without limitation, PBTC acknowledges and agrees that all
               intellectual property or other tangible or intangible work
               product made by such PBTC Employees for NEON during the course
               and scope of their employment with NEON ("Hired Employee IP")
               shall remain the sole and exclusive property of NEON, and that no
               right or license in or to such Hired Employee IP shall be
               conveyed to PBTC under this Agreement.

     3.4  Timetable. The Parties agree to the following timetable for the
     cessation of their obligations under the Distributor Agreement.

               3.4.1 Marketing Efforts. Unless otherwise provided in this
               Agreement, the parties acknowledge and agree that NEON's right to
               market and sell the PBTC Products as set forth in the Distributor
               Agreement shall end as of the Effective Date; provided, however,
               that NEON shall mutually agree with PBTC on a marketing
               transition plan and provide marketing assistance through
               September 30, 2002 (the "Service Transfer Date"). Pursuant to
               such transition plan, (i) NEON shall cease to list the PBTC
               Products on its corporate price list no later than September 30,
               2002, and (ii)NEON and PBTC shall honor and accept all domestic
               and international orders for the PBTC Products placed with NEON
               from August 1, 2002 to September 30, 2002 according to the terms
               of this Agreement. The Parties hereby acknowledge and agree that,
               except as otherwise agreed by the parties in writing, PBTC shall
               be responsible for the fulfillment of all orders for PBTC
               Products received on or after the Closing.

               3.4.2 Customer Inquiries. NEON agrees that it shall refer all new
               Customer inquiries for the PBTC Products and renewals of existing
               licenses, maintenance contracts or service agreements originating
               on or after August 1, 2002 to PBTC. In addition, NEON agrees that
               it will share with PBTC and that PBTC shall have the exclusive
               right to pursue any Customer leads with respect to the PBTC
               Products that NEON's sales force had begun, but not completed,
               prior to the Closing.

               3.4.3 Forecasts, Sales Information and Reports. As of the
               Effective Date, NEON shall have no further obligation to provide
               sales forecasts pursuant to Section 7.6 and 7.7 of the
               Distributor Agreement. Instead of within the time periods
               otherwise required by Section 14.3 of the

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               Distributor Agreement, on or before August 31, 2002, NEON shall
               provide a final inventory reconciliation, as required by Section
               14.3(a) and (c) of the Distributor Agreement, final sales
               information, as required by Section 14.3(f) of the Distributor
               Agreement, and a final sales pipeline report, as required by
               Section 14.3(h) of the Distributor Agreement.

               3.4.4 Customer Support. The provisions of Section 2.4 of the
               Distributor Agreement shall continue to apply up to and including
               the Service Transfer Date (as defined in Section 3.4.1 of this
               Agreement), subject to the provisions of Section 3.3. On or after
               the Service Transfer Date, the provisions of Section 4 of this
               Agreement will govern the support of Customers.

               3.4.5 Return of Materials. NEON agrees that it will return all
               copies of the Licensed Products and any materials associated
               therewith in its possession to PBTC on or before September 30,
               2002.

     3.5  Escrow. The Parties acknowledge that, (i) PBTC shall establish its own
          escrow account pursuant to the terms of an escrow agreement with a
          reputable escrow agent on or before October 1, 2002; (ii) NEON shall
          be obligated to maintain and escrow of the PBTC Products under its
          current escrow agreement only through such date.

     3.6  Survival. The following provisions of the Distributor Agreement shall
          survive termination: Article 9 - Indemnification; Sections 10.2 to
          10.4 of Article 10 - Confidentiality; Article 11 - Audits; Section 7.5
          - Books and Records; and Section 14.5 - Survival. Notwithstanding the
          provisions of Section 14.5 of the Distributor Agreement, NEON and PBTC
          hereby agree that Section 10.1 of the Distributor Agreement will not
          survive termination of the Distributor Agreement and that all
          obligations of NEON to pay any amounts to PBTC under the Distributor
          Agreement are hereby superceded by the provisions of this Agreement
          and will not survive termination of the Distributor Agreement.

4.   MAINTENANCE AND SUPPORT. Between the Effective Date hereof and the Closing,
NEON will refer any Customer who wishes to purchase a PBTC Product to PBTC,
including Customers requesting support and maintenance of previously licensed
copies of the PBTC Products and/or the OEM Product.

               4.1 Assignment of Support Contracts and Indemnification. In
               connection with their purchase of the PBTC Products, Customers
               have contracted with NEON for maintenance and support of the PBTC
               Products and/or the OEM Product (such Customers to be referred to
               hereinafter as "Service Customers"). NEON's obligations to these
               Service Customers are set forth in certain software license
               agreements, copies of which PBTC hereby acknowledges it has
               received and which are listed on Schedule 4 (collectively, the
               "Support Contracts"). The Parties agree that, as of the Service
               Transfer Date, and only as to those Service Customers whose
               Support Contracts do not require consent to assignment and to
               those Service Customers who have executed consents to assignment
               ("Consents to Assignments") as provided in Section 4.2 below,
               NEON shall be deemed to have assigned all of its right, title and
               interest in and to the Support Contracts and PBTC shall assume
               all of NEON's liabilities and obligations thereunder pursuant to
               the terms of the Assignment Agreement. PBTC further agrees to
               indemnify and hold NEON harmless for any claim by a Service
               Customer under any of the Support Contracts arising on or after
               the Service Transfer Date.

               4.2 Consents to Assignment and Service Transfer Date. In
               accordance with the terms of certain of the Support Contracts,
               NEON may not assign its interest in certain of the Support
               Contracts without the prior written consent of the Service
               Customer. Accordingly, NEON shall contact

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               each Service Customer to obtain a Consent to Assignment. No later
               than the Service Transfer Date, NEON shall provide to PBTC, in
               writing, a list of all Service Customers who have executed a
               Consent to Assignment.

               4.3 Support to Service Customers Not Consenting to Assignment.
               PBTC shall have no obligation to provide support to any Service
               Customer who has not executed a Consent to Assignment if such
               Service Customer's Service Contract requires such consent.

5.   CONFIDENTIALITY. Each party ("Recipient") receiving Confidential
     Information under this Agreement from the other party ("Discloser") shall
     protect the disclosed Confidential Information by using the same degree of
     care, but no less than a reasonable degree of care, to prevent the
     unauthorized use, dissemination, or publication of the Confidential
     Information as Recipient uses to protect its own confidential information
     of a like nature. Recipient shall only allow employees with a need to know
     to have access to Confidential Information. The terms of this Agreement
     shall be considered Confidential Information for purposes of this
     Agreement. Confidential Information disclosed under the Distributor
     Agreement will continue to be governed by the terms of that Agreement.

               5.1 "Confidential Information" includes only information that is
               either (a) marked as confidential at the time of disclosure; or
               (b) unmarked (e.g. orally disclosed) but treated as confidential
               at the time of disclosure, and is designated as confidential in a
               written memorandum sent to Recipient's primary representative
               within 30 days of disclosure, summarizing the Confidential
               Information sufficiently for identification.

               5.2 Use. The Recipient may use Confidential Information received
               under this Agreement only for the purposes of this Agreement and
               fulfilling the surviving obligations under the Distributor
               Agreement.

               5.3 Exclusions. This Agreement imposes no obligation upon
               Recipient with respect to information that: (a) was in
               Recipient's possession before receipt from Discloser; (b) is or
               becomes a matter of public knowledge through no fault of
               Recipient; (c) is rightfully received by Recipient from a third
               party, (d) is disclosed by Discloser to a third party without a
               duty of confidentially on the part of the third party; (e) is
               independently developed by Recipient; (f) is disclosed pursuant
               to operation of law; or (g) is disclosed by Recipient with
               Discloser's prior written approval.

               5.4 Term. The Recipient's obligation of confidentiality shall
               extend for two years following the Effective Date of this
               Agreement.

6.   RELEASE OF CLAIMS. The Parties intend this Agreement to be a full, final
and complete release of any and all claims that either of them may now or in the
future have against the other arising out of any claims related to the
Distributor Agreement. Each party fully and finally releases, discharges, and
settles all claims or causes of action, known or unknown, arising out of or
relating to such claims described in the preceding sentence. The Parties intend
to waive, release, and promise never to assert any such claims even if they do
not presently believe that they have such a claim. The Parties therefore waive
their rights under Section 1542 of the California Civil Code, which reads as
follows:

         A general release does not extend to claims which the creditor does not
         know or suspect to exist in his favor at the time of executing the
         release, which if known by him must have materially affected his
         settlement with the debtor.

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Notwithstanding the foregoing, this release shall not apply to any warranty or
indemnification claims arising under Article 12 and Article 9 of the Distributor
Agreement, respectively.

7.   INDEMNIFICATION.

          7.1 PBTC Indemnification of NEON. PBTC shall defend NEON against, and
          indemnify and hold NEON harmless from, any third party claim, suit, or
          other action ("Claim") and pay any judgments or damages awarded in any
          judicial proceeding on the Claim, pay any settlement amounts agreed
          upon by PBTC, and pay any associated costs and the reasonable fees of
          attorneys, arising out of, or relating to any Claim (a) that any PBTC
          Product, or its use, copying, distribution, modification, or
          disclosure, infringes any third party intellectual property rights,
          including any infringement of any third party patent, trademark, trade
          secret, copyright, mask work, or other intellectual property or
          proprietary rights, or (b) that any third party has incurred,
          suffered, or otherwise been damaged by any PBTC Product, or its use,
          modification, copying, distribution, or disclosure, or (c) based on
          PBTC's actions or omissions. In the event of any such Claim, NEON
          agrees to promptly notify PBTC of the Claim and give PBTC sole control
          and reasonably requested non-monetary assistance in the defense of the
          Claim. PBTC shall not make any settlement or compromise with respect
          to a Claim covered by this Section 7.1 without the prior written
          consent of NEON (which consent shall not be unreasonably withheld or
          delayed) unless the sole relief provided is monetary damages that are
          paid in full by PBTC. PBTC'S OBLIGATIONS UNDER THIS SECTION SHALL
          EXTEND TO CLAIMS WHERE NEON IS PARTIALLY OR CONCURRENTLY NEGLIGENT. If
          a court of competent jurisdiction enters a final judgment that NEON is
          partially negligent with respect to any such Claim, PBTC's obligations
          under this Section shall be reduced on a proportionate basis based on
          the relative share of NEON's negligence so adjudicated.

          7.2 NEON Indemnification of PBTC. NEON shall defend PBTC against, and
          indemnify and hold PBTC harmless from, any third party claim, suit, or
          other action and pay any judgments or damages awarded in any judicial
          proceeding on the Claim, pay any settlement amounts agreed upon by
          NEON, and pay any associated costs and the reasonable fees of
          attorneys, arising out of, or relating to any Claim (a) that any
          portion of NEON software code which is incorporated into the OEM
          Product (the "NEON Code"), or its use, copying, distribution,
          modification, or disclosure, infringes any third party intellectual
          property rights, including any infringement of any third party patent,
          trademark, trade secret, copyright, mask work, or other intellectual
          property or proprietary rights, or (b) that any third party has
          incurred, suffered, or otherwise been damaged by the NEON Code, or its
          use, modification, copying, distribution, or disclosure, or (c) based
          on NEON's actions or omissions prior to the Closing. In the event of
          any such Claim, PBTC agrees to promptly notify NEON of the Claim and
          give NEON sole control and reasonably requested non-monetary
          assistance in the defense of the Claim. NEON shall not make any
          settlement or compromise with respect to a Claim covered by this
          Section 7.2 without the prior written consent of PBTC (which consent
          shall not be unreasonably withheld or delayed) unless the sole relief
          provided is monetary damages that are paid in full by NEON. NEON'S
          OBLIGATIONS UNDER THIS SECTION SHALL EXTEND TO CLAIMS WHERE PBTC IS
          PARTIALLY OR CONCURRENTLY NEGLIGENT. If a court of competent
          jurisdiction enters a final judgment that PBTC is partially negligent
          with respect to any such Claim, NEON's

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          obligations under this Section shall be reduced on a proportionate
          basis based on the relative share of PBTC's negligence so adjudicated.

8.   GENERAL TERMS.

          8.1 Right of Assignment. This Agreement and any rights and licenses
          granted herein are personal to each party and are binding upon and
          inure to the benefit of the Parties hereto and their respective
          successors and assigns. Neither party may assign any of its rights,
          privileges or obligations hereunder without the prior written consent
          of the other party, which consent shall not be unreasonably withheld.

          8.2 Notices. All notices required or permitted to be given under this
          Agreement shall be in writing. Notices shall be deemed validly given
          upon the earlier of (a) confirmed receipt by the recipient or (b) five
          business days after dispatch by registered airmail, postage prepaid,
          in any post office in the United States addressed to the other party
          at the address specified herein. Notices shall be delivered to the
          following persons:

          NEON:                                   PBTC:

          Brian D. Helman                         James Bradford Poynter
          Chief Financial Officer                 Chief Financial Officer
          14100 Southwest Freeway, Suite 500      12680 High Bluff Dr. Suite 200
          Sugar Land, Texas 77478                 San Diego, CA  92130
          Phone: 281-634-8301                     Phone: 858-259-2500
          Fax: 281-634-8282                       Fax: 858-259-4843

          8.3 Entire Agreement. Except as otherwise provided herein, this
          Agreement sets forth the entire agreement and understanding between
          the Parties as to the termination of the PBTC Agreements and the
          provision of support to Customers, and it incorporates all prior
          agreements on that subject matter by reference. No conditions,
          definitions, warranties, understanding or other representations with
          respect to such subject matter other than as expressly provided herein
          shall bind either of the Parties.

          8.4 Modifications. This Agreement may only be modified by a written
          instrument signed by the Parties.

          8.5 No Agency Representation or Joint Venture. NEON and PBTC are
          strictly independent contractors and shall so represent themselves to
          third parties. Neither party has the right to bind the other in any
          manner whatsoever and nothing in this Agreement shall be interpreted
          to make either party the agent or legal representative of the other
          party or to make the parties joint venturers.

          8.6 Force Majeure. Neither party will be liable in damages or have the
          right to cancel or terminate this Agreement, in whole or in part, for
          any delay or default in performance thereunder if such delay or
          default is caused by conditions beyond the control of the delaying or
          defaulting party (including, but not limited to, acts of God,
          government restrictions, continuing domestic or international events
          such as wars or insurrection, strikes, fires, floods, work stoppages
          and embargoes). Each party will give the other prompt written notice
          of any condition likely to cause

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          any such delay or default and shall use all reasonable efforts to
          minimize the period and impact of the delay or default.

          8.7 Subsidiaries. Except as otherwise specifically provided in this
          Agreement, the Parties agree that this Agreement will apply to a
          party's subsidiaries so long as such subsidiaries agree to comply
          fully with the obligations imposed on the party by the Agreement. Each
          party will remain fully responsible for actions and omissions of its
          subsidiaries relative to rights granted under this Agreement.

          8.8 Waiver. The waiver of any term, condition, or provision of this
          Agreement or any of the Agreements attached hereto as Exhibits by
          either party must be in writing. No such waiver will be construed as a
          waiver of any other term, condition, or provision except as provided
          in writing, nor as a waiver of any subsequent breach of the same term,
          condition, or provision.

          8.9 Survival of Terms. Notwithstanding anything to the contrary
          herein, the following provisions of this Agreement shall survive
          termination: the indemnity provision of Section 4.1 AND section 7,
          Section 5--Confidentiality, and Section 6--Release of Claims.

          8.10 Severability. If any provision of this Agreement is held invalid
          or unenforceable by a body of competent jurisdiction, such provision
          will be construed, limited or, if necessary, severed to the extent
          necessary to eliminate such invalidity or unenforceability. The
          Parties agree to negotiate in good faith a valid, enforceable
          substitute provision that most nearly effects the Parties' original
          intent in entering into this Agreement or to provide an equitable
          adjustment in the event no such provision can be added. The other
          provisions of this Agreement will remain in full force and effect.

          8.11 Governing Law. This Agreement will be governed in all respects by
          the laws of the State of Texas without reference to any choice of laws
          provisions.

          IN WITNESS WHEREOF, each party has executed this Agreement by
          signature of its authorized representative.

NEON Systems, Inc.                         Peregrine/Bridge Transfer Corporation

By ______________________________          By __________________________________

Name_____________________________          Name_________________________________

Title____________________________          Title________________________________

Date  ___________________________          Date  _______________________________

________________________________________________________________________________

________________________________________________________________________________

                                       9<PAGE>

                                                                    Exhibit 10.2

     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT
BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT
UNDER THE ACT AND APPLICABLE LAWS IS IN EFFECT WITH RESPECT TO THIS NOTE OR (II)
THERE IS AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION, THAT AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE LAWS IS
AVAILABLE.

                      PEREGRINE/BRIDGE TRANSFER CORPORATION

                           CONVERTIBLE PROMISSORY NOTE

Note No. 1                                                    August 14, 2002

$3,000,000.00                                                 Houston, Texas

     For value received, Peregrine/Bridge Transfer Corporation ("Maker"), a
Delaware corporation, for value received hereby promises to pay to Neon Systems,
Inc. (the "Payee"), in lawful money of the United States of America, the
principal sum of THREE MILLION AND NO/100 Dollars ($3,000,000.00), with no
interest, subject to the terms and conditions hereof, at the times and in the
manner hereinafter provided.

1.   Payments.

     1.1 Subject to the provisions of Section 2 of this Convertible Promissory
Note (the "Note"), repayment of the entire principal amount shall be made on
March 31, 2005 (the "Maturity Date").

     1.2 This Note may be prepaid, but only in full, without penalty or premium,
at any time prior to the Maturity Date upon not less than thirty (30) days'
prior written notice to the Payee, which notice shall specify the prepayment
date (which shall be a business day).

2.   Conversion.

     2.1 At the option of the Payee, (a) at any time before the Maturity Date:
(unless a notice of prepayment pursuant to Section 1.2 has been given with
respect to the Note), this Note may be converted in whole or in part, and (b) at
any time prior to the Maturity Date and after delivery of a notice of prepayment
pursuant to Section 1.2 and prior to the close of business on the second
business day prior to the date prepayment is to be made (unless Maker fails to
make the prepayment on the date of proposed prepayment, in which event this
clause (b) of this Section 2.1 shall be of no further force or effect with
respect to such proposed prepayment), this Note may be converted, in whole but
not in part, in each case of conversion, into fully paid and nonassessable
shares of common stock of Maker (the "Common Stock") in accordance with the

<PAGE>

provisions of Section 2.2. The number of shares of Common Stock to be issued
upon conversion shall be determined by dividing the aggregate principal amount
to be converted by the Conversion Price (as defined below) in effect at the time
of such conversion. The initial conversion price shall be established in a
letter agreement executed by authorized officers of each party prior to
September 30, 2002 and will be based on an assumed $30 million pre-cash
valuation.

     2.2 Conversion Procedure. Before the Payee shall be entitled to convert
this Note into shares of Common Stock, it shall surrender this Note duly
endorsed at the principal office of Maker and shall give written notice (in the
form of Exhibit A hereto) to Maker at its principal corporate office, of the
election to convert the same pursuant to Section 2.1, and shall state therein
the name or names in which the certificate or certificates for shares of Common
Stock are to be issued. Maker shall, as soon as practicable thereafter, and at
Maker's expense, issue and deliver to the Payee a certificate or certificates
for the number of full shares of Common Stock to which the Payee shall be
entitled as aforesaid, together with any other securities and property to which
the Payee is entitled upon such conversion under the terms of this Note,
including a check payable to the Payee for any cash amounts payable in lieu of
fractional shares. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of this Note, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date. No fractional shares of
Common Stock shall be issued upon conversion of this Note. In lieu of issuing
any fractional shares to the Payee upon the conversion of this Note, Maker shall
pay in cash to the Payee the amount of outstanding principal that is not so
converted.

3.   Conversion Price Adjustments.

     3.1 Adjustments for Stock Splits, Subdivisions, and Combinations. In the
event Maker shall (A) pay a dividend or make a distribution in shares of Common
Stock on the Common Stock, (B) subdivide its outstanding shares of Common Stock
into a greater number of shares, (C) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, or (D) issue, by
reclassification of its shares of Common Stock, any shares of capital stock of
Maker, the Conversion Price in effect immediately prior to such action shall be
adjusted so that the Payee shall be entitled to receive the number of shares of
capital stock of Maker which the Payee would have owned or been entitled to
receive immediately following such action had the Note been converted
immediately prior thereto. An adjustment made pursuant to this Section 3.1 shall
become effective immediately after the record date in the case of a dividend or
distribution and shall become effective immediately after the effective date in
the case of a reclassification, subdivision or combination. If as a result of an
adjustment made pursuant to this Section 3.1, the Payee shall become entitled to
receive shares of two or more classes of capital stock (including shares of
Common Stock and other capital stock) of Maker, the Board of Directors shall
reasonably determine in good faith the allocation of the adjusted Conversion
Price between or among shares of such classes of capital stock or shares of
Common Stock and other capital stock.

     3.2 Adjustments for Certain Rights Issuances. In the event Maker shall
issue rights, options, or warrants to all holders of Common Stock entitling them
(for a period not exceeding

                                      -2-

<PAGE>

45 days from the date of such issuance) to subscribe for or purchase shares of
Common Stock at a price per share less than the Fair Market Value per share (as
determined in Section 3.7 below) of the Common Stock on the record date
mentioned below, the Conversion Price shall be adjusted to a price, computed to
the nearest cent, so that the same shall equal the price determined by
multiplying:

          (a) the Conversion Price in effect immediately prior to the date of
issuance of such rights, options, or warrants by a fraction, of which

          (b) the numerator shall be (i) the number of shares of Common Stock
outstanding on the date of issuance of such rights, options, or warrants,
immediately prior to such issuance, plus (ii) the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase would purchase at such Fair Market Value (determined by
multiplying such total number of shares by the exercise price of such rights,
options or warrants and dividing the product so obtained by such Fair Market
Value), and of which

          (c) the denominator shall be (i) the number of shares of Common Stock
outstanding on the date of issuance of such rights, options, or warrants,
immediately prior to such issuance, plus (ii) the number of additional shares of
Common Stock which are so offered for subscription or purchase.

Such adjustments shall become effective immediately after the record date for
the determination of holders entitled to receive such rights, options, or
warrants.

     3.3  Adjustments for Other Distributions. In the event Maker shall
distribute to all holders of Common Stock any of its assets, evidences of
indebtedness, cash or shares of capital stock (including equity interests in any
subsidiaries of Maker), other than Common Stock (including securities, but other
than (a) dividends or distributions exclusively in cash paid out of the surplus
of Maker or (b) any dividend or distribution for which an adjustment is required
to be made in accordance with Sections 3.1 or 3.2 above) or shall distribute to
substantially all holders of Common Stock any rights, warrants or options to
subscribe for securities of Maker (other than those referred to in Section 3.2
above), then in each such case the Conversion Price shall be adjusted so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the date of such distribution by a fraction the
numerator of which shall be the Fair Market Value per share of the Common Stock
on the record date mentioned below less the then Fair Market Value of the
portion of the assets or evidence of indebtedness so distributed or of such
subscription rights, options or warrants applicable to one share of Common
Stock, and the denominator of which shall be such Fair Market Value per share of
the Common Stock. Such adjustment shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
distribution.

     3.4  Continuation of Conversion Privilege in Case of Merger, Consolidation
or Sale of Assets.

     If any of the following shall occur, namely: (a) any consolidation or
merger of Maker or share exchange involving Maker as a result of which the
holders of Common Stock shall be

                                      -3-

<PAGE>

entitled to receive stock, other securities or other assets (including cash)
with respect to or in exchange for Common Stock; or (b) any conveyance, transfer
or lease of the properties and assets of Maker substantially as an entirety to
any entity, then the Payee shall have the right to convert this Note into the
kind and amount of shares of stock and other securities and property (including
cash) receivable upon or in connection with such consolidation, merger, share
exchange, conveyance, transfer or lease by a holder of the number of shares of
Common Stock issuable upon conversion of this Note immediately prior to such
consolidation, merger, share exchange, conveyance, transfer or lease.

     3.5  Notices of Record Date. In the event of:

          (a) Any taking by Maker of a record of the holders of Common Stock of
Maker for the purpose of determining the holders thereof who are entitled to
receive any dividend or other distribution, or any right to subscribe for,
purchase, or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or

          (b) Any authorization by Maker of any capital reorganization of Maker,
any reclassification or recapitalization of the capital stock of Maker, or any
transfer of all or substantially all of the assets of Maker to any other person
or any consolidation or merger involving Maker; or

          (c) Any authorization or order of voluntary or involuntary
dissolution, liquidation, or winding up of Maker,

Maker will mail to the Payee at least ten (10) days prior to the earliest date
specified therein, a notice specifying:

               (i)  The date on which any such record is to be taken for the
          purpose of such dividend, distribution, or right, and the amount and
          character of such dividend, distribution, or right; and

               (ii) The date on which any such reorganization, reclassification,
          transfer, consolidation, merger, dissolution, liquidation, or winding
          up is expected to become effective and the record date for determining
          stockholders entitled to vote thereon.

     3.6  Reservation of Common Stock Issuable Upon Conversion. Maker shall at
all times reserve, free from preemptive rights, and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the Note such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of the Note.
If at any time the number of authorized but unissued shares of Common Stock
(and/or its treasury stock) shall not be sufficient to effect the conversion of
the entire outstanding principal amount of the Note, then, in addition to such
other remedies as shall be available to the Payee, Maker will take all corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock (and/or its treasury stock) to
such number of shares as shall be sufficient for such purposes. Maker covenants
that all shares of Common Stock which may be issued upon conversion of this Note
will upon issue be fully paid and non-assessable by Maker and free of preemptive
rights.

                                      -4-

<PAGE>

     3.7  Fair Market Value. For the purpose of any computation under Sections
3.2 and 3.3 above, "Fair Market Value" shall mean the fair market value of such
shares or other property as of the specified date as reasonably determined in
good faith by the Board of Directors of Maker.

     3.8  Notice of Adjustment. Whenever the Conversion Price is adjusted as
herein provided, Maker shall promptly mail or cause to be mailed a notice of
such adjustment to the Payee in accordance with Section 9.1.

4.   Covenants.

     Maker covenants and agrees that, until this Note has been paid in full or
converted as provided in Section 2 hereof:

     4.1  Reporting Requirements. Maker shall deliver, or shall cause to be
delivered, to the Payee:

               (i)  Annual Financial Statements. As soon as available, the
          audited consolidated statements of income, stockholders' equity,
          changes in financial position and cash flow of Maker and its
          consolidated subsidiaries for such fiscal year, and the related
          consolidated balance sheets of Maker and its consolidated subsidiaries
          as at the end of such fiscal year, and setting forth in each case in
          comparative form the corresponding figures for the preceding fiscal
          year.

               (ii) Quarterly Financial Statements. As soon as available,
          consolidated statements of income, stockholders' equity, changes in
          financial position and cash flow of Maker and its consolidated
          subsidiaries for such period and for the period from the beginning of
          the respective fiscal year to the end of such period, and the related
          consolidated balance sheets as at the end of such period, and setting
          forth in each case in comparative form the corresponding figures for
          the corresponding period in the preceding fiscal year.

     4.2 Indebtedness. Maker shall not create, incur, assume or suffer to exist
any indebtedness other than indebtedness that ranks pari passu with, or is
subordinated to, the indebtedness evidenced by this Note.

     4.3 Liens. Maker shall not create, incur, assume or permit to exist any
Lien on any of its properties (now owned or leased or hereafter acquired or
leased), except:

               (i)  Liens securing the payment of any amounts owing or to be
          owed (including all renewals, extensions or rearrangement thereof) by
          Maker under this Note or the Consolidated Note (as defined by that
          certain Terminations and Support Agreement) dated as of the date
          hereof and executed by Maker in favor of the Payee;

               (ii) Excepted Liens;

                                      -5-

<PAGE>

               (iii) any Lien existing on any property or asset prior to the
          acquisition thereof by Maker, provided that such Lien shall secure
          only those obligations which it secures on the date of such
          acquisition; provided, however, that any such Liens shall be subject
          to the terms of the Subordination Agreement dated as of the date
          hereof between the Payee, Maker and Skunkware, Inc., the sole
          stockholder of Maker;

               (iv)  Liens on fixed or capital assets acquired, constructed or
          improved by Maker; provided that (i) such security interests and the
          indebtedness secured thereby are incurred prior to or within 90 days
          after such acquisition or the completion of such construction or
          improvement and (ii) such security interests shall not apply to any
          other property or assets of Maker; and

               (v)   Liens in connection with capital leases, finance leases and
          conditional sales agreements.

     For purposes of this Section 4.3, the following terms shall have the
following meanings:

     "Excepted Liens" shall mean: (i) Liens for taxes, assessments or other
governmental charges or levies that are not delinquent or that are being
contested in good faith by appropriate action; (ii) Liens in connection with
workers' compensation, unemployment insurance or other social security, old age
pension or public liability obligations that are not delinquent or that are
being contested in good faith by appropriate action; (iii) operators', vendors',
carriers', warehousemen's, repairmen's, mechanics', suppliers', workers',
materialmen's, construction or other like Liens arising by operation of law in
the ordinary course of business or statutory landlord's liens, including lessee
or operator obligations under statutes, governmental regulations, each of which
is in respect of obligations that are not delinquent or which are being
contested in good faith by appropriate proceedings; (iv) Liens that arise in the
ordinary course of business and are for claims that either are not delinquent or
are being contested in good faith by appropriate action; (v) Liens arising
solely by virtue of any statutory or common law provision relating to banker's
liens, rights of set-off or similar rights and remedies and burdening only
deposit accounts or other funds maintained with a creditor depository
institution, provided that no such deposit account is a dedicated cash
collateral account or is subject to restrictions against access by the depositor
in excess of those set forth by regulations promulgated by the Board of
Governors of the Federal Reserve System and no such deposit account is intended
by Maker to provide collateral to the depository institution; (vi) all other
non-consensual defects in title (which might otherwise constitute Liens) arising
in the ordinary course of Maker's business or incidental to the ownership of its
properties; provided that no such Liens shall secure the payment of
indebtedness; (vii) encumbrances (other than to secure the payment of borrowed
money or the deferred purchase price of property or services), easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in any property of Maker for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the removal of
gas, oil, coal or other minerals or timber, and other like purposes, or for the
joint or common use of real estate, rights of way, facilities and equipment, and
defects, irregularities, zoning restrictions and deficiencies in title of any
property which in the aggregate do not materially impair the use of such
property for the purposes of which such property is held by Maker; (viii) Liens
on cash or securities pledged to secure performance of tenders, surety and

                                      -6-

<PAGE>

appeal bonds, government contracts, performance and return of money bonds, bids,
trade contracts, leases, statutory obligations, regulatory obligations and other
obligations of a like nature incurred in the ordinary course of business; and
(ix) judgment Liens, provided that any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have been
finally terminated or the period within which such proceeding may be initiated
shall not have expired and no action to enforce such Lien has been commenced.

     "Lien" shall mean any interest in property securing an obligation owed to,
or a claim by, a person or entity other than the owner of the property, whether
such interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to the
lien or security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes.

5.   Representations and Warranties of Payee.

     5.1  The Payee hereby represents and warrants that:

          (a)  The Payee is familiar with the business and financial condition,
properties, operations and prospects of Maker, and has been afforded the
opportunity to ask questions of, and has received satisfactory answers from,
Maker's officers and directors, or other persons acting on Maker's behalf,
concerning the business and financial condition, properties, operations and
prospects of Maker and concerning the terms and conditions of this Note.

          (b)  The Payee understands that the extension of credit to Maker
involves various risks and that no assurance can be given as to the future value
of any investment in or conversion into the equity securities of Maker or the
future financial condition or results of operations of Maker. The Payee
understands that Maker's future performance will depend on a number of factors
beyond Maker's control and general economic and industry conditions.

          (c)  No representations or warranties have been made to the Payee by
Maker as to the tax consequences of this Note.

          (d)  All documents, records and books of Maker that the Payee has
requested have been made available to the Payee.

     5.2  The Payee has such knowledge, skill and experience in business,
financial and investment matters so that the Payee is capable of evaluating the
merits and risks of the Note. To the extent necessary, the Payee has retained,
at its own expense, and relied upon, appropriate professional advice regarding
the investment, tax and legal merits and consequences of this Note.

6.   Events of Default.

     The occurrence of any of the following events shall constitute an event of
default (an "Event of Default"):

          (a)  Maker shall fail to pay this Note, whether principal or interest,
     when due.

                                      -7-

<PAGE>

          (b)  Any representation or warranty made or deemed made by Maker or
     any of its respective officers in any certificate, report, notice, or
     financial statement furnished at any time in connection with this Note or
     any other instrument or document executed in connection with or as security
     for this Note shall be false, misleading, or erroneous in any material
     respect when made or deemed to have been made.

          (c)  Maker shall fail to perform, observe, or comply with any
     covenant, agreement or term contained in this Note, for a period of five
     (5) days following the date on which Payee gives Make notice of such
     failure.

          (d)  Maker shall commence a voluntary proceeding seeking liquidation,
     reorganization, or other relief with respect to itself or its debts under
     any bankruptcy, insolvency, or other similar law now or hereafter in effect
     or seeking the appointment of a trustee, receiver, liquidator, custodian,
     or other similar official of it or a substantial part of its property or
     shall consent to any such relief or to the appointment of or taking
     possession by any such official in an involuntary case or other proceeding
     commenced against it or shall make a general assignment for the benefit of
     creditors or shall generally fail to pay its debts as they become due or
     shall take any corporate action to authorize any of the foregoing.

          (e)  An involuntary proceeding shall be commenced against Maker
     seeking liquidation, reorganization, or other relief with respect to it or
     its debts under any bankruptcy, insolvency, or other similar law now or
     hereafter in effect or seeking the appointment of a trustee, receiver,
     liquidator, custodian or other similar official for it or a substantial
     part of its property, and such involuntary proceeding shall remain
     undismissed and unstayed for a period of thirty (30) days.

          (f)  Maker shall fail to pay when due any amount owing on any of its
     other debt, or the maturity of any such debt shall have been accelerated,
     or any such debt shall have been required to be prepaid prior to the stated
     maturity thereof, or any event shall have occurred that permits (or, with
     the giving of notice or lapse of time or both, would permit) any holder or
     holders of such debt or any person acting on behalf of such holder or
     holders to accelerate the maturity thereof or require any such prepayment.

          (g)  This Note or any other instrument or document executed by Maker
     in connection with or as security for these Notes shall at any time and for
     any reason cease to be in full force and effect or shall be declared null
     and void or the validity or enforceability thereof shall be contested or
     challenged by Maker, or Maker shall deny that it has any further liability
     or obligation hereunder prior to payment in full of all obligations
     hereunder.

          (h)  A "Change of Control" shall occur. "Change of Control" shall mean
     any change in the ownership of 50% or more of the shares of stock of Maker
     or voting power of such stock (other than among the current shareholders of
     Assignor on the date hereof)

7.   Remedies Upon Default.

                                      -8-

<PAGE>

     7.1  Upon the occurrence of an Event of Default, the principal amount then
outstanding of this Note shall upon written notice by the Payee to Maker become
immediately due and payable without other or further presentment, demand,
protest, or other formalities of any kind, all of which are hereby expressly
waived by Maker.

     7.2  The Payee may institute such actions or proceedings in law or equity
as it shall deem expedient for the protection of its rights and may prosecute
and enforce its claims against all assets of Maker, and in connection with any
such action or proceeding shall be entitled to receive from Maker payment of the
principal amount of this Note plus reasonable expenses of collection, including,
without limitation, attorneys' fees and expenses.

8.   Rights of Stockholders.

     This Note shall not entitle the Payee to be deemed the holder of Common
Stock or any other securities of Maker that may be issuable, nor shall anything
contained herein be construed to confer upon the Payee, as the holder of this
Note, any of the rights of a stockholder of Maker or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock reclassification of stock, change
of par value or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until and to the extent this Note
shall have been converted and the certificates representing the Common Stock
shall have been issued, as provided herein.

9.   Miscellaneous.

     9.1  Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail, or similar
overnight delivery or courier service or delivered (in person or by telecopy,
telex, or similar telecommunications equipment) against receipt to the party to
whom it is to be given, (i) if to Maker, at 12680 High Bluff Drive, Suite 200,
San Diego, California 92130, (ii) if to the Payee, at 14100 Southwest Freeway,
Suite 500, Sugar Land, Texas 77478, or (iii) in either case, to such other
address as the party shall have furnished in writing in accordance with the
provisions of this Section 9.1. Any notice or other communication given by
certified mail shall be deemed given at the time of certification thereof,
except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof. Any notice given by other means permitted by this
Section 9.1 shall be deemed given at the time of receipt thereof.

     9.2  Replacement of Note. Upon receipt of evidence satisfactory to Maker of
the loss, theft, destruction, or mutilation of this Note (and upon surrender of
this Note if mutilated), Maker shall execute and deliver to the Payee a new Note
of like date, tenor, and denomination.

     9.3  Waiver. No course of dealing and no delay or failure on the part of
the Payee in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice the Payee's rights, powers, or remedies. No
right, power or remedy conferred by this Note upon the Payee shall be exclusive
of any other right, power, or remedy referred to herein or now or

                                      -9-

<PAGE>

hereafter available at law, in equity, by statute or otherwise, and all such
remedies may be exercised singly, partially or concurrently.

     9.4  Entire Agreement; Amendment. This Note and the indebtedness evidenced
hereby are subject to, and entitled to the grant of security interests as set
forth in, the Security Agreement dated of even date herewith among Maker and the
Payee. Except as provided in the Security Agreement, this Note embodies the
entire agreement between Payee and Maker relating to the Note and supersedes all
prior agreements and understandings relating thereto. This Note may be amended
only by a written instrument executed by Maker and the Payee. Any amendment
shall be endorsed upon this Note, and all future holders shall be bound thereby.

     9.5  Governing Law. This Note shall be governed by, and construed in
accordance with, the laws of the State of Texas, without giving effect to
principles governing conflicts of law.

     9.6  Wavier of Demand. Maker and any and each co-maker, guarantor,
accommodation party, endorser or other person liable for the payment or
collection of this Note expressly waive demand and presentment for payment,
notice of nonpayment, protest, notice of protest, notice of dishonor, notice of
intent to accelerate, notice of acceleration, bringing of suit, and diligence in
taking any action to collect amounts called for hereunder and in the handling of
property at any time existing as security in connection herewith, and shall be
directly and primarily liable for the payment of all sums owing and to be owing
hereon, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any amount called for hereunder or in
connection with any Lien at any time had or existing as security for any amount
called for hereunder.

     9.7  Collection. If, after the Maturity Date, this Note is placed in the
hands of an attorney for collection or if it is collected through judicial,
probate, bankruptcy, or receivership proceedings, Maker shall be obligated to
pay to the Payee the reasonable attorneys' fees incurred by the Payee in
connection therewith

     9.8  Conversion Taxes. Maker will pay any and all documentary, stamp or
similar taxes payable to the United States of America or any political
subdivision or taxing authority thereof in respect of the issue or delivery of
shares of Common Stock upon conversion of this Note.

     9.9  Assignment. The rights and obligations of the Payee and Maker under
this Note shall be binding upon and benefit their respective successors and
permitted assigns.

     9.10 No Third Party Beneficiaries. The Payee and Maker agree that this Note
is solely for the benefit of the Payee and Maker and their respective successors
and permitted assigns, and no other person shall acquire or have any rights
under or by virtue of this Note.

     9.11 Severability. If any portion of this Note is determined to be invalid
or unenforceable under law, it shall not affect the validity or enforcement of
the remaining obligations or portions hereof.

                                      -10-

<PAGE>

     9.12 Headings. The headings for the Sections and paragraphs in this Note
are inserted for convenience only and shall not constitute a part hereof.

                  [Remainder of page intentionally left blank]

                                      -11-

<PAGE>

     IN WITNESS WHEREOF, Maker has caused this Note to be executed in its
corporate name and this Note to be dated, issued and delivered, all on August
14, 2002.

PEREGRINE/BRIDGE TRANSFER CORPORATION

By:___________________________________
Name:  _______________________________
Title:________________________________

                                      -12-

<PAGE>

                                    EXHIBIT A

                      PEREGRINE/BRIDGE TRANSFER CORPORATION
                           CONVERTIBLE PROMISSORY NOTE
                                NOTICE TO CONVERT

     The undersigned, the holder of the foregoing Note, hereby surrenders such
Note for conversion into shares of Common Stock, to the extent of
$_______________ unpaid principal amount of such Note, and request that the
certificates for such shares be issued in the name of, and delivered to,
____________________, whose address is _________________________________.

Dated: ____________________________________

___________________________________________
Tax Identification Number
or Social Security Number of holder of Note

                                                   _____________________________
                                                   Signature

(Signature must conform in all respects to name of holder as specified on the
face of the Note)

                                                  ______________________________
                                                  Printed Name (and title if
                                                  signing on behalf of an entity
                                                  or trust)

                                                  ______________________________

                                                             (Address)

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