Document:

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                                                                   EXHIBIT 10.24

                         EXECUTIVE EMPLOYMENT AGREEMENT

         THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of December 1, 2000 by and between, Samuel Gulko, currently residing at
10562 Grove Oak Drive Santa Ana, California 92705 (hereinafter referred to as
"Executive"), and NeoTherapeutics, Inc. (hereinafter referred to as
"Corporation").

         WHEREAS:

         A. The Corporation is a corporation organized under the laws of the
            State of Delaware, and is engaged in the business of developing and
            manufacturing pharmaceutical products and services; and

         B. Executive is a person whose skills, experience and training are
            required by the Corporation; and

         C. Executive wishes to accept the employment offered by the Corporation
            on the terms and conditions hereinafter set forth.

         NOW, THEREFORE, the parties hereto, intending to be legally bound, do
hereby agree as follows:

1. EMPLOYMENT

         1.1 Position and Duties

             The Corporation does hereby employ Executive and Executive hereby
         accepts such employment as Senior Vice President of Finance, Chief
         Financial Officer, Secretary and Treasurer of Corporation upon the
         terms and provisions set forth in this Agreement. Executive shall
         report to the Chief Executive Officer of the Corporation subject to the
         directions of the Chief Executive Officer. Executive shall devote his
         full working time and effort to the business and affairs of the
         Corporation as necessary to faithfully discharge the duties and
         responsibilities of his office.

             Executive may participate in other business and act as a director
         of any profit or nonprofit corporation, so long as such activity is not
         competitive with the business of the Corporation in any material
         respect and does not materially detract from the performance of his
         duties as a full time executive of the Corporation.

2. TERM

         This Agreement shall continue in full force and effective for a period
(the "Term") which shall commence as of December 1, 2000 (the "effective date")
and shall continue until December 31, 2002 unless sooner terminated as hereafter
provided. Thereafter, this Agreement will automatically renew for one (1) year
periods, unless either party gives to the other written notice at least ninety
(90) days prior to the commencement of the next year, of such party's intent not
to renew this Agreement.

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3. COMPENSATION

         3.1 Base Salary

             As compensation for the services to be performed by Executive
         during the continuance of this Agreement, the Corporation shall pay
         Executive a base salary of not less than $200,000 per year for each
         year of his employment hereunder, payable in accordance with
         Corporation practices in effect from time to time, but not less often
         than monthly (the "Base Salary"). Base Salary shall be payable in
         substantially equal installments and reduced on a pro rata basis for
         any fraction of a year or month during which Executive is not so
         employed.

         3.2 Bonus

             The Board of Directors of the Corporation may, at its sole
         discretion, award bonuses of cash or stock from time to time. Any such
         Bonus earned by Executive shall be paid at least annually within ninety
         (90) days after the conclusion of the Corporation's fiscal year or,
         upon mutual agreement of the parties, in another fashion.

         3.3 Additional Benefits

             Executive shall be entitled to all rights and benefits for which
         Executive is otherwise entitled under any pension plan, profit sharing
         plan, life, medical, dental, or benefit the Corporation may provide for
         senior executives generally and for employees of the Corporation
         generally from time to time in effect during the term of this Agreement
         (collectively, "Additional Benefits"). Executive shall receive
         participation in the Executive Medical Plan and shall commence such
         participation immediately.

         3.4 Stock Options

             As an additional element of compensation to Executive in
         consideration of the services to be rendered hereunder, Employer shall
         grant to Executive options to acquire shares of Corporation's common
         stock at the sole discretion of the Board of Directors as follows:

                 (A) The specific terms of stock options awarded to Executive
             shall be as set forth in the separate option agreements. To the
             extent that Corporation does not have available options in its
             option plans to grant to Executive as contractually committed
             hereinabove, Corporation agrees to amend its plans and/or adopt new
             plans as promptly as possible to provide

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             sufficient options for such option grants. Corporation shall use
             its best efforts to prepare and submit for approval by its
             directors and its stockholders at the 2001 Annual Meeting of
             Stockholders a new option plan which would provide sufficient
             options to allow Corporation to meet its contractual obligations to
             Executive herein and to provide for potential grants of stock
             options to other key employees.

                 (B) Executive shall be considered for additional grants of
             options, SAR's, phantom stock rights and any similar option or
             securities compensation when and as such grants are considered for
             other executives or employees of the Corporation, but any grant is
             wholly at the discretion of the Board.

                 (C) For all purposes of this Agreement, a "change of control"
             shall mean and shall be deemed to have occurred if:

                     (1) There shall be consummated (x) any consolidation or
                 merger of the Corporation with another corporation or entity
                 and as a result of such consolidation or merger, a majority of
                 the outstanding voting securities of the surviving or resulting
                 corporation or entity shall be owned in the aggregate by
                 persons who were not stockholders of the Corporation prior to
                 the merger or consolidation (excluding the affiliates of the
                 acquiror who acquired their shares within one hundred eighty
                 (180) days prior to such merger or transfer (or in one
                 transaction or a series of related transactions) of all, or
                 substantially all, of the assets of the Corporation, or

                     (2) The stockholders of the Corporation shall have approved
                 any plan or proposal for the liquidation or dissolution of the
                 Corporation; or

                     (3) Any "person" (as such term is used in the Sections
                 13(d) and 14 (d) (2) of the Securities Exchange Act of 1934),
                 shall have become the beneficial owner (within the meaning of
                 Rule 13d-3 under the Exchange Act) of forty percent (40%) or
                 more of the Corporation's outstanding common stock, without the
                 prior approval of the Board, or

                     (4) During any period of two (2) consecutive years,
                 individuals who at the beginning of such period constituted the
                 entire Board of Directors shall have ceased for any reason to
                 constitute a majority thereof unless the election, or the
                 nomination for election by the Corporation's stockholders, of
                 each new Director was approved by vote of the Directors then
                 still in office who were Directors at the beginning of the
                 period.

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                 (D) Retirement of Executive

                     Any options held by Executive will become fully vested at
                 the time that Executive terminates employment due to his
                 retirement. Retirement is defined as the voluntary termination
                 of employment by the Executive as a result of the Executive
                 having reached the retirement age as established by the
                 Corporation or age 65, whichever occurs first or, subsequent to
                 thereto, voluntarily terminates his employment.

         3.5 Periodic Review

             The Corporation shall review Executive's Base Salary bonus, Stock
         Options, and Additional Benefits then being provided to Executive not
         less frequently than every twelve (12) months. Following such review,
         the Corporation may, in its discretion, increase the Base Salary, award
         a Bonus, grant Stock Options and Additional Benefits.

         3.6 Reimbursements

             3.6.1 General. Subject to approval of his/her superior, Executives
         shall be promptly reimbursed by the Corporation for amounts actually
         expended by Executive in the course of performing duties for the
         Corporation where Executive tenders receipts or other documentation
         reasonably substantiating the amounts as required by the Corporation.
         As a condition of employment hereunder, Executive shall entertain
         business prospects, provide and maintain an appropriate automobile,
         maintain and improve Executive's professional skills by participating
         in continuing education courses and seminars, and maintain memberships
         in civic groups and professional societies and Corporation agrees to
         reimburse Executive therefore consistent with criteria under the
         Internal Revenue Code, subject to approval by their superior.

             3.6.2 Business Expenses. During the term of this Agreement to the
         extent that such expenditures satisfy the criteria under the Internal
         Revenue Code for deductibility by the Corporation (whether or not fully
         deductible by the Corporation) for federal income tax purposes as
         ordinary and necessary business expenses, Corporation agrees to and
         shall reimburse Executive promptly for all reasonable business
         expenditures including travel, entertainment, parking, business
         meetings, professional dues and the costs of and dues associated with
         maintaining club memberships and expenses of education, made or
         substantiated in accordance with policies, practices and procedures
         established from time to time by the Corporation generally with respect
         to other senior executives/managers and other employees of the
         Corporation and incurred in the pursuit and furtherance of the
         Corporation's business and good will.

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             3.6.3 Travel. In connection with any travel by Executive in the
         performance of his duties hereunder, Corporation shall advance to
         Executive an amount equivalent to the reasonable and necessary expenses
         of such travel and appropriate to Executive's position in Corporation
         pursuant to the policies and procedures established for this purpose by
         the Corporation.

             3.6.4 Entertainment. Executive shall be expected to entertain those
         with whom the Corporation conducts business both at Executives' home
         and at public restaurants, etc. The Corporation shall pay Executive for
         or promptly reimburse Executive for the reasonable and necessary costs
         of such entertainment.

             3.6.5 Credit Cards. To Assist Executive in the performance of his
         duties, Corporation shall provide Executive with a Corporation credit
         card or cards for use in paying for any and all reimbursable expenses.

         3.7 Deductions

             There shall be deducted from Executive's gross compensation
         appropriate amounts for standard employee deductions (e.g., income tax
         withholding, social security and state disability insurance) and any
         other amounts authorized for deduction by Executive.

4. VACATION

         Executive shall be entitled to not less than four weeks per year of
paid vacation for each twelve (12) month period of employment which shall accrue
on a pro rata basis from the date employment commences under this Agreement.
Subject to the foregoing minimum vacation, Executive shall be entitled to paid
vacation, holidays and leave time in accordance with the plans, policies,
programs and practices in effect generally with respect to other senior
employees of the Corporation. Executive shall not forfeit or cease to accrue any
paid vacation, if he is unable to or does not use it, in any year or period of
years during the term hereof, or any extensions thereof.

5. INDEMNIFICATION

         The Corporation shall, to the maximum extent permitted by law,
indemnify and hold Executive harmless from and against any expenses, including
reasonable attorney's fees, judgements, fines, settlements and other amounts
actually and reasonably incurred in connection with any proceeding arising out
of, or related to, Executive's employment by the Corporation. The Corporation
shall advance to Executive any expenses, including reasonable attorneys' fees
and costs of settlement, reasonably incurred in defending any such proceeding to
the maximum extent permitted by law. The Corporation will include Executive
under all directors' and officers' liability insurance policies and will use its
best efforts to maintain existing coverage levels, assuming continuation of
insurance availability at commercially reasonable rates.

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6. TERMINATION OF EMPLOYMENT

         Employment shall terminate upon the occurrence of any of the following
events:

         6.1 Expiration of Term

             Upon at least ninety (90) days prior written notice by Corporation
         to Executive terminating this Agreement prior to the expiration of the
         original term or an extended term as specified in Section 2; upon such
         termination, Executive shall be entitled to the compensation provided
         in paragraph 6.4 payable as provided therein.

         6.2 Mutual Agreement

             Whenever the Corporation and Executive mutually agree in writing to
         termination;

         6.3 Termination for Cause

             At any time for cause. For purposes of this Agreement,"cause" shall
         be defined as any of the following, provided however, that the board of
         directors of the Corporation by a duly adopted resolution has
         determined the presence of such cause in good faith: (i) Executive's
         material breach of any of his duties and responsibilities under this
         Agreement (other than as a result of incapacity due to disability);
         (ii) Executive's conviction by, or entry of a plea of guilty in, a
         court of competent jurisdiction for a felony; or, (iii) Executive's
         commission of an act of fraud or willful misconduct or gross negligence
         in the performance of his duties.

             Not withstanding the foregoing, Executive shall not be terminated
         for "cause pursuant to the clauses above, unless and until Executive
         has received notice of the proposed termination for cause including
         details on the bases for such termination and has had an opportunity to
         be heard before at least a majority of members of the board of
         directors of the Corporation. Executive shall be deemed to have had
         such an opportunity if written or telephonic notice is given at least
         ten (10) days in advance of a meeting.

         6.4 Termination without Cause

             Without cause. Notwithstanding any other provision of this section,
         the Corporation shall have the right to terminate Executive's
         employment with the Corporation without cause at any time, but any such
         termination shall be without prejudice to Executive's rights to receive
         Base Salary and Additional Benefits provided; under this Agreement for
         two (2) years and, except as provided in the proviso below, Executive
         shall be vested in all options granted to him, and shall have one (1)
         month for each month of Executive's tenure, with a minimum of six (6)
         months and a maximum of one (1) year, to exercise all vested options;
         provided, further, if the Board determines that Executive's employment
         is being terminated for the reason that the shared expectations of
         Executive and the Board are not being met; in the Board's judgement,
         then Executive's vesting as shall occur during a period following the
         date of termination of Executive's

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         employment equal to the number of months of Executive's tenure with the
         Corporation, with a minimum of six (6) months and a maximum of one (1)
         year, with the right to exercise for the same period plus thirty (30)
         days. The continued vesting and exercise rights relative to all options
         granted to Executive shall be subject to the same limitations as set
         forth in the immediately preceding sentence. If Executive is terminated
         without cause, Executive may elect to receive a lump sum payment
         representing the aggregate cash compensation (including salary, bonus,
         auto allowance and any other cash or equivalent compensation, other
         than continued vacation accrual). Such lump sum payment shall be made
         not later than ten (10) days after Executive makes such election. In
         the event of such lump sum election, all insurance and other noncash
         benefits shall cease.

         6.5 Death/Disability

             The death or disability of Executive. For the purposes of this
         Agreement, disability shall mean the absence of Executive performing
         Executive's duties with the Corporation on a full time basis for a
         period of six (6) consecutive months, as a result of incapacity due to
         mental or physical illness which is determined to be total and
         permanent by a physician selected by the Corporation or its insurers
         and reasonably acceptable to Executive or Executive's legal
         representative. If Executive shall become disabled, Executive's
         employment may be terminated; by written notice to Executive. In the
         event of the death of Executive, all compensation hereunder shall be
         paid based on value at time of death.

         6.6 By Executive Without Cause

             By Executive at any time upon ninety (90) days' notice to
         Corporation. Executive shall not be entitled to any severance in the
         event of such a termination.

7. CHANGE OF CONTROL

         If there should occur a "change of control" of the Corporation (or any
successor), as defined in paragraph 3.4 (C) hereof, and Executive's employment
is terminated (other than by Executive) or Executive is adversely affected in
terms of overall compensation, benefits, title, authority, reports reporting
relationships, location of employment or similar matters, then Executive,
without limitation on any other rights hereunder, may, within six (6) months
after receiving notice of such event, elect to resign from full time service to
the Corporation. In the event of such election by Executive, Executive shall be
provided with senior executive outplacement services at an outplacement or
executive search firm of Executive's selection (and reasonably acceptable to
Corporation), and the cash compensation and all benefits to which Executive is
entitled hereunder shall be discontinued twenty-four (24) months after the date
of election (or earlier, if a lump sum payment of cash compensation is
specified). Executive, at his election, shall have the right to request and, if
requested, shall be paid the full cash value of all amounts of cash compensation
due for the 24-month period (including salary, approved bonus, auto allowance,
and any other cash or equivalent compensation) in a lump sum, such lump

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sum payment shall be made not later than ten (10) days after Executive gives
notice to the Corporation of his lump sum election. In the event of such
election, all insurance and noncash benefits shall cease. All options granted to
Executive shall vest to the extent provided in paragraph 6.4 above. In addition,
if an acquirer of 100% of the Corporation stock is itself a publicly held
company, the Corporation shall make reasonable efforts to negotiate that
Executive shall have the right, but not the obligation, to convert all his
Corporation vested options into options on the acquirer's stock and shall have
two (2) years to exercise those options, but Corporation shall have no
obligation to Executive if it fails to secure such rights or concludes that
pursuing such rights would materially prejudice the interest of the stockholders
of the Corporation.

8. BREAKUP AND DISPOSITION OF CORPORATION ASSETS

         If within the first year of Executive's employment, the Board
determines to maximize stockholder value through disposition of a significant
amount of assets or business units of the Corporation, Executive shall assist
Corporation through such disposition and shall thereafter be entitled to
terminate this Agreement within six (6) months of such event (completion of such
disposition) and receive all benefits provided under section 6.4 hereof. As used
herein, the term "significant amount of assets or business units of the
Corporation" shall mean either fifty percent (50%) or more of the gross revenues
of Corporation or, in the absence of gross revenues, 50% of the gross assets of
the Corporation including intellectual properties, as determined by an
independent appraisal, or fifty percent (50%) or more of the operating income by
excluding losses from business units of the Corporation which are operating at a
loss.)

9. BUSINESS DISCLOSURES AND SOLICITATION OF EMPLOYEES

         Executive agrees during the term of his employment by the Corporation
and thereafter that he will not disclose, other than to an authorized employee,
officer, director or agent of the Corporation, any information relating to the
Corporation's business, trade, practices, trade secrets or know-how or
proprietary information without the Corporation's prior express written consent.
Following termination of Executive's employment, Executive shall be permitted to
continue in his usual occupation and shall not be prohibited from competing with
the Corporation except during the two (2) year severance period and in the
specific industry market segments in which the Corporation competes and which
represent twenty percent (20%) or more of its revenues. Executive agrees that
for a period of one (1) year following the termination of Executive's employment
with the Corporation for any reason, Executive shall not directly or indirectly
solicit, induce, recruit or encourage any of the Corporation's employees to
leave their employment or take away such employees to leave their employment or
take away such employees or attempts to solicit, induce, recruit, encourage or
take away employees of the Corporation.

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10. MISCELLANEOUS

         10.1 Arbitration

              Any dispute, controversy or claim arising out of or in respect of
         this Agreement (or its validity, interpretation or enforcement), the
         employment relationship or the subject matter hereof shall, at the
         request of either party, be settled by binding arbitration in Orange
         County, California in accordance with the Commercial Arbitration Rules
         of the American Arbitration Association and judgement upon the award
         rendered by the arbitrator(s) may be entered in any court having
         jurisdiction thereof. The parties shall have rights to discovery as
         provided in section 1283.05 of the California Code of Civil Procedure.
         The prevailing party in any such matter shall recover all of its costs
         and expenses, including reasonable attorney's fees.

         10.2 No Third-Party Beneficiaries

              This Agreement shall not confer any rights or remedies upon any
         person other than the parties and their respective successors and
         permitted assigns.

         10.3 Entire Agreement

              This Agreement (including the documents referred to herein)
         constitutes the entire agreement between the parties and supersedes any
         prior understandings, agreements, or representations between the
         parties, written or oral, to the extent they have related in any way to
         the subject matter hereof.

         10.4 Succession and Assignment

              This Agreement shall be binding upon and inure to the benefit of
         the parties named herein and their respective successors and permitted
         assigns. No party may assign either the Agreement or any of his or its
         rights, interests, or obligations hereunder without the prior written
         approval of the Corporation and Executive; provided, however, that the
         Corporation may (i) assign any or all of its rights and interests
         hereunder to one or more of its affiliates and (ii) designate one or
         more of its affiliates to perform its obligations hereunder (in any or
         all of which cases the Corporation nonetheless shall remain responsible
         for the performance of all of its obligations hereunder).

         10.5 Counterparts

              This Agreement may be executed in one or more Counterparts, each
         of which shall be deemed an original but all of which together will
         constitute one and the same instrument.

         10.6 Headings

              The section headings contained in this Agreement are inserted for
         convenience only and shall not affect in any way the meaning or
         interpretation of this agreement.

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         10.7 Notices

              All notices, requests, demands, claims, and other communications
         required or permitted hereunder will be in writing. Any notice,
         request, demand, claim, or other communication hereunder shall be
         deemed duly given if (and then two business days after) it is sent by
         registered or certified mail, return receipt requested, postage
         prepaid, and addressed to the intended recipient as set forth below:

                        If to Corporation

                        NEOTHERAPEUTICS, INC.
                        157 TECHNOLOGY DRIVE
                        IRVINE, CA 92618

                        If to Executive:

                        SAMUEL GULKO
                        10562 GROVEOAK DRIVE
                        SANTA ANA, CA 92705

              Any party may send any notice, request, demand, claim, or other
         communication hereunder to the intended recipient at the address set
         forth above using any other means (including personal delivery,
         expedited courier, messenger service, telecopy, telex, ordinary mail,
         or electronic mail), but no such notice, request, demand, claim, or
         other communication shall be deemed to have been duly given unless and
         until it actually is received by the intended recipient. Any party may
         change the address to which notices, requests, demands, claims, and
         other communications hereunder are to be delivered by giving notice in
         the manner herein set forth.

         10.8 Governing Law

              This Agreement shall be governed by, and construed and enforced in
         accordance with, the laws of the State of California without giving
         effect to any choice or conflict of law provision or rule (whether of
         the State of California or any other jurisdiction) that would cause the
         application of the laws of any jurisdiction other than the State of
         California.

         10.9 Amendments and Waivers

              No amendment of any provision of this Agreement shall be valid
         unless the same shall be in writing and signed by Corporation and the
         Executive. No waiver by any party of any default, misrepresentation, or
         breach of warranty or convenant hereunder, whether intentional or not,
         shall be deemed to extend to any prior or subsequent default,
         misrepresentation, or breach of warranty or convenant hereunder or
         affect in any way any rights arising by virtue of any prior or
         subsequent such occurrence.

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         10.10 Severability

               Any term or provision of this Agreement that is invalid or
         unenforceable in any situation in any jurisdiction shall not affect the
         validity or enforceability of the remaining terms and provisions hereof
         or the validity or enforceability of the offending term or provision in
         any other situation or in any other jurisdiction.

         IN WITNESS THEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                              "CORPORATION"

                                              By:
                                                  ------------------------------
                                              Its:
                                                  ------------------------------

                                              "EXECUTIVE"

                                              By:
                                                  ------------------------------
                                                     Samuel Gulko
                                              Title: Senior VP Finance, CFO,
                                                     Secretary and Treasurer

                                       11<PAGE>

                                 EXHIBIT 10.1
                            BUSINESS LOAN AGREEMENT

                                                         BUSINESS LOAN AGREEMENT
                                                                   (Receivables)

This Agreement dated as of ________, _____ is between Bank of America, N.A. (the
"Bank") and U.S. Laboratories Inc. (the "Borrower").

1.   DEFINITIONS

     In addition to the terms which are defined elsewhere in this Agreement, the
following terms have the meanings indicated for the purposes of this Agreement:

     1.1  "Borrowing Base" means 75% of the balance due on Acceptable
Receivables.

     1.2  "Acceptable Receivable" means an account receivable which satisfies
the following requirements:

          (a)  The account is not in default. An account will be considered in
          default if the account is not paid within 90 days from its invoice
          date.

          (b)  The account is an unbilled receivable, as described as work-in-
          progress on the Borrower's financial statements. The aggregate amount
          of acceptable unbilled receivables may not exceed Four Hundred
          Thousand Dollars ($400,000) .

     1.3  "Credit Limit" means the amount of Six Million and 00/100 Dollars
($6,000,000.00).

2.   FACILITY NO. 1 : LINE OF CREDIT AMOUNT AND TERMS

     2.1  Line of Credit Amount.

          (a)  During the availability period described below, the Bank will
          provide a line of credit ("Facility No. 1") to the Borrower. The
          amount of the line of credit (the "Facility No. 1 Commitment") is
          equal to the lesser of (i) the Credit Limit or (ii) the Borrowing
          Base.

          (b)  This is a revolving line of credit providing for cash advances.
          During the availability period, the Borrower may repay principal
          amounts and reborrow them.

          (c)  The Borrower agrees not to permit the outstanding principal
          balance of advances under the line of credit to exceed the Facility
          No. 1 Commitment. If
<PAGE>

          the Borrower exceeds this limit, the Borrower will immediately pay the
          excess to the Bank upon the Bank's demand. The Bank may apply payments
          received from the Borrower under this Paragraph to the obligations of
          the Borrower to the Bank in the order and the manner as the Bank, in
          its discretion, may determine.

     2.2  Availability Period. The line of credit is available between the date
of this Agreement and May 31, 2002, or such earlier date as the availability may
terminate as provided in this Agreement (the "Facility No. 1 Expiration Date").

     2.3  Interest Rate.

          (a)  Unless the Borrower elects an optional interest rate as described
          below, the interest rate is the Bank's Prime Rate.

          (b)  The Prime Rate is the rate of interest publicly announced from
          time to time by the Bank as its Prime Rate. The Prime Rate is set by
          the Bank based on various factors, including the Bank's costs and
          desired return, general economic conditions and other factors, and is
          used as a reference point for pricing some loans. The Bank may price
          loans to its customers at, above, or below the Prime Rate. Any change
          in the Prime Rate shall take effect at the opening of business on the
          day specified in the public announcement of a change in the Bank's
          Prime Rate.

     2.4  Repayment Terms.

          (a)  The Borrower will pay interest on March 31, 2001, and then
          monthly thereafter until payment in full of any principal outstanding
          under this line of credit.

          (b)  The Borrower will repay in full all principal and any unpaid
          interest or other charges outstanding under this line of credit no
          later than the Facility No. 1 Expiration Date. Any interest period for
          an optional interest rate (as described below) shall expire no later
          than the Facility No. 1 Expiration Date.

     2.5  Optional Interest Rates. Instead of the interest rate based on the
Bank's Prime Rate, the Borrower may elect the optional interest rates listed
below during interest periods agreed to by the Bank and the Borrower. The
optional interest rates shall be subject to the terms and conditions described
later in this Agreement. Any principal amount bearing interest at an optional
rate under this Agreement is referred to as a "Portion." The following optional
interest rates are available:

          (a)  Short Term Fixed Rates.

          (b)  Offshore Rates.

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<PAGE>

3.   FACILITY NO. 2 : TERM LOAN AMOUNT AND TERMS

     3.1  Outstanding Term Loan:. There is outstanding from the Bank to the
Borrower a term loan in the original principal amount of Two Hundred Thousand
Dollars ($200,000.00). This term loan is currently subject to the terms and
conditions of Facility No. 2 of the Business Loan Agreement dated September 16,
1999. The present principal balance of this term loan is One Hundred Seventy
Nine Thousand Seven Hundred Eighty Two and 56/100 Dollars ($179,782.56). As of
the date of this Agreement, the term loan shall be deemed to be outstanding as
Facility No. 2 under this Agreement, and shall be subject to all the terms and
conditions stated in this Agreement.

     3.2  Interest Rate. Unless the Borrower elects an optional interest rate as
described below, the interest rate is the Bank's Prime Rate.

     3.3  Repayment Terms.

          (a)  The Borrower will pay all accrued but unpaid interest on March
          31, 2001, and then monthly thereafter and upon payment in full of the
          principal of the loan.

          (b)  The Borrower will repay principal in fifty three (53) successive
          monthly installments of Three Thousand Three Hundred Twenty Nine and
          97/100 Dollars ($3,329.97) starting March 31, 2001. On July 31, 2005,
          the Borrower will repay the remaining principal balance plus any
          interest then due.

          (c)  The Borrower may prepay the loan in full or in part at any time.
          The prepayment will be applied to the most remote payment of principal
          due under this Agreement.

     3.4  Optional Interest Rates. Instead of the interest rate based on the
Bank's Prime Rate, the Borrower may elect the optional interest rates listed
below during interest periods agreed to by the Bank and the Borrower. The
optional interest rates shall be subject to the terms and conditions described
later in this Agreement. Any principal amount bearing interest at an optional
rate under this Agreement is referred to as a "Portion." The following optional
interest rates are available:

          (a)  Long Term Fixed Rates.

4.   OPTIONAL INTEREST RATES

     4.1  Optional Rates. Each optional interest rate is a rate per year.
Interest will be paid on the last day of each interest period, and on the last
day of each month during the interest period. At the end of any interest period,
the interest rate will revert to the rate based on the Prime Rate, unless the
Borrower has designated another optional interest rate for the Portion. No
Portion will be converted to a different interest rate during the applicable
interest period. Upon the occurrence of an event of default under this
Agreement, the Bank may

                                       3
<PAGE>

terminate the availability of optional interest rates for interest periods
commencing after the default occurs.

     4.2  Short Term Fixed Rate. The election of Short Term Fixed Rates shall be
subject to the following terms and requirements:

          (a)  The "Short Term Fixed Rate" means the fixed interest rate the
          Bank and the Borrower agree will apply during the applicable interest
          period.

          (b)  The interest period during which the Short Term Fixed Rate will
          be in effect will be no shorter than 30 days and no longer than one
          year.

          (c)  Each Short Term Fixed Rate Portion will be for an amount not less
          than the following:

               (i)  for interest periods of 91 days or longer, Five Hundred
                    Thousand Dollars ($500,000).

               (ii) for interest periods of between 30 days and 90 days, One
                    Million Dollars ($1,000,000).

          (d)  Each prepayment of a Short Term Fixed Rate Portion, whether
          voluntary, by reason of acceleration or otherwise, will be accompanied
          by the amount of accrued interest on the amount prepaid, and a
          prepayment fee as described below. A "prepayment" is a payment of an
          amount on a date earlier than the scheduled payment date for such
          amount as required by this Agreement.

          (e)  The prepayment fee shall be in an amount sufficient to compensate
          the Bank for any loss, cost or expense incurred by it as a result of
          the prepayment, including any loss of anticipated profits and any loss
          or expense arising from the liquidation or reemployment of funds
          obtained by it to maintain such Portion or from fees payable to
          terminate the deposits from which such funds were obtained. The
          Borrower shall also pay any customary administrative fees charged by
          the Bank in connection with the foregoing. For purposes of this
          paragraph, the Bank shall be deemed to have funded each Portion by a
          matching deposit or other borrowing in the applicable interbank
          market, whether or not such Portion was in fact so funded.

     4.3  Offshore Rate. The election of Offshore Rates shall be subject to the
following terms and requirements:

          (a)  The "Offshore Rate" means the interest rate the Bank and the
          Borrower agree will apply to the Portion during the applicable
          interest period.

          (b)  The interest period during which the Offshore Rate will be in
          effect will be no shorter than 30 days and no longer than one year.
          The last day of the

                                       4
<PAGE>

          interest period will be determined by the Bank using the practices of
          the offshore dollar inter-bank market.

          (c)  Each Offshore Rate Portion will be for an amount not less than
          the following:

               (i)  for interest periods of 91 days or longer, Five Hundred
                    Thousand Dollars ($500,000).

               (ii) for interest periods of between 30 days and 90 days, One
                    Million Dollars ($1,000,000).

          (d)  Each prepayment of an Offshore Rate Portion, whether voluntary,
          by reason of acceleration or otherwise, will be accompanied by the
          amount of accrued interest on the amount prepaid, and a prepayment fee
          as described below. A "prepayment" is a payment of an amount on a date
          earlier than the scheduled payment date for such amount as required by
          this Agreement.

          (e)  The prepayment fee shall be in an amount sufficient to compensate
          the Bank for any loss, cost or expense incurred by it as a result of
          the prepayment, including any loss of anticipated profits and any loss
          or expense arising from the liquidation or reemployment of funds
          obtained by it to maintain such Portion or from fees payable to
          terminate the deposits from which such funds were obtained. The
          Borrower shall also pay any customary administrative fees charged by
          the Bank in connection with the foregoing. For purposes of this
          paragraph, the Bank shall be deemed to have funded each Portion by a
          matching deposit or other borrowing in the applicable interbank
          market, whether or not such Portion was in fact so funded.

          (f)  The Bank will have no obligation to accept an election for an
          Offshore Rate Portion if any of the following described events has
          occurred and is continuing:

               (i)  Dollar deposits in the principal amount, and for periods
                    equal to the interest period, of an Offshore Rate Portion
                    are not available in the offshore dollar inter-bank market;
                    or

               (ii) the Offshore Rate does not accurately reflect the cost of an
                    Offshore Rate Portion.

     4.4  Long Term Fixed Rate. The election of Long Term Fixed Rates shall be
subject to the following terms and requirements:

          (a)  The interest period during which the Long Term Fixed Rate will be
          in effect will be one year or more.

                                       5
<PAGE>

          (b)  The "Long Term Fixed Rate" means the fixed interest rate the Bank
          and the Borrower agree will apply to the Portion during the applicable
          interest period.

          (c)  Each Long Term Fixed Rate Portion will be for an amount not less
          than Two Hundred Thousand Dollars ($200,000).

          (d)  The Borrower may prepay the Long Term Fixed Rate Portion in whole
          or in part in the minimum amount of One Hundred Thousand Dollars
          ($100,000). The Borrower will give the Bank irrevocable written notice
          of the Borrower's intention to make the prepayment, specifying the
          date and amount of the prepayment. The notice must be received by the
          Bank at least 5 banking days in advance of the prepayment. All
          prepayments of principal on the Long Term Fixed Rate Portion will be
          applied on the most remote payment of principal then unpaid.

          (e)  Each prepayment of a Long Term Fixed Rate Portion, whether
          voluntary, by reason of acceleration or otherwise, will be accompanied
          by payment of all accrued interest on the amount of the prepayment and
          the prepayment fee described below.

          (f)  The prepayment fee shall be in an amount sufficient to compensate
          the Bank for any loss, cost or expense incurred by it as a result of
          the prepayment, including any loss of anticipated profits and any loss
          or expense arising from the liquidation or reemployment of funds
          obtained by it to maintain such Portion or from fees payable to
          terminate the deposits from which such funds were obtained. The
          Borrower shall also pay any customary administrative fees charged by
          the Bank in connection with the foregoing. For purposes of this
          paragraph, the Bank shall be deemed to have funded each Portion by a
          matching deposit or other borrowing in the applicable interbank
          market, whether or not such Portion was in fact so funded.

          (g)  The following definitions will apply to the calculation of the
          prepayment fee:

          "Original Payment Dates" mean the dates on which principal of the Long
          Term Rate Portion would have been paid if there had been no
          prepayment. If any of the principal would have been paid later than
          the end of the interest period in effect at the time of prepayment,
          then the Original Payment Date for that amount will be the last day of
          the interest period.

          "Prepaid Installment" means the amount of the prepaid principal of the
          Long Term Fixed Rate Portion which would have been paid on a single
          Original Payment Date.

                                       6
<PAGE>

          "Treasury Rate" means the interest rate yield for U.S. Government
          Treasury Securities which the Bank determines could be obtained by
          reinvesting a specified Prepaid Installment in such securities from
          the date of prepayment through the Original Payment Date.

          (h)  The Bank may adjust the Treasury Rate to reflect the compounding,
          accrual basis, or other costs of the Long Term Fixed Rate Portion.
          Each of the rates is the Bank's estimate only and the Bank is under no
          obligation to actually reinvest any prepayment. The rates will be
          based on information from either the Telerate or Reuters information
          services, The Wall Street Journal, or other information sources the
                    -----------------------
          Bank deems appropriate.

5.   FEES AND EXPENSES

     5.1  Fees.

          (a)  Waiver fee. If the Bank, at its discretion, agrees to waive or
          amend any terms of this Agreement, the Borrower will, at the Bank's
          option, pay the Bank a fee for each waiver or amendment in an amount
          advised by the Bank at the time the Borrower requests the waiver or
          amendment. Nothing in this paragraph shall imply that the Bank is
          obligated to agree to any waiver or amendment requested by the
          Borrower. The Bank may impose additional requirements as a condition
          to any waiver or amendment.

          (b)  Late Fee. To the extent permitted by law, the Borrower agrees to
          pay a late fee in an amount not to exceed four (4%) of any installment
          that is more than fifteen (15) days late. The imposition and payment
          of a late fee shall not constitute a waiver of the Bank's rights with
          respect to the default.

     5.2  Expenses. The Borrower agrees to immediately repay the Bank for
expenses that include, but are not limited to, filing, recording and search
fees, appraisal fees, title report fees and documentation fees.

     5.3  Reimbursement Costs.

          (a)  The Borrower agrees to reimburse the Bank for any expenses it
          incurs in the preparation of this Agreement and any agreement or
          instrument required by this Agreement in excess of those fees and
          costs listed above. Expenses include, but are not limited to,
          reasonable attorneys' fees, including any allocated costs of the
          Bank's in-house counsel.

          (b)  The Borrower agrees to reimburse the Bank for the cost of
          periodic appraisals of the personal property collateral securing this
          Agreement, at such intervals as the Bank may reasonably require. The
          appraisals may be performed by employees of the Bank or by independent
          appraisers.

                                       7
<PAGE>

6.   COLLATERAL

     6.1  Personal Property. The Borrowers obligations to the Bank under this
Agreement will be secured by personal property the Borrower now owns or will own
in the future as listed below. The collateral is further defined in security
agreement(s) executed by the Borrower. In addition, all personal property
collateral securing this Agreement shall also secure all other present and
future obligations of the Borrower to the Bank (excluding any consumer credit
covered by the federal Truth in Lending law, unless the Borrower has otherwise
agreed in writing). All personal property collateral securing any other present
or future obligations of the Borrower to the Bank shall also secure this
Agreement.

          (a)  Machinery and equipment.

          (b)  Receivables and general intangibles.

     6.2  Lent Collateral. The Borrower's obligations to the Bank under this
Agreement will be secured by personal property now owned or owned in the future
by Professional Engineering & Inspection Company, Inc., U.S. Engineering
Laboratories Inc., San Diego Testing Engineers, Inc., Los Angeles Testing
Engineers, Inc., Buena Engineers, Inc., Unitek Technical Services, Inc. and
Earth Consultants, Inc. (collectively, the "Subsidiaries") as listed below. The
collateral is further defined in security agreements executed by the
Subsidiaries.

          (a)  Machinery and equipment.

          (b)  Receivables and general intangibles.

7.   DISBURSEMENTS, PAYMENTS AND COSTS

     7.1  Requests for Credit. Each request for an extension of credit will be
made in writing in a manner acceptable to the Bank, or by another means
acceptable to the Bank.

     7.2  Disbursements and Payments. Each disbursement by the Bank and each
payment by the Borrower will be:

          (a)  made at the Bank's branch (or other location) selected by the
          Bank from time to time;

          (b)  made for the account of the Bank's branch selected by the Bank
          from time to time;

          (c)  made in immediately available funds, or such other type of funds
          selected by the Bank;

          (d)  evidenced by records kept by the Bank. In addition, the Bank may,
          at its discretion, require the Borrower to sign one or more promissory
          notes.

     7.3  Telephone and Telefax Authorization.

                                       8
<PAGE>

          (a)  The Bank may honor telephone or telefax instructions for advances
          or repayments or for the designation of optional interest rates given,
          or purported to be given, by any one of the individuals authorized to
          sign loan agreements on behalf of the Borrower, or any other
          individual designated by any one of such authorized signers.

          (b)  Advances will be deposited in and repayments will be withdrawn
          from the Borrower's account number 12892-01362, or such other of the
          Borrower's accounts with the Bank as designated in writing by the
          Borrower.

          (c)  The Borrower will indemnify and hold the Bank harmless from all
          liability, loss, and costs in connection with any act resulting from
          telephone or telefax instructions the Bank reasonably believes are
          made by any individual authorized by the Borrower to give such
          instructions. This paragraph will survive this Agreement's
          termination, and will benefit the Bank and its officers, employees,
          and agents.

     7.4  Direct Debit (Pre-Billing).

          (a)  The Borrower agrees that the Bank will debit the Borrower's
          deposit account number 12892-01362, or such other of the Borrower's
          accounts with the Bank as designated in writing by the Borrower (the
          "Designated Account") on the date each payment of interest from the
          Borrower becomes due (the "Due Date"). If the Due Date is not a
          banking day, the Designated Account will be debited on the next
          banking day.

          (b)  Approximately 10 days prior to each Due Date, the Bank will mail
          to the Borrower a statement of the amounts that will be due on that
          Due Date (the "Billed Amount"). The calculation will be made on the
          assumption that no new extensions of credit or payments will be made
          between the date of the billing statement and the Due Date, and that
          there will be no changes in the applicable interest rate.

          (c)  The Bank will debit the Designated Account for the Billed Amount,
          regardless of the actual amount due on that date (the "Accrued
          Amount"). If the Billed Amount debited to the Designated Account
          differs from the Accrued Amount, the discrepancy will be treated as
          follows:

               (i)  If the Billed Amount is less than the Accrued Amount, the
                    Billed Amount for the following Due Date will be increased
                    by the amount of the discrepancy. The Borrower will not be
                    in default by reason of any such discrepancy.

               (ii) If the Billed Amount is more than the Accrued Amount, the
                    Billed Amount for the following Due Date will be decreased
                    by the amount of the discrepancy.

                                       9
<PAGE>

                    Regardless of any such discrepancy, interest will continue
                    to accrue based on the actual amount of principal
                    outstanding without compounding. The Bank will not pay the
                    Borrower interest on any overpayment.

          (d)  The Borrower will maintain sufficient funds in the Designated
          Account to cover each debit. If there are insufficient funds in the
          Designated Account on the date the Bank enters any debit authorized by
          this Agreement, the debit will be reversed.

     7.5  Banking Days. Unless otherwise provided in this Agreement, a banking
day its a day other than a Saturday or a Sunday on which the Bank is open for
business in California. [For amounts bearing interest at an offshore rate (if
any), a banking day is a day other than a Saturday or a Sunday on which the Bank
is open for business in California and dealing in offshore dollars.] All
payments and disbursements which would be due on a day which is not a banking
day will be due on the next banking day. All payments received on a day which is
not a banking day will be applied to the credit on the next banking day.

     7.6  Taxes. If any payments to the Bank under this Agreement are made from
outside the United States, the Borrower will not deduct any foreign taxes from
any payments it makes to the Bank. If any such taxes are imposed on any payments
made by the Borrower (including payments under this paragraph), the Borrower
will pay the taxes and will also pay to the Bank, at the time interest is paid,
any additional amount which the Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such taxes had not been imposed.
The Borrower will confirm that it has paid the taxes by giving the Bank official
tax receipts (or notarized copies) within 30 days after the due date.

     7.7  Additional Costs. The Borrower will pay the Bank, on demand, for the
Bank's costs or losses arising from any statute or regulation, or any request or
requirement of a regulatory agency which is applicable to all national banks or
a class of all national banks. The costs and losses will be allocated to the
loan in a manner determined by the Bank, using any reasonable method. The costs
include the following:

          (a)  any reserve or deposit requirements; and

          (b)  any capital requirements relating to the Bank's assets and
               commitments for credit.

     7.8  Interest Calculation. Except as otherwise stated in this Agreement,
all interest and fees, if any, will be computed on the basis of a 360-day year
and the actual number of days elapsed. This results in more interest or a higher
fee than if a 365-day year is used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid.

     7.9  Default Rate. Upon the occurrence of any default under this Agreement,
principal amounts outstanding under this Agreement will at the option of the
Bank bear

                                       10
<PAGE>

interest at a rate which is four (4) percentage points higher than the rate of
interest otherwise provided under this Agreement. This will not constitute a
waiver of any default.

     7.10  Interest Compounding. At the Bank's sole option in each instance, any
interest, fees or costs which are not paid when due under this Agreement shall
bear interest from the due date at the Bank's Prime Rate plus 2 percentage
points. This may result in compounding of interest.

     7.11  Payments in Kind. If the Bank requires delivery in kind of the
proceeds of collection of the Borrower's accounts receivable, such proceeds
shall be credited to interest, principal, and other sums owed to the Bank under
this Agreement in the order and proportion determined by the Bank in its sole
discretion. All such credits will be conditioned upon collection and any
returned items may, at the Bank's option, be charged to the Borrower.

8.   CONDITIONS

The Bank must receive the following items, in form and content acceptable to the
Bank, before it is required to extend any credit to the Borrower under this
Agreement:

     8.1  Authorizations. Evidence that the execution, delivery and performance
by the Borrower and each guarantor of this Agreement and any instrument or
agreement required under this Agreement have been duly authorized.

     8.2  Security Agreements. Signed original security agreements, assignments,
financing statements and fixture filings (together with collateral in which the
Bank requires a possessory security interest), which the Bank requires.

     8.3  Evidence of Priority. Evidence that security interests and liens in
favor of the Bank are valid, enforceable, and prior to all others' rights and
interests, except those the Bank consents to in writing.

     8.4  Guaranties. Guaranties signed by Professional Engineering & Inspection
Company, Inc., U.S. Engineering Laboratories Inc., San Diego Testing Engineers,
Inc., Los Angeles Testing Engineers, Inc., Buena Engineers, Inc., Unitek
Technical Services, Inc. and Earth Consultants, Inc., each in the amount of Six
Million One Hundred Eighty Thousand Dollars ($6,180,000).

     8.5  Legal Opinion. A written opinion from the Borrower's legal counsel,
covering such matters as the Bank may require. The legal counsel and the terms
of the opinion must be acceptable to the Bank.

     8.6  Good Standing. Certificates of good standing for the Borrower from its
state of formation.

     8.7  Other Items. Any other items that the Bank reasonably requires.

9.   REPRESENTATIONS AND WARRANTIES

                                       11
<PAGE>

When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewed representation:

     9.1  Organization of Borrower. The Borrower is a corporation duly formed
and existing under the laws of the state where organized.

     9.2  Authorization. This Agreement, and any instrument or agreement
required hereunder, are within the Borrower's powers, have been duly authorized,
and do not conflict with any of its organizational papers.

     9.3  Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.

     9.4  Good Standing. In each state in which the Borrower does business, it
is properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.

     9.5  No Conflicts. This Agreement does not conflict with any law,
agreement, or obligation by which the Borrower is bound.

     9.6  Financial Information. All financial and other information that has
been or will be supplied to the Bank is:

          (a)  sufficiently complete to give the Bank accurate knowledge of the
          Borrower's (and any guarantor's) financial condition, including all
          material contingent liabilities.

          (b)  in compliance with all government regulations that apply.

     9.7  Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if lost, would impair the Borrower's
financial condition or ability to repay the loan, except as have been disclosed
in writing to the Bank.

     9.8  Collateral. All collateral required in this Agreement is owned by the
grantor of the security interest free of any title defects or any liens or
interests of others.

     9.9  Permits, Franchises. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged.

     9.10 Other Obligations. The Borrower is not in default on any obligation
for borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.

                                       12
<PAGE>

     9.11  Income Tax Matters. The Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year.

     9.12  No Tax Avoidance Plan. The Borrower's obtaining of credit from the
Bank under this Agreement does not have as a principal purpose the avoidance of
U.S. withholding taxes.

     9.13  No Event of Default. There is no event which is, or with notice or
lapse of time or both would be, a default under this Agreement.

     9.14  Location of Borrower. The Borrower's place of business (or, if the
Borrower has more than one place of business, its chief executive office) is
located at the address listed under the Borrowers signature on this Agreement.

10   COVENANTS

The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:

     10.1  Use of Proceeds. To use the proceeds of Facility No. 1 only for
acquisition financing and working capital.

     10.2  Financial Information. To provide the following financial information
and statements in form and content acceptable to the Bank, and such additional
information as requested by the Bank from time to time:

           (a)  Within 120 days of the Borrower's fiscal year end, the
           Borrower's annual financial statements. These financial statements
           must be audited by a Certified Public Accountant acceptable to the
           Bank. The statements shall be prepared on a consolidated basis.

           (b)  Within 45 days of the period's end, the Borrowers quarterly
           financial statements. These financial statements may be Borrower
           prepared. The statements shall be prepared on a consolidated basis.

           (c)  Copies of the Borrower's Form 10-K Annual Report, Form 10-Q
           Quarterly Report concurrent with the date of filing with the
           Securities and Exchange Commission.

           (d)  A borrowing certificate setting forth the amount of Acceptable
           Receivables as of the last day of each month within 20 days after
           month end.

           (e)   Within 45 days of each quarter end, the Borrowers backlog
           reports.

           (f)  Promptly upon the Bank's request, a detailed aging by invoice
           and a summary aging by account debtor of the Borrower's receivables.

                                       13
<PAGE>

     10.3  Tangible Net Worth. To maintain tangible net worth equal to at least
Four Million Dollars ($4,000,000).

"Tangible net worth" means the gross book value of the Borrowers assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
unamortized debt discount and expense, capitalized or deferred research and
development costs, deferred marketing expenses, deferred receivables, and other
like intangibles, and monies due from affiliates, officers, directors, employees
or shareholders of the Borrower) less total liabilities, including but not
limited to accrued and deferred income taxes, and any reserves against assets.

     10.4  Total Liabilities to Tangible Net Worth. To maintain a ratio of total
liabilities to tangible net worth not exceeding 2.5:1.0. "Total liabilities"
means the sum of current liabilities plus long term liabilities.

     10.5  Cash Flow Ratio. To maintain a cash flow ratio of at least 1.5:1.0.
"Cash flow ratio" is defined as the sum of earnings before interest, taxes,
depreciation and amortization minus taxes minus dividends plus any non-cash
charges divided by the sum of interest plus the current portion of long term
liabilities plus 20% of line outstandings. This ratio will be calculated at the
end of each fiscal quarter, using the results of that quarter and each of the 3
immediately preceding quarters. The current portion of long term liabilities
will be measured as of the last day of the preceding fiscal year.

     10.6  Profitability. To maintain a positive net income after taxes and
extraordinary items at the end of each fiscal quarter, using the results of that
quarter and each of the 3 immediately preceding quarters.

     10.7  Limitation on Losses. Not to incur a net loss after taxes and
extraordinary items in any two consecutive fiscal quarters.

     10.8  Other Debts. Not to have outstanding or incur any direct or
contingent liabilities (other than those to the Bank), or become liable for the
liabilities of others, without the Bank's written consent. This does not
prohibit:

           (a)  Acquiring goods, supplies, or merchandise on normal trade
           credit.

           (b)  Endorsing negotiable instruments received in the usual course of
           business.

           (c)  Obtaining surety bonds in the usual course of business.

           (d)  Unsecured indebtedness (i) up to Five Hundred Twenty Five
           Thousand Dollars ($525,000.00) for personal property (vehicles) (ii)
           that is incurred to finance the Borrower's purchase of a business,
           (iii) that is owed to the seller of such business, (iv) that by the
           terms thereof may not be accelerated except upon a payment default,
           and (v) that will not otherwise cause or result in a default under
           the terms of this Agreement.

                                       14
<PAGE>

           (e)  Liabilities in existence on the date of this Agreement disclosed
           in writing to the Bank.

     10.9  Other Liens. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property the Borrower now or later owns,
except:

           (a)  Liens and security interests in favor of the Bank.

           (b)   Liens for taxes not yet due.

           (c)  Additional purchase money liens against personal property of the
           Borrower which secure obligations in a total principal amount of Five
           Hundred Twenty Five Thousand Dollars ($525,000.00).

     10.10 Dividends. Not to declare or pay any dividends on any of its shares
except dividends payable in capital stock of the Borrower, and not to purchase,
redeem or otherwise acquire for value any of its shares, or create any sinking
fund in relation thereto.

     10.11 Notices to Bank. To promptly notify the Bank in writing of:

           (a)  any lawsuit over Five Hundred Thousand Dollars ($500,000)
           against the Borrower (or any guarantor) or any trustor.

           (b)  any substantial dispute between the Borrower (or any guarantor)
           or any trustor and any government authority.

           (c)  any event of default under this Agreement, or any event which,
           with notice or lapse of time or both, would constitute an event of
           default.

           (d)  any material adverse change in the Borrower's (or any
           guarantor's) or any trustor's business condition (financial or
           otherwise), operations, properties or prospects, or ability to repay
           the credit.

           (e)  any change in the Borrower's name, legal structure, place of
           business, or chief executive office if the Borrower has more than one
           place of business.

           (f)  any acquisitions, including proforma financial statements for
           material acquisitions (using SEC definition of 10% revenues or 10%
           net income).

     10.12 Books and Records. To maintain adequate books and records.

     10.13 Audits. To allow the Bank and its agents to inspect the Borrower's
properties (including taking and removing samples for environmental testing) and
examine, audit, and make copies of books and records at any reasonable time. If
any of the Borrower's properties, books or records are in the possession of a
third party, the Borrower authorizes that third party to permit the Bank or its
agents to have access to perform inspections or audits and to respond to the
Bank's requests for information concerning such properties, books and records.

                                       15
<PAGE>

The Bank has no duty to inspect the Borrower's properties or to examine, audit,
or copy books and records and the Bank shall not incur any obligation or
liability by reason of not making any such inspection or inquiry. In the event
that the Bank inspects the Borrower's properties or examines, audits, or copies
books and records, the Bank will be acting solely for the purposes of protecting
the Bank's security and preserving the Bank's rights under this Agreement.
Neither the Borrower nor any other party is entitled to rely on any inspection
or other inquiry by the Bank. The Bank owes no duty of care to protect the
Borrower or any other party against, or to inform the Borrower or any other
party of, any adverse condition that may be observed as affecting the Borrower's
properties or premises, or the Borrower's business. In the event that the Bank
has a duty or obligation under applicable laws, regulations or legal
requirements to disclose any report or findings made as a result of, or in
connection with, any site visit, observation or testing by the Bank, the Bank
may make such a disclosure to the Borrower or any other party.

     10.14  Compliance with Laws. To comply with the laws (including any
fictitious name statute), regulations, and orders of any government body with
authority over the Borrower's business.

     10.15  Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises the Borrower now has.

     10.16  Maintenance of Properties. To make any repairs, renewals, or
replacements to keep the Borrower's properties in good working condition.

     10.17  Perfection of Liens. To help the Bank perfect and protect its
security interests and liens, and reimburse it for related costs it incurs to
protect its security interests and liens.

     10.18  Cooperation. To take any action reasonably requested by the Bank to
carry out the intent of this Agreement.

     10.19  Insurance.

            (a)  General Business Insurance. To maintain insurance satisfactory
            to the Bank as to amount, nature and carrier covering property
            damage (including loss of use and occupancy) to any of the
            Borrower's properties, public liability insurance including coverage
            for contractual liability, product liability and workers'
            compensation, and any other insurance which is usual for the
            Borrowers business.

     10.20  Additional Negative Covenants. Not to, without the Bank's written
consent:

            (a)  engage in any business activities substantially different from
            the Borrowers present business.

            (b)  liquidate or dissolve the Borrower's business.

                                       16
<PAGE>

           (c)  enter into any consolidation, merger, or other combination, or
           become a partner in a partnership, a member of a joint venture, or a
           member of a limited liability company.

           (d)  sell, assign, lease, transfer or otherwise dispose of any assets
           for less than fair market value, or enter into any agreement to do
           so.

           (e)  sell, assign, lease, transfer or otherwise dispose of any part
           of the Borrower's business or the Borrower's assets except inventory
           sold in the ordinary course of the Borrower's business.

           (f)  acquire or purchase a business or its assets for a
           consideration, including assumption of direct or contingent debt,
           unless either (i) the total cost for each acquisition is less than
           Two Million Five Hundred Thousand Dollars ($2,500,000) or (ii) the
           total cost of each acquisition is less than Five Hundred Thousand
           Dollars ($500,000) and the costs for acquisitions for the year is
           less than Four Million Dollars ($4,000,000) in the aggregate.

           (g)  enter into any sale and leaseback agreement covering any of its
           fixed assets.

           (h)  voluntarily suspend its business for more than 7 consecutive
           days in any 30 day period.

     10.21 Bank as Principal Depository. To maintain the Bank as its principal
depository bank, including for the maintenance of business, cash management,
operating and administrative deposit accounts.

     10.22 ERISA Plans. Promptly during each year, to pay and cause any
subsidiaries to pay contributions adequate to meet at least the minimum funding
standards under ERISA with respect to each and every Plan; file each annual
report required to be filed pursuant to ERISA in connection with each Plan for
each year; and notify the Bank within ten (10) days of the occurrence of any
Reportable Event that might constitute grounds for termination of any capital
Plan by the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer any Plan.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time. Capitalized terms in this paragraph shall have the meanings
defined within ERISA.

11.  HAZARDOUS WASTE INDEMNIFICATION

The Borrower will indemnify and hold harmless the Bank from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply whether
the hazardous substance is on, under or about the Borrower's property or
operations or property leased to the Borrower. The indemnity includes but is not
limited to attorneys' fees (including the reasonable estimate of the allocated
cost of in-house counsel and

                                       17
<PAGE>

staff). The indemnity extends to the Bank, its parent, subsidiaries and all of
their directors, officers, employees, agents, successors, attorneys and assigns.
"Hazardous substances" means any substance, material or waste that is or becomes
designated or regulated as "toxic," "hazardous,"

12.  DEFAULT

If any of the following events occurs, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit
available to the Borrower, and require the Borrower to repay its entire debt
immediately and without prior notice. If an event of default occurs under the
paragraph entitled "Bankruptcy," below, with respect to the Borrower, then the
entire debt outstanding under this Agreement will automatically be due
immediately.

     12.1  Failure to Pay. The Borrower fails to make a payment under this
Agreement when due.

     12.2  Lien Priority. The Bank fails to have an enforceable first lien
(except for any prior liens to which the Bank has consented in writing) on or
security interest in any property given as security for this Agreement (or any
guaranty).

     12.3  False Information. The Borrower (or any guarantor) or any trustor has
given the Bank false or misleading information or representations.

     12.4  Bankruptcy. The Borrower (or any guarantor) or any trustor files a
bankruptcy petition, a bankruptcy petition is filed against the Borrower (or any
guarantor) or any trustor or the Borrower (or any guarantor) or any trustor
makes a general assignment for the benefit of creditors.

     12.5  Receivers. A receiver or similar official is appointed for a
substantial portion the Borrower's (or any guarantor's) or any trustor's
business, or the business is terminated.

     12.6  Lawsuits. Any lawsuit or lawsuits are filed on behalf of one or more
trade creditors against the Borrower (or any guarantor) or any trustor in an
aggregate amount of Five Hundred Thousand Dollars ($500,000) or more in excess
of any insurance coverage.

     12.7  Judgments. Any judgments or arbitration awards are entered against
the Borrower (or any guarantor) or any trustor, or the Borrower (or any
guarantor) or any trustor enters into any settlement agreements with respect to
any litigation or arbitration, in an aggregate amount of One Hundred Thousand
Dollars ($100,000) or more in excess of any insurance coverage.

     12.8  Government Action. Any government authority takes action that the
Bank believes materially adversely affects the Borrower's (or any guarantor's)
or any trustor's financial condition or ability to repay.

                                       18
<PAGE>

     12.9   Material Adverse Change. A material adverse change occurs, or is
reasonably likely to occur, in the Borrower's (or any guarantor's) or any
trustor's business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit.

     12.10  Cross-default. Any default occurs under any agreement in connection
with any credit the Borrower (or any guarantor) or any trustor or any of the
Borrower's related entities or affiliates has obtained from anyone else or which
the Borrower (or any guarantor) or any trustor or any of the Borrower's related
entities or affiliates has guaranteed.

     12.11  Default under Related Documents. Any guaranty, subordination
agreement, security agreement, deed of trust, or other document required by this
Agreement is violated or no longer in effect.

     12.12  Other Bank Agreements. The Borrower (or any guarantor) or any
trustor or any of the Borrower's related entities or affiliates fails to meet
the conditions of, or fails to perform any obligation under any other agreement
the Borrower (or any guarantor) or any trustor or any of the Borrower's related
entities or affiliates has with the Bank or any affiliate of the Bank.

     12.13  Other Breach Under Agreement. The Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of this
Agreement not specifically referred to in this Article. This includes any
failure or anticipated failure by the Borrower to comply with any financial
covenants set forth in this Agreement, whether such failure is evidenced by
financial statements delivered to the Bank or is otherwise known to the Borrower
or the Bank.

13.  ENFORCING THIS AGREEMENT; MISCELLANEOUS

     13.1  GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.

     13.2  California Law. This Agreement is governed by California law.

     13.3  Successors and Assigns. This Agreement is binding on the Borrower's
and the Bank's successors and assignees. The Borrower agrees that it may not
assign this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower with actual or potential participants or assignees; provided
that such actual or potential participants or assignees shall agree to treat all
financial information exchanged as confidential. If a participation is sold or
the loan is assigned, the purchaser will have the right of set-off against the
Borrower.

     13.4  Arbitration.

           (a)  This paragraph concerns the resolution of any controversies or
           claims between the Borrower and the Bank, whether arising in
           contract, tort or by statute, including but not limited to
           controversies or claims that arise out of or

                                       19
<PAGE>

          relate to: (i) this Agreement (including any renewals, extensions or
          modifications); or (ii) any document related to this Agreement
          (collectively a "Claim").

          (b)  At the request of the Borrower or the Bank, any Claim shall be
          resolved by arbitration in accordance with the Federal Arbitration Act
          (Title 9, U. S. Code) (the "Act"). The Act will apply even though this
          Agreement provides that it is governed by the law of a specified
          state.

          (c)  Arbitration proceedings will be determined in accordance with the
          Act, the rules and procedures for the arbitration of financial
          services disputes of J.A.M.S./Endispute or any successor thereof
          ("J.A.M.S."), and the terms of this paragraph. In the event of any
          inconsistency, the terms of this paragraph shall control.

          (d)  The arbitration shall be administered by J.A.M.S. and conducted
          in any U.S. state where real or tangible personal property collateral
          for this credit is located or if there is no such collateral, in . All
          Claims shall be determined by one arbitrator; however, if Claims
          exceed Five Million Dollars ($5,000,000), upon the request of any
          party, the Claims shall be decided by three arbitrators. All
          arbitration hearings shall commence within ninety (90) days of the
          demand for arbitration and close within ninety (90) days of
          commencement and the award of the arbitrator(s) shall be issued within
          thirty (30) days of the close of the hearing. However, the
          arbitrator(s), upon a showing of good cause, may extend the
          commencement of the hearing for up to an additional sixty (60) days.
          The arbitrator(s) shall provide a concise written statement of reasons
          for the award. The arbitration award may be submitted to any court
          having jurisdiction to be confirmed and enforced.

          (e)  The arbitrator(s) will have the authority to decide whether any
          Claim is barred by the statute of limitations and, if so, to dismiss
          the arbitration on that basis. For purposes of the application of the
          statute of limitations, the service on J.A.M.S. under applicable
          J.A.M.S. rules of a notice of Claim is the equivalent of the filing of
          a lawsuit. Any dispute concerning this arbitration provision or
          whether a Claim is arbitrable shall be determined by the
          arbitrator(s). The arbitrator(s) shall have the power to award legal
          fees pursuant to the terms of this Agreement.

          (f)  This paragraph does not limit the right of the Borrower or the
          Bank to: (i) exercise self-help remedies, such as but not limited to,
          setoff; (ii) initiate judicial or nonjudicial foreclosure against any
          real or personal property collateral; (iii) exercise any judicial or
          power of sale rights, or (iv) act in a court of law to obtain an
          interim remedy, such as but not limited to, injunctive relief, writ of
          possession or appointment of a receiver, or additional or
          supplementary remedies.

                                       20
<PAGE>

           (g)  The filing of a court action is not intended to constitute a
           waiver of the right of the Borrower or the Bank, including the suing
           party, thereafter to require submittal of the Claim to arbitration.

     13.5  Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.

     13.6  Administration Costs. The Borrower shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering this
Agreement.

     13.7  Attorneys' Fees. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, "workout" or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys' fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. In the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar
or successor statute, the Bank is entitled to recover costs and reasonable
attorneys' fees incurred by the Bank related to the preservation, protection, or
enforcement of any rights of the Bank in such a case. As used in this paragraph,
"attorneys' fees" includes the allocated costs of the Bank's in-house counsel.

     13.8  One Agreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:

           (a)  represent the sum of the understandings and agreements between
           the Bank and the Borrower concerning this credit;

           (b)  replace any prior oral or written agreements between the Bank
           and the Borrower concerning this credit; and

           (c)  are intended by the Bank and the Borrower as the final, complete
           and exclusive statement of the terms agreed to by them.

           In the event of any conflict between this Agreement and any other
           agreements required by this Agreement, this Agreement will prevail.

     13.9  Indemnification. The Borrower will indemnify and hold the Bank
harmless from any loss, liability, damages, judgments, and costs of any kind
relating to or arising directly or indirectly out of (a) this Agreement or any
document required hereunder, (b) any credit extended or committed by the Bank to
the Borrower hereunder, (c) any claim, whether well-founded or otherwise, that
there has been a failure to comply with any law regulating the Borrower's sales
or leases to or performance of services for debtors obligated upon the

                                       21
<PAGE>

Borrower's accounts receivable and disclosures in connection therewith, and (d)
any litigation or proceeding related to or arising out of this Agreement, any
such document, any such credit, or any such claim. This indemnity includes but
is not limited to attorneys' fees (including the allocated cost of in-house
counsel). This indemnity extends to the Bank, its parent, subsidiaries and all
of their directors, officers, employees, agents, successors, attorneys, and
assigns. This indemnity will survive repayment of the Borrower's obligations to
the Bank. All sums due to the Bank hereunder shall be obligations of the
Borrower, due and payable immediately without demand.

     13.10  Notices. All notices required under this Agreement shall be
personally delivered or sent by first class mail, postage prepaid, or by
overnight courier, to the addresses on the signature page of this Agreement, or
sent by facsimile to the fax numbers listed on the signature page, or to such
other addresses as the Bank and the Borrower may specify from time to time in
writing. Notices sent by first class mail shall be deemed delivered on the
earlier of actual receipt or on the fourth business day after deposit in the
U.S. mail.

     13.11  Headings. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.

     13.12  Counterparts. This Agreement may be executed in as many counterparts
as necessary or convenient, and by the different parties on separate
counterparts each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.

     13.13  Prior Agreement Superseded. This Agreement supersedes the Business
Loan Agreement entered into as of September 16, 1999 between the Bank and the
Borrower, and any credit outstanding thereunder shall be deemed to be
outstanding under this Agreement.

This Agreement is executed as of the date stated at the top of the first page.

                                       22

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