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Exhibit 10.9  

 
 

N O R T H  T E X A S  C O M M E R C I A L  A S S O C I A T I O N  O F  R E A L T O R  S®
  C O M M E R C I A L  L E A S E  A G R E E M E N T

    

TABLE OF CONTENTS  

	Article
 
	 	Page

	1.	 	Defined Terms	 	2
	2.	 	Lease and Lease Term	 	3
	3.	 	Rent and Security Deposit	 	4
	4.	 	Taxes	 	5
	5.	 	Insurance and Indemnity	 	6
	6.	 	Use of Demised Premises	 	7
	7.	 	Property Condition, Maintenance, Repairs and Alterations	 	9
	8.	 	Damage or Destruction	 	11
	9.	 	Condemnation	 	12
	10.	 	Assignment and Subletting	 	12
	11.	 	Default and Remedies	 	12
	12.	 	Landlord's Contractual Lire	 	15
	13.	 	Protection of Lenders	 	15
	14.	 	Environmental Representations and Indemnity	 	17
	15.	 	Professional Service Fees	 	18
	16.	 	Miscellaneous	 	18
	17.	 	Additional Provisions	 	20

        EXHIBITS AND ADDENDA.    Any exhibit or addendum attached to this Lease is incorporated as a part of this Lease for all
purposes. Any term not specifically defined in the Addenda shall have the same meaning given to it in the body of this Lease. To the extent any provisions in the body of this Lease conflict with the
Addenda, the Addenda shall control. 

[Check all boxes which apply. Boxes not checked do not apply.]

	ý	 	Survey and/or Legal Description of the Property
	ý	 	Floor Plan and/or Site Plan
	ý	 	Rental SUmmary
	

ý	
 	

Addendum A	
 	

Expense Reimbursement
	ý	 	Addendum B	 	Renewal Options
	o	 	Addendum C	 	Right of First Refusal for Additional Space
	o	 	Addendum D	 	Percentage Rental/Gross Sales Reports
	ý	 	Addendum E	 	Guarantee
	ý	 	Addendum F	 	Construction of Improvements
	ý	 	Addendum G	 	Rules and Regulations
	o	 	Addendum H	 	Other	 	 

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        IN CONSIDERATION of the terms, provisions and agreements contained in this Lease, the parties agree as follows: 

        ARTICLE ONE: DEFINED TERMS.    As used in this Commercial Lease Agreement (the "Lease"), the terms set forth in this Article One
have the following respective meanings: 

1.01.    Effective Date:    The last date beneath the signatures of Landlord and
Tenant on page 13 below. 

	1.02.	 	Landlord:	 	710-14 North Watson, LLC

	 	 	Address:	 	1350 Manufacturing St., Ste. 214, Dallas, TX 75207

	 	 	 
	 	Telephone:	 	214-752-7050
	 	Fax:	 	214-752-7054

	1.03.	 	Tenant:	 	Sunbelt Bank

	 	 	Address:	 	3000 South Watson Road, Arlington, Texas

	 	 	 
	 	Telephone:	 	 
	 	Fax:	 	 

	1.04.	 	Demised Premises:	 	3000 South Watson Road

	A.	 	Street address:	 	3000 South Watson Road

	 	 	 
	 	in	 	Tarrant
	 	County, Texas.

	B.	 	Legal description:    The property on which the Demised Premises is situated (the "Property") is
	 	 	more particularly described as:	 	 

	 	 	SEE EXHIBIT "A"	 	 
	 	 	

	 	 	 
	 	or is described on Exhibit A, SURVEY AND/OR LEGAL DESCRIPTION.

    C.    Floor Plan or Site Plan:    Being a floor area of approximately
5,000 square feet and being approximately N/A feet by N/A feet (measured to the exterior of outside walls and to
the center of the interior walls) and being more particularly shown in outline form on Exhibit B, FLOOR PLAN AND/OR SITE PLAN. 

    D.    Tenant's pro rata share of the Property is
100%.    [See Addendum A, EXPENSE REIMBURSEMENT, if applicable] 

	1.05.
	Lease Term:    20 years and 0 months beginning on
January 1, 2005 (the "Commencement Date") and ending on December 31, 2025 (the "Expiration Date").

	1.06.
	Base Rent:    $SEE EXHIBIT "C" total Base Rent for the Lease Term payable in monthly
installments of $18,667.00 per month in advance. (The total amount of Rent is defined in Section 3.01.)

	1.07.
	Percentage Rent:    N/A%. [See Addendum D, PERCENTAGE
RENTAL/GROSS SALES REPORTS, if applicable]

	1.08.
	Security Deposit:    $10,000.00 (due upon execution of this Lease). [See
Section 3.04] 

2

 
	1.09.
	Permitted Use:    Any "CS" use as defined by City of Arlington code. [See
Section 6.01] 

	1.10.	 	Party to whom Tenant is to deliver payments under this Lease [check one].    ý Landlord,
	 	 	o Principal Broker, or o Other	 	 
	.
	 	 	Landlord may designate in writing the party authorized to act on behalf of Landlord to enforce this Lease. Any such authorization will remain in effect until it is revoked by Landlord in writing.

	1.11.	 	Principal Broker:	 	N/A
	, acting as
	 	 	[check one]: o agent for Landlord exclusively, o agent for Tenant exclusively,
o an intermediary.

	 	 	Principal Broker's Address:	 	 

	 	 	 
	 	Telephone:	 	 
	 	Fax:	 	 

	
1.12.	
 	
Cooperating Broker:	
 	

N/A
	

, acting as
	

 	
 	
[check one]: o agent for Landlord exclusively, o agent for Tenant exclusively, o an intermediary.

	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 

	 	 	Cooperating Broker's Address:	 	 

	 	 	 
	 	Telephone:	 	 
	 	Fax:	 	 

	1.13.
	The Fee:    The Professional Service Fee shall be as set forth in [check
one]: o Paragraph A, or
o Paragraph B of Section 15.01. 

            A.    The percentage applicable for leases in Sections 15.01 and 15.03 shall be
N/A percent (    %). 

            B.    The percentage applicable for leases in Section 15.04 and 15.03 shall be
N/A percent (    %). 

1.14.    Acceptance:    The number of days for acceptance of
this offer is N/A days. [See Section 16.14] 

ARTICLE TWO: LEASE AND LEASE TERM  

2.01.    Lease of Demised Premises for Lease Term.    Landlord leases the Demised
Premises to Tenant and Tenant leases the Demised Premises from Landlord for the Lease Term stated in Section 1.05. The Commencement Date is the date specified in Section 1.05, unless
advanced or delayed under any provision of this Lease. 

2.02.    Delay in Commencement.    Landlord shall not be liable to Tenant if
Landlord does not deliver possession of the Demised Premises to Tenant on the Commencement Date. specified in Section 1.05 above. Landlord's non-delivery of possession of the
Demised Premises to Tenant on the Commencement Date will not affect this Lease or the obligations of Tenant under this Lease. However, the Commencement Date shall be delayed until possession of the
Demised Premises is delivered to Tenant. The Lease Term shall be extended for a period equal to the delay in delivery of possession of the Demised Premises to Tenant, plus the number of days necessary
for the Lease Term to expire on the last day of a month. If Landlord does not deliver possession of the Demised Premises to Tenant within sixty (60) days after the Commencement Date specified
in Section 1.05, Tenant may cancel this Lease by giving written notice to Landlord within ten (10) days after the 60-day period ends. If Tenant gives such notice, this Lease
shall be canceled effective as of the date of its execution, and no party shall have any obligations under this Lease. If Tenant does not give such notice within the time specified, Tenant shall have
no right to cancel this Lease, and the Lease Term shall commence upon the delivery of possession of the Demised Premises to Tenant. If delivery of possession of the Demised Premises to Tenant is
delayed, Landlord and Tenant shall, upon such delivery, execute an amendment to this Lease setting forth the revised Commencement Date and Expiration Date of the Lease Term. 

3

 

2.03.    Early Occupancy.    If Tenant occupies the Demised Premises prior to the
Commencement Date, Tenant's occupancy of the Demised Premises shall be subject to all of the provisions of this Lease. Early occupancy of the Demised Premises shall not advance the Expiration Date.
Unless otherwise provided herein, Tenant shall pay Base Rent and all other charges specified in this Lease for the period of occupancy. 

2.04.    Holding Over.    Tenant shall vacate the Demised Premises immediately upon
the expiration of the Lease Term or earlier termination of this Lease. Tenant shall reimburse Landlord for and indemnify Landlord against all damages incurred by Landlord as a result of any delay by
Tenant in vacating the Demised Premises. If Tenant does not vacate the Demised Premises upon the expiration of the Lease Term or earlier termination of this Lease, Tenant's occupancy of the Demised
Premises shall be a day-to-day tenancy, subject to all of the terms of this Lease, except that the Base Rent during the holdover period shall be increased to an amount which is
one-and-one-half (11/2) times the Base Rent in effect on the expiration or termination of this Lease, computed on a daily basis for each day of the
holdover period, plus all additional sums due under this Lease. This paragraph shall not be construed as Landlord's consent for Tenant to hold over or to extend this Lease. 

ARTICLE THREE: RENT AND SECURITY DEPOSIT  

3.01.    Manner of Payment.    All sums payable under this Lease by Tenant (the
"Rent") shall be made to the Landlord at the address designated in Section 1.02, unless another person is designated in Section 1.10, or to any other party or address as Landlord may
designate in writing. Any and all payments made to a designated third party for the account of the Landlord shall be deemed made to Landlord when received by the designated third party. All sums
payable by Tenant under. this Lease, whether or not expressly denominated as rent, shall constitute rent for the purposes of Section 502(b)(6) of the Bankruptcy Code and for all other purposes.
The Base Rent is the minimum rent for the Demised Premises and. is subject to the terms and conditions contained in this Lease, together with the attached Addenda, if any. 

3.02.    Time of Payment.    Upon execution of this Lease, Tenant shall pay the
installment of Base Rent for the first month of the Lease Term. On or before the first day of the second month of the Lease Term and of each month: thereafter, the installment of Base Rent and other
sums due under this Lease shall be due and payable, in advance, without off set, deduction or prior demand. Tenant shall cause payments to be properly mailed or otherwise delivered so as to be
actually received by the party identified in 1.10 above on or before the due date (and not merely deposited in the mail). If the Lease Term commences or ends on a day other than the first or last day
of a calendar month, the rent for any fractional calendar month following the Commencement Date or preceding the end of the Lease Term shall be prorated by days. 

3.03.    Late Charges.    Tenant's failure to promptly pay sums due under this Lease
may cause Landlord to incur unanticipated costs. The exact amount of those costs is impractical or extremely difficult to ascertain. The costs may include, but are not limited to, processing and
accounting charges and late charges which may be imposed on Landlord by any ground lease or deed of trust encumbering the Demised Premises. Payments due to Landlord under this Lease are not an
extension of credit. Therefore, if any payment under the Lease is not actually received on or before the due date (and not merely deposited in the main, Landlord may, at Landlord's option and to the
extent allowed by applicable law, impose a Late Charge on any late payments in an amount equal to one-half of one percent (0.5%) of the amount of the past due payment (the "Late Charge")
per day for each day after the due date, until the past due amount an Good Funds is received by Landlord, up to a maximum of ten percent (10%) of the past due amount. A Late Charge may be imposed only
once on each past due payment. Any Late Charge will be in addition to Landlords other remedies for nonpayment of rent. If any check tendered to Landlord by Tenant under this Lease is dishonored for
any reason, Tenant shall pay to the party receiving payments wider this Lease a fee of twenty-five dollars ($25.00), plus (at 

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Landlord's
option) a Late Charge as provided above until good finds are received by Landlord. The parties agree that any Late Charge and dishonored check fee represent a fair and reasonable estimate
of the costs Landlord will incur by reason of the late payment or dishonored check. Payments received from Tenant shall be applied first to any Late Charges, second to Base Rent, and lost to other
unpaid charges or reimbursements due to Landlord. Notwithstanding the foregoing, Landlord will not impose a Late Charge as to the first late payment a any calendar year, unless Tenant fails to pay the
late payment to Landlord within three (3) business days after the delivery of a written notice from Landlord to Tenant demanding the late payment be paid. However, Landlord may impose a Late
Charge without advance notice to Tenant on any subsequent late payment in the same calendar year. 

3.04.    Security Deposit.    Upon execution of this Lease, Tenant shall deposit
with Landlord a cash Security Deposit in the amount stated in Section 1.08. Landlord may apply all or part of the Security Deposit to any unpaid Rent or other charges due from Tenant or to cure
any other defaults of Tenant If Landlord uses any part of the Security Deposit, Tenant shall restore the Security Deposit to its full amount within ten (10) days after Landlords written demand.
Tenants failure to restore the full amount of the Security Deposit within the time specified shall be a default under this Lease. No interest will be paid on the Security Deposit. Landlord will not be
required to keep the Security Deposit separate front its other accounts and no trust relationship is created with respect to the Security Deposit. Upon any termination of this Lease not resulting from
Tenants default, and after Tenant has vacated the Property and cleaned and restored the Demised Premises in the manner required by this Lease, Landlord shall refund the unused portion of the Security
Deposit to Tenant within thirty days after the Termination Date or thirty days after Tenant fully complies with the conditions of termination as required in. Section 7.05, whichever is later. 

3.05.    Good Funds Payments.    If, for any reason whatsoever, any two or more
payments by check from Tenant to Landlord for Rent are dishonored and returned unpaid, thereafter Landlord may, at Landlord's sole option, upon written notice to Tenant, require that all future
payments of Rent for the remaining term of the Lease must be made by cash, certified check, cashier's check or money order ("Good Funds") and that the delivery of Tenant's personal or corporate check
will no longer constitute payment of Rent wider this Lease. Any acceptance by Landlord of a payment for Rent by Tenant's personal or corporate check thereafter shall not be construed as a waiver of
Landlords right to insist upon payment by Good Funds as set forth herein. 

ARTICLE FOUR: TAXES  

4.01.    Payment by Landlord.    Landlord shall pay the real estate taxes on the
Demised Premises during the Lease Term. 

4.02.    Improvements. by Tenant.,    If the real estate taxes levied against the
Demised Premises for the real estate tax year in which the Lease Term commences are increased as a result of any alterations, additions or improvements made by Tenant or by Landlord at the request of
Tenant, Tenant shall pay to Landlord upon demand the amount of the increase and continue to pay the increase during the Lease Term. Landlord shall use reasonable efforts to obtain from the tax
assessor or assessors a written statement of the total amount of the increase. 

4.03.    Joint Assessment.    If the real estate taxes are assessed against the
Demised Premises jointly with other property not constituting a part of the Demised Premises, the real estate taxes applicable to the Demised Premises shall be equal to the amount bearing the same
proportion to the aggregate assessment that the total square feet of building area in the Demised Premises bears to the total square feet of building area included in the joint assessment. 

4.04.    Personal Property Taxes.    Tenant shall pay all taxes accessed against
trade fixtures, furnishings, equipment; inventory, products, or any other personal property belonging to Tenant. Tenant shall use reasonable efforts to have. Tenant's property taxed separately from
the Demised Premises. If any of 

5

 

Tenants
property is taxed with the Demised Premises, Tenant shall pay the taxes for its property to Landlord within fifteen (15) days after Tenant receives a written statement from Landlord for
the property taxes. 

ARTICLE FIVE: INSURANCE AND INDEMNITY  

5.01.    Casualty Insurance.    During the Lease Term, Landlord shall maintain
policies of insurance covering loss of or damage to the Demised Premises in an amount or percentage of replacement value as Landlord deems reasonable in relation to the age, location, type of
construction and physical condition of the Demised Premises and the availability of insurance at reasonable rates. The policies shall provide protection against all perils included within the
classification of fire. and extended coverage and any other pen's which Landlord deems necessary. Landlord may, at Landlord's option, obtain insurance coverage for Tenant's fixtures, equipment or
building improvements installed by Tenant in or on the Demised Premises. Tenant shall at Tenant's expense, maintain insurance on its fixtures, equipment and building improvements as Tenant deems
necessary to protect Tenant's interest Tenant shall not do or permit to be dome anything which invalidates any insurance policies. Any casualty insurance carried by Landlord. or Tenant shall be for
the sole benefit of the party carrying the insurance and under its sole control. 

5.02.    Increase in Premiums.    Tenant shall not permit any operation or activity
to be conducted, or storage or use of any volatile or any other materials, on or about the Demised Premises that would cause suspension or cancellation of any fire and extended coverage insurance
policy carried by Landlord, or increase the premiums therefor, without the prior written consent of Landlord. If Tenant's use and occupancy of the Demised Premises causes an increase in the premiums
for any fire and extended coverage insurance poky carried by Landlord, Tenant shall pay to Landlord, as additional rental, the amount of the increase within ten days after demand and presentation by
Landlord of written evidence of the increase. 

5.03.    Liability Insurance.    During the Lease Term, Tenant shall maintain a
commercial general liability policy of insurance, at Tenant's expense, insuring Landlord against liability arising out of the ownership, use, occupancy, or maintenance of the Demised Premises. The
initial amounts of the insurance must be at least $1,000,000 for Each Occurrence, $2,000,000 General Aggregate per policy year, $100,000 Property Damage for the Demised Premises, and $10,000 Medical
Expense; plus a $5,000,000 commercial general liability umbrella; and shall be subject to periodic increases based upon as Landlord may determine, in Landlord's discretion, exercised in good faith.
However, the amounts of the insurance shall not limit Tenant's liability nor relieve Tenant of any obligation under the Lease. The policies mist contain cross-liability endorsements, if applicable,
and must insure Tenants performance of the indemnity provisions of Section 5.04. The policies must contain a provision which prohibits cancellation or modification of the policy except upon
thirty (30) days' prior written notice to Landlord. Tenant may discharge Tenant's obligations under this Section by naming Landlord as an additional insured under a comprehensive policy of
commercial general liability insurance maintained by Tenant and containing the coverage and provisions described in this Section. Tenant shall deliver a copy of the policy or certificate (or a
renewal) to Landlord prior to the Commencement Date and prior to the expiration of the policy during the Lease Term. If Tenant fails to maintain the policy, Landlord may elect to maintain the
insurance at Tenant's expense. Tenant may, at Tenants expense, maintain other liability insurance as Tenant deems necessary. 

5.04.    Indemnity.    Landlord shall not be liable to Tenant or to Tenant's
employees, agents, invitees or visitors, or to any other person, for any injury to persons or damage to property on or about the Demised Premises or any adjacent area owned by Landlord caused by the
negligence or misconduct of Tenant, Tenants employees, subtenants, agents, licensees or concessionaires or any other person entering the Demised Premises under express or implied invitation of Tenant,
or arising out of the use of the Demised Premises by Tenant and the conduct of Tenant's business, or arising out of any breach 

6

 

or
default by Tenant in. the performance of Tenant's. obligations under this Lease; and Tenant hereby agrees to indemnify and hold Landlord harmless from any loss, expense or claims arising out of
such damage or injury. Tenant shall not be liable far any injury or damage caused by the negligence or misconduct of Landlord, or Landlord's employees or agents, and Landlord agrees to indemnify and
hold Tenant harmless from any loss, expense or damage arising out of such damage or injury. 

5.05.    Comparative Negligence.    Tenant and Landlord hereby unconditionally and
irrevocably agree to indemnify, defend and hold each other and their officers, agents, directors, subsidiaries, partners, employees, licensees and counsel harmless, to the extent of each party's
comparative negligence, if any, from and against any and all loss, liability, demand, damage, judgment, suit, claim, deficiency, interest, fee, charge, cost or expense (including, without limitation,
interest, court costs and penalties, reasonable attorneys fees and disbursements and amounts paid in settlement, or liabilities resulting from any change in federal; state or local law or regulation
or interpretation of this Lease) of whatever nature, on a comparative negligence basis, even when caused in part by Landlord's or Tenant's negligence or the joint or concurring negligence of Landlord,
Tenant, and any other person or entity, which may result or to which Landlord or Tenant and/or any of their successors, agents, directors, employees, subsidiaries, partners, licensees and counsel may
sustain, become subject to in connection with or arising in any way whatsoever out of the leasing, operation, promotion, management, maintenance, repair, use or occupation of the Demised Premises, or
any other activity of whatever nature in connection therewith, or arising out of or by reason of any investigation, motion or other proceedings brought or, arising out of or based upon the leasing,
operation, promotion, management, maintenance, repair, use or occupancy of the Demised Premises, or any other activity.on the Demised Premises. This provision shall survive the expiation or
termination of this Lease. 

5.06.    Waiver of Subrogation.    Each party to this Lease waives any and every
claim which arises or may arise in its favor against the other party during the term of the Lease or any renewal or extension of this Lease for any and all loss of, or damage to, any of its property
located within or upon, or constituting a part of; the Demised Premises, which loss or damage is covered by valid and collectible fire and extended coverage insurance policies, to the extent that such
loss or damage is recoverable under such insurance policies. These mutual waivers shall be in addition to, and not in limitation or derogation of any other waiver or release contained in this Lease
with respect to any loss of, or damage to, property of the parties. Inasmuch as these mutual waivers will preclude the assignment of any aforesaid claim by way of subrogation or otherwise to an
insurance company (or any other person), each party hereby agrees to give immediately to each insurance company (which has issued to such party policies of fire and extended coverage insurance)
written notice of the terms of such mutual waivers, and to cause such policies to be properly endorsed to prevent the invalidation of the insurance coverage by reason of these waivers. 

ARTICLE SIX: USE OF DEMISED PREMISES  

6.01.    Permitted Use.    Tenant may use the Demised Premises only for the
Permitted Use stated in Section 1.09. The parties to this Lease acknowledge that the current use of the Demised Premises or the improvements located on the Demised Premises, or both, may or may
not conform to the city zoning ordinance with respect to the permitted use, height, setback requirements, minimum parking requirements, coverage ratio of improvements to total area of land, and. other
matters which may have a significant economic impact upon the Tenant's intended use of the Demised Premises. Tenant acknowledges that Tenant has or will independently investigate and verify to Tenants
satisfaction the extent of any limitations or non-conforming uses of the Demised Premises. Tenant further acknowledges that Tenant is not relying upon ay warranties or representations of
Landlord or the Brokers who are participating in the negotiation of this Lease concerning the Permitted Use of the Demised Premises, or with respect to any uses of the improvements located on the
Demised Premises. 

7

 

6.02.    Compliance with Laws.    Tenant shall comply with all governmental laws,
ordinances and regulations applicable to the use of the Demised Premises, and shall promptly comply with all governmental orders and directives for the correction, prevention and abatement of
nuisances and other activities in or upon, or connected with the Demised Premises, all at Tenant's sole expense, including any expense or cost resulting from the construction or installation of
fixtures and improvements or other accommodations for handicapped or disabled persons required for compliance with governmental laws and regulations, including but not limited to the Texas
Architectural Barriers Act (Article 9102 and any successor statute) and the Americans with Disabilities Act (the "ADA"). To the extent any alterations to the Demised Premises are required by
the ADA or other applicable laws or regulations, Tenant shall bear the expense of the alterations. To the extent any alterations to areas of the Property outside the Demised Premises are required by
Title III of the ADA or other applicable laws or regulations (for "path of travel" requirements or otherwise), Landlord shall bear the expense of the alterations. 

6.03.    Certificate of Occupancy.    If required, Tenant shall obtain a Certificate
of Occupancy from the municipality in which the Property is located prior to occupancy of the Demised Premises. Tenant may apply for a Certificate of Occupancy prior to the Commencement Date and, if
Tenant is unable to obtain a Certificate of Occupancy, Tenant shall have the right to terminate this Lease by written notice to Landlord if Landlord or Tenant is unwilling or unable to cure the
defects which prevented the issuance of the Certificate of Occupancy. Landlord may, but has no obligation to, cure any such defects, including. any repairs, installations, or replacements of any items
which are not presently existing on the Demised Premises, or which have not been expressly agreed upon by Landlord in writing. 

6.04.    Signs.    Without the prior written consent of Landlord, Tenant may not
place any signs, ornaments or other objects upon the Demised Premises or on the Property, including but not limited to the roof or exterior of the building or other improvements on the Property, or
paint or otherwise decorate or deface the exterior of the building. Any signs installed by Tenant must conform with applicable laws, deed restrictions on the Property, and other applicable
requirements. Tenant must remove all signs, decorations and ornaments at the expiration or termination of this Lease and must repair any damage and close any holes caused by the removal. 

6.05.    Utility Services.    Tenant shall pay the cost of all utility services,
including not limited to initial connection charges, all charges for gas, water, sewerage, storm water disposal, communications and electricity used on the Demised Premises, and for replacing all
electric lights, lamps and tubes. 

6.06.    Landlord's Access.    Landlord and Landlord's agents shall have the right
to, during normal business hours and upon reasonable advance notice, and without unreasonably interfering with Tenants business, enter the Demised. Premises: (a) to inspect the general
condition and state of repair of the Demised Premises, (b) to make repairs required or permitted under this Lease, (c) to show the Demised Premises or the Property to any prospective
tenant or purchaser, and (d) for any other reasonable purpose. If Tenant charges the locks on the Demised Premises, Tenant must provide Landlord with a copy of each separate key. During the
final one hundred fifty (150) days of the Lease Term, Landlord and Landlord's agents may erect and maintain on or about the Demised Premises signs advertising the Demised Premises for lease or
for sale. 

6.07.    Possession.    If Tenant pays the rent, properly maintain the Demised
Premises, and complies with all other terms of this Lease, Tenant may occupy and enjoy the Demised Premises for the fill Lease Term, subject to the provisions of this Lease. 

6.08.    Exemptions from Liability.    Landlord shall not be liable for any damage
or injury to.the persons, business (or any loss of income), goods, inventory, furnishings, fixtures, equipment, merchandise or other property of Tenant, Tenant's employees, invitees, customers or any
other person in or about the Demised Premises, whether the damage or injury is caused by or results from (a) fire, 

8

 

steam,
electricity, water, gas or wind; (b) the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires appliances, plumbing, air conditioning or lighting fixtures or any
other cause; (c) conditions arising on or about the Demised Premises or upon other portions of any building of which the Demised Premises is a part, or from other sources or places; or
(d) any act or omission of any other tenant of any bulling on the Property. Landlord shall not be liable for any damage or injury even though the cause of or the means of repairing the damage
or injury ant not accessible to Tenant. The provisions of this Section 6.08 shall not, however, exempt Landlord from liability for Landlord's gross negligence or willful misconduct. 

ARTICLE SEVEN: PROPERTY CONDITION, MAINTENANCE, REPAIRS AND ALTERATIONS  

7.01.    Property Condition.    Except as disclosed in writing by Landlord to Tenant
contemporaneously with the execution of this Lease, to the best of Landlord's actual knowledge the Demised Premises has no known latent structural defects, construction defects of a material nature,
and to the best of Landlord's actual knowledge none of the improvements has been constructed with materials known to be a potential health hazard to occupants of the Demised Premises. Tenant
acknowledges that neither the Principal Broker nor any Cooperating Broker has made any warranty or representation to Tenant with respect to the condition of the Demised Premises, and that Tenant is
relying exclusively upon Tenant's own investigations and the representations of Landlord, if any, with respect to the condition of the Demised Premises. Landlord and Tenant agree to bold the Brokers
harmless of and from any and all damages, claims, costs and expenses of every kind and character resulting from or related to Landlord's furnishing to the Brokers any false, incorrect or inaccurate
information with respect to the Demised Premises, or Landlord's concealing any material information with respect to the condition of the Demised Premises. Other than as expressly set forth in this
Lease, Landlord represents that on the Commencement Date (and for a period of thirty (30) days thereafter) the building fixtures and equipment, plumbing and plumbing fixtures, electrical and
lighting system, any fire protection sprinkler system, ventilating equipment, heating system, air conditioning equipment, roof, skylights, doors, overhead doors, windows, dock levelers, elevators, and
the interior of the Demised Premises in general are in good operating condition. Tenant shall have a period of thirty (30) days following the Commencement Date in which to inspect the Demised
Premises and to notify Landlord in writing of any defects and maintenance, repairs or replacements required to the above named equipment, fixtures, system and interior. Within a reasonable period of
tame after the timely receipt of any such written notice from Tenant, Landlord shall at Landlord's expense, correct the defects and perform the maintenance, repairs and replacements. 

7.02.    Acceptance of Demised Premises:    Subject to the provisions in
Section 7.01, Tenant acknowledges that (a) a full and complete inspection of the Demised Premises and adjacent common areas has been made and Landlord has fully and adequately disclosed
the existence of any defects which would interfere with Tenant's use of the Demised Premises for their intended commercial purpose, and (b) as a result of such inspection and disclosure, Tenant
has taken possession of the Demised Premises and accepts the Demised Premises in its "As Is" condition. 

7.03.    Maintenance and Repair.    Except as otherwise provided in this Lease,
Landlord shall be under no obligation to perform any repair, maintenance or management service in the Demised Premises or adjacent common areas. Tenant shall be fully responsible, at is expense, for
all repair, maintenance and management services other than those which are expressly assumed by Landlord. 

        A.    Landlord's Obligation.    

        (1)   Subject to the provisions of Article Eight (Damage or Destruction) and Article Nine (Condemnation) and except for damage
caused by any act or omission of Tenant, Landlord shall keep the roof; skylights, foundation, structural components and the structural portions of exterior walls of the Demised Premises in good order,
condition and repair. Landlord shall not 

9

 

be
obligated to maintain or repair windows, doors, overhead doors, plate glass or the surfaces of walls. In addition, Landlord shall not be obligated to make any repairs under this Section until a
reasonable time after receipt of written notice from Tenant of the need for repairs. If any repairs are required to be made by Landlord, Tenant shall, at Tenant's sole cost and expense, promptly
remove Tenant's furnishings, fixtures, inventory, equipment and other Property, to the extent required to enable Landlord to make repairs. Landlord's liability under this, Section shall be limited to
the cost of those repairs or corrections. Tenant waives the benefit of any present or future law which night give Tenant the right to repair the Demised Premises at Landlord's expense or to terminate
the Lease because of the condition. 

        (2)   All repair, maintenance, management and other services to be performed by Landlord or Landlord's agents involve the
exercise of professional judgment by service providers, and Tenant expressly waives any claims for breach of warranty arising from the performance of those services. 

        B.    Tenant's Obligation.    

        (1)   Subject to the provisions of Section 7.01, Section 7.03.A, Article Eight (Damage or Destruction) and
Article Nine (Condemnation), Tenant shall, at all tines, keep all other portions of the Demised Premises in good order, condition and repair, ordinary wear and tear excepted, including but not limited
to maintenance, repairs and all necessary replacements of the windows, plate glass, doors, overhead doors, heating system; ventilating equipment, air conditioning equipment, electrical and lighting
systems, fire protection sprinkler system, dock levelers, elevators, interior and exterior plumbing, the interior of the Demised Premises in general, pest control and extermination, down spouts,
gutters, paving, railroad siding, care of landscaping and regular mowing of grass, and including the exterior of the Demised Premises. In addition, Tenant shall, at Tenant's expense, repair any,
damage to any portion of the Property, including the roof, skylights, foundation, or structural components and exterior walls of the Demised Prernises, caused by Tenant's acts or omissions. If Tenant
fails to maintain and repair the Property as required by this Section, Landlord may, on ten (10) days' prior written notice, enter the Demised Premises and perform the maintenance or repair on
behalf of Tenant, except that no notice is required in case of emergency, and Tenant shall reimburse Landlord immediately upon demand for all costs incurred in performing the maintenance or repair,
plus a reasonable service charge. 

        (2)    HVAC Service.    Tenant shall, at Tenant's own cost and
expense, enter into a regularly scheduled preventative maintenance and service contract for all refrigeration, heating, ventilating and air conditioning systems and equipment within the Demised
Premises during the Lease Term. If Tenant
fails to enter into such a service contract acceptable to Landlord, Landlord may do so on Tenant's behalf and Tenant agrees to pay Landlord the cost and expense thereof, plus a reasonable service
charge, regularly upon demand. 

7.04.    Alterations, Additions and Improvements.    Tenant shall not create any
openings in the roof or exterior walk, or make any actions, addition or improvements to the Demised Premises without the prior written consent of Landlord. Consent for non-structural
alterations, additions or improvements shall not be unreasonably withheld by Landlord: Tenant may erect or inshall trade fixtures, shelves, bins, machinery, heating, ventilating air conditioning
equipment and, provided that Tenant complies with all applicable governmental laws, ordinances, codes, and regulations. At the expiration or termination of this Lease, Tenant shall, subject to the
restrictions of Section 7.05 below, have the right to remove items installed by Tenant, provided Tenant is not in default at the time of the removal and provided further that Tenant shall, at
the tine of removal of the items, repair in a good and workmanlike manner any damage caused by the or removal. Tenant shall pay for all costs incurred or arising out of alterations, additions or
improvements in or to the Demised Premises and shall not 

10

 

permit
any mechanic's or materialman's lien to be filed against the Demised Premises or the Property. Upon request by Landlord, Tenant shall deliver to Landlord proof of payment reasonably
satisfactory to Landlord of all costs incurred or arising out of any alterations, additions or improvements. 

7.05.    Condition upon Termination.    Upon the expiration or termination of this
Lease, Tenant shall surrender the Demised Premises to Landlord broom clean and in the same condition as received, except for ordinary wear and tear which Tenant is not otherwise obligated to remedy
under any provision of this Lease. Tenant shall not be obligated to repair any damage which Landlord is required to repair under Article Seven (Property Condition) or Article Eight (Damage or
Destruction). In addition, Landlord may require Tenant to remove any alterations, additions or improvements (whether or not made with Landlord's consent) prior to the expiration or termination of the
Lease and to restore the Demised Premises to its prior condition, all at Tenant's expense. All alterations, additions and improvements which Landlord has not required Tenant to remove shall become
Landlord's property and shall be surrendered to Landlord upon the expiration or termination of this Lease. In no event, however, shall Tenant remove any of the following materials or equipment without
Landlord's prior written consent: (i) electrical wiring or power panels; (ii) lighting or lighting fixtures; (iii) wall coverings, drapes, blinds or other window coverings;
(iv) carpets or other floor coverings; (v) heating, ventilating or air conditioning; (vii) fencing or security gates; or (vi) any other fixtures, equipment or items which,
if removed, would affect the operation or the appearance of the Property. 

ARTICLE EIGHT: DAMAGE OR DESTRUCTION  

8.01.    Notice.    If any buildings or other improvements situated on the Property
are damaged or destroyed by fire, flood, windstorm, tornado or other casualty, Tenant shall immediately give written notice of the damage or destruction to Landlord. 

8.02.    Partial Damage.    If the building or other improvements situated on the
Demised Premises are damaged by fire, tornado, or other casualty but not to such an extent that rebuilding or repairs cannot reasonably be completed within one hundred twenty (120) days from
the date Landlord receives written notification by Tenant of the occurrence of the damage, this Lease shall not terminate, but Landlord shall proceed with reasonable diligence to rebuild or repair the
building and other improvements on the Demised Premises (other than leasehold Improvements made by Tenant or any assignee, subtenant or other occupant of the Demised Premises) to substantially the
condition in which they existed prior to the damage. If the casualty occurs during the final eighteen (18) months of the Lease Term, Landlord shall not be required to rebuild or repair the
damage unless Tenant exorcises Tenant's renewal option (if any) within fifteen (15) days after the date of receipt by Landlord of the notification of the occurrence of the damage. If Tenant
does not exercise its renewal option, or if there is no renewal option contained in this Lease, Landlord may, at Landlord's option, terminate this Lease by promptly delivering a written termination
notice to Tenant, in which event the Rent shall be abated for the unexpired portion of the Lease Term, effective from the date of receipt by Landlord of the written notification of the damage. To the
extent the Demised Premises cannot be occupied (in whole or in part) following the casualty, the Rent payable under this Lease during the period in which the Demised Premises cannot be fully occupied
shall be adjusted equitably. 

8.03.    Substantial or Total Destruction.    If the building or other improvements
situated on the Demised Premises are substantially or totally destroyed by fire, tornado, or other casualty, or so damaged that rebuilding or repairs cannot reasonably be completed with one hundred
twenty (120) days from the date Landlord receives written notification by Tenant of the occurrence of the damage, either Landlord or Tenant may terminate this lease by promptly delivering a
written termination notice to the other party, in which event the monthly installments of Rent shall be abated for the unexpired portion of the Lease Term, effective from the date of the damage or
destruction. If neither party promptly termites this Lease, Landlord shall proceed with reasonable diligence to rebuild and repair the building and other improvements (except that Tenant shall rebuild
and repair Tenant's 

11

 

fixtures
and improvements in the Demised Premises). To the extent the Demised Premises cannot be occupied (in whole or in part) following the casualty, the Rent payable under this Lease during the
period in which the Demised Premises cannot be fully occupied shall be adjusted equitably. 

ARTICLE NINE: CONDEMNATION  

        If during the Lease Term or any extension thereof all or a substantial part of the Demised Premises are taken for any public or quasi-public use under any
governmental law, ordinance or regulation or by right of eminent domain, or are conveyed to the condemning authority under threat of condemnation,
this Lease shill terminate and the monthly installments of Rent shall be abated during the unexpired portion of this Lease Term, effective from the date of the taking. If less than a substantial part
of the Demised Premises is taken for public or quasi-public use under any governmental law, ordinance or regulation, or by right of eminent domain, or is conveyed to the condemning authority under
threat of condemnation, Landlord, at is option, may by when notice terminate this Lease. If Landlord does not terminate this Lease, Landlord shall promptly, at Landlord's expense, restore and
reconstruct the buildings and improvements (other than leasehold improvements made by Tenant or any assignee, subtenant or other occupant of the Demised Premises) situated on the Demised Premises inn
order to make the same reasonably tenantable and suitable for the use for which the Demised Premises is leased as defined in Section 6.01. The monthly installments of Rent payable under this
Lease during the unexpired portion of the Lease Term shall be adjusted equitably. Landlord and Tenant shall each be entitled to receive and retain such separate awards and portions of lump sum awards
as may be allocated to their respective interests in any condemnation proceeding. The termination of this Lease shall not affect the rights of the parties to such awards. 

ARTICLE TEN: ASSIGNMENT AND SUBLETTING  

        Tenant shall not, without the prior written consent of Landlord, assign this, Lease or sublet the Demised Premises or any portion thereof Any assignment or
subletting shall be expressly subject to all terms and provisions of this Lease, including the provisions of Section 6.01 pertaining to the use of the Demised Premises. In the event of any
assignment or subletting, Tenant shall remain fully liable for the full performance of all Tenants obligations under this Lease. Tenant shall not assign its rights under this Lease or sublet the
Demised Premises without first obtaining a written agreement from the assignee or sublessee whereby the assignee or sublessee agrees to assume the obligations of Tenant under this Lease and to be
bound by the terms of this Lease. If an event of default occurs while the Demised Premises is assigned or sublet, Landlord may, at Landlord's option, in addition to any other remedies provided in this
Lease or by law, collect directly from the assignee or subtenant all rents becoming due under the terms of the assignment or subletting and apply the rent against any sums due to Landlord under this
Lease. No direct collection by Landlord from any assignee or subtenant will release Tenant from Tenant's obligations under this Lease. 

ARTICLE ELEVEN: DEFAULT AND REMEDIES  

11.01.    Default.    Each of the following events is an event of default under this
Lease: 

        A.    Failure of Tenant to pay any installment of the Rent or other sum payable to Landlord under this Lease on the date that it
is due and the continuance of that failure for a period of five (5) days after Landlord delivers written notice of the failure to Tenant. This clause shall not be construed to permit
or allow a delay in paying Rent beyond the. due date and shall not attest Landlord's right to impose a Late Charge as permitted in Section 3.03. 

        B.    Failure of Tenant to comply with any term; condition or covenant of this Lease, other than the payment of Rent or other
sum of money, and the continuance of that failure for a period of thirty (30) days after Landlord delivers written notice of the failure to Tenant; 

12

 

        C.    Failure of Tenant or any guarantor of Tenant's obligations under this Lease to pay its debts as they become due or an
admission in writing of inability to pay its debts, or the making of a general assignment for the benefit of creditors; 

        D.    The commencement by Tenant or any guarantor of Tenant's obligations under this Lease of any case, proceeding or other
action seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of
debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property; 

        E.    The commencement of any case, proceeding or other action against Tenant or any guarantor of Tenant's obligations under
this Lease seeking to have an order for relief entered against it as debtor, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any
law relating to bankruptcy, insolvency, -reorganization or relief of debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial
part of is property, and Tenant or any guarantor (i) fails to obtain a dismissal of such case, proceeding, or other action within sixty (60) days of its commencement; or
(ii) converts the case from one chapter of the Federal Bankruptcy Code to another chapter; or (iii) is the subject of an order of relief which is not fully stayed within seven
(7) business days after the entry thereof; and 

        F.     Vacancy or abandonment by Tenant of any substantial portion of the Demised Premises or cessation of the use of the Demised
Premises for the purpose leased. 

11.02.    Remedies.    Upon the occurrence of any of the events of Default listed in
Section 11.01, Landlord shall have the option to pursue any one or more of the blowing remedies without any prior notice or demand. 

        A.    Terminate this Lease, in which event Tenant shall immediately surrender the Demised Premises to Landlord. If Tenant fails
to so surrender the Demised Premises, Landlord may, without prejudice to any other remedy which it may have for possession of the Demised Premises or Rent it arrears, enter upon and take possession of
the Demised Premises and expel or remove Tenant and any other person who may be occupying the Demised Premises or any part thereof, by force if necessary, without being liable for prosecution or any
claim for damages. Tenant shall pay to Landlord on demand the amount of all loss and damage which Landlord may suffer by reason of the termination, whether through liability to re-let the
Demised Premises on satisfactory terms or otherwise. 

        B.    Enter upon and take possession of the Demised Premises, by force if necessary, without terminating this Lease and without
being liable for prosecution or for any claim or damages, and expel or remove Tenant and any other person who may be occupying the Demised Premises. or any part thereof Landlord may re-let
the Demised Premises and receive the rent therefor. Tenant agrees to pay to Landlord monthly or on demand from time to time any deficiency that may arise by reason of any such re-letting.
In determining the amount of the deficiency, the professional service fees, attorneys' fees, court costs, remodeling expenses and other costs of re-letting shall be subtracted from the
amount of rent received under the re-letting. 

        C.    Enter upon the Demised Premises, by force, if necessary, without terminating this Lease and without being liable for
prosecution or for any claim for damages, and do whatever Tenant is obligated to do under the terms of this Lease. Tenant agrees to pay Landlord on demand for expenses which Landlord may incur in thus
effecting compliance with Tenant's oblations under this Lease, together with interest thereon at the rate of twelve percent (12%) per annum from the date expended until paid. Landlord shall not be
liable for any damages resulting to Tenant from such action, whether caused by negligence of Landlord or otherwise. 

13

 

        D.    Accelerate and declare the Rent for the entire Lease Terms and all other amounts due under this Lease, at once due and
payable, and proceed by attachment, suit or otherwise, to collect all amounts in the same manner as if all such amounts due or to become due during the entire Lease Term were payable in advance by the
terms of this Lease, and neither the enforcement or collection by Landlord of such amounts nor the payment by Tenant of such amounts shall constitute a waiver by Landlord of any breach, existing or in
the future, of any of the terms or provisions of this Lease by Tenant or a waiver of any rights or remedies which the Landlord may have with respect to any such breach. 

        E.    In addition to the foregoing remedies, Landlord shall have the right to change or modify the locks on the Demised Premises
in the event Tenant fails to pay the monthly installment of Rent when due. Landlord shall not be obligated to provide another key to Tenant or allow Tenant to regain entry to the Demises Premises
unless and until Tenant pays Landlord all Rent which is delinquent. Tenant agrees that Landlord shall not be liable for any damages resulting to the Tenant from the lockout. At such
time that Landlord changes or modifies tie lock, Landlord shall post a "Notice of Change of Locks" on the front of the Demised Premises. Such Notice shall state that: 

        (1)   Tenant's monthly installment of Rent is delinquent and therefore, under authority of Section 11.02.E of Tenant's
Lease, the Landlord has exercised its contractual right to change or modify Tenant's door locks; 

        (2)   The Notice has been posted on the Tenant's front door by a representative of Landlord and Tenant should make arrangements
with the representative to pay the delinquent installments of Rent when Tenant picks up the key; and 

        (3)   The failure of Tenant to comply with the provisions of the Lease and the Notice and/or tampering with or changing the
door lock(s) by Tenant may subject Tenant to legal liability. 

        F.     No re-entry or taking possession of the Demised Premises by Landlord shall be construed as an election to
terminate this Lease, unless a written notice of that intention is given to Tenant. Notwithstanding any such re-letting or re-entry or taking possession, Landlord may, at any
time thereafter, elect to terminate this Lease far a previous default. Pursuit of any of the foregoing remedies shall not preclude pursuit of any other remedies provided by law, nor shall. pursuit of
any remedy provided in this Lease constitute a failure or waiver of any monthly installment of Rent due to Landlord under this Lease or of any damages accruing to Landlord by reason of the violation
of any of the terms, provisions and covenants contained in this Lease. Failure of Landlord to declare any default immediately upon its occurrence, or failure to enforce one or more of Landlord's
remedies, or furtherance by Landlord to enforce one or more of Landlord's remedies upon an event of default shall not be deemed or construed to constitute a waiver of default or waiver of any
violation or breach of the term of this Lease. Pursuit of any one of the above remedies shall not preclude pursuit by Landlord of any of the other remedies provided in this Lease. Tine loss or damage
that Landlord may suffer by reason of termination of this Lease or the deficiency from any re-letting as provided for above shall include the expense of repossession mid any repairs or
remodeling undertaken by Landlord following possession. If Landlord terminates this Lease at anytime for any default, in addition to other Landlord's remedies, Landlord may recover from Tenant all
damages Landlord may incur by reason of the default, including the cost of recovering the Demised Premises and the Rent then remaining unpaid. 

11.03.    Notice of Default.    Tenant shall give written notice of any failure by
Landlord to perform any of Landlord's obligations under this Lease to Landlord and to any ground lessor, mortgagee or beneficiary under any deed of trust encumbering the Demised Premises whose name
and address have been furnished to Tenant it writing. Landlord shall not be in default under this Lease unless Landlord (or such ground lessor, mortgagee or beneficiary) fails to cure the
nonperformance within thirty 

14

 

(30) days
after receipt of Tenant's notice. However, if the nonperformance reasonably requires more than thirty (30) days to cure, Landlord shall not be in default if the cure is
commenced within the 30-day period and is thereafter diligently pursued to completion. 

11.04.    Limitation of Landlord's Liability.    As used in this Lease, the term
"Landlord" means only the current owner or owners of the fee title to the Demised Premises or the leasehold estate under a ground lease of the Demised Premises at the time in question. Each Landlord
is obligated to perform the obligations of Landlord under this Lease only during the time such landlord owns such interest or title. Any Landlord who transfers its title or interest is relieved of all
liability with respect to the obligations of Landlord under this Lease accruing on or after the date of transfer, and Tenant agrees to recognize the transferee as Landlord under this Lease. However,
each landlord shall deliver to its transferee the Security Deposit held by Landlord if such Security Deposit has not then been applied under the terms of this Lease. 

ARTICLE TWELVE: LANDLORD'S CONTRACTUAL LIEN  

        In addition to the statutory Landlord's lien, Tenant hereby grants to Landlord a security interest to secure payment of alt Rent and other scans of money becoming
due under this Lease from Tenant, upon all Inventory, goods, wares, equipment; fixtures, furniture and all other personal property of Tenant situated in or upon the Demised Premises, together with the
proceeds from the sale or lease thereof Tenant may not remove such property without the consent of Landlord until all Rent in arrears and other sums of money then due to Landlord under this Lease have
been paid and discharged. Upon the occurrence of an event of default, Landlord may, in addition to any other remedies provided in this Lease or by law, enter upon the Demised Premises and take
possession of any and all goods, wares, equipment, fixtures, furniture and other personal property of Tenant situated on the Demised Premises without liability for trespass or conversion, and sell the
property at public or private sale, with or without having the property at the sale, after giving Tenant reasonable notice of the time and place of any such sale. Unless otherwise required by law,
notice to Tenant of the sale shall be deemed sufficient if given in the manner prescribed in this Lease at least ten (10) days before the time of the sale. Any pubic sale made under this
Article shall be deemed to have been conducted in a commercially reasonable manner if held on the Demised Premises or where the property is located, after the time, place and method of sale and a
general description of the types of property to be sold have been advertised in a daily newspaper published in the county where the Demised Premises is located for five (5) consecutive days
before the date of the sale. Landlord or its assigns may purchase at a plubic sale and, unless prohibited by law, at a private sale. The proceeds from any disposition dealt with in this Article, less
any and all expenses connected with the taking of possession, holding and selling of the property (including reasonable attorneys' fees and legal expenses), shall be applied as a credit against
the indebtedness secured by the security interest granted herein. Any surplus shall be paid to Tenant or as otherwise required by law, and Tenant shall promptly pay any deficiencies. Upon request by
Landlord, Tenant agrees to execute and deliver to Landlord a Financing Statement in a form sufficient to perfect the security interest of Landlord in the aforementioned property and proceeds thereof
under the provisions of the Business and Commerce Code in force in the State of Texas. The statutory lien for rent is expressly reserved; the security interest herein granted is in addition and
supplementary thereto. Provided Tenant is not in default under any of the terms of this Lease, upon written request by Tenant Landlord shall deliver a written subordination of Landlord's statutory and
contractual liens to any lens and security interests securing any institutional third party financing of Tenant. Landlord shall not unreasonably withhold or delay the delivery of Landlord's written
subordination. 

ARTICLE THIRTEEN: PROTECPION OF LENDERS  

13.01.    Subordination and Attorninent.    Landlord shall have the right to
subordinate this Lease to any future ground Lease, deed of trust or mortgage encumbering the Demised Premises, and advances 

15

 

made
on the security thereof and any renewals, modifications, consolidations, replacements or exterior thereof whenever made or recorded. Landlord's right to obtain such a subordination is subject to
Landlord's providing Tenant with a written Subordination, Nondisturbance and Attornment Agreement from the ground lessor, beneficiary or mortgagee wherein Tenant's right to peaceable possession of the
Demised Premises during the Lease Term shall not be disturbed if Tenant pays the Rent and performs all of Tenant's obligations under this Lease and is not otherwise in default, in which case Tenant
shall attorn to the transferee of or successor to Landlord's interest n the Demised Premises and recognize the transferee or successor as Landlord under this Lease. If any ground lessor, beneficiary
or mortgagee elects to have the Lease superior to the lien of its ground lease, deed of trust or mortgage and gives Tenant written notice thereof this Lease shall be deemed superior to the ground
lease, deed of trust or mortgage whether this Lease is dated prior or subsequent to the date of the ground lease, deed of trust or mortgage or the date of recording thereof. Tenant's rights under this
Lease, unless specifically modified at the time this Lease is executed, are subordinated to any existing ground lease, deed of trust or mortgage encumbering the Demised Premises. 

13.02.    Signing of Documuents.    Tenant shall sign and deliver any instruments or
documents necessary or appropriate to evidence any attornment or subordination or any agreement to attorn or subordinate. If Tenant fails to do so within ten (10) days after written request,
Tenant. hereby makes, constitutes and irrevocably appoints Landlord, or any transferee or successor of Landlord, the attorney-in-fact of Tenant to execute and deliver the
attornment or subordination document or agreement. 

13.03.    Estoppel Certificates.    

        A.    Upon Landlord's written request, Tenant shall execute and deliver to Landlord a written statement certifying:
(1) whether Tenants an assignee or subtenant; (2) the expiration date of the Lease; (3) the number of renewal options under the lease and the total period of time covered by the
renewal options) (4) that none of the terms or provisions of the Lease have been changed since the original execution of the Lease, except as shown on attached amendments or modifications;
(5) that no default by Landlord exists under the terms of the Lease (or if Landlord is claimed to be in default, stating why); (6) that the Tenant has no claim against the Landlord under
the Lease and has no defense or right of offset against collection of rent or other charges accruing under the Lease; (7) the amount and date of the last payment of Rent; (8) the amount
of any security deposits and other deposits, if any, and (9) the identity and address of any guarantor of the lease. Tenant shall deliver the statement to Landlord within ten (10) days
after Landlord's request. Landlord may forward any such statement to any prospective purchaser or lender of the Demised Premises. The purchaser or lender may rely conclusively upon the statement as
true and correct 

        B.    If Tenant does not deliver the written statement to Landlord within the ten (10) day period, Landlord, and any
prospective purchaser or lender, may conclusively presume and rely upon the following facts: (1) that the terms and provisions of this Lease have not been changed except as otherwise
represented by Landlord; (2) that this Lease has not been canceled or terminated except as otherwise represented by Landlord; (3) that not more than one monthly installment of Base Rent
and other charges have been paid in advance; (4) there are no claims against Landlord nor any defenses or rights of offset against collection of Rent or other charges; and (5) that
Landlord is not in default under this Lease. In such event, Tenant shall be estopped from denying the truth of the presumed facts. 

13.04.    Tenant's Financial Condition.    Within ten (10) days after written
request from Landlord, Tenant shall deliver to Landlord financial statements as are reasonably required by Landlord to verify the net worth of Tenant, or any assignee, subtenant, or guarantor of
Tenant. In addition, Tenant shall deliver to any lender designated by Landlord any financial statements required by the lender to facilitate the financing or refunding of the Demised Premises. Tenant
represents and warrants to 

16

 

Landlord
that each financial statement is a true, complete, and accurate statement as of the date of the statement. All financial statements shall be confidential and shall be used only for the
purposes set forth in the Lease. 

ARTICLE FOURTEEN: ENVIRONMENTAL REPRESENTATIONS AND INDEMNITY  

14.01.    Tenant's Compliance with Environmental Laws.    Tenant, at Tenant's
expense, shall comply with all laws, rules, orders, ordinances, directions, regulations and requirements of Federal, State, county and municipal authorities pertaining to Tenant's use of the Property
and with the recorded covenants, conditions and restrictions, regardless of when they become effective, including, without limitation, all applicable Federal, State and local laws, regulations or
ordinances pertaining to air and water quality, Hazardous Materials (as defined in Section 14.05), waste disposal, air emissions and other environmental matters, all zoning and other land use
matters, and with any direction of any public officer or officers, pursuant to law, which inpose any duty upon Landlord or Tenant with respect to the use or occupancy of the Property. 

14.02.    Tenant's Indemnification.    Tenant shall not cause or permit any
Hazardous Materials to be brought upon, kept or used in or about the Property by Tenant, its agents, employees, contractors or invitees without the prior written consent of Landlord. If Tenant
breaches the obligations stated in the preceding Section or sentence, or if the presence of Hazardous Materials on the Property caused or permitted by Tenant results in contamination of the Property
or any other property, or if contamination of the Property or any other property by Hazardous Materials otherwise occurs for which Tenant is legally liable to Landlord for damage resulting therefrom,
then Tenant shall indemnify, defend and hold Landlord harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities or losses (including, without limitation, diminution in
value of the Property, damages for the loss or restriction on use of rentable or unusable space or of any amenity or appurtenance of the Property, damages arising from any adverse impact on marketing
of building space or land area, sums paid in settlement of claims; reasonable attorneys' fees, court costs, consultant fees and expert fees) which arise during or after the Lease Term as a result of
the contamination. This indemnification of Landlord by Tenant includes, without Imitation, costs incurred in connection with any investigation of site conditions or any clean-up, remedial
work, removal or restoration work required by any Federal, State or local government agency because of Hazardous Materials present in the soil or groundwater on or under the Property. Without limiting
the foregoing, if the presence of any Hazardous Materials on the Property (or any other property) caused or permitted by Tenant results in any contamination of the Property, Tenant shall promptly take
all actions at Tenant's sole expense as are necessary to return the Property to the condition existing prior to the introduction of any such Hazardous Materials, provided that Landlord's approval of
such actions is first obtained. The foregoing indemnity shall survive the expiration or termination of this Lease. 

14.03.    Landlord's Representations and Warranties.    Landlord represents and
warrants, to the best of Landlord's actual knowledge, that: (i) any handling, transportation, storage, treatment or usage of Hazardous Materials that has occurred on the Property to date has
been in compliance with all applicable Federal, State, and local laws, regulations and ordinances; and (ii) no leak, spill, release, discharge, emission or disposal of Hazardous Materials has
occurred on the Property to date and that the soil or groundwater on or under the Property is free of Hazardous Materials as of the Commencement Date, unless expressly disclosed by Landbrd to Tenant
in writing. 

14.04.    Landlord's Indemnification.    Landlord hereby indemnifies, defends and
holds Tenant harmless from any claims, judgments, damages, penalties, fines, costs, liabilities, (including sums paid in settlements of claim) or loss, including without limitation, attorneys' fees,
court costs, consultant fees, and expert fees, which arise during or after the term of this Lease from or in connection with the presence or suspected presence of Hazardous Materials in the soil or
groundwater on or under the Property, unless the Hazardous Material is released by Tenant or is present solely as a result of the 

17

 

negligence
or willful misconduct of Tenant. Without limiting the generality of the foregoing, the indemnification provided by this Section 14.04 shall specifically cover costs incurred in
connection with any investigation of site conditions or any clean-up, remedial work, removal or restoration work required by any Federal, State or local governmental authority. 

14.05.    Definition.    For purposes of this Lease, the term "Hazardous Materials"
means any one or more pollutant, toxic substance, hazardous waste, hazardous material, hazardous substance, solvent or oil as defined in or pursuant to the Resource Conservation and Recovery Act, as
amended, the Comprehensive Environmental Response, Compensation and Liability Act, as amended, the Federal Clean Water Act, as amended, or any other Federal, State or local environmental law,
regulation, ordinance, or rule, whether existing as of the date of this Lease or subsequently enacted. 

14.06.    Survival.    The representation and indemnities contained in this
Article 14 shall survive the expiration or termination of this Lease. 

ARTICLE FIFTEEN: PROFESSIONAL FEES  

15.01.    Deleted.    

ARTICLE SIXTEEN: MISCELLANEOUS  

16.01.    Disclosure.    Landlord and Tenant understand that a real estate broker is
qualified to advise on matters concerning real estate and is not expert in matters of law, tax, financing, surveying, hazardous materials, engineering, construction, safety, zoning, land planning,
architecture or the ADA. The Brokers hereby advise Tenant to seek expert assistance on such matters. Brokers do not investigate a property's compliance with building codes, governmental ordinances,
statutes and laws that relate to the use or condition of a property and its construction, or that relate to its acquisition. If Brokers provide names of consultants or sources for advice or
assistance, Tenant acknowledges that the Brokers do not warrant the services of the advisors or their products and cannot warrant the suitability of property to be acquired or leased. Furthermore, the
Brokers do not warrant that the Landlord will disclose any or all property defects, although the Brokers will disclose to Tenant any actual knowledge possessed by Brokers regarding defects of the
Demised Premises and the Property. In this regard, Tenant agrees to make all necessary and appropriate inquiries and to use diligence in investigating the Demised Premises and the Property before
consummating this Lease. Landlord and Tenant hereby agree to indemnify, defend, and hold the Brokers harmless of and from any and all liabilities, claims, debts, damages, costs, or expenses, including
but not limited to reasonable attorneys' fees and court costs, related to or arising out of or in any way connected to representations concerning matters properly the subject of advice by experts. In
addition; to the extent permitted by applicable law, the Brokers' liability for errors or omissions, negligence, or otherwise, is limited to the return of the Fee, if any, paid to the Brokers pursuant
to this Lease. 

16.02.    Force Majeure.    If performance by Landlord of any term, condition or
covenant in this Lease is delayed or prevented by any Act of God, strike, lockout, shortage of material or labor, restriction by any governmental authority, civil riot, flood, or any other cause not
within the control of Landlord, the period for performance of the term, condition or covenant shall be extended for a period equals to the period Landlord is so delayed or prevented. 

16.03.    Interpretation.    The captions of the Articles or Sections of this Lease
are to assist the parties in reading this Lease and are not a part of the terms or provisions of this Lease. Tenant shall be responsible for the conduct, acts and omissions of Tenant's agents,
employees, customers, contractors, invitees, agents, successors or others using the Demised Premises with Tenant's expressed or implied permission. Whenever required by the context of this Lease, the
singular shall include the plural and the plural shall include the singular, and the masculine, feminine and neuter genders shall each include the other. 

18

 

16.04.    Waivers.    All waivers to provisions of this Lease must be in writing and
signed by the waiving party. Landlord's delay or failure to enforce any provisions of this Lease or its acceptance of late installments of Rent shall not be a waiver and shall not prevent Landlord
from enforcing that provision or any other provision of this Lease in the future. No statement on a payment check from Tenant or in a letter accompanying a payment check shall be binding on Landlord.
Landlord may, with or without notice to Tenant, negotiate, cash, or endorse the check without being bound to the conditions of any such statement. 

16.05.    Severability.    A determination by a court of competent jurisdiction that
any provision of this Lease is invalid or unenforceable shall not cancel or invalidate the remainder of that provision or this Lease, which shall remain in full force and effect. 

16.06.    Joint and Several Liability.    All parties signing this Lease as Tenant
shall be jointly and severally liable for all obligations of Tenant. 

16.07.    Amendments or Modifications.    This Lease is the only agreement between
the parties pertaining to the lease of the Demised Premises and no other agreements are effective unless made apart of this Lease. All amendments to this Lease must be in writing and signed by all
parties. Any other attempted amendment shall be void. 

16.08.    Notices.    All notices and other communications required or permitted
under this Lease must be in writing and shall be deemed delivered, whether actually received or not on the earlier of (i) actual receipt if delivered in person or by messenger with evidence of
delivery, or (ii) receipt of an electronic facsimile transmission ("Fax") with confirmation of delivery; or (iii) upon deposit in the United States Mail as required below. Notices may be
transmitted by Fax to the Fax telephone numbers specified in Article One on the first page of this Lease, if any. Notices delivered by mail must be deposited in the U.S. Postal Service, first class
postage prepaid, and properly addressed to the intended recipient as set forth in Article One. After possession of the Demised Premises by Tenant, Tenant's address for notice purposes will be the
address of the Demised Premises unless Tenant notifies Landlord in writing of a different address to be used for that purpose. Any party may change its address for notice by delivering written notice
of its new address to all other parties in the manner set forth above. Copies of all notices should also be delivered to the Principal Broker, but failure to notify the Principal Broker will not cause
an otherwise properly delivered notice to be ineffective. 

16.09.    Attorneys' Fees.    If on account of any breach or default by any party to
this Lease in its obligations to any other party to this Lease (including but not limited to the Principal Broker), it becomes necessary for a party to employ an attorney to enforce or defend any of
its rights or remedies under this Lease, the non-prevailing party agrees to pay the prevailing party its reasonable attorneys' fees and court costs, if any, whether or not suit is
instituted in connection with the enforcement or defense. 

16.10.    Venue.    All obligations under this Lease, including but not limited to
the payment of Fees to the Principal Broker, shall be performed and payable in the county in which the property is located. The laws of the State of Texas shall govern this Lease. 

16.11.    Survival.    All obligations of any party to this Lease which are not
fulfilled at the expiration or the termination of this Lease shall survive such expiration or termination as continuing obligations of the party. 

16.12.    Binding Effect.    This Lease shall inure to the benefit of; and be
binding upon, each of the parties to this Lease and their respective heirs, representatives, successors and assigns. However, Landlord shall not have any obligation to Tenant's successors or assigns
unless the rights or interests of the successors or assigns are acquired in accordance with the terms of this Lease. 

19

 

16.13.    Consult an Attorney.    This Lease is an enforceable, legally binding
agreement. Read it carefully. The brokers involved in the negotiation of this Lease cannot give you legal advice. The parties to this Lease acknowledge that they have been advised by the Brokers to
have this Lease reviewed by competent legal counsel of their choice before signing this Lease. By executing this Lease, Landlord and Tenant each agree to the provisions, terms, covenants and
conditions contained in this Lease. 

16.14.    Offer.    The execution of this Lease by the first party to do so
constitutes an offer to lease the Demised Premises. Unless within the number of days stated in Section 1.14 above after the date of its execution by the first party to do so, this Lease is
signed by the other party and a fully executed copy is delivered to the first party, such offer to lease shall be automatically withdrawn and terminated. 

ARTICLE SEVENTEEN: ADDITIONAL PROVISIONS  

17.01.    Past Due Penalties:    It is explicitly understood as stated in this lease
agreement that the rental payments are to be delivered to the Landlord's office on or before the first day of the month. If the rental payment is not received on or before the fifth day of the month,
then a service charge of ten (10%) percent of the monthly rental is due and payable in addition to the monthly rental. 

17.02.    The Tenant will be permitted to place a temporary building on the property to be utilized for the use of the Tenant at any time
after execution of this Agreement. No cash monthly rental payment will be due to Landlord during the construction period and pending the issuance of a certificate of occupancy for the permanent
building covered under this Lease. 

	LANDLORD	 	TENANT
	

710-14 North Watson, LLC
	
 	

Sunbelt Bank

	

By [Signature]:	
 	

/s/  RICHARD SEIB      
	
 	

By [Signature]:	
 	

/s/  JERRY BURNETT      

	Name:	 	 
	 	Name:	 	 

	Title:	 	 
	 	Title:	 	 

	Date of Execution:	 	8/2/04
	 	Date of Execution:	 	7/28/04

	
PRINCIPAL BROKER	
 	
COOPERATING BROKER
	

 
	
 	

 

	

By [Signature]:	
 	

 
	
 	

By [Signature]:	
 	

 

	Name:	 	 
	 	Name:	 	 

	Title:	 	 
	 	Title:	 	 

20

EXHIBIT "B"

Site Plan 

        

  

EXHIBIT "C" 

Rental
Summary 

ARTICLE
ONE: 

	1.05
	Lease
Term:    Commencing on the last to occur, the issuance of a certificate of occupancy for the subject space or January 1, 2005.

	1.06
	Effective
as of the Commencement Date as in Section 1.05 of the lease, the minimum guaranteed rental for the Premises shall be as follows: 

Tenant
agrees to pay the minimum guaranteed rental at the place provided in the lease on the first (1s`) day of each month in advance. 

        Attached
herein is a computer generated print-out showing monthly payments based upon a $28.00 per square foot rental rate escalating at 3% per year through year 20. 

EXHIBIT "C"

Rental Summary—7240 South Highway 287, Arlington 

	 
	 	Year 1
	 	Year 2
	 	Year 3
	 	Year 4
	 	Year 5
	 	Year 6
	 	Year 7
	 	Year 8
	 	Year 9
	 	Year 10
	 	Year 11
	 	Year 12

	Monthly

Rental	 	11,667.00	 	12,017.01	 	12,377.52	 	12,748.85	 	13,131.31	 	13,525.25	 	13,931.01	 	14,348.94	 	14,779.41	 	15,222,79	 	15,679.47	 	16,149.86

	 
	 	Year 13
	 	Year 14
	 	Year 15
	 	Year 16
	 	Year 17
	 	Year 18
	 	Year 19
	 	Year 20
	 	Year 21

	Monthly

Rental	 	16,634.35	 	17,133.38	 	17,647.38	 	18,176.81	 	18,722.11	 	19,283.77	 	18,862,29	 	20,458.16	 	21,071.90

        Said rental of the estimated 5,000 square foot building will be adjusted to reflect the actual measurable square footage of the building as built.
This calculation shall be at 528.00 times the leasable square footage of the building adjusted annually to reflect a 3% increase. 

NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS & ADDENDUM A TO LEASE  

EXPENSE REIMBURSEMENT  

Demised Premises/Address: 3000
S. Watson Rd, Arlington

                                         
      ___________________________________________________

                                         
      [Check all boxes which apply. Boxes not checked do not apply to this Lease.] 

        A. Expense Reimbursement.    Tenant shall pay the Landlord as additional Rent a portion of the following expenses (collectively
the "Reimbursement") which are incurred by or assessed against the Demised Premises [check all that are to apply]: 

ý  Ad
Valorem Taxes;

ý  Insurance Premiums;

ý  Common Area Maintenance (CAM) Expenses;

ý  Rating Expenses;

ý  Roof and Structural Maintenance Expenses; 

        B. Expense Reimbursement Limitations.    The amount of Tenant's Reimbursement shall be determined by one of the following
methods as described in Section 4 below [check only one]: 

o  Base
Year/Expense Stop Adjustment;

o  Pro Rata Adjustment;

o  Fixed Amount Adjustment;

o  Net Lease Provisions. 

        C. Expense Reimbursement Payments.    Tenant agrees to pay any end-of-year lump sum Reimbursement within
thirty (30) days after receiving an invoice from Landlord. Any time during the Lease Term (or any renewals or extensions) Landlord may direct Tenant to pay monthly an estimated portion of the
projected future Reimbursement amount. Any such payment directed by Landlord shall be due and payable monthly on the same day that the Base Rent is due. Landlord may, at Landlord's option and to the
extent allowed by applicable law, impose a Late Charge on any Reimbursement payments which are not actually received by Landlord on or before the due date, in the amount and manner set forth in
Section 3.03 of this Lease. Any Reimbursement relating to partial calendar years shall be prorated accordingly. Tenant's Pro Rata Share of such Reimbursements shall be based on the square
footage of useable area contained in the Demised Premises in proportion to the square footage of useable building area of the Property. Tenant may audit or examine those items of expense in Landlord's
records which relate to Tenant's obligations under this Lease. Landlord shall promptly refund to Tenant any overpayment which is established by an audit or examination. If the audit or examination
reveals an error of more than five percent (5%) over the figures billed to Tenant, Landlord shall pay the reasonable cost of the audit or examination. 

        D. Definitions.    

        1.     Ad Valorem Taxes. All general real estate taxes, general and special assessments, parking surcharges, rent taxes, and
other similar governmental charges levied against the Property for each calendar year. 

        2.     Insurance Premiums. All Landlord's insurance premiums attributable to the Property, including but not limited to insurance
for fire, casualty, general liability, property damage, medical expenses, and extended coverage, and loss of rents coverage for six months' Rent. 

        3.     Common Area Maintenance Expenses.. Common area maintenance expenses ("CAM") means all costs of maintenance, inspection and
repairs of the common areas of the Property,, including but not limited to those costs for security, lighting, painting, cleaning, decorations and fixtures, utilities, ice and snow removal, trash
disposal, project signs, minor roof defects, pest control, project promotional expenses, property owners' association dues, wages and salary costs of maintenance personnel, and other expenses
benefiting all the Property which may be incurred by Landlord, in its discretion, including sales taxes and a reasonable service charge for the administration thereof The "common area" is defined as
that part of the Property intended for the collective use of all tenants including, but not limited to, the parking areas, driveways, loading areas, landscaping, gutters and downspouts, plumbing,
electrical systems, roof, exterior walls, sidewalks, malls, promenades (enclosed or otherwise), meeting rooms, doors, windows, corridors and public rest rooms. CAM does not include depreciation on
Landlord's original investment, cost of tenant improvements, real estate brokers' fees, Landlords management office and overhead expenses, or interest or depreciation on capital investments. 

        4.     Operating Expenses. All costs of ownership, building management, maintenance, repairs and operation of the Property,
including but not limited to taxes, insurance, CAM, reasonable management fees, wages and salary costs of building management personnel, overhead and operational costs of a management office,
janitorial, utilities, and professional services such as accounting and legal fees. Operating Expenses do not include the capital cost of management office equipment and furnishings, depreciation on
Landlords original investment, roof and structural. maintenance, the cost of tenant improvements, real estate brokers' fees, advertising, or interest or depreciation on capital investments. 

        5.     Roof and Structural Maintenance Expenses. All costs of maintenance, repair and replacement of the roof, roof deck,
flashings, skylights, foundation, floor slabs, structural components and the structural soundness of the building in general. 

        6.     Base Year/Expense Stop Adjustment. Tenant shall pay to Landlord as additional rent Tenant's Pro Rata Share of increases in
Landlord's Ad Valorem Taxes; Insurance Premiums, CAM Expenses, Operating Expenses, and/or Roof and Structural Maintenance Expenses, whichever are applicable, for the Property for any calendar year
during the Lease Term or during any Extension of this Lease, over [check only one!: 

        o     a.
Such amounts paid by Landlord for the Base Year _____________ , or 

        o     b.
$_________________ per square foot of floor area (as set forth in Section 1.04.C) per year. 

        7.     Pro Rata Adjustment. Tenant shall pay to Landlord as additional Rent Tenant's Pro Rata Share of the total amount of
Landlord's Ad Valorem Taxes, Insurance Premiums, CAM, Operating Expenses, and/or Roof and Structural Maintenance Expenses, whichever are applicable, for every calendar year during the Lease Term and
during any extension of this Lease. 

        8.     Fixed Amount Adjustment. Tenant shall pay to Landlord as additional Rent the following monthly amounts as Tenant's
Reimbursement to Landlord for the applicable expenses which are incurred by or assessed against the Property:. 

	 	Ad Valorem Taxes	 	$ N/A	per month.	 	 
	 	 	 	
	 	 	 
	 	Insurance Premiums	 	$ N/A	per month.	 	 
	 	 	 	
	 	 	 
	 	CAM Expenses	 	$ N/A	per month.	 	 
	 	 	 	
	 	 	 
	 	Operating Expenses	 	$ N/A	per month.	 	 
	 	 	 	
	 	 	 
	 	Roof and Structural Maintenance Expenses	 	$ N/A	per month.	 	 
	 	 	 	
	 	 	 

        9.     Net Lease Provisions. Notwithstanding anything contained in this Lease to the contrary in Article Seven or otherwise,
Tenant shall be responsible for paying Tenant's Pro Rata Share of all costs of ownership, maintenance, repairs, replacements, and operation of the Demised Premises and the Property, including but not
limited to all costs of Ad Valorem Taxes, Insurance Premiums, Common Area Maintenance Expenses, Operating Expenses, aril Roof and Structural Maintenance Expenses. 

        E. o Gross-Up Provisions. [Check this only if
applicable.]    If the Property is a multi-tenant building and is not fully occupied during the Base Year or any portion of the
Lease Term, an adjustment shall be made in computing the variable costs for each applicable calendar year. Variable costs shall include only those items of expense that vary directly proportionately
to the occupancy of the Property. Variable costs which are included in the CAM and Operating Expenses shall be increased proportionately to the amounts that, in Landlord's reasonable judgment, would
have been incurred had ninety percent (90%) of the useable area of the Property been occupied during those years. 

ADDENDUM B

ATTACHED TO AND MADE A PART

OF

LEASE AGREEMENT  

RENEWAL OPTION TO EXTEND  

Tenant
has two (2) option(s) (as to each, an "Option") to renew and to extend the Term of this Lease for Eighty-four (84) months each [(the "Renewal
Term")], to follow consecutively on the expiration of the Term of this Lease, provided that at the time that an Option to renew is exercised, this Lease is in full force and effect and
Tenant is not in default hereunder. An Option shall be exercised by Tenant's giving to Landlord written notice of its intention to renew and extend the Term of this Lease at least six
(6) months before the expiration date of the initial Term [or Renewal Term, as appropriate] of this Lease, including those providing for adjustments to the rent during
the Renewal Term. 

NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS®

ADDENDUM E TO LEASE

GUARANTEE  

Demised Premises/Address: 3000 S. Watson Rd, Arlington

                                         
      ___________________________________________________

        A.    In order to induce 710-14 North Watson, LLC ("Landlord") to execute the Lease (the "Lease") with Sunbelt Bank
("Tenant") for the Demised Premises described above in Tarrant County, State of Texas, the undersigned (the "Guarantor," whether one or more than one) has. guaranteed and by this instrument does
hereby guarantee the full payment and performance of all liabilities, obligations, and duties (including but not limited to maintenance and the, payment of Rent) imposed upon Tenant under the terms of
the Lease, as if Guarantor had executed the Lease as Tenant. 

        B.    Guarantor hereby waives notice of acceptance of this guarantee and all other notices in connection herewith or in
connection with the liabilities, obligations, and duties guaranteed hereby, including notices of default by Tenant under the Lease, and waives diligence, presentment, and suit on the part of Landlord
in the enforcement of any liability, obligation, or duty guaranteed hereby. 

        C.    Landlord shall not be first required to enforce against Tenant or any other person any liability, obligation, or duty
guaranteed hereby before seeking enforcement thereof against Guarantor. Suit may be brought and maintained against Guarantor by Landlord to enforce any liability, obligation, or duty guaranteed hereby
without joinder of Tenant or any other person. The liability of Guarantor shall not be affected by any indulgence, compromise, settlement, or variation of terms which may extended to Tenant by
Landlord or agreed upon by Landlord and Tenant, and shall not be impaired, modified, changed, released, or limited in any manner whatsoever by any impairment, modification, change, release, or
limitation of the liability of Tenant or its estate -in bankruptcy or of any remedy for the enforcement thereof; resulting from the operation of any present or future provision of the
United States Bankruptcy Code, or any similar law or statute of the United States or any state thereof. Landlord and Tenant, without notice to-or consent by the Guarantor, may at any time
or times enter into such extensions;. amendments, assignments, subleases, or other covenants respecting the Lease as. they may deem appropriate; and Guarantor shall not be released thereby, but shall
continue to be fully liable for the payment and performance of all liabilities, obligations, and duties of Tenant under the Lease as so extended, amended, assigned or otherwise modified. 

        D.    Other agreements similar to this guarantee may, at Landlord's sole option and discretion, be executed by other persons
with respect to the Lease. This Guarantee shall be cumulative of any such agreements and the, liabilities and obligations of Guarantor under this Guarantee shall not be affected or diminished by
reason of such other agreements. Moreover, if Landlord obtains. another signature of more than one guarantor on this Guarantee or by obtaining additional guarantee agreements, or both, Guarantor
agrees that Landlord, in Landlord's sole discretion, may (i) bring suit against all guarantors of the Lease, jointly and severally, or against any one or more of them, (ii) compound or
settle with any one or more of the guarantors for such consideration as Landlord may deem proper, and (iii) release one or more of the,guarantors from liability such action shall impair the
rights of Landlord to enforce the Lease against any remaining guarantor or guarantors, including Guarantor. 

        E.    If Guarantor is a corporation, then the undersigned officer personally represents and warrants that the Board of Directors
of the corporation, by unanimous consent or in a duly held meeting, has authorized the execution of this Guarantee and determined that this Guarantee may reasonably be expected to benefit the
corporation. 

        F.    If Landlord employs an attorney to present, enforce, or defend any of Landlord's rights or remedies under this Guarantee,
Guarantor shall pay Landlord's reasonable attorney's fees and court costs. 

        G.    This Guarantee shall be binding upon Guarantor and Guarantor's successors, heirs, executors, and administrators, and shall
inure to the benefit of Landlord and Landlord's successors, heirs, executors, administrators, and assigns. . 

EXECUTED
on the dates beneath the signatures below, to be effective as of Effective Date of the Lease. 

	
  GUARANTOR	
 	

GUARANTOR
	

Sunbelt Bancshares, Inc.
	
 	

    

	

By [Signature]: /s/ Jerry Burnett
	
 	

By [Signature]:

	

Name: Jerry Burnett
	
 	

Name:

	

Title:
	
 	

Title:

	

Home Address:
	
 	

Home Address:

	

    
	
 	

    

	

Social Security No.:
	
 	

Social Security No.:

	

Drivers License No.:
	
 	

Drivers License No.:                State:

	

Drivers License No.:                State:
	
 	

    

	

Date of Execution: 7/28/04
	
 	

Date of Execution:

[If a person is signing as an officer of a corporate Guarantor, specify the person's corporate title.]

ADDENDUM F

ATTACHED TO AND MADE A PART

OF

LEASE AGREEMENT  

TENANT FINISHOUT ALLOWANCE  

        PLANS AND SPECIFICATIONS; PERMITS AND CERTIFICATES OF OCCUPANCY; PAYMENT FOR WORK: 

        1.     Defined
Terms: The work to be completed in the Demised Premises, whether or not all of it is described herein is called the "Leasehold Improvements." The costs to
complete the building to a "white box" configuration are to be Landlord's responsibility and are called "Landlord's Costs." The costs to complete all of the Leasehold Improvements, including any not
described herein, are called "Tenant's Cost" Other terms are defined below. 

        2.     Plans
and Specifications. The Plans will jointly be prepared and approved by the Landlord and Tenant. 

        3.     Building
Permit, Certificate of Occupancy. Unless the Landlord has expressly agreed to do so in writing. Tenant is responsible for obtaining all necessary building and
other permits for construction of the Leasehold Improvements and for obtaining a certificate of occupancy permitting unconditional occupancy and use of the Demised Premises after completion of the
Leasehold Improvements, and shall provide a true copy to Landlord on Tenant's receipt thereof. Tenant indemnifies and agrees to defend and hold harmless Landlord from and against liability, cost and
expenses from Tenant's occupancy and/or conduct of business from the Demised Premises without first obtaining a certificate of occupancy. 

        4.     Payment
for Work. 

        (a)   Landlord
shall, in addition to paying Landlord's Costs, provide to Tenant an allowance not to exceed $240,000.00 ("the Allowance") to be applied against Tenant's Costs.
So much of the Allowance for which Tenant has qualified by expending funds to complete Leasehold Improvements shall be paid to Tenant on completion of the Leasehold Improvements and satisfaction of
the following 

	i.
	Landlord
has approved the Leasehold Improvements:

	ii.
	Landlord
has received invoices or other evidence reasonably satisfactory to it confirming the amount expended by Tenant;

	iii.
	Landlord
has received from Tenant a final Certificate of Occupancy issued by the City or other municipal or governmental agency authorized to issue a Certificate of
Occupancy for the Demised Premises; and

	iv.
	Landlord
has received from Tenant or Tenant's general contractor a release of lien and an indemnity holding Landlord harmless from any obligation or lien whatsoever that
may have been incurred by Tenant, or Tenant's contractor or subcontractors, during the construction of the Demised Premises. 

Under
no circumstances shall Tenant be paid cash by Landlord other than in reimbursement of Tenant's Costs actually incurred by Tenant, but in no event to exceed the Allowance. 

        (b)   If
Landlord (or its affiliate) is serving as contractor or construction manager with respect to Leasehold Improvements, then Tenant shall pay to Landlord the amount of
Tenant's Costs, as follows: 

	i.
	Tenant
shall pay to Landlord before the commencement of construction of the Leasehold Improvements, an amount equal to fifty percent (50%) of Tenant's Costs (as then
reasonably estimated by Landlord in written documents delivered to Tenant) 

	ii.
	After
substantial completion of the Leasehold Improvements, but before occupancy of the Demised Premises by Tenant, Tenant shall pay to Landlord an amount equal to
eighty percent (80%) of Tenant's Costs as then reasonably estimated by Landlord, less payments received by Landlord according to (a) above; and

	iii.
	As
soon as the final accounting can be prepared and submitted to Tenant, Tenant shall pay to Landlord the entire unpaid balance of the actual Tenant's Costs incurred in
completing the Leasehold Improvements. 

Tenant
shall promptly pay all Tenant's Costs and shall comply fully with any contract or other agreement therefore, to the end that there is no basis for a mechanic's or material man's lien claim
against the Demised Premises or the Center. The amounts payable under subsection (b) constitute rent due pursuant to this Lease at the times specified herein and failure to make any payments
with ten (10) days after written notice that the payments are past due constitutes and Event of Default under Article 11.01 of this Lease, entitling Landlord to all of its remedies under
Article 11.02. If Tenant requests any changes in the Final Plans, then any of those changes that are approved by Landlord shall become part of the Final Plans, and the costs resulting from the
changes shall be added to Tenant's Costs, and shall be paid in accordance with the provision set out in this Exhibit "D". 

        5.     Construction.
Construction of the Leasehold Improvements shall be performed by Landlord and its contractors or by Tenant's contractor, so long as Tenant's Contractor is a
reputable, experienced commercial contractor and has been approved by Landlord, as agreed in writing between Landlord and Tenant. Construction shall begin promptly after issuance of any necessary
building permit(s). 

        6.     Delay.
Tenant shall pay any and all costs and expenses incurred by Landlord in connection with any delay in the commencement or completion of the Leasehold Improvements.,
and any increase in the cost of items included in Landlord's Costs, caused by (i) Tenant's failure to timely prepare and submit Tenant's Plans; (ii) Tenant's specification of
non-building standard improvements or finishes; (iii) any changes additions or alterations to the Final Plans (or the Leasehold Improvements covered thereby) that are requested by
Tenants; and (iv) any other delay requested or caused by Tenant 

        7.     Default.
A default by Tenant under this Work Letter is an Event of Default under the Lease and entities Landlord to any remedies under the Lease (notwithstanding that the
Term thereof has not commenced). 

NORTH TEXAS COMMERCIAL ASSOCIATION OF REALTORS®

ADDENDUM G TO LEASE

RULES AND REGULATIONS  

Demised Premises/Address: ___________________________________________________

        A. Application.    The following standards shall affect and shall be observed by Tenant, Tenant's employees and invitees, for
the mutual safety, cleanliness, care, protection, comfort and convenience of all tenants and occupants of the Property, and shall be applicable to the building(s), to the parking garages, if any, to
the common areas, driveways, parking lots, and to the Demised Premises, including the land situated beneath and any appurtenances thereto. 

        B. Consent Required.    Any exception to these Rules and Regulations must first be approved in writing by Landlord. For purposes
of these Rules and Regulations, the term Landlord" includes the building manager, the building manager's employees, and any other agent or designee authorized by Landlord to manage or operate the
Property. 

C. Rules and Regulations: 

        1.     Tenant
may not conduct any auction, "flea market" or "garage sale" on the Demised Premises nor store any goods or merchandise on the Property except for Tenant's own
business use. Food may not be prepared in the Demised Premises except in small amounts for consumption by Tenant. Vending machines or dispensing machines may not be placed in the Demised Premises
without Landlord written approval. The Demised Premises may not be used or occupied as sleeping quarters or for lodging purposes. Animals may not be kept in or about the Property. 

        2.     Tenant
shall not obstruct sidewalks, driveways, loading areas, parking areas, corridors, hallways, vestibules, stairs and other similar areas designated for the
collective use of tenants, or use such areas for Tenant's storage, temporary or otherwise, or for any purpose other than ingress and egress to and from the Demised Premises. Tenant shall comply with
parking rules and guidelines as may be posted on the Property from time to time. 

        3.     Tenant
shall not make any loud noises, unusual vibrations, unpleasant odors, objectionable or illegal activities on the Property. Tenant shall not permit the operation of
any equipment in the Demised Premises that could annoy other occupants of the Property. Tenant shall not interfere with the possession of other tenants of the Property. 

        4.     Tenant
may not bring any flammable, explosive, toxic, noxious, dangerous or hazardous materials onto the Property. 

        5.     Installation
of security systems, telephone, television and other communication cables, fixtures and equipment must comply with Section 7.04 of the Lease, except
that routine installation and-construction of normal communication devices which do not require any holes in the roof or exterior walls of the Property do not require the written approval
of Landlord. 

        6.     Movement
into or out of the building through public entrances, lobbies or corridors which requires use of a hand truck, dolly or pallet jack to carry freight, furniture,
office equipment; supplies sad other large or heavy material, must be limited to the service entrances and freight elevators only and must be done at times and in a manner so as not to unduly
inconvenience other occupants of the Property. All wheels for such use must have rubber tires and edge guards to prevent damage to the building. Tenant shall be responsible for and shall pay all costs
to repair damages to the burl caused by the movement of materials by Tenant. 

        7.     Requests
by Tenant for building services, maintenance and repair must be made in writing to the office of the building manager designated by Landlord and must be dated.
Tenant shall give prompt written notice to Landlord of any significant damage to or defects in the Demised Premises or the Property, especially including plumbing, electrical and mechanical systems,
heating, ventilating and air conditioning systems; roofs, windows, doors, foundation and structural components, regardless of whose responsibility it is to repair such damage. 

        8.     Harmful
liquids, toxic wastes, bulky objects, insoluble substances and other materials Which may cause clogging, stains or damage to plumbing fixtures or systems must not
be placed in the lavatories, water closets, sinks, or drains. Tenant must pay the costs to repair and replace drains, plumbing fixtures and piping which is required because of damage caused by Tenant. 

        9.     Tenant
shall cooperate with Landlord and other occupants of the Property in keeping the Property. and the Demised Premises neat and clean. Nothing may be swept, thrown or
left in the corridors, stairways; elevator shafts, lobbies, loading areas, parking lots or any other common areas on the Property. All trash and debris must be properly placed in receptacles provided
therefor. 

        10.   Landlord
has the power and authority to regulate the weight and position of heavy furnishings and equipment on the floor of the Demised Premises, including safes, groups
of filing cabinets, machines, and any other item which may overload the floor. Tenant shall notify the Landlord when heavy items are to be taken into or out of the building, and the placement and
transportation of heavy items may be done only with the prior written approval of Landlord. 

        11.   No
window screens, blinds, draperies, awnings, solar screen films, window ventilators or other materials visible from the exterior of the Demised Premises maybe placed
in the Demised Premises without Landlord's approval. Landlord is entitled to control all lighting that may be visible from the exterior of the building. 

        12.   No
advertisement, sign, notice, handbill, poster or banner may be exhibited, distributed, painted or affixed upon the Property. No directory of tenants is allowed on the
Property other than that provided by Landlord. 

        13.   Tenant
agrees to cooperate with and assist Landlord in the prevention of peddling, canvassing and soliciting on the Property. 

        14.   Tenant
accepts any and all liability for damages and injuries to persons and property resulting from the serving and sales of alcoholic beverages on or from the
Property. 

        D. Revisions.    Landlord reserves the right to revise and/or rescind any of these Rules and Regulations and to make additional
rules which Landlord may determine are necessary from time to time for the safety, care, cleanliness, protection, comfort and convenience of the tenants and occupants of the Property and for the care,
protection and cleanliness of the building. Revisions and additions will be binding upon the Tenant as if they had been originally prescribed herein when furnished in writing by Landlord to Tenant,
provided the additions and revisions apply equally to all tenants occupying the Property. 

        E. Enforcement.    Any failure or delay by Landlord in enforcing these Rules and Regulations will not prevent Landlord from
enforcing these Rules and Regulations in the future. If any of these Rules and Regulations is determined to be unenforceable, it shall be severed from this Lease without affecting the remainder of
these Rules and Regulations. 

Addendum "I"  

        Notwithstanding any other provisions contained in this Lease, in the event Tenant or its successors or assignees shall become insolvent or bankrupt, or if it or
their interest under this Lease shall be levied upon or sold under execution or other legal process by any depository institution supervisory authority ("Authority"), Landlord may, in either such
event, terminate this Lease only with the concurrence of any receiver or liquidator appointed by such Authority, provided, that in the event this Lease is terminated by the receiver or liquidator, the
maximum claim of Landlord for rent, damages or indemnity for injury resulting from the termination, rejection or abandonment of the unexpired Lease shall be by law no greater than an amount equal to
all accrued and unpaid rent to the date of termination. 

        Termination
for Lack of Federal Approval. The obligation of Lessee to be bound under the terms of this Lease is conditioned on Lessee obtaining all necessary approvals to operate as a
state bank. Lessee shall promptly pursue all necessary approvals for it to operate as a state bank. 

RIGHT OF FIRST REFUSAL FOR ADDITIONAL SPACE  

        A.    During this initial Right of First Refusal contract period, 710-14 North Watson LLC ("710-14NW")
shall have a right of first refusal (the "Right of First Refusal") to develop for lease any space or facility to be used by Sunbelt Bank, or Sunbelt Banc Shares, Inc.("Sunbelt") anywhere
Sunbelt elects to conduct operations. When Sunbelt receives a legally sufficient offer which Sunbelt desires to accept to lease Additional Space from a third party, Sunbelt shall present the details
of the offer in writing to 710-14NW and 710-14NW shall thereafter have twenty-one (21) days in which to accept or decline to meet the offer in writing. If
710-14NW rejects the offer or fails to properly and timely accept the offer, upon substantially the same terms and conditions set forth in the offer, then Sunbelt shall be free to lease
the Additional Space from the third party on the same terms and conditions offered to 710-14NW. If Sunbelt does enter into a lease with a third party, the Right of First Refusal shall
continue to apply and Sunbelt shall be required to submit any future offer for any additional lease to 710-14NW in the foregoing manner. 

        B.    As consideration for this Right of First Refusal For Additional Space, 710-14NW shall grant to Sunbelt the
separate Temporary Building Occupancy Agreement wherein a temporary building of modular design shall be permitted to be placed upon any proposed and agreed property to be developed for use by Sunbelt
and it shall be allowed to function and remain until such time as the to-be-built permanent building is completed and can be legally occupied by Sunbelt. Sunbelt shall not be
required to pay any monthly cash rental amount for the land use during the construction period of the permanent building. 

        C.    Term: 20 Years and 0 Months beginning on January 1, 2005 and ending on December 31, 2025. 

	

AGREED TO:	
 	

 
	

710-14 North Watson LLC	
 	

Sunbelt Bank
	

By: /s/ Richard Seib	
 	

By: /s/ Jerry Burnett
	

Name: Richard Seib	
 	

Name: Jerry Burnett
	

Title:	
 	

Title: Chairman & CEO
	

Date: 8/2/04	
 	

Date: 7/29/04

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                                                                 Exhibit 4.1

                                                           Execution Version

                         LOAN AND WARRANT AGREEMENT

         This Loan and Warrant Agreement is entered into and dated as of
February 9, 2005 (as amended, supplemented or otherwise modified from time
to time, together with the Disclosure Schedule, this "AGREEMENT"), among
Zoltek Companies, Inc., a Missouri corporation (the "BORROWER"), the Lenders
identified on the signature pages hereto (each, a "LENDER" and collectively,
the "LENDERS"), and Omicron Master Trust, a Bermuda business trust ("OMT"),
as administrative agent for the Lenders (in such capacity, the
"ADMINISTRATIVE AGENT").

         WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Borrower desires to borrow certain sums from each of the
Lenders and, in consideration thereof issue certain notes and warrants to
each of the Lenders, and each Lender, severally and not jointly, desires to
make a loan to the Borrower and accept such notes and warrants from the
Borrower, all pursuant to the terms set forth herein.

         NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained
in this Agreement, and for other good and valuable consideration the receipt
and adequacy of which are hereby acknowledged, the Borrower and the Lenders
agree as follows:

                                 ARTICLE I.

                                 DEFINITIONS

         1.1. Definitions. In addition to the terms defined elsewhere in
              -----------
this Agreement, when used herein the following terms shall have the meanings
set forth in this Section 1.1:

                  "ACTION" means any action, suit, inquiry, notice of
         violation, proceeding (including any partial proceeding such as a
         deposition) or investigation pending or threatened in writing
         against or affecting the Borrower, any Subsidiary or any property
         of the Borrower or any Subsidiary before or by any court,
         arbitrator, governmental or administrative agency, regulatory
         authority (federal, state, county, local or foreign), stock market,
         stock exchange or trading facility.

                  "AFFILIATE" means, with respect to any Person, any other
         Person that, directly or indirectly through one or more
         intermediaries, controls or is controlled by or is under common
         control with such Person, as such terms are used in and construed
         under Rule 144.

                  "BORROWER COUNSEL" means Thompson Coburn LLP.

                  "BUSINESS DAY" means any day except Saturday, Sunday and
         any day that is a federal legal holiday or a day on which banking
         institutions in the State of New York are authorized or required by
         law or other governmental action to close.

                  "CAPITAL LEASE OBLIGATIONS" of any Person shall mean the
         obligations of such Person to pay rent or other amounts under any
         lease of (or other arrangement conveying

         the right to use) real or personal property, or a combination
         thereof, which obligations are required to be classified and accounted
         for as capital leases on a balance sheet of such Person under GAAP
         and, for the purposes of this Agreement, the amount of such
         obligations at any time shall be the capitalized amount thereof at
         such time determined in accordance with GAAP.

                  "CASH EQUIVALENTS" means:

                  (a) investments in Debt obligations maturing within one year
from the date of acquisition thereof to the extent the principal thereof and
interest thereon is backed by the full faith and credit of the United States
of America;

                  (b) investments in commercial paper maturing within 180 days
or less from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard & Poor's
Ratings Services, a division of The McGraw Hill Companies, or any successor
thereto, or from Moody's Investors Service, Inc. or any successor thereto;

                  (c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of not
less than $500,000,000, in each case denominated in dollars; and

                  (d) money market mutual funds, at least 90% of the
investments of which are in cash or investments contemplated by clauses (a),
(b) and (c) of this definition.

                  "CLOSING" means the closing of the loan and the purchase
         and sale of Securities pursuant to Section 2.1.

                  "CLOSING DATE" means the Business Day immediately
         following the date on which all the conditions set forth in
         Sections 6.1 and 6.2 hereof are satisfied or waived by the
         appropriate party.

                  "COMMISSION" means the U.S. Securities and Exchange
         Commission.

                  "COMMON STOCK" means the common stock of the Borrower,
         $0.01 par value per share, and any securities into which such
         common stock may hereafter be reclassified.

                  "COMMON STOCK EQUIVALENTS" means any securities of the
         Borrower or any Subsidiary which entitle the holder thereof to
         acquire Common Stock at any time, including without limitation, any
         Debt, preferred stock, rights, options, warrants or other
         instrument that is at any time convertible into or exchangeable
         for, or otherwise entitles the holder thereof to receive, Common
         Stock or other securities that entitle the holder to receive,
         directly or indirectly, Common Stock.

                  "CONTINGENT OBLIGATION" with respect to any Person, any
         obligation of such Person arising from any guaranty, indemnity or
         other assurance of payment or

                                     2

         performance of any Debt, lease, dividend or other obligation ("primary
         obligations") of any other Person (the "primary obligor") in any
         manner, whether directly or indirectly, including (i) the direct
         or indirect guaranty, endorsement (other than for collection or
         deposit in the ordinary course of business), co-making, discounting
         with recourse or sale with recourse by such Person of the obligation
         of a primary obligor, (ii) the obligation to make take or pay or
         similar payments, if required, regardless of nonperformance by any
         other party or parties to an agreement, (iii) any obligation of such
         Person, whether or not contingent, (A) to purchase any such primary
         obligation or any property constituting direct or indirect security
         therefor, (B) to advance or supply funds (1) for the purchase or
         payment of any such primary obligations or (2) to maintain working
         capital or equity capital of the primary obligor or otherwise to
         maintain the net worth or solvency of the primary obligor, (C) to
         purchase property, securities or services primarily for the purpose
         of assuring the owner of any such primary obligation of the ability
         of the primary obligor to make payment of such primary obligation
         or (D) otherwise to assure or hold harmless the holder of such
         primary obligation against loss in respect thereof; provided,
         however, that the term "Contingent Obligation" shall not include
         (i) any product warranties extended in the ordinary course of
         business, (ii) indemnities made to officers and directors of any
         such Person whether pursuant to the governing organizational
         documents of such Person or otherwise and (iii) any environmental
         indemnities. The amount of any Contingent Obligation shall be
         deemed to be an amount equal to the stated or determinable amount
         of the primary obligation with respect to which such Contingent
         Obligation is made (or, if less, the maximum amount of such primary
         obligation for which such Person may be liable pursuant to the
         terms of the instrument evidencing such Contingent Obligation) or,
         if not stated or determinable, the maximum reasonably anticipated
         liability with respect thereto (assuming such Person is required to
         perform thereunder), as determined by such Person in good faith.

                  "DEBT" as applied to a Person means, without duplication:
         (i) all items which in accordance with GAAP would be included in
         determining total liabilities as shown on the liability side of a
         balance sheet of such Person as of the date as of which Debt is to
         be determined, including Capital Lease Obligations; (ii) all
         Contingent Obligations of such Person; (iii) all reimbursement
         obligations in connection with letters of credit or letter of
         credit guaranties issued for the account of such Person; and (iv)
         in the case of a Borrower (without duplication), the Notes. The
         Debt of a Person shall include any recourse Debt of any partnership
         or joint venture in which such Person is a general partner or joint
         venturer.

                  "DISCLOSURE SCHEDULE" means the Disclosure Schedule
         attached to this Agreement.

                  "DOLLARS" means U.S. dollars.

                  "EFFECTIVE DATE" means the date that a Registration
         Statement is first declared effective by the Commission.

                  "ELIGIBLE MARKET" means any of the New York Stock
         Exchange, the American Stock Exchange, the Nasdaq National Market
         or the Nasdaq SmallCap Market.

                                     3

                  "EQUITY INTEREST" means (i) shares of corporate stock,
         partnership interests, membership interests and any other interest
         that confers on a Person the right to receive a share of the
         profits and losses of, or a distribution of the assets of, the
         issuing Person and (ii) all warrants, options or other rights to
         acquire any Equity Interest set forth in clause (i) of this defined
         term.

                  "EXCHANGE ACT" means the U.S. Securities Exchange Act of
         1934, as amended.

                  "EVENT OF DEFAULT" has the meaning assigned to such term
         in the Notes.

                  "GAAP" means U.S. generally accepted accounting principles
         as in effect from time to time applied on a consistent basis during
         the periods involved.

                  "LENDER PERCENTAGE" means, with respect to any Lender as
         of any date, the percentage equal to a fraction the numerator of
         which shall be the outstanding principal balance of such Lender's
         Notes and the denominator of which shall be the aggregate
         outstanding principal balance of all Notes.

                  "LIEN" means (a) any lien, charge, claim, security
         interest, encumbrance, right of first refusal or other restriction,
         wherever created or charged, (b) with respect to any property, the
         interest of a vendor or a lessor under any conditional sale
         agreement, capital lease or title retention agreement relating to
         such property, and (c) in the case of securities, any purchase
         option, call or similar right of a third party with respect to such
         securities.

                  "LOAN" has the meaning set forth in Section 2.1.

                  "LOAN AMOUNT" means, with respect to each Lender, the loan
         amount indicated below such Lender's name on its signature page of
         this Agreement.

                  "MORTGAGE CONDITIONS ARE SATISFIED" means Borrower's
         Subsidiary, Zoltek Properties, Inc. ("ZPI") has granted to the
                                               ---
         Lenders: (i) a first priority lien on ZPI's interest in the real
         estate owned by ZPI and commonly referred to as 3101 McKelvey Road,
         St. Louis, Missouri, (ii) a first priority lien on ZPI's interest
         in the leasehold estated owned by ZPI with respect to the real
         estate commonly referred to as 11 Missouri Research Park, St.
         Charles, Missouri and (iii) a second priority lien on ZPI's
         interest in the real estate owned by ZPI and commonly referred to
         as 1221 Fulwiler Road, Abilene, Texas, in all such cases subject to
         all matters of record.

                  "NOTES" means, collectively, each of the senior
         convertible promissory notes, due on the date that is 42 months
         after the Closing Date, each issuable by the Borrower to one of the
         Lenders pursuant to the terms hereof, in the form of Exhibit A
                                                              ---------
         hereto.

                  "OPCO" means Zoltek Vegyipari Reszvenytarsasag, a
         corporation formed under the laws of the Republic of Hungary, whose
         registered office is at H-2537 Nyergesujfalu, Varga Jozsef ter 1.,
         registered by the Court of Komarom-Esztergom county acting as Court
         of Registration under registration No. 11-10-001447.

                                     4

                  "PERMITTED LIENS" means: (a) liens for taxes, assessments
         or governmental charges not delinquent or being contested in good
         faith and by appropriate proceedings and for which adequate
         reserves in accordance with GAAP are maintained on the books of the
         Borrower or the applicable Subsidiary; (b) liens arising out of
         deposits in connection with workers' compensation, unemployment
         insurance, old age pensions or other social security or retirement
         benefits legislation; (c) deposits or pledges to secure bids,
         tenders, contracts (other than contracts for the payment of money),
         leases, statutory obligations, surety and appeal bonds, and other
         obligations of like nature arising in the ordinary course of
         business of the Borrower or a Subsidiary; (d) liens imposed by law,
         such as mechanics', workers', materialmens', carriers' or other
         like liens arising in the ordinary course of business of the
         Borrower or a Subsidiary which secure the payment of obligations
         which are not past due or which are being diligently contested in
         good faith by appropriate proceedings and for which adequate
         reserves in accordance with GAAP are maintained on the books of the
         Borrower or the applicable Subsidiary; (e) liens existing on the
         Closing Date and disclosed in Section 1.1 of the Disclosure
         Schedule, and any extensions, renewals or replacements thereof,
         provided that no additional property shall be encumbered by such
         liens and the unpaid principal amount of the Debt secured thereby
         shall not be increased on or after the date of any such extension,
         renewal or replacement; (f) purchase money security interests or
         liens for the purchase of fixed assets to be used in the business
         of the Borrower or a Subsidiary, securing solely the fixed assets
         so purchased and the proceeds thereof; (g) capitalized leases which
         do not violate any provision of this Agreement; (h) liens of
         commercial depository institutions, arising in the ordinary course
         of business, constituting a statutory or common law right of setoff
         against amounts on deposit with such institution; (i) liens in
         favor of the Administrative Agent and the Lenders pursuant to the
         Transaction Documents; and (j) rights of way, zoning restrictions,
         easements and similar encumbrances affecting the Borrowers' real
         property which do not materially interfere with the use of such
         property.

                  "PERSON" means an individual or corporation, partnership,
         trust, incorporated or unincorporated association, joint venture,
         limited liability company, joint stock company, government (or an
         agency or subdivision thereof) or other entity of any kind.

                  "PROCEEDING" means an action, claim, suit, investigation
         or proceeding (including, without limitation, an investigation or
         partial proceeding, such as a deposition), whether commenced or
         threatened.

                  "REGISTRATION STATEMENT" means one or more registration
         statements meeting the requirements of the Registration Rights
         Agreement and covering the resale of Underlying Shares by the
         Lenders who shall be named "selling shareholders" thereunder.

                  "REGISTRATION RIGHTS AGREEMENT" means the Registration
         Rights Agreement, dated as of the date of this Agreement, among the
         Borrower and the Lenders, in the form of Exhibit B hereto.
                                                  ---------

                  "RELATED PARTIES" means, with respect to any specified
         Person, such Person's Affiliates and the respective directors,
         officers, employees, agents and advisors of such Person and such
         Person's Affiliates.

                                     5

                  "REQUIRED LENDERS" means collectively one or more Lenders
         that made one or more Loans in an initial principal amount
         representing greater than 50% of the aggregate initial principal
         amount of all Loans.

                  "REQUIRED MINIMUM" means, as of any date, the maximum
         aggregate number of shares of Common Stock then issued or
         potentially issuable in the future pursuant to the Transaction
         Documents that the Borrower is obligated to issue, whether
         contingently or otherwise, including, without limitation, any
         Underlying Shares issuable upon exercise or conversion (as
         applicable) in full of all Warrants and Notes and assuming that any
         previously unconverted Notes are held until the maturity date
         thereof, and all interest on the Notes is paid with shares of
         Common Stock.

                  "RESTRICTED PAYMENT" means, as to any Person, (a) any
         dividend or other distribution by such Person (whether in cash,
         securities or other property) with respect to any Equity Interests
         of such Person, (b) any payment (whether in cash, securities or
         other property), including any sinking fund or similar deposit, on
         account of the purchase, redemption, retirement, acquisition,
         cancellation or termination of any such Equity Interest, (c) the
         acquisition for value by such Person of any Equity Interests issued
         by such Person or any other Person that controls such Person and
         (d) any payment by such Person to its officers or directors other
         than (i) in compliance with existing Borrower stock option plans,
         (ii) salaries in the ordinary course of business, and (iii)
         payments required by the terms of the 2003 Debentures (as defined
         in the Notes), the 2004 Debentures (as defined in the Notes), the
         2004 Notes (as defined in the Notes) and the Notes, in each case to
         the extent held by such officers and directors.

                  "RULE 144" means Rule 144 promulgated by the Commission
         pursuant to the Securities Act, as such Rule may be amended from
         time to time, or any similar rule or regulation hereafter adopted
         by the Commission having substantially the same effect as such
         Rule.

                  "SECURITIES" means the Notes, the Warrants and the
         Underlying Shares issuable under the Notes and the Warrants.

                  "SECURITIES ACT" means the Securities Act of 1933, as
         amended.

                  "SHAREHOLDER AGREEMENT" has the meaning set forth in
         Section 2.2(a)(iv).

                  "STRATEGIC TRANSACTION" means a transaction or
         relationship in which (1) the Borrower issues shares of Common
         Stock to a Person which the Board of Directors of the Borrower
         determines in good faith is, itself or through its Subsidiaries, an
         operating company in a business synergistic with the business of
         the Borrower and (2) the Borrower expects to receive benefits in
         addition to the investment of funds, but shall not include a
         transaction in which the Borrower issues securities primarily for
         the purpose of raising capital or to an entity whose primary
         business is investing in securities.

                  "SUBSIDIARY" means, with respect to any Person (the
         "PARENT") at any date, any corporation, limited liability company,
         partnership, association or other entity the accounts of which
         would be consolidated with those of the parent in the parent's

                                     6

         consolidated financial statements if such financial statements were
         prepared in accordance with GAAP as of such date, as well as any
         other corporation, limited liability company, partnership,
         association or other entity of which securities or other ownership
         interests representing 50% or more of the equity or 50% or more of
         the ordinary voting power is or, in the case of a partnership, 50%
         or more of the general partnership interests are, as of such date,
         owned, controlled or held by the parent or one or more subsidiaries
         of the parent. Unless otherwise expressly provided, "Subsidiary"
         shall mean a Subsidiary of the Borrower.

                  "TRADING DAY" means (i) a day on which the Common Stock is
         traded on a Trading Market (other than the OTC Bulletin Board), or
         (ii) if the Common Stock is not traded on a Trading Market (other
         than the OTC Bulletin Board), a day on which the Common Stock is
         traded in the over the counter market, as reported by the OTC
         Bulletin Board, or (iii) if the Common Stock is not traded on any
         Trading Market and not quoted on the OTC Bulletin Board, a day on
         which the Common Stock is quoted in the over the counter market as
         reported by the National Quotation Bureau Incorporated (or any
         similar organization or agency succeeding to its functions of
         reporting prices); provided, that in the event that the Common
         Stock is not listed or quoted as set forth in (i), (ii) and (iii)
         hereof, then Trading Day shall mean a Business Day.

                  "TRADING MARKET" means Nasdaq National Market or any
         Eligible Market on which the Common Stock is then listed or quoted.

                  "TRANSACTION DOCUMENTS" means this Agreement, the Notes,
         the Warrants, the Registration Rights Agreement and any other
         documents or agreements executed or delivered in connection with
         the transactions contemplated hereunder.

                  "UNDERLYING SHARES" means the shares of Common Stock
         issuable upon conversion of the Notes, as payment of interest
         thereunder, and upon exercise of the Warrants, and in satisfaction
         of any other obligation of the Borrower to issue shares of Common
         Stock pursuant to the Transaction Documents.

                  "WARRANTS" means the Common Stock purchase warrants in the
         form of Exhibit C, issuable pursuant to Section 2.2(a)(ii).
                 ---------

                                  ARTICLE II.

                           LOAN; PURCHASE AND SALE

         2.1. Closing. Subject to the terms and conditions set forth in this
              -------
Agreement, at the Closing each Lender shall severally make a loan to the
Borrower in a principal amount equal to the Loan Amount with respect to such
Lender (with respect to each Lender, a "LOAN") and, in consideration
thereof, Borrower shall execute and deliver to such Lender a Note evidencing
such Loan and a Warrant. The Closing shall take place at the offices of
Proskauer Rose LLP, 1585 Broadway, New York, NY 10036 on the date this
Agreement is executed and delivered by the parties or at such other location
or time as the parties may agree.

                                     7

         2.2. Closing Deliveries.
              ------------------

         (a) At the Closing, the Borrower shall deliver or cause to be
delivered to each Lender the following, appropriately dated (the "BORROWER
DELIVERABLES"):

                  (i)    a Note, in the aggregate principal amount of the Loan
         Amount indicated below such Lender's name on its signature page of
         this Agreement under the heading "Loan Amount", registered in the name
         of such Lender;

                  (ii)   a Warrant, duly executed by the Borrower and
         registered in the name of such Lender, pursuant to which such Lender
         shall have the right to acquire the number of shares of Common Stock
         indicated below such Lender's name on its signature page of this
         Agreement under the heading "Warrant Shares";

                  (iii)  the Registration Rights Agreement, duly executed by
         the Borrower;

                  (iv)   a letter agreement, duly executed by Zsolt Rumy,
         Chief Executive Officer of the Borrower, in his individual capacity,
         and accepted and agreed to by the Borrower (as amended, supplemented
         or otherwise modified from time to time, the "SHAREHOLDER AGREEMENT");

                  (v)    evidence of proper applications made to, and approvals
         received from, each Trading Market with respect to the trading of
         Underlying Securities thereon;

                  (vi)   the legal opinion of Borrower Counsel, in agreed form,
         addressed to the Administrative Agent and such Lender; and

                  (vii)  any other document reasonably requested by the
         Administrative Agent or such Lender.

         (b) At the Closing, each Lender shall deliver or cause to be
delivered to the Borrower the following:

                  (i)    the Loan Amount indicated below such Lender's name on
         the signature page of this Agreement, in United States dollars and in
         immediately available funds, by wire transfer to an account designated
         in writing by the Borrower for such purpose; and

                  (ii)   the Registration Rights Agreement, duly executed by
         such Lender.

                                 ARTICLE III.

                       REPRESENTATIONS AND WARRANTIES

         3.1. Representations and Warranties of the Borrower. Subject to the
              ----------------------------------------------
qualifications and disclosures set forth beside the specific reference to
this Agreement in the Disclosure Schedule (the parties hereto agreeing that
a reference in the Disclosure Schedule to a particular Section shall only
apply to the representation in such Section), the Borrower hereby makes the
following representations and warranties to the Administrative Agent and
each Lender:

                                     8

                  (a) Subsidiaries. The Borrower does not directly or indirectly
                      ------------
control or own any Equity Interest in any Subsidiary, other than as listed
in Section 3.1(a) of the Disclosure Schedule. Except as disclosed in Section
3.1(a) of the Disclosure Schedule, the Borrower owns, directly or
indirectly, all of the Equity Interests of each Subsidiary free and clear of
any Lien, and all the issued and outstanding Equity Interests of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights.

                  (b) Organization and Qualification. Each of the Borrower and
                      ------------------------------
each Subsidiary is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its
business as currently conducted. Neither the Borrower nor any Subsidiary is
in violation of any of the provisions of its respective certificate or
articles of incorporation, bylaws or other organizational or charter
documents. Each of the Borrower and each Subsidiary is duly qualified to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could
not, individually or in the aggregate, have or reasonably be expected to
result in (i) an adverse effect on the legality, validity or enforceability
of any Transaction Document, (ii) a material and adverse effect on the
results of operations, assets, prospects, business or condition (financial
or otherwise) of the Borrower and the Subsidiaries, taken as a whole, or
(iii) an adverse impairment to the Borrower's ability to perform on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or
(iii), a "MATERIAL ADVERSE EFFECT").

                  (c) Authorization; Enforcement. The Borrower and each
                      --------------------------
Subsidiary party to a Transaction Document has the requisite power and
authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents and otherwise to carry out its obligations
thereunder. The execution and delivery by the Borrower and each Subsidiary
party to a Transaction Document of each of the Transaction Documents to
which it is a party and the consummation by it of the transactions
contemplated thereunder have been duly authorized by all necessary action on
the part of the Borrower or such Subsidiary, as the case may be, and no
further consent or action is required by the Borrower, such Subsidiary, or
their respective Boards of Directors, members, partners, managers or
shareholders, as applicable. Each of the Transaction Documents to which the
Borrower or any Subsidiary is a party has been (or upon delivery will be)
duly executed by the Borrower or such Subsidiary, as the case may be, and,
when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of the Borrower and such Subsidiary, to the
extent a party thereto, enforceable against the Borrower or such Subsidiary,
as the case may be, in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
equitable principles of general application.

                  (d) No Conflicts. The execution, delivery and performance
                      ------------
of the Transaction Documents by the Borrower and each Subsidiary party to a
Transaction Document and the consummation by the Borrower and such
Subsidiaries of the transactions contemplated thereby do not and will not
(i) conflict with or violate any provision of the Borrower's or any
Subsidiary's certificate or articles of incorporation, bylaws or other
organizational or charter

                                     9

documents, or (ii) conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, contract,
credit facility, Debt or other instrument (evidencing Debt of the Borrower
or a Subsidiary or otherwise) or other understanding to which the Borrower
or any Subsidiary is a party or by which any property or asset of the
Borrower or any Subsidiary is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the
Borrower or any Subsidiary is subject (including federal and state
securities laws and regulations) and the rules and regulations of any
self-regulatory organization to which the Borrower or its securities are
subject, or by which any property or asset of the Borrower or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii),
such as could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect. Payments of cash on account
of principal of or interest under the Notes, upon any Event of Default under
the Notes, as a result of liquidated damages under any Transaction Document
or upon a Buy-In under and as such term is defined in a Warrant will not
require the consent of, any payment to, or the springing of any Lien in
favor of any lender to or creditor of the Borrower or any Subsidiary (under
a credit facility, loan agreement or otherwise) and will not result in a
default under any such credit facilities, loans or other agreements.

                  (e) Filings, Consents and Approvals. Neither the Borrower
                      -------------------------------
nor any Subsidiary is required to obtain any consent, waiver, authorization
or order of, give any notice to, or make any filing or registration with,
any court or other federal, state, local or other governmental authority or
other Person in connection with the execution, delivery and performance by
it of any Transaction Document to which it is a party, other than (i) the
filing with the Commission of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement, (ii)
the application(s) to the Trading Market on which the Common Stock is listed
for trading for the listing of the Underlying Shares for trading thereon in
the time and manner required thereby which have been made and obtained prior
to the Closing Date, and (iii) the requirements, disclosed in Section 3.1(e)
of the Disclosure Schedule, if any.

                  (f) Issuance of the Securities. Each of the Securities
                      --------------------------
have been duly authorized and, when issued and paid for in accordance with
the Transaction Documents or otherwise, have been or, when issued, will be
duly and validly issued, fully paid and nonassessable, free and clear of all
Liens. The Borrower has reserved from its duly authorized capital stock a
number of shares of Common Stock issuable upon conversion of the Notes (as
may be issued on account of interest thereunder) and exercise of the
Warrants, which number of reserved shares is not less than the Required
Minimum calculated as of the date hereof.

                  (g) Capitalization. The number of shares and type of all
                      --------------
authorized, issued and outstanding capital stock of the Borrower, and all
shares of Common Stock reserved for issuance under the Borrower's various
option and incentive plans and all warrants, debentures and Common Stock
Equivalents (on a pro forma basis immediately after giving effect to the
transactions contemplated by the Transaction Documents), is set forth in
Section 3.1(g) of the Disclosure Schedule. Except as set forth in Section
3.1(g) of the Disclosure Schedule, no securities of the Borrower are
entitled to preemptive or similar rights, and no Person has any

                                     10

right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the
Transaction Documents. Except as a result of the purchase and sale of the
Securities and except as set forth in Section 3.1(g) of the Disclosure
Schedule, there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or securities, rights or obligations convertible into or exchangeable for,
or giving any Person any right to subscribe for or acquire, any shares of
Common Stock, or any contract, commitment, understanding or arrangement by
which the Borrower is or may become bound to issue additional shares of
Common Stock or Common Stock Equivalents. The issue and sale of the
Securities will not, immediately or with the passage of time, obligate the
Borrower to issue shares of Common Stock or other securities to any Person
(other than the Lenders) and will not result in a right of any holder of
Borrower securities to adjust the exercise, conversion, exchange or reset
price under such securities.

                  (h) SEC Reports; Financial Statements. The Borrower has
                      ---------------------------------
filed all reports required to be filed by it under the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the twelve months
preceding the date hereof (or such shorter period as the Borrower was
required by law to file such material) (the foregoing materials being
collectively referred to herein as the "SEC REPORTS" and, together with this
Agreement and Section 3.1(h) of the Disclosure Schedule to this Agreement,
the "DISCLOSURE MATERIALS") on a timely basis or has timely filed a valid
extension of such time of filing and has filed any such SEC Reports prior to
the expiration of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Borrower included in
the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have
been prepared in accordance GAAP, except as may be otherwise specified in
such financial statements or the notes thereto, and fairly present in all
material respects the financial position of the Borrower and its
consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case
of unaudited statements, to normal, immaterial, year-end audit adjustments
and the absence of footnotes. All material agreements to which the Borrower
or any Subsidiary is a party or to which the property or assets of the
Borrower or any Subsidiary are subject are included as part of or
specifically identified in the SEC Reports.

                  (i) Press Releases. The press releases disseminated by the
                      --------------
Borrower during the two (2) years preceding the date of this Agreement taken
as a whole do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.

                  (j) Material Changes. Since the date of the latest audited
                      ----------------
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected

                                     11

to result in a Material Adverse Effect, (ii) the Borrower has not incurred
any liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the
Borrower's financial statements pursuant to GAAP or not required to be
disclosed in filings made with the Commission, (iii) the Borrower has not
altered its method of accounting or the identity of its auditors, (iv) the
Borrower has not declared or made any dividend or distribution of cash or
other property to its shareholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock, and (v)
the Borrower has not issued any equity securities to any officer, director
or Affiliate, except pursuant to existing Borrower stock incentive plans.
Except as noted in the Borrower's SEC Reports, the Borrower does not have
pending before the Commission any request for confidential treatment of
information.

                  (k) Litigation. Except as set forth in Section 3.1(k) of
                      ----------
the Disclosure Schedule, there is no Action which (i) adversely affects or
challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) except as otherwise set
forth in the SEC Reports, would reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect. Neither the Borrower
nor any Subsidiary, nor any director or officer thereof, is or has been the
subject of any Action involving a claim of violation of or liability under
federal or state securities laws or a claim of breach of fiduciary duty.
There has not been, and to the knowledge of the Borrower, there is not
pending or contemplated, any investigation by the Commission involving the
Borrower or any current or former director or officer of the Borrower. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Borrower or any
Subsidiary under the Exchange Act or the Securities Act.

                  (l) Labor Relations. No material labor dispute exists or,
                      ---------------
to the knowledge of the Borrower, is imminent with respect to any of the
employees of the Borrower or any Subsidiary.

                  (m) Compliance. Except as set forth in Section 3.1(m) of
                      ----------
the Disclosure Schedule, neither the Borrower nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not
been waived that, with notice or lapse of time or both, would result in a
default by the Borrower or any Subsidiary under), nor has the Borrower or
any Subsidiary received notice of a claim that it is in default under or
that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any
of its properties is bound (other than defaults or violations that have been
cured or waived), (ii) is in violation of any order of any court, arbitrator
or governmental body, or (iii) is or has been in violation of any statute,
rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality
and safety and employment and labor matters, except in each case as could
not, individually or in the aggregate, have or could not reasonably be
expected to result in a Material Adverse Effect. The Borrower is in
compliance with the applicable requirements of the Sarbanes-Oxley Act of
2002, as amended, and the rules and regulations thereunder promulgated by
the Commission, except where such noncompliance could not have or reasonably
be expected to result in a Material Adverse Effect. The Borrower is not, to
the best of its knowledge (after due inquiry), in default in any material

                                     12

respect with the terms, conditions or covenants set forth in (i) the
Securities Purchase Agreement, or the debentures or warrants issued pursuant
thereto, among the Borrower and the lenders therein, dated as of December
19, 2003, (ii) the Securities Purchase Agreement, or the debentures or
warrants issued pursuant thereto, among the Borrower and the lenders
therein, dated as of March 11, 2004 or (iii) the Loan and Warrant Agreement,
or the notes and warrants issued pursuant thereto, among the Borrower and
the lenders therein dated as of October 14, 2004.

                  (n) Regulatory Permits. The Borrower and the Subsidiaries
                      ------------------
possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits could not,
individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect ("MATERIAL PERMITS"), and neither the Borrower
nor any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any Material Permit.

                  (o) Title to Assets. The Borrower and the Subsidiaries
                      ---------------
have good and marketable title in fee simple to all real property owned by
them that is material to the business of the Borrower and the Subsidiaries
and good and marketable title in all personal property owned by them that is
material to the business of the Borrower and the Subsidiaries, in each case
free and clear of all Liens, except for Permitted Liens, which are set forth
in Section 3.1(k) of the Disclosure Schedule, and except for such Liens as
do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Borrower and the Subsidiaries. Any real property and facilities held under
lease by the Borrower and the Subsidiaries that are material to the business
of the Borrower and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Borrower and the Subsidiaries
are in compliance.

                  (p) Patents and Trademarks. The Borrower and the
                      ----------------------
Subsidiaries own, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
licenses and other similar rights that are necessary or material for use in
connection with their respective businesses as described in the SEC Reports
and which the failure to so have could not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect (collectively, the "INTELLECTUAL PROPERTY RIGHTS"). Neither the
Borrower nor any Subsidiary has received a written notice that any
Intellectual Property Right violates or infringes upon the rights of any
Person. Except as set forth in the SEC Reports, to the knowledge of the
Borrower, all such Intellectual Property Rights are enforceable and there is
no existing infringement by another Person of any of the Intellectual
Property Rights.

                  (q) Insurance. The Borrower and the Subsidiaries are
                      ---------
insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and customary in the
businesses in which the Borrower and the Subsidiaries are engaged. Neither
the Borrower nor any Subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business without a significant increase in cost.

                                     13

                  (r) Transactions With Affiliates and Employees. Except as
                      ------------------------------------------
set forth in the SEC Reports, none of the officers or directors of the
Borrower or any Subsidiary and, to the knowledge of the Borrower, none of
the employees of the Borrower or any Subsidiary is presently a party to any
transaction with the Borrower or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to
the knowledge of the Borrower, any entity in which any officer, director, or
any such employee has a substantial interest or is an officer, director,
trustee or partner.

                  (s) Internal Accounting Controls. The Borrower and the
                      ----------------------------
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to maintain asset accountability, (iii) access to assets is permitted only
in accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences. The Borrower has established disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the Borrower and
designed such disclosure controls and procedures to ensure that material
information relating to the Borrower, including its Subsidiaries, is made
known to the certifying officers by others within those entities,
particularly during the period in which the Borrower's Form 10-K or 10-Q, as
the case may be, is being prepared. The Borrower's certifying officers have
evaluated the effectiveness of the Borrower's controls and procedures in
accordance with Item 307 of Regulation S-K under the Exchange Act for the
Borrower's most recently ended fiscal quarter or fiscal year-end (such date,
the "EVALUATION DATE"). The Borrower presented in its most recently filed
Form 10-K or Form 10-Q the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no significant changes in the Borrower's internal controls (as such
term is defined in Item 308(c) of Regulation S-K under the Exchange Act) or,
to the Borrower's knowledge, in other factors that could significantly
affect the Borrower's internal controls.

                  (t) Solvency. Based on the financial condition of the
                      --------
Borrower as of the Closing Date (and assuming that the Closing shall have
occurred), (i) the Borrower's fair saleable value of its assets exceeds the
amount that will be required to be paid on or in respect of the Borrower's
existing Debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Borrower's assets do not constitute
unreasonably small capital to carry on its business for the current fiscal
year as now conducted and as proposed to be conducted including its capital
needs taking into account the particular capital requirements of the
business conducted by the Borrower, and projected capital requirements and
capital availability thereof; and (iii) the current cash flow of the
Borrower, together with the proceeds the Borrower would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses
of the cash, would be sufficient to pay all amounts on or in respect of its
Debt when such amounts are required to be paid. The Borrower does not intend
to incur Debts beyond its ability to pay such Debts as they mature (taking
into account the timing and amounts of cash to be payable on or in respect
of its Debt).

                                     14

                  (u) Certain Fees. Except as set forth in Section 3.1(u) of
                      ------------
the Disclosure Schedule, no brokerage or finder's fees or commissions are or
will be payable by the Borrower to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by this Agreement. Neither the
Administrative Agent nor any Lender shall have any obligation with respect
to any fees or with respect to any claims (other than such fees or
commissions owed by such Person pursuant to written agreements executed by
such Person which fees or commissions shall be the sole responsibility of
such Person) made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement.

                  (v) Certain Registration Matters. Assuming the accuracy of
                      ----------------------------
the Lenders' representations and warranties set forth in Sections
3.2(b)-(e), no registration under the Securities Act is required for the
offer and sale of the Securities by the Borrower to the Lenders under the
Transaction Documents. The Borrower is eligible to register the resale of
its Common Stock for resale by the Lenders under Form S-3 promulgated under
the Securities Act. The Borrower has not granted or agreed to grant to any
Person any rights (including without limitation "PIGGY BACK" registration
rights) to have any securities of the Borrower registered with the
Commission or any other governmental authority that have not been satisfied.

                  (w) Listing and Maintenance Requirements. Except as
                      ------------------------------------
specified in the SEC Reports, the Borrower has not, in the two years
preceding the date hereof, received notice from any Eligible Market to the
effect that the Borrower is not in compliance with the listing or
maintenance requirements thereof. The Borrower is, and has no reason to
believe that it will not in the foreseeable future continue to be, in
compliance with the listing and maintenance requirements for continued
listing of the Common Stock on the Trading Market. The issuance and sale of
the Securities under the Transaction Documents does not contravene the rules
and regulations of the Trading Market, and no approval of the shareholders
of the Borrower thereunder is required for the Borrower to issue and deliver
to the Lenders the maximum number of Securities contemplated by Transaction
Documents, including as may be required pursuant to Nasdaq Rule Filing
SR-NASD-2003-40 (March 14, 2003) concerning shareholder approval
requirements when officers and directors participate in discounted private
placements and Nasdaq Rule Filing SR-NASD-2003-61 (March 28, 2003)
concerning shareholder approval requirements in connection with a change of
control.

                  (x) Environmental Matters. Neither the Borrower nor any
                      ---------------------
Subsidiary (i) is in violation of any statute, rule, regulation, decision or
order of any governmental agency or body or any court, domestic or foreign,
relating to the use, disposal or release of hazardous or toxic substances or
relating to the protection or restoration of the environment or human
exposure to hazardous or toxic substances (collectively, "ENVIRONMENTAL
LAWS"), (ii) owns or operates any real property contaminated with any
substance that is subject to any Environmental Laws, (iii) is liable for any
off-site disposal or contamination pursuant to any Environmental Laws, and
(iv) is subject to any claim relating to any Environmental Laws, which
violation, contamination, liability or claim has had or could reasonably be
expected to have a Material Adverse Effect, individually or in the
aggregate; and there is no pending investigation threatened in writing by
any governmental authority that might lead to such a claim.

                                     15

                  (y) Investment Company. The Borrower is not, and is not an
                      ------------------
Affiliate of, an "INVESTMENT COMPANY" within the meaning of the Investment
Company Act of 1940, as amended.

                  (z) Application of Takeover Protections. The Borrower and
                      -----------------------------------
its Board of Directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Borrower's Articles of
Incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Administrative Agent
or the Lenders as a result of the Administrative Agent, the Lenders and the
Borrower fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation the Borrower's issuance
of the Securities and the Lenders' ownership of the Securities.

                  (aa) No Additional Agreements. The Borrower does not have
                       ------------------------
any agreement or understanding with the Administrative Agent or any Lender
with respect to the transactions contemplated by the Transaction Documents
other than as specified therein, except that any officer or director who
participates in this transaction as a Lender shall not be entitled to any
anti-dilution protection (other than on account of stock splits, stock
combinations and similar events) under the Notes or the Warrants acquired by
them or their Affiliates so as not to violate Nasdaq Rule Filing
SR-NASD-2003-40 (March 14, 2003).

                  (bb) Disclosure. The Borrower confirms that neither it nor
                       ----------
any Person acting on its behalf has provided the Administrative Agent or any
of the Lenders or their agents or counsel with any information that the
Borrower believes constitutes material, non-public information. The Borrower
understands and confirms that the Administrative Agent and the Lenders will
rely on the foregoing representations and warranties in effecting
transactions in securities of the Borrower. All disclosure provided to the
Administrative Agent and the Lenders regarding the Borrower, its business
and the transactions contemplated hereby, furnished by or on behalf of the
Borrower (including the Borrower's representations and warranties set forth
in this Agreement and the Disclosure Schedule) are true and correct and do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.

                  (cc) Acknowledgment Regarding Lenders' Purchase of
                       ---------------------------------------------
Securities. The Borrower acknowledges and agrees that each of the Lenders is
----------
acting solely in the capacity of an arm's length lender with respect to the
Transaction Documents and the transactions contemplated hereby. The Borrower
further acknowledges that neither the Administrative Agent nor any Lender is
acting as a financial advisor or fiduciary of the Borrower (or in any
similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and any advice given by the Administrative
Agent or any Lender or any of their respective representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby is merely incidental to the Lenders' purchase of the Securities or
the Administrative Agent's performance of its duties under the Transaction
Documents. The Borrower further represents to the Administrative Agent and
each Lender that the Borrower's

                                     16

decision to enter into this Agreement has been based solely on the
independent evaluation by the Borrower and its representatives.

         3.2. Representations and Warranties of the Lenders. Each Lender, for
              ---------------------------------------------
itself and for no other Lender, hereby represents and warrants to the Borrower
as follows:

                  (a) Organization; Authority. Such Lender is an entity duly
                      -----------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate, partnership,
limited liability company or other applicable like power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations thereunder.
The execution, delivery and performance by such Lender of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or, if such Lender is not a corporation, such partnership, limited
liability company or other applicable like action, on the part of such
Lender. Each of this Agreement and the Registration Rights Agreement has
been duly executed by such Lender, and when delivered by such Lender in
accordance with the terms hereof, will constitute the valid and legally
binding obligation of such Lender, enforceable against it in accordance with
its terms.

                  (b) Investment Intent. Such Lender is acquiring its Note
                      -----------------
and Warrant for investment purposes and not with a view to or for
distributing or reselling them or any part thereof, without prejudice,
however, to such Lender's right at all times to sell or otherwise dispose of
all or any part thereof in compliance with applicable federal and state
securities laws. Subject to the immediately preceding sentence, nothing
contained herein shall be deemed a representation or warranty by such Lender
to hold any Securities for any period of time. Such Lender is acquiring such
Note and Warrant in the ordinary course of its business. Such Lender does
not have any agreement or understanding, directly or indirectly, with any
Person to distribute any of the Securities.

                  (c) Lender Status. At the time such Lender was offered its
                      -------------
Note and its Warrant, it was, and at the date hereof, it is, an "accredited
investor" as defined in Rule 501(a) under the Securities Act. Such Lender is
not a registered broker-dealer under Section 15 of the Exchange Act.

                  (d) General Solicitation. Such Lender is not taking the
                      --------------------
Note or the Warrant as a result of any advertisement, article, notice or
other communication regarding either of them published in any newspaper,
magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.

                  (e) Access to Information. Such Lender acknowledges that
                      ---------------------
it has reviewed the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Borrower concerning the terms
and conditions of the offering of the Securities and the merits and risks of
investing in the Securities; (ii) access to information about the Borrower
and the Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to
enable it to evaluate its investment; and (iii) the opportunity to obtain
such additional information that the Borrower possesses or can acquire
without unreasonable effort or

                                     17

expense that is necessary to make an informed investment decision with
respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Lender or its
representatives or counsel shall modify, amend or affect such Lender's right
to rely on the truth, accuracy and completeness of the Disclosure Materials
and the Borrower's representations and warranties contained in the
Transaction Documents.

                  (f) Limited Ownership. The purchase by such Lender of the
                      -----------------
Securities issuable to it at the Closing (including the Underlying Shares
that would be issuable upon the conversion and exercise of such Securities)
will not result in such Lender (individually or together with other Persons
with whom such Lender has identified, or will have identified, itself as
part of a "group" in a public filing made with the Commission involving the
Borrower's securities) acquiring, or obtaining the right to acquire, in
excess of 19.999% of the Common Stock or the voting power of the Borrower on
a post transaction basis that assumes that the Closing shall have occurred.
Such Lender does not presently intend to, alone or together with others,
make a public filing with the Commission to disclose that it has (or that it
together with such other Persons have) acquired, or obtained the right to
acquire, as a result of the Closing (when added to any other securities of
the Borrower that it or they then own or have the right to acquire), in
excess of 19.999% of the Common Stock or voting power of the Borrower on a
post transaction basis that assumes that the Closing shall have occurred.

                  (g) Independent Investment Decision. Such Lender has
                      -------------------------------
independently evaluated the merits of its decision to invest in the Note and
the Warrant pursuant to this Agreement, such decision has been independently
made by such Lender and such Lender confirms that it has only relied on the
advice of its own business and/or legal counsel and not on the advice of any
other Lender's business and/or legal counsel in making such decision.

The Borrower acknowledges and agrees that no Lender makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2. The
Borrower acknowledges and agrees that the Administrative Agent does not make
and has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
this Section 3.2.

                                  ARTICLE IV.

                       OTHER AGREEMENTS OF THE PARTIES

         4.1.     (a) Securities may only be disposed of in compliance with
state and federal securities laws. In connection with any transfer of the
Securities other than pursuant to an effective registration statement, to
the Borrower, to an Affiliate of a Lender or in connection with a pledge as
contemplated in Section 4.1(b), the Borrower may require the transferor
thereof to provide to the Borrower an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Borrower, to the effect that such transfer does not
require registration of such transferred Securities under the Securities Act.

                  (b) Certificates evidencing the Securities will contain
the following legend, so long as is required by this Section 4.1(b) or
Section 4.1(c):

                                     18

         [NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON
         CONVERSION/EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED]
         [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE SECURITIES AND
         EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
         RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
         ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
         MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
         REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
         AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
         REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
         WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
         OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
         OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE BORROWER. [THESE
         SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION/EXERCISE OF
         THESE SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN A MANNER
         CONSISTENT WITH THE SECURITIES ACT IN CONNECTION WITH A BONA FIDE
         MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

                  The Borrower acknowledges and agrees that a Lender may
from time to time pledge, and/or grant a security interest in some or all of
the Securities pursuant to a bona fide margin agreement in connection with a
bona fide margin account in accordance with the Securities Act and, if
required under the terms of such agreement or account, such Lender may
transfer pledged or secured Securities to the pledgees or secured parties.
Such a pledge or transfer would not be subject to approval or consent of the
Borrower and no legal opinion of legal counsel to the pledgee, secured party
or pledgor shall be required in connection with the pledge, but such legal
opinion may be required in connection with a subsequent transfer, following
default, by the Lender transferee of the pledge. No notice shall be required
of such pledge. At the appropriate Lender's expense, the Borrower will
execute and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a pledge or
transfer of the Securities including the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) under the Securities Act
or other applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders thereunder.

                  (c) Certificates evidencing Underlying Shares shall not
contain any legend (including the legend set forth in Section 4.1(b)): (i)
following a sale of such Securities under a registration statement
(including the Registration Statement), or (ii) following any sale of such
Securities pursuant to Rule 144, or (iii) while such Securities are eligible
for sale under Rule 144(k), or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the Commission).
Borrower may not make any notation on its records or give instructions to
any transfer agent of the Borrower that enlarge the restrictions on transfer
set forth in this Section.

         4.2. Furnishing of Information. As long as any Lender owns the
              -------------------------
Securities issued or issuable to it, the Borrower covenants to timely file
(or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Borrower after the

                                     19

date hereof pursuant to the Exchange Act. Upon the request of any such
Person, the Borrower shall deliver to such Person a written certification of
a duly authorized officer as to whether it has complied with the preceding
sentence. As long as any Lender owns Securities, if the Borrower is not
required to file reports pursuant to such laws, it will prepare and furnish
to the Lenders and make publicly available in accordance with Rule 144(c)
such information as is required for the Lenders to sell the Underlying
Shares under Rule 144. The Borrower further covenants that it will take such
further action as any holder of Securities may reasonably request, all to
the extent required from time to time to enable such Person to sell such
Underlying Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.

         4.3. Acknowledgment of Dilution. The Borrower acknowledges that the
              --------------------------
issuance of the Securities (including the Underlying Shares) will result in
dilution of the outstanding shares of Common Stock, which dilution may be
substantial. The Borrower further acknowledges that its obligations under
the Transaction Documents, including without limitation its obligation to
issue the Securities (including the Underlying Shares) pursuant to the
Transaction Documents, are unconditional and absolute and not subject to any
right of set off, counterclaim, delay or reduction, regardless of the effect
of any such dilution or any claim that the Borrower may have against the
Administrative Agent or any Lender.

         4.4. Integration. The Borrower shall not, and shall use its best
              -----------
efforts to ensure that no Affiliate of the Borrower shall, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the
Securities to the Lenders, or that would be integrated with the offer or
sale of the Securities for purposes of the rules and regulations of any
Trading Market.

         4.5. Listing of Common Stock. From the date hereof through the
              -----------------------
Effectiveness Period (as such term is defined in the Registration Rights
Agreement) the Borrower agrees (i) if the Borrower applies to have the
Common Stock traded on any Trading Market other than the Trading Market
which the Common Stock is currently listed for trading, it will include in
such application the Underlying Shares, and will take such other action as
is necessary or desirable to cause such securities to be listed on such
other Trading Market as promptly as possible and (ii) it will take all
action reasonably necessary to continue the listing and trading of its
Common Stock on a Trading Market and will comply in all material respects
with the Borrower's reporting, filing and other obligations under the bylaws
or rules of the Trading Market.

         4.6. Reservation of Shares. The Borrower shall maintain a reserve
              ---------------------
from its duly authorized shares of Common Stock to comply with its
conversion obligations under the Notes and its exercise obligations under
the Warrants. If on any date the Borrower would be, if notice of exercise or
conversion were to be delivered on such date, precluded from issuing the
number of Underlying Shares, as the case may be, issuable upon conversion in
full of the Notes or exercise in full under the Warrants due to the
unavailability of a sufficient number of authorized but unissued or reserved
shares of Common Stock, then the Board of Directors of the Borrower shall
promptly prepare and mail to the shareholders of the Borrower proxy
materials or other applicable materials requesting authorization to amend
the Borrower's articles of incorporation or other organizational document to
increase the number of shares of Common Stock which the

                                     20

Borrower is authorized to issue so as to provide enough shares for issuance
of the Underlying Shares. In connection therewith, the Board of Directors
shall (a) adopt proper resolutions authorizing such increase, (b) recommend
to and otherwise use its best efforts to promptly and duly obtain
shareholder approval to carry out such resolutions (and hold a special
meeting of the shareholders as soon as practicable, but in any event not
later than the 60th day after delivery of the proxy or other applicable
materials relating to such meeting) and (c) within five Business Days of
obtaining such shareholder authorization, file an appropriate amendment to
the Borrower's articles of incorporation or other organizational document to
evidence such increase.

         4.7. Conversion and Exercise Procedures. The form of Exercise
              ----------------------------------
Notice included in and as defined in the Warrants and the form of Conversion
Notice included in and as defined in the Notes set forth the totality of the
procedures required by the Lenders in order to exercise the Warrants and
convert the Notes. No additional legal opinion or other information or
instructions shall be necessary to enable the Lenders to exercise the
Warrants or convert Notes. The Borrower shall honor exercises of the
Warrants and conversions of the Notes and shall deliver Underlying Shares in
accordance with the terms, conditions and time periods set forth in the
Transaction Documents.

         4.8. Subsequent Registrations; Subsequent Placements.
              -----------------------------------------------

                  (a) From the Closing Date through and including the
Effective Date, the Borrower will not file a registration statement (other
than on a Form S-8 and pursuant to the Registration Rights Agreement) with
the Commission with respect to any securities of the Borrower.

                  (b) Prior to the first year anniversary of the Closing
Date, in the event the Borrower or any Subsidiary, directly or indirectly,
determines to offer, sell, grant any option to purchase, or otherwise
dispose of (or announces any offer, sale, grant or any option to purchase or
otherwise dispose of) any Common Stock or Common Stock Equivalents (other
than under and pursuant to the Notes and the Warrants) or any of its
Subsidiaries' equity or Common Stock Equivalents, including without
limitation, pursuant to a private placement, an equity line of credit or a
shelf registration statement in accordance with Rule 415 under the
Securities Act, (such offer, sale, grant, disposition or announcement being
referred to as "SUBSEQUENT PLACEMENT"), the Borrower shall deliver to each
Lender a written notice (the "SUBSEQUENT PLACEMENT NOTICE") of its intention
to effect such Subsequent Placement, which specifies in reasonable detail
the type of securities being offered (the "OFFERED SECURITIES"), all of the
other material terms of such Subsequent Placement, the amount of proceeds
intended to be raised thereunder, the names of the investors (including the
investment manager of such investors, if any) and the investment bankers
with whom such Subsequent Placement is proposed to be effected, and attached
to which shall be a term sheet or similar document. Each Lender shall have
until 6:30 p.m. (New York City time) on the fifth Trading Day after their
respective receipt of the Subsequent Placement Notice to notify Borrower of
its intention to participate ("NOTICE OF ACCEPTANCE"), subject to completion
of mutually acceptable documentation, in such financing on the same terms as
set forth in the Subsequent Placement Notice, provided however, that as to
any transaction or series of related transactions, the Borrower shall have
no obligation to offer the Lenders the right to participate, in the
aggregate, in an amount that exceeds the greater of (i) 50% of the
securities offered and (ii) securities with an aggregate purchase of price
of $10,000,000.

                                     21

                  (c) The Company shall have five (5) Trading Days from the
expiration of the period set forth in Section 4.8(b) above to issue, sell or
exchange all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the Lenders (the "REFUSED SECURITIES"), but
only to the offerees described in the Subsequent Placement Notice and only
upon terms and conditions (including, without limitation, unit prices and
interest rates) that are not more favorable to the acquiring Person or
Persons or less favorable to the Company than those set forth in the
Subsequent Placement Notice.

                  (d) Any Offered Securities not acquired by the Lenders or
other persons in accordance with this Section 4.8(b) above may not be
issued, sold or exchanged until they are again offered to the Lenders under
the procedures specified in this Agreement.

                  (e) The period set forth in the first sentence of Section
4.8(b) shall be extended for the number of Trading Days during such period
in which (i) trading in the Common Stock is suspended by any Trading Market
or the Commission, or (ii) the Registration Statement is not effective or
the prospectus included in the Registration Statement may not be used by the
Lenders for the resale of the Underlying Shares following the required
effective date as set forth in Section 2(b) of the Registration Rights
Agreement.

                  (f) The Borrower's obligations under Section 4.8(b) shall
not apply to any grant or issuance by the Borrower of any of the following:
(i) the issuance of securities upon the exercise or conversion of any Common
Stock Equivalents issued by the Borrower prior to the date of this Agreement
(but will apply to any amendments, modifications and reissuances thereof),
and (ii) the grant of options or warrants, or the issuance of additional
securities, under any duly authorized company stock option, restricted stock
plan or stock purchase plan in existence on the Closing Date, (iii) the
issuance of Common Stock in payment of interest on the Notes, or (iv) the
issuance of Common Stock Equivalents pursuant to a Strategic Transaction.

         4.9. Securities Laws Disclosure; Publicity. By 8:30 a.m. (New York
              -------------------------------------
City time) on both the Trading Day following the day this Agreement is
executed and on the Closing Date, the Borrower shall issue a press release
reasonably acceptable to the Lenders and the Administrative Agent disclosing
the transactions contemplated hereby on the date of this Agreement and file
a Current Report on Form 8-K disclosing the material terms of the
transactions contemplated hereby. The Borrower will file an additional
Current Report on Form 8-K on the Closing Date to disclose the Closing. In
addition, the Borrower will make such other filings and notices in the
manner and time required by the Commission and the Trading Market on which
the Common Stock is listed. Notwithstanding the foregoing, the Borrower
shall not publicly disclose the name of the Administrative Agent, any
Lender, or include the name of the Administrative Agent or any Lender in any
filing with the Commission (other than the Registration Statement and any
exhibits to filings made in respect of this transaction in accordance with
periodic filing requirements under the Exchange Act) or any regulatory
agency or Trading Market, without the prior written consent of the
Administrative Agent or such Lender, as the case may be, except to the
extent such disclosure is required by law or Trading Market regulations, in
which case the Borrower shall provide the Administrative Agent and the
Lenders with prior notice of such disclosure.

                                     22

         4.10. Limitation on Issuance of Future Priced Securities. Following
               --------------------------------------------------
the Closing and for so long as Notes remain outstanding, the Borrower shall
not issue or agree to issue any "FUTURE PRICED SECURITIES" as such term is
described by NASD IM-4350-1.

         4.11. Indemnification of Lenders. In addition to the indemnity
               --------------------------
provided in the Registration Rights Agreement and in Section 8.18, the
Borrower will indemnify and hold the Lenders and their directors, officers,
shareholders, partners, employees and agents (each, a "LENDER PARTY")
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys' fees and costs of
investigation that any such Lender Party may suffer or incur as a result of
or relating to any misrepresentation, breach or inaccuracy of any
representation, warranty, covenant or agreement made by the Borrower in any
Transaction Document. In addition to the indemnity contained herein, the
Borrower will reimburse each Lender Party for its reasonable legal and other
expenses (including the cost of any investigation, preparation and travel in
connection therewith) incurred in connection therewith, as such expenses are
incurred.

         4.12. Non-Public Information. The Borrower covenants and agrees
               ----------------------
that neither it nor any other Person acting on its behalf will provide the
Administrative Agent, any Lender or any agent or counsel to the
Administrative Agent or any Lender with any information that the Borrower
believes constitutes material non-public information. The Borrower
understands and confirms that the Administrative Agent and each Lender shall
be relying on the foregoing representations in effecting transactions in
securities of the Borrower.

         4.13. Certain Trading Restrictions. Each Lender agrees that neither
               ----------------------------
it nor its Affiliates (taken as a whole) will enter into or maintain a net
short position with respect to the Common Stock. Accordingly, each Lender
agrees that neither it nor its Affiliates will enter into or maintain any
short sale of the Common Stock at a time when there is no equivalent
offsetting long position in the Common Stock held by such Lender. For
purposes of determining whether there is an equivalent offsetting long
position in the Common Stock held by such Lender, the Underlying Shares
issuable upon exercise of all warrants (including the Warrants) and
conversion of all debentures and notes (including the Notes and in each case
any shares issuable on account of interest under such notes or debentures)
held by such Lender (without regard to any exercise or conversion caps
contained therein, and whether or not any exercise or conversion notice
shall have been tendered by such Lender) shall be deemed held long by such
Lender for purposes of this Section.

         4.14. Existence; Conduct of Business. The Borrower will, and will
               ------------------------------
cause each of the Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business, provided that the foregoing shall
not prohibit (a) any sale, lease, transfer or other disposition permitted by
Section 5.1, or (b) any merger of (i) any domestic Subsidiary with any other
domestic Subsidiary, (ii) any domestic Subsidiary with and into the
Borrower, (iii) any foreign Subsidiary (other than Opco and its
Subsidiaries) with any other foreign Subsidiary, or (iv) any Subsidiary of
Opco with Opco or any other Subsidiary of Opco.

                                     23

         4.15. Maintenance of Cash and Cash Equivalents. While any Notes are
               ----------------------------------------
outstanding, the Borrower will, at all times, maintain unrestricted cash and
Cash Equivalents, together with availability under the Borrower's revolving
line of credit, in an aggregate amount not less than $500,000, free and
clear of all Liens (other than Permitted Liens within the meaning of clauses
(a), (h) or (i) of such defined term) and any right of offset. In the event
that such unrestricted cash and Cash Equivalents maintained by the Borrower
hereunder shall at the end of any fiscal quarter (as reflected in Borrower's
Quarterly Report on Form 10-Q under the Exchange Act for such fiscal
quarter) be in an aggregate amount less than such amount, the Borrower shall
deliver to each Lender at the Borrower's expense, a letter of credit (in
form and substance acceptable to such Lender) and issued by a bank
reasonably acceptable to such Lender in a face amount equal to the sum of
100% of the then outstanding principal amount of such Lender's Note plus
interest payable thereon until the maturity date thereof. Such letters of
credit shall provide, among other things, that the beneficiary thereof shall
have the right to draw thereunder upon presentation of a draft together with
a certificate signed by such Lender referring to this Agreement and the
Notes held by such Lender and certifying that an Event of Default has
occurred and is continuing under the Transaction Documents.

         4.16. Use of Proceeds. The Borrower shall use the net proceeds from
               ---------------
the sale of the Securities hereunder for (i) working capital purposes, (ii)
the purchase, installation, start-up, operation, maintenance and support of
two new continuous carbon fiber production lines in Hungary and (iii) for
the payment of all outstanding principal and interest of the Borrower's Debt
secured by the properties listed on Schedule 4.16, within 15 days of the
Closing Date, but not (a) for the satisfaction of any portion of the
Borrower's or any of its Subsidiaries' other Debt (other than payment of the
Borrower's existing line of credit and trade payables and accrued expenses
in the ordinary course of the Borrower's business and consistent with prior
practices), (b) to redeem any Common Stock or Common Stock Equivalents or
(c) to settle any outstanding Action or Proceeding.

                                 ARTICLE V.

                             NEGATIVE COVENANTS

                  The Borrower covenants and agrees that from and after the
Closing Date and (except as provided in Section 5.3) so long as any there
remains any outstanding principal amount under the Notes, the Borrower shall
not, and shall not permit its Subsidiaries to:

         5.1. Dispositions of Assets or Subsidiaries. Sell, convey, assign,
              --------------------------------------
lease, abandon or otherwise transfer or dispose of, voluntarily or
involuntarily, any material properties or assets, tangible or intangible
(including any spin-offs of any divisions, lines of business or subsidiaries
and also including sale, assignment, discount or other disposition of
accounts, contract rights, chattel paper, equipment or general intangibles
with or without recourse or of capital stock, shares of beneficial interest,
partnership interests or limited liability company interests of a Subsidiary
of the Borrower), except transactions involving the sale of inventory or
upgrade or exchange of machinery, in either case, in the ordinary course of
business and for usual and ordinary prices.

                                     24

         5.2. Restricted Payments. Declare or make, or agree to pay for or
              -------------------
make, directly or indirectly, any Restricted Payment, provided that (a) the
                                                      --------
Borrower may declare and pay, and agree to pay, dividends with respect to
its Equity Interests payable solely in Common Stock, (b) any wholly owned
Subsidiary of the Borrower may declare and pay dividends with respect to its
Equity Interests to the Borrower or any other wholly owned Subsidiary of the
Borrower, (c) the Borrower may pay bonuses to its officers, directors and
employees consistent with past practices, (d) the Borrower may pay
director's fees to its directors consistent with past practices, and (e) the
Borrower may pay fees to its directors for bona fide consulting services
consistent with past practices.

         5.3. Permitted Debt. Prior to such time as the Mortgage Conditions
              --------------
are Satisfied and the Company shall have delivered each of the documents set
forth on Exhibit D, create, incur, assume, guarantee or suffer to exist any
Debt, except:

                  (i)    Debt evidenced by the Notes, the 2004 Notes (as
defined in the Notes), the 2004 Debentures (as defined in the Notes) and the
2003 Debentures (as defined in the Notes);

                  (ii)   subordinated Debt approved in writing by the Required
Lenders;

                  (iii)  accounts payable by such Borrower or a Subsidiary to
trade creditors, accrued expenses and other liabilities incurred in the
ordinary course of business;

                  (iv)   Capital Lease Obligations which do not in the
aggregate exceed $500,000 at any time outstanding;

                  (v)    Debt for accrued payroll taxes so long as payment
thereof is not past due and payable unless such taxes are being contested in
good faith and by appropriate proceedings and for which adequate reserves in
accordance with GAAP are maintained on the books of the Borrower or the
applicable Subsidiary;

                  (vi)   Contingent Obligations not in excess of the sum of
(i) an aggregate of $1,402,864.50, incurred in connection with that certain
Letter of Credit dated June 21, 2004 issued by Marshall & Ilsley Bank in the
amount of $85,864.50 in favor of Cisco Systems, and that certain Letter of
Credit dated December 17, 2004 issued by Marshall & Ilsley Bank in the
amount of $1,317,000 in favor of Contractor Bonding and Insurance Company
(the "EXISTING LETTERS OF CREDIT") or any extension or renewal thereof, and
(ii) $300,000; provided that upon termination of or permanent reduction in
the Existing Letters of Credit, the amount of Contingent Obligations the
Company may incur shall be reduced to reflect such termination or permanent
reduction.

                  (vii)  Debt in respect of netting services, overdraft
protections and otherwise in connection with deposit accounts of the
Borrower or any Subsidiary; and

                  (viii) Debt incurred in the ordinary course of business
solely to support any Borrower or any Subsidiary's insurance or self-insurance
obligations in the ordinary course of business (including to secure worker's
compensation and other similar insurance coverages).

                                     25

                                 ARTICLE VI.

                            CONDITIONS PRECEDENT

         6.1. Conditions Precedent to the Obligations of the Lenders. The
              ------------------------------------------------------
obligation of each Lender to make its Loan is subject to the satisfaction or
waiver by such Lender of each of the following conditions:

                  (a) Representations and Warranties. The representations
                      ------------------------------
and warranties of the Borrower contained herein shall be true and correct in
all respects as of the date when made and as of the Closing Date as though
made on and as of such date;

                  (b) Performance. The Borrower shall have performed,
                      -----------
satisfied and complied in all respects with, and caused each of its
Subsidiaries to perform, satisfy and comply in all respects with, all
covenants, agreements and conditions required by the Transaction Documents
to be performed, satisfied or complied with by it at or prior to the
Closing;

                  (c) No Injunction. No treaty and no U.S. or foreign
                      -------------
statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents;

                  (d) Adverse Changes. Since the date of execution of this
                      ---------------
Agreement, no event or series of events shall have occurred that reasonably
would be expected to have or result in a (i) an adverse effect on the
legality, validity or enforceability of any Transaction Document, or (ii) a
material and adverse effect on the results of operations, assets, business
or condition (financial or otherwise) of (i) the Borrower, (ii) any
Subsidiary party to a Transaction Document, or (iii) the Borrower and the
Subsidiaries, taken as a whole;

                  (e) No Suspensions of Trading in Common Stock; Listing.
                      --------------------------------------------------
Trading in the Common Stock shall not have been suspended by the Commission
or any Trading Market (except for any suspensions of trading of not more
than one Trading Day solely to permit dissemination of material information
regarding the Borrower) at any time since the date of execution of this
Agreement, and the Common Stock shall have been at all times since such date
listed for trading on a Trading Market;

                  (f) Nasdaq Listing. The Nasdaq Stock Market shall have
                      --------------
waived application of the 15 day prior notice contained in NASD Marketplace
Rule 4310(17)(D) or such timeframe shall have expired without objection;

                  (g) Bank Consent. The Borrower shall have received the
                      ------------
consent of each bank or other lender or provider of credit to the Borrower
or any Subsidiary whose consent is required with respect to the transactions
contemplated by the Transaction Documents as well as an estoppel certificate
indicating the absence of any event of default or any default which could
with or without the passage of time or notice or both in an event of default
under any document or agreement governing the transactions with such bank,
lender or provider or credit; and

                                     26

                  (h) Borrower Deliverables. The Lenders shall have received
                      ---------------------
the Borrower Deliverables.

         6.2. Conditions Precedent to the Obligations of the Borrower to
              ----------------------------------------------------------
deliver the Notes and the Warrants. The obligation of the Borrower to
----------------------------------
deliver the Notes and the Warrants is subject to the satisfaction or waiver
by the Borrower hereunder of each of the following conditions:

                  (a) Representations and Warranties. The representations
                      ------------------------------
and warranties of each Lender contained herein shall be true and correct in
all respects as of the date when made and as of the Closing Date as though
made on and as of such date;

                  (b) Performance. Each Lender shall have performed,
                      -----------
satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by such Lender at or prior to the
Closing;

                  (c) No Injunction. No statute, rule, regulation, executive
                      -------------
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents; and

                  (d) Nasdaq Listing. The Nasdaq Stock Market shall have
                      --------------
waived application of the 15 day prior notice contained in NASD Marketplace
Rule 4310(17)(D) or such timeframe shall have expired without objection.

                                ARTICLE VII.

                            ADMINISTRATIVE AGENT

         Each Lender hereby irrevocably appoints the Administrative Agent as
its agent and authorizes the Administrative Agent to take such actions on
its behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.

         The Person serving as the Administrative Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent,
and such Person and its Affiliates may lend money to and generally engage in
any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.

         The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of
the foregoing, (i) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether an Event of Default
(or an event which, with the giving of notice, lapse of time, or both, would
constitute an Event of Default) has occurred and is continuing, (ii) the
Administrative Agent shall not have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated by the Transaction Documents that the
Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided

                                     27

in Section 8.4), and (iii) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the
Borrower, any Affiliate thereof or any Subsidiary that is communicated to or
obtained by the Person serving as Administrative Agent or any of its
Affiliates in any capacity. The Administrative Agent shall not be liable for
any action taken or not taken by it with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 8.4) or in
the absence of its own gross negligence or willful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Event of
Default (or any event which, with the giving of notice, lapse of time, or
both, would constitute an Event of Default) unless and until written notice
thereof is given to the Administrative Agent by the Borrower or a Lender
(and, promptly after its receipt of any such notice, it shall give each
Lender and the Borrower notice thereof), and the Administrative Agent shall
not be responsible for or have any duty to ascertain or inquire into (a) any
statement, warranty or representation made in or in connection with any
Transaction Document, (b) the contents of any certificate, report or other
document delivered thereunder or in connection therewith, (c) the
performance or observance of any of the covenants, agreements or other terms
or conditions set forth therein, (d) the validity, enforceability,
effectiveness or genuineness thereof or any other agreement, instrument or
other document or (e) the satisfaction of any condition set forth in Article
VI or elsewhere in the Transaction Documents.

         The Administrative Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to
be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or
by telephone and believed by it to be made by the proper Person, and shall
not incur any liability for relying thereon. The Administrative Agent may
consult with legal counsel (who may be counsel for the Borrower or any
Subsidiary), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in accordance
with the advice of any such counsel, accountants or experts.

         The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub agents
appointed by the Administrative Agent, provided that no such delegation
                                       --------
shall serve as a release of the Administrative Agent or waiver by the
Borrower or any Lender of any rights hereunder. The Administrative Agent and
any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and
to the Related Parties of the Administrative Agent and any such sub agent,
and shall apply to their respective activities in connection with the
activities as Administrative Agent.

         Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent
may resign at any time by notifying the Lenders and the Borrower. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor. If no successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent. Upon the acceptance of its appointment as

                                     28

Administrative Agent hereunder by a successor, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After the Administrative Agent's resignation
hereunder, the provisions of this Article and Section 8.18 shall continue in
effect for the benefit of such retiring Administrative Agent, its sub-agents
and their respective Related Parties in respect of any actions taken or
omitted to be taken by any of them while it was acting as Administrative
Agent.

         Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon any
Transaction Document, any related agreement or any document furnished
thereunder.

                                ARTICLE VIII.

                                MISCELLANEOUS

         8.1. Fees and Expenses. The Borrower shall be responsible for the
              -----------------
reasonable legal fees and expenses of the Administrative Agent and each
Lender in the event that the Borrower requests any waiver or amendment of
the provisions of any Transaction Document following the Closing. Except as
otherwise specified in the Transaction Documents (including without
limitation Section 8.18), and except that Borrower shall reimburse OMT for
its legal fees, of which amount $40,000 has been previously paid by the
Borrower, and expenses incurred in connection with its entering into the
Transaction Documents (OMT may deduct such amount from the Loan Amount
deliverable to the Borrower at Closing), each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of the Transaction
Documents. The Borrower shall pay all stamp and other taxes and duties
levied in connection with the sale of the Securities.

         8.2. Entire Agreement. The Transaction Documents, together with the
              ----------------
Exhibits and Schedules thereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such
matters, which the parties acknowledge have been merged into such documents,
exhibits and schedules. At or after the Closing, and without further
consideration, each party will execute and deliver to the other party hereto
such further documents as may be reasonably requested in order to give
practical effect to the intention of the parties under the Transaction
Documents.

         8.3. Notices. All notices or other communications or deliveries
              -------
required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the

                                     29

earliest of (a) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section
prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on a day that is not a Trading Day or later than 6:30 p.m. (New York City
time) on any Trading Day, (c) the Trading Day following the date of mailing,
if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The
addresses and facsimile numbers for such notices and communications shall be
as follows:

                  If to the Borrower:  Zoltek Companies, Inc.
                                       3101 McKelvey Rd.
                                       St. Louis, Missouri 63044
                                       Facsimile No.: (314) 291-9082
                                       Attention: Chief Financial Officer

                  With a copy to:      Thompson Coburn LLP
                                       One U.S. Bank Plaza
                                       St. Louis, Missouri 63101
                                       Facsimile No.: (314) 552-7000
                                       Attention: Thomas A. Litz, Esq.

                  If to any Lender:    To the address and facsimile number set
                                       forth under such Lender's name on its
                                       signature page attached hereto.

                  If to the
                  Administrative       To the address and facsimile number
                  Agent:               set forth under the Administrative
                                       Agent's name on its signature page
                                       attached hereto.

or such other address or facsimile number as may be designated in writing
hereafter, in the same manner, by such Person.

         8.4. Amendments; Waivers
              -------------------

                  (a) No failure or delay by the Administrative Agent or any
Lender in exercising any right or power under any Transaction Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies
of the Administrative Agent and the Lenders under the Transaction Documents
are cumulative and are not exclusive of any rights or remedies that they
would otherwise have. No waiver of any provision of any Transaction Document
or consent to any departure by the Borrower or any Subsidiary therefrom
shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.

                                     30

                  (b) Neither any Transaction Document (which, for purposes
of this Section 8.4(b), shall include the Shareholders Agreement) nor any
provision thereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower and the
Required Lenders or by the Borrower and the Administrative Agent with the
consent of the Required Lenders, provided that no such agreement shall (i)
increase the amount of the Loan agreed to be made by any Lender without the
written consent of such Lender, (ii) change the rate of interest applicable
to any Loan or the conversion price with respect to any Note unless the
resulting rate of interest or conversion price (as the case may be) applies
to all Loans or Notes (as the case may be), (iii) change any other term of
any Transaction Document if, as a result thereof, the rights and obligations
of any Lender under the Transaction Documents would be disproportionately
(based on its pro rata share) affected relative to the rights and
obligations of any other Lender under the Transaction Documents, or (iv)
change any of the provisions of this Section or the definition of the term
"REQUIRED LENDERS" or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, or
change the currency in which Loans are to be made or payments under the
Transaction Documents are to be made, or provide for additional borrowers,
without the written consent of each Lender, and provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent without the prior written consent of the
Administrative Agent.

         8.5. Construction. The headings herein are for convenience only, do
              ------------
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their
mutual intent. This Agreement shall be construed as if drafted jointly by
the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement or any of the Transaction Documents.

         8.6. Successors and Assigns. This Agreement shall be binding upon
              ----------------------
and inure to the benefit of the parties and their successors and permitted
assigns. The Borrower may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Lenders. Any
Lender may assign its rights under this Agreement to any Person to whom such
Lender assigns or transfers any Securities.

         8.7. No Third-Party Beneficiaries. This Agreement is intended for
              ----------------------------
the benefit of the parties hereto and their respective successors and
permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person.

         8.8. Governing Law. All questions concerning the construction,
              -------------
validity, enforcement and interpretation of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement, the Notes, the Warrants and the Registration Rights
Agreement (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York, Borough of Manhattan
(the "NEW YORK

                                     31

COURTS"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of the
any of the Transaction Documents), and hereby irrevocably waives, and agrees
not to assert in any Proceeding, any claim that it is not personally subject
to the jurisdiction of any such New York Court, or that such Proceeding has
been commenced in an improper or inconvenient forum. Each party hereto
hereby irrevocably waives personal service of process and consents to
process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby. If either party shall commence a
Proceeding to enforce any provisions of a Transaction Document, then the
prevailing party in such Proceeding shall be reimbursed by the other party
for its reasonable attorneys' fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such Proceeding.

         8.9. Survival. The representations, warranties, agreements and
              --------
covenants contained herein shall survive the Closing and the delivery,
exercise and conversion of the Securities.

         8.10. Execution. This Agreement may be executed in two or more
               ---------
counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall
create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) the same with the same force and effect
as if such facsimile signature page were an original thereof.

         8.11. Severability. If any provision of this Agreement is held to
               ------------
be invalid or unenforceable in any respect, the validity and enforceability
of the remaining terms and provisions of this Agreement shall not in any way
be affected or impaired thereby and the parties will attempt to agree upon a
valid and enforceable provision that is a reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision in this
Agreement.

         8.12. Rescission and Withdrawal Right. Notwithstanding anything to
               -------------------------------
the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, whenever any Lender exercises a right, election,
demand or option under a Transaction Document and the Borrower does not
timely perform its related obligations within the periods therein provided,
then such Lender may rescind or withdraw, in its sole discretion from time
to time upon written notice to the Borrower, any relevant notice, demand or
election in whole or in part without prejudice to its future actions and
rights.

         8.13. Replacement of Securities. If any certificate or instrument
               -------------------------
evidencing any Securities is mutilated, lost, stolen or destroyed, the
Borrower shall issue or cause to be issued in exchange and substitution for
and upon cancellation thereof, or in lieu of and substitution

                                     32

therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Borrower of such loss, theft or destruction
and customary and reasonable indemnity, if requested. The applicants for a
new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs associated with the issuance of such
replacement Securities.

         8.14. Remedies. In addition to being entitled to exercise all
               --------
rights provided herein or granted by law, including recovery of damages, the
Lenders and the Borrower will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive
in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.

         8.15. Payment Set Aside. To the extent that the Borrower makes a
               -----------------
payment or payments to any Lender pursuant to any Transaction Document or a
Lender enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Borrower, a trustee, receiver or any other
person under any law (including, without limitation, any bankruptcy law,
state or federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff
had not occurred.

         8.16. Independent Nature of Lenders. The obligations of each Lender
               -----------------------------
under each Transaction Document are several and not joint with the
obligations of each other Lender, and no Lender shall be responsible in any
way for the performance or observance of the obligations of any other Lender
under any Transaction Document. The decision of each Lender to acquire
Securities pursuant to this Agreement has been made by such Lender and each
Lender confirms that it has only relied on the advice of its own business
and/or legal counsel and not on the advice of any other Lender's business
and/or legal counsel. Nothing contained herein, or in any Transaction
Document, and no action taken by any Lender pursuant hereto or thereto,
shall be deemed to constitute the Lenders (or any of them) as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Lenders are in any way acting in concert or as a group
with respect to the transactions contemplated by the Transaction Documents.
Except as specifically provided in the Transaction Documents, each Lender
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the
other Transaction Documents, without joining any other Lender as an
additional party in any proceeding for such purpose. Each Lender represents
that it has been represented by its own separate legal counsel in its review
and negotiations of this Agreement and the Transaction Documents and that
Proskauer Rose LLP represents only OMT in connection with this Agreement and
the Transaction Documents.

         8.17. Limitation of Liability. Notwithstanding anything herein to
               -----------------------
the contrary, the Borrower acknowledges and agrees that the liability of any
Lender arising directly or indirectly, under any Transaction Document, of
any and every nature whatsoever, shall be satisfied solely out of the assets
of such Lender, and that no trustee, officer, other investment vehicle
affiliated

                                     33

with such Lender or any investor, shareholder or holder of shares of
beneficial interest of such a Lender shall be personally liable for any
liabilities of such Lender.

         8.18. Expenses; Indemnity; Damage Waiver
               ----------------------------------

                  (a) The Borrower shall pay (i) all reasonable out of
pocket costs and expenses incurred by the Administrative Agent and its
Related Parties, including the reasonable fees, charges and disbursements of
counsel for the Administrative Agent, in connection with the administration
of each Transaction Document, and (ii) all reasonable out of pocket costs
and expenses incurred by any Lender, including the reasonable fees, charges
and disbursements of any counsel for any Lender and any consultant or expert
witness fees and expenses, in connection with the enforcement or protection
of its rights in connection with the Transaction Documents, including its
rights under this Section, or in connection with the Loans made, including
all such reasonable out of pocket costs and expenses incurred during any
workout, restructuring or negotiations in respect of such Loans.

                  (b) The Borrower shall indemnify each Lender and each
Related Party thereof (each such Person being called an "INDEMNITEE")
                                                         ----------
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of any Transaction Document or any
agreement or instrument contemplated thereby, the performance by the parties
to the Transaction Documents of their respective obligations thereunder or
the consummation of the Transactions or any other transactions contemplated
thereby, (ii) any Loan or the use of the proceeds thereof, or (iii) any
actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any
other theory and regardless of whether any Indemnitee is a party thereto,
provided that such indemnity shall not, as to any Indemnitee, be available
--------
to the extent that such losses, claims, damages, liabilities or related
expenses are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee.

                  (c) To the extent that the Borrower or any Subsidiary
fails to pay any amount required to be paid by it to the Administrative
Agent under this Section 8.18, each Lender severally agrees to pay to the
Administrative Agent an amount equal to the product of such unpaid amount
multiplied by a fraction, the numerator of which is the outstanding
-------------
principal balance of such Lender's Loans and the denominator of which is the
outstanding principal balance of all Lenders' Loans (in each case determined
as of the time that the applicable unreimbursed expense or indemnity payment
is sought or, in the event that no Lender shall have any outstanding Loans
at such time, as of the last time at which any Lender had any outstanding
Loans), provided that the unreimbursed expense or indemnified loss, claim,
        --------
damage, liability or related expense, as applicable, was incurred by or
asserted against the Administrative Agent in its capacity as such.

                  (d) To the extent permitted by applicable law, the
Borrower shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential
or punitive damages (as opposed to direct and actual damages) arising out

                                     34

of, in connection with, or as a result of, any Transaction Document or any
agreement, instrument or other document contemplated thereby, the
transactions contemplated by the Loan Documents or the use of the proceeds
thereof.

                  (e) All amounts due under this Section shall be payable
promptly but in no event later than ten days after written demand therefor.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                           SIGNATURE PAGES FOLLOW]

                                     35

                         LOAN AND WARRANT AGREEMENT
                         --------------------------

                  IN WITNESS WHEREOF, the parties hereto have caused this
Loan and Warrant Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.

                                 ZOLTEK COMPANIES, INC.

                                 By:
                                    ---------------------------------
                                    Name:
                                    Title:

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES OF LENDERS FOLLOW]

                         LOAN AND WARRANT AGREEMENT
                         --------------------------

                  IN WITNESS WHEREOF, the parties hereto have caused this
Loan and Warrant Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.

                                 OMICRON MASTER TRUST, in its capacity as
                                 Administrative Agent

                                 By:
                                    ---------------------------------
                                    Name:
                                    Title:

                                 Address for Notice:

                                 c/o Omicron Capital, L.P.
                                 810 Seventh Avenue, 39th Floor
                                 New York, New York 10019
                                 Facsimile: (212) 803-5269
                                 Attn: Bruce Bernstein

                                 With a copy to:

                                 Proskauer Rose LLP
                                 1585 Broadway
                                 New York, NY 10036-8299
                                 Facsimile (212) 969-2900
                                 Attn: Adam J. Kansler, Esq.

                         LOAN AND WARRANT AGREEMENT
                         --------------------------

                  IN WITNESS WHEREOF, the parties hereto have caused this
Loan and Warrant Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.

                                 [Lender]

                                 By:
                                    ---------------------------------
                                    Name:
                                    Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00077-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00077-of-00352.parquet"}]]