Document:

<PAGE>

                                                                   EXHIBIT 10.38

                         COMMERCIAL SECURITY AGREEMENT

<TABLE>
<S>                <C>             <C>             <C>           <C>        <C>               <C>           <C>           <C>
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    Principal       Loan Date       Maturity       Loan No       Call       Collateral        Account       Officer       Initials
  $1,250,000.00    04-24-2000      04-24-2001       9001          500          6073           3105442         952
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References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
                                                             or item.
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Borrower: INDUSTRIAL DATA SYSTEMS CORPORATION (TIN:    Lender: THE FROST NATIONAL BANK
          88-0322261); ET.AL.                                  P.O. BOX 1600
          600 CENTURY PLAZA DRIVE, BUILDING 140                SAN ANTONIO, TX 78296
          HOUSTON, TX 77073

Grantor:  INDUSTRIAL DATA SYSTEMS CORPORATION
====================================================================================================================================
</TABLE>

THIS COMMERCIAL SECURITY AGREEMENT is entered into among INDUSTRIAL DATA SYSTEMS
CORPORATION INDUSTRIAL DATA SYSTEMS, INC., THERMAIRE, INC. dba THERMAL
CORPORATION, CONSTANT POWER MANUFACTURING, INC. and IDS ENGINEERING, INC.
(referred to below individually and collectively as "Borrower"); INDUSTRIAL DATA
SYSTEMS CORPORATION (referred to below as "Grantor"); and THE FROST NATIONAL
BANK (referred to below as "Lender"). For valuable consideration, Grantor grants
to Lender a security interest in the Collateral to secure the Indebtedness and
agrees that Lender shall have the rights stated in this Agreement with respect
to the Collateral, in addition to all other rights which Lender may have by law.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

     Agreement. The word "Agreement" means this Commercial Security Agreement,
     as this Commercial Security Agreement may be amended or modified from time
     to time, together with all exhibits and schedules attached to this
     Commercial Security Agreement from time to time.

     Borrower. The word "Borrower" means each and every person or entity signing
     the Note, including without limitation INDUSTRIAL DATA SYSTEMS CORPORATION,
     INDUSTRIAL DATA SYSTEMS, INC., THERMAIRE, INC. dba THERMAL CORPORATION,
     CONSTANT POWER MANUFACTURING, INC. and IDS ENGINEERING, INC.

     Collateral. The word "Collateral" means the following described property of
     Grantor, whether now owned or hereafter acquired, whether now existing or
     hereafter arising, and wherever located:

          All inventory and accounts

     In addition, the word "Collateral" includes all the following, whether now
     owned or hereafter acquired, whether now existing or hereafter arising, and
     wherever located:

          (a)  All attachments, accessions, accessories, tools, parts, supplies,
          increases, and additions to and all replacements of and substitutions
          for any property described above.

          (b)  All products and produce of any of the property described in this
          Collateral section.

          (c)  All accounts, general intangibles, instruments, rents, monies,
          payments, and all other rights, arising out of a sale, lease, or other
          disposition of any of the property described in this Collateral
          section.

          (d)  All proceeds (including insurance proceeds) from the sale,
          destruction, loss, or other disposition of any of the property
          described in this Collateral section.

          (e)  All records and data relating to any of the property described in
          this Collateral section, whether in the form of a writing, photograph,
          microfilm, microfiche, or electronic media, together with all of
          Grantor's right, title, and interest in and to all computer software
          required to utilize, create, maintain, and process any such records or
          data on electronic media.

     Event of Default. The words "Event of Default" mean and include without
     limitation any of the Events of Default set forth below in the section
     titled "Events of Default."

     Grantor. The word "Grantor" means INDUSTRIAL DATA SYSTEMS CORPORATION. Any
     Grantor who signs this Agreement, but does not sign the Note, is signing
     this Agreement only to grant a security interest in Grantor's interest in
     the Collateral to Lender and is not personally liable under the Note except
     as otherwise provided by contract or law (e.g., personal liability under a
     guaranty or as a surety).

     Guarantor. The word "Guarantor" means and includes without limitation each
     and all of the guarantors, sureties, and accommodation parties in
     connection with the Indebtedness.

     Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
     the Note, including all principal and earned interest, together with all
     other indebtedness and costs and expenses for which Grantor or Borrower is
     responsible under this Agreement or under any of the Related Documents. In
     addition, the word "Indebtedness" includes all other obligations, debts and
     liabilities, plus interest thereon, of Borrower, or any one or more of
     them, to Lender, as well as all claims by Lender against Borrower, or any
     one or more of them, whether existing now or later; whether they are
     voluntary or involuntary, due or not due, direct or indirect, absolute or
     contingent, liquidated or unliquidated; whether Borrower may be liable
     individually or jointly with others; whether Borrower may be obligated as
     guarantor, surety, accommodation party or otherwise.

     Lender. The word "Lender" means THE FROST NATIONAL BANK, its successors and
     assigns.

     Note. The word "Note" means the note or credit agreement dated April 24,
     2000, in the principal amount of $1,250,000.00 from Borrower to Lender,
     together with all renewals of, extensions of, modifications of,
     refinancings of, consolidations of and substitutions for the note or credit
     agreement.

     Related Documents. The word "Related Documents" mean and include without
     limitation all promissory notes, credit agreements, loan agreements,
     environmental agreements, guaranties, security agreements, mortgages, deeds
     of trust, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this
Agreement or by applicable law, (a) Borrower agrees
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04-24-200              COMMERCIAL SECURITY AGREEMENT                     Page 2
Loan No 9001                      (Continued)

=================    ==============================     ========================
that Lender need not tell Borrower about any action or inaction Lender takes in
connection with this Agreement; (b) Borrower assumes the responsibility for
being and keeping informed about the Collateral; and (c) Borrower waives any
defenses that may arise because of any action or inaction of Lender, including
without limitation any failure of Lender to realize upon the Collateral or any
delay by Lender in realizing upon the Collateral; and Borrower agrees to remain
liable under the Note no matter what action Lender takes or fails to take under
this Agreement.

GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (a) this
Agreement is executed at Borrower's request and not at the request of Lender;
(b) Grantor has the full right, power and authority to enter into this Agreement
and to pledge the Collateral to Lender; (c) Grantor has established adequate
means of obtaining from Borrower on a continuing basis information about
Borrower's financial condition; and (d) Lender has made no representation to
Grantor about Borrower or Borrower's creditworthiness.

GRANTOR'S WAIVERS. Grantor waives all requirements of presentment, protest,
demand, and notice of dishonor or non-payment to Grantor, Borrower, or any other
party to the Indebtedness or the Collateral. Lender may do any of the following
with respect to any obligation of any Borrower, without first obtaining the
consent of Grantor: (a) grant any extension of time for any payment, (b) grant
any renewal, (c) permit any modification of payment terms or other terms, or (d)
exchange or release any Collateral or other security. No such act or failure to
act shall affect Lender's rights against Grantor or the Collateral.

If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Grantor hereby forever waives and relinquishes in favor of
Lender and Borrower, and their respective successors, any claim or right to
payment Grantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Grantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.

RIGHT OF SETOFF. Grantor hereby grants Lender a contractual security interest in
and hereby assigns, conveys, delivers, pledges, and transfers all of Grantor's
right, title and interest in and to Grantor's accounts with Lender (whether
checking, savings, or some other account), including all accounts held jointly
with someone else and all accounts Grantor may open in the future, excluding,
however, all IRA and Keogh accounts, and all trust accounts for which the grant
of a security interest would be prohibited by law. Grantor authorizes Lender, to
the extent permitted by applicable law, to charge or setoff all indebtedness
against any and all such accounts.

OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:

     Perfection of Security Interest. Grantor agrees to execute such financing
     statements and to take whatever other actions are requested by Lender to
     perfect and continue Lender's security interest in the Collateral. Upon
     request of Lender, Grantor will deliver to Lender any and all of the
     documents evidencing or constituting the Collateral, and Grantor will note
     Lender's interest upon any and all chattel paper if not delivered to Lender
     for possession by Lender. Grantor hereby appoints Lender as its irrevocable
     attorney-in-fact for the purpose of executing any documents necessary to
     perfect or to continue the security interest granted in this Agreement.
     Lender may at any time, and without further authorization from Grantor,
     file a carbon, photographic or other reproduction of any financing
     statement or of this Agreement for use as a financing statement. Grantor
     will reimburse Lender for all expenses for the perfection and the
     continuation of the perfection of Lender's security interest in the
     Collateral. Grantor promptly will notify Lender before any change in
     Grantor's name including any change to the assumed business names of
     Grantor. This is a continuing Security Agreement and will continue in
     effect even though all or any part of the indebtedness is paid in full and
     even though for a period of time Borrower may not be indebted to Lender.

     No Violation. The execution and delivery of this Agreement will not violate
     any law or agreement governing Grantor or to which Grantor is a party, and
     its articles or agreements relating to entity incorporation, organization
     or existence do not prohibit any term or condition of this Agreement.

     Enforceability of Collateral. To the extent the Collateral consists of
     accounts, chattel paper, or general intangibles, the Collateral is
     enforceable in accordance with its terms, is genuine, and complies with
     applicable laws concerning form, content and manner of preparation and
     execution, and all persons appearing to be obligated on the Collateral have
     authority and capacity to contract and are in fact obligated as they appear
     to be on the Collateral. At the time any account becomes subject to a
     security interest in favor of Lender, the account shall be a good and valid
     account representing an undisputed, bona fide indebtedness incurred by the
     account debtor, for merchandise held subject to delivery instructions or
     theretofore shipped or delivered pursuant to a contract of sale, or for
     services theretofore performed by Grantor with or for the account debtor;
     there shall be no setoffs or counterclaims against any such account; and no
     agreement under which any deductions or discounts may be claimed shall have
     been made with the account debtor except those disclosed to Lender in
     writing.

     Location of the Collateral. Grantor, upon request of Lender, will deliver
     to Lender in form satisfactory to Lender a schedule of real properties and
     Collateral locations relating to Grantor's operations, including without
     limitation the following: (a) all real property owned or being purchased by
     Grantor; (b) all real property being rented or leased by Grantor; (c) all
     storage facilities owned, rented, leased, or being used by Grantor; and (d)
     all other properties where Collateral is or may be located. Except in the
     ordinary course of its business, Grantor shall not remove the Collateral
     from its existing locations without the prior written consent of Lender.

     Removal of Collateral. Grantor shall keep the Collateral (or to the extent
     the Collateral consists of intangible property such as accounts, the
     records concerning the Collateral) at Grantor's address shown above, or at
     such other locations as are acceptable to Lender. Except in the ordinary
     course of its business, including the sales of inventory, Grantor shall not
     remove the Collateral from its existing locations without the prior written
     consent of Lender. To the extent that the Collateral consists of vehicles,
     or other titled property, Grantor shall not take or permit any action which
     would require application for certificates of title for the vehicles
     outside the State of Texas, without the prior written consent of Lender.

     Transactions Involving Collateral. Except for inventory sold or accounts
     collected in the ordinary course of Grantor's business, Grantor shall not
     sell, offer to sell, or otherwise transfer or dispose of the Collateral.
     While Grantor is not in default under this Agreement, Grantor may sell
     inventory, but only in the ordinary course of its business and only to
     buyers who qualify as a buyer in the ordinary course of business. A sale in
     the ordinary course of Grantor's business does not include a transfer in
     partial or total satisfaction of a debt or any bulk sale. Grantor shall not
     pledge, mortgage, encumber or otherwise permit the Collateral to be subject
     to any lien, security interest, encumbrance, or charge, other than the
     security interest provided for in this Agreement, without the prior written
     consent of Lender. This includes security interests even if junior in right
     to the security interests granted under this Agreement. Unless waived by
     Lender, all proceeds from any disposition of the Collateral (for whatever
     reason) shall be held in trust for Lender and shall not be commingled with
     any other funds; provided however, this requirement shall not constitute
     consent by Lender to any sale or other disposition. Upon receipt, Grantor
     shall immediately deliver any such proceeds to Lender.

     Title. Grantor represents and warrants to Lender that it holds good and
     marketable title to the Collateral, free and clear of all liens and
     encumbrances except for the lien of this Agreement. No financing statement
     covering any of the Collateral is on file in any public office other than
     those which reflect the security interest created by this Agreement or to
     which Lender has specifically consented. Grantor shall defend Lender's
     rights in the Collateral against the claims and demands of all other
     persons.

     Collateral Schedules and Locations. As often as Lender shall require, and
     insofar as the Collateral consists of accounts, Grantor shall deliver to
     Lender schedules of such Collateral, including such information as Lender
     may require, including without limitation names and addresses of account
     debtors and agings of accounts. Insofar as the Collateral consists of
     inventory, Grantor shall deliver to Lender, as often as Lender shall
     require, such lists, descriptions, and designations of such Collateral as
     Lender may require to identify the nature, extent, and location of such

<PAGE>

04-24-2000               COMMERCIAL SECURITY AGREEMENT                    Page 3
Loan No 9001                      (Continued)

================================================================================

     Collateral. Such information shall be submitted for Grantor and each of its
     subsidiaries or related companies.

     Maintenance and Inspection of Collateral. Grantor shall maintain all
     tangible Collateral in good condition and repair. Grantor will not commit
     or permit damage to or destruction of the Collateral or any part of the
     Collateral. Lender and its designated representatives and agents shall have
     the right at all reasonable times to examine, inspect, and audit the
     Collateral wherever located. Grantor shall immediately notify Lender of all
     cases involving the return, rejection, repossession, loss or damage of or
     to any Collateral; of any request for credit or adjustment or of any other
     dispute arising with respect to the Collateral; and generally of all
     happenings and events affecting the Collateral or the value or the amount
     of the Collateral.

     Taxes, Assessments and Liens. Grantor will pay when due all taxes,
     assessments and liens upon the Collateral, its use or operation, upon this
     Agreement, upon any promissory note or notes evidencing the Indebtedness,
     or upon any of the other Related Documents. Grantor may withhold any such
     payment or may elect to contest any lien if Grantor is in good faith
     conducting an appropriate proceeding to contest the obligation to pay and
     so long as Lender's interest in the Collateral is not jeopardized in
     Lender's sole opinion. If the Collateral is subjected to a lien which is
     not discharged within fifteen (15) days, Grantor shall deposit with Lender
     cash, a sufficient corporate surety bond or other security satisfactory to
     Lender in an amount adequate to provide for the discharge of the lien plus
     any interest, costs, attorneys' fees or other charges that could accrue as
     a result of foreclosure or sale of the Collateral. In any contest Grantor
     shall defend itself and Lender and shall satisfy any final adverse judgment
     before enforcement against the Collateral. Grantor shall name Lender as an
     additional obligee under any surety bond furnished in the contest
     proceedings.

     Compliance With Governmental Requirements. Grantor shall comply promptly
     with all laws, ordinances, rules and regulations of all governmental
     authorities, now or hereafter in effect, applicable to the ownership,
     production, disposition, or use of the Collateral. Grantor may contest in
     good faith any such law, ordinance or regulation and withhold compliance
     during any proceeding, including appropriate appeals, so long as Lender's
     interest in the Collateral, in Lender's opinion, is not jeopardized.

     Hazardous Substances. Grantor represents and warrants that the Collateral
     never has been, and never will be so long as this Agreement remains a lien
     on the Collateral, used for the generation, manufacture, storage,
     transportation, treatment, disposal, release or threatened release of any
     hazardous waste or substance, as those terms are defined in the
     Comprehensive Environmental Response, Compensation, and Liability Act of
     1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund
     Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"),
     the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
     seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
     et seq., or other applicable state or Federal laws, rules, or regulations
     adopted pursuant to any of the foregoing. The terms "hazardous waste" and
     "hazardous substance" shall also include, without limitation, petroleum and
     petroleum by-products or any fraction thereof and asbestos. The
     representations and warranties contained herein are based on Grantor's due
     diligence in investigating the Collateral for hazardous wastes and
     substances. Grantor hereby (a) releases and waives any future claims
     against Lender for indemnity or contribution in the event Grantor becomes
     liable for cleanup or other costs under any such laws, and (b) agrees to
     indemnify and hold harmless Lender against any and all claims and losses
     resulting from a breach of this provision of this Agreement. This
     obligation to indemnify shall survive the payment of the Indebtedness and
     the satisfaction of this Agreement.

     Maintenance of Casualty Insurance. Grantor shall procure and maintain all
     risks insurance, including without limitation fire, theft and liability
     coverage together with such other insurance as Lender may require with
     respect to the Collateral, in form, amounts, coverages and basis reasonably
     acceptable to Lender. GRANTOR MAY FURNISH THE REQUIRED INSURANCE WHETHER
     THROUGH EXISTING POLICIES OWNED OR CONTROLLED BY GRANTOR OR THROUGH
     EQUIVALENT INSURANCE FROM ANY INSURANCE COMPANY AUTHORIZED TO TRANSACT
     BUSINESS IN THE STATE OF TEXAS. If Grantor fails to provide any required
     insurance or fails to continue such insurance in force, Lender may, but
     shall not be required to, do so at Grantor's expense, and the cost of the
     insurance will be added to the Indebtedness. If any such insurance is
     procured by Lender at a rate or charge not fixed or approved by the State
     Board of Insurance, Grantor will be so notified, and Grantor will have the
     option for five (5) days of furnishing equivalent insurance through any
     insurer authorized to transact business in Texas. Grantor, upon request of
     Lender, will deliver to Lender from time to time the policies or
     certificates of insurance in form satisfactory to Lender, including
     stipulations that coverages will not be cancelled or diminished without at
     least ten (10) days' prior written notice to Lender and not including any
     disclaimer of the insurer's liability for failure to give such a notice.
     Each insurance policy also shall include an endorsement providing that
     coverage in favor of Lender will not be impaired in any way by any act,
     omission or default of Grantor or any other person. In connection with all
     policies covering assets in which Lender holds or is offered a security
     interest, Grantor will provide Lender with such loss payable or other
     endorsements as Lender may require. If Grantor at any time fails to obtain
     or maintain any insurance as required under this Agreement Lender may (but
     shall not be obligated to) obtain such insurance as Lender deems
     appropriate, including if it so chooses "single interest insurance" which
     will cover only Lender's interest in the Collateral.

     Application of Insurance Proceeds. Grantor shall promptly notify Lender of
     any loss or damage to the Collateral. Lender may make proof of loss if
     Grantor fails to do so within fifteen (15) days of the casualty. All
     proceeds of any insurance on the Collateral, including accrued proceeds
     thereon, shall be held by Lender as part of the Collateral. If Lender
     consents to repair or replacement of the damaged or destroyed Collateral,
     Lender shall, upon satisfactory proof of expenditure, pay or reimburse
     Grantor from the proceeds for the reasonable cost of repair or restoration.
     If Lender does not consent to repair or replacement of the Collateral,
     Lender shall retain a sufficient amount of the proceeds to pay all of the
     Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
     not been disbursed within six (6) months after their receipt and which
     Grantor has not committed to the repair or restoration of the Collateral
     shall be used to prepay the Indebtedness.

     Insurance Reserves. Lender may require Grantor to maintain with Lender
     reserves for payment of insurance premiums, which reserves shall be created
     by monthly payments from Grantor of a sum estimated by Lender to be
     sufficient to produce, at least fifteen (15) days before the premium due
     date, amounts at least equal to the insurance premiums to be paid. If
     fifteen (15) days before payment is due, the reserve funds are
     insufficient, Grantor shall upon demand pay any deficiency to Lender. The
     reserve funds shall be held by Lender as a general deposit and shall
     constitute a non-interest-bearing account which Lender may satisfy by
     payment of the insurance premiums required to be paid by Grantor as they
     become due. Lender does not hold the reserve funds in trust for Grantor,
     and Lender is not the agent of Grantor for payment of the insurance
     premiums required to be paid by Grantor. The responsibility for the payment
     of premiums shall remain Grantor's sole responsibility.

     Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender
     reports on each existing policy of insurance showing such information as
     Lender may reasonably request including the following: (a) the name of the
     insurer; (b) the risks insured; (c) the amount of the policy; (d) the
     property insured; (e) the then current value on the basis of which
     insurance has been obtained and the manner of determining that value; and
     (f) the expiration date of the policy. In addition, Grantor shall upon
     request by Lender (however not more often than annually) have an
     independent appraiser satisfactory to Lender determine, as applicable, the
     cash value or replacement cost of the Collateral.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised
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04-24-2000                  COMMERCIAL SECURITY AGREEMENT                 Page 4
Loan No 9001                        (Continued)
=========================   ============================== ====================

reasonable care in the custody and preservation of the Collateral if Lender
takes such action for that purpose as Grantor shall request or as Lender, in
Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
Indebtedness.

EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the Note rate from the date incurred or paid by
Lender to the date of repayment by Grantor. All such expenses shall become a
part of the Indebtedness and, at Lender's option, will (a) be payable on demand,
(b) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (i) the term of any
applicable insurance policy or (ii) the remaining term of the Note, or (c) be
treated as a balloon payment which will be due and payable at the Note's
maturity. This Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon the occurrence of an Event of Default.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

     Default on Indebtedness. Failure of Borrower to make any payment when due
     on the Indebtedness.

     Other Defaults. Failure of Grantor or Borrower to comply with or to perform
     any other term, obligation, covenant or condition contained in this
     Agreement or in any of the Related Documents or failure of Borrower to
     comply with or to perform any term, obligation, covenant or condition
     contained in any other agreement between Lender and Borrower.

     Default in Favor of Third Parties. Should Borrower or any Grantor default
     under any loan, extension of credit, security, agreement, purchase or sales
     agreement, or any other agreement, in favor of any other creditor or person
     that may materially affect any of Borrower's property or Borrower's or any
     Grantor's ability to repay the Loans or perform their respective
     obligations under this Agreement or any of the Related Documents.

     False Statements. Any warranty, representation or statement made or
     furnished to Lender by or on behalf of Grantor or Borrower under this
     Agreement, the Note or the Related Documents is false or misleading in any
     material respect, either now or at the time made or furnished.

     Defective Collateralization. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including failure of any collateral
     documents to create a valid and perfected security interest or lien) at any
     time and for any reason.

     Insolvency. The dissolution or termination of Grantor or Borrower's
     existence as a going business, the insolvency of Grantor or Borrower, the
     appointment of a receiver for any part of Grantor or Borrower's property,
     any assignment for the benefit of creditors, any type of creditor workout,
     or the commencement of any proceeding under any bankruptcy or insolvency
     laws by or against Grantor or Borrower.

     Creditor or Forfeiture Proceedings. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Grantor or Borrower or
     by any governmental agency against the Collateral or any other collateral
     securing the Indebtedness. This includes a garnishment of any of Grantor or
     Borrower's deposit accounts with Lender.

     Events Affecting Guarantor. Any of the preceding events occurs with respect
     to any Guarantor of any of the Indebtedness or such Guarantor dies or
     becomes incompetent.

     Adverse Change. A material adverse change occurs in Borrower's financial
     condition, or Lender believes the prospect of payment or performance of the
     Indebtedness is impaired.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Texas Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:

     Accelerate Indebtedness. Lender may declare the entire Indebtedness
     immediately due and payable, without notice.

     Assemble Collateral. Lender may require Grantor to deliver Lender all or
     any portion of the Collateral and any and all certificates of title and
     other documents relating to the Collateral. Lender may require Grantor to
     assemble the Collateral and make it available to Lender at a place to be
     designated by Lender. Lender also shall have full power to enter, provided
     Lender does so without a breach of the peace or a trespass, upon the
     property of Grantor to take possession of and remove the Collateral. If the
     Collateral contains other goods not covered by this Agreement at the time
     of repossession, Grantor agrees Lender may take such other goods, provided
     that Lender makes reasonable efforts to return them to Grantor after
     repossession.

     Sell the Collateral. Lender shall have full power to sell, lease, transfer,
     or otherwise deal with the Collateral or proceeds thereof in its own name
     or that of Grantor. Lender may sell the Collateral at public auction or
     private sale. Unless the Collateral threatens to decline speedily in value
     or is of a type customarily sold on a recognized market, Lender will give
     Grantor reasonable notice of the time after which any private sale or any
     other intended disposition of the Collateral is to be made. The
     requirements of reasonable notice shall be met if such notice is given at
     least ten (10) days before the time of the sale or disposition. All
     expenses relating to the disposition of the Collateral, including without
     limitation the expenses of retaking, holding, insuring, preparing for sale
     and selling the Collateral, shall become a part of the Indebtedness secured
     by this Agreement and shall be payable on demand, with interest at the Note
     rate from date of expenditure until repaid.

     Appoint Receiver. To the extent permitted by applicable law, Lender shall
     have the following rights and remedies regarding the appointment of a
     receiver: (a) Lender may have a receiver appointed as a mater of right, (b)
     the receiver may be an employee of Lender and may serve without bond, and
     (c) all fees of the receiver and his or her attorney shall become part of
     the Indebtedness secured by this Agreement and shall be payable on demand,
     with interest at the Note rate from date of expenditure until repaid.

     Collect Revenues, Apply Accounts. Lender, either itself or through a
     receiver, may collect the payments, rents, income, and revenues from the
     Collateral. Lender may at any time in its discretion transfer any
     Collateral into its own name or that of its nominee and receive the
     payments, rents, income and revenues therefrom and hold the same as
     security for the Indebtedness or apply it to payment of the Indebtedness in
     such order of preference as Lender may determine. Insofar as the Collateral
     consists of accounts, general intangibles, insurance policies, instruments,
     chattel paper, choses in action, or similar property, Lender may demand,
     collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
     realize on the Collateral as Lender may determine, whether or not
     Indebtedness or Collateral is then due. For these purposes, Lender may, on
     behalf of and in the name of Grantor, receive, open and dispose or mail
     addressed to Grantor; change any address to which mail and payments are to
     be sent; and endorse notes, checks, drafts, money orders, documents of
     title, instruments and items pertaining to payment, shipment, or storage of
     any Collateral. To facilitate collection, Lender may notify account debtors
     and obligors on any Collateral to make payments directly to Lender.

     Obtain Deficiency. If Lender chooses to sell any or all of the Collateral,
     Lender may obtain a judgment against Borrower for any deficiency

<PAGE>

04-24-2000                 COMMERCIAL SECURITY AGREEMENT                  Page 5
Loan No 9001                        (Continued)
================================================================================
     remaining on the Indebtedness due to Lender after application of all
     amounts received from the exercise of the rights provided in this
     Agreement. Borrower shall be liable for a deficiency even if the
     transaction described in this subsection is a sale of accounts or chattel
     paper.

     Other Rights and Remedies. Lender shall have all the rights and remedies of
     a secured creditor under the provisions of the Uniform Commercial Code, as
     may be amended from time to time. In addition, Lender shall have and may
     exercise any or all other rights and remedies it may have available at law,
     in equity, or otherwise.

     Cumulative Remedies. All of Lender's rights and remedies, whether evidenced
     by this Agreement or the Related Documents or by any other writing, shall
     be cumulative and may be exercised singularly or concurrently. Election by
     Lender to pursue any remedy shall not exclude pursuit of any other remedy,
     and an election to make expenditures or to take action to perform an
     obligation of Grantor or Borrower under this Agreement, after Grantor or
     Borrower's failure to perform, shall not affect Lender's right to declare a
     default and to exercise its remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     Amendments. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement. No alteration of or amendment to this
     Agreement shall be effective unless given in writing and signed by the
     party or parties sought to be charged or bound by the alteration or
     amendment.

     Applicable Law. This Agreement has been delivered to Lender and accepted by
     Lender in the State of Texas. If there is a lawsuit, and if the transaction
     evidenced by this Agreement occurred in Bexar County, Grantor and Borrower
     agree upon Lender's request to submit to the jurisdiction of the courts of
     Bexar County, the State of Texas. This Agreement shall be governed by and
     construed in accordance with the laws of the State of Texas and applicable
     Federal laws.

     Attorneys' Fees and Other Costs. Lender may hire an attorney to help
     collect the Note if Borrower does not pay, and Grantor and Borrower will
     pay Lender's reasonable attorneys' fees. Grantor and Borrower also will pay
     Lender all other amounts actually incurred by Lender as court costs, lawful
     fees for filing, recording, or releasing to any public office any
     instrument securing the Note; the reasonable cost actually expended for
     repossessing, storing, preparing for sale, and selling any security; and
     fees for noting a lien on or transferring a certificate of title to any
     motor vehicle offered as security for the Note, or premiums or identifiable
     charges received in connection with the sale of authorized insurance.

     Caption Headings. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     Multiple Parties; Corporate Authority. All obligations of Grantor and
     Borrower under this Agreement shall be joint and several, and all
     references to Borrower shall mean each and every Borrower, and all
     references to Grantor shall mean each and every Grantor. This means that
     each of the persons signing below is responsible for all obligations in
     this Agreement.

     Notices. All notices required to be given under this Agreement shall be
     given in writing, may be sent by telefacsimile (unless otherwise required
     by law), and shall be effective when actually delivered or when deposited
     with a nationally recognized overnight courier or deposited in the United
     States mail, first class, postage prepaid, addressed to the party to whom
     the notice is to be given at the address shown above. Any party may change
     its address for notices under this Agreement by giving formal written
     notice to the other parties, specifying that the purpose of the notice is
     to change the party's address. To the extent permitted by applicable law,
     if there is more than one Grantor or Borrower, notice to any Grantor or
     Borrower will constitute notice to all Grantor and Borrowers. For notice
     purposes, Grantor and Borrower will keep Lender informed at all times of
     Grantor and Borrower's current address(es).

     Power of Attorney. Grantor hereby appoints Lender as its true and lawful
     attorney-in-fact, irrevocably, with full power of substitution to do the
     following: (a) to demand, collect, receive, receipt for, sue and recover
     all sums of money or other property which may now or hereafter become due,
     owing or payable from the Collateral; (b) to execute, sign and endorse any
     and all claims, instruments, receipts, checks, drafts or warrants issued in
     payment for the Collateral; (c) to settle or compromise any and all claims
     arising under the Collateral, and, in the place and stead of Grantor, to
     execute and deliver its release and settlement for the claim; and (d) to
     file any claim or claims or to take any action or institute or take part in
     any proceedings, either in its own name or in the name of Grantor, or
     otherwise, which in the discretion of Lender may seem to be necessary or
     advisable. This power is given as security for the Indebtedness, and the
     authority hereby conferred is and shall be irrevocable and shall remain in
     full force and effect until renounced by Lender.

     Severability. If a court of competent jurisdiction finds any provision of
     this Agreement to be invalid or unenforceable as to any person or
     circumstance, such finding shall not render that provision invalid or
     unenforceable as to any other persons or circumstances. If feasible, any
     such offending provision shall be deemed to be modified to be within the
     limits of enforceability or validity; however, if the offending provision
     cannot be so modified, it shall be stricken and all other provisions of
     this Agreement in all other respects shall remain valid and enforceable.

     Successor Interests. Subject to the limitations set forth above on transfer
     of the Collateral, this Agreement shall be binding upon and inure to the
     benefit of the parties, their successors and assigns.

     Waiver. Lender shall not be deemed to have waived any rights under this
     Agreement unless such waiver is given in writing and signed by Lender. No
     delay or omission on the part of Lender in exercising any right shall
     operate as a waiver of such right or any other right. A waiver by Lender of
     a provision of this Agreement shall not prejudice or constitute a waiver of
     Lender's right otherwise to demand strict compliance with that provision or
     any other provision of this Agreement. No prior waiver by Lender, nor any
     course of dealing between Lender and Grantor, shall constitute a waiver of
     any of Lender's rights or of any of Grantor's obligations as to any future
     transactions. Whenever the consent of Lender is required under this
     Agreement, the granting of such consent by Lender in any instance shall not
     constitute continuing consent to subsequent instances where such consent is
     required and in all cases such consent may be granted or withheld in the
     sole discretion of Lender.

FACSIMILE DOCUMENT AND SIGNATURES. For purposes of negotiating and finalizing
this document, if this document is transmitted by facsimile machine ("fax"), it
shall be treated for all purposes as an original document. Additionally, the
signature of any party on this document transmitted by way of a fax machine
shall be considered for all purposes as an original signature. Any such faxed
document shall be considered to have the same binding legal effect as an
original document. At the request of any party, any faxed document shall be
re-executed by each signatory party in an original form.

WAIVER OF RIGHT TO TRIAL BY JURY. THE PARTIES TO THIS AGREEMENT HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE
PARTIES HERETO AGAINST THE OTHER TO ENFORCE THIS AGREEMENT, TO COLLECT DAMAGES
FOR THE BREACH OF THIS AGREEMENT, OR WHICH IN ANY OTHER WAY ARISE OUT OF, ARE
CONNECTED TO OR RELATED TO THIS AGREEMENT, OR THE SUBJECT MATTER OF THIS
AGREEMENT, ANY SUCH ACTION SHALL BE TRIED BY THE JUDGE WITHOUT A JURY.

<PAGE>

04-24-2000                  COMMERCIAL SECURITY AGREEMENT                 Page 6
Loan No 9001                        (Continued)
================================================================================
BORROWER AND GRANTOR ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY AGREEMENT, AND BORROWER AND GRANTOR AGREE TO ITS TERMS.
THIS AGREEMENT IS DATED APRIL 24, 2000.

The below listed Texas Corporations, each being bound by their President,
William A. Coskey:
INDUSTRIAL DATA SYSTEMS CORPORATION, Borrower
INDUSTRIAL DATA SYSTEMS, INC., Co-Borrower
THERMAIRE, INC., dba THERMAL CORPORATION, Co-Borrower
CONSTANT POWER MANUFACTURING, INC., Co-Borrower
IDS ENGINEERING, INC., Co-Borrower

/s/ William A. Coskey
------------------------------
WILLIAM A. COSKEY

GRANTOR:

INDUSTRIAL DATA SYSTEMS CORPORATION

By: /s/ William A. Coskey
   --------------------------------
   WILLIAM A. COSKEY, President

================================================================================<PAGE>

                                                                   EXHIBIT 10.39

                              COMMERCIAL GUARANTY
<TABLE>
<S>                 <C>             <C>             <C>        <C>        <C>             <C>            <C>             <C>
------------------------------------------------------------------------------------------------------------------------------------
    Principal       Loan Date       Maturity        Loan No    Call       Collateral      Account        Officer         Initial
                                                               500          6073          3105442         952
------------------------------------------------------------------------------------------------------------------------------------
        References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
                                                     particular loan or item.
------------------------------------------------------------------------------------------------------------------------------------

Borrower:  INDUSTRIAL DATA SYSTEMS CORPORATION (TIN:     Lender:  THE FROST NATIONAL BANK
           88-0322261); ET.AL.                                    P.O. BOX 1600
           600 CENTURY PLAZA DRIVE, BUILDING 140                  SAN ANTONIO, TX 78296
           HOUSTON, TX 77073

Guarantor: WILLIAM A. COSKEY AND HULDA L. COSKEY
           222 PALI COURT
           CONROE, TX 77304
====================================================================================================================================
</TABLE>

AMOUNT OF GUARANTY. The principal amount of this Guaranty is Six Hundred Twenty
Five Thousand & 00/100 Dollars ($625,000.00).

GUARANTY. For good and valuable consideration, WILLIAM A. COSKEY AND HULDA L.
COSKEY ("Guarantor") absolutely and unconditionally guarantees and promises to
pay to THE FROST NATIONAL BANK ("Lender") or its order, in legal tender of the
United States of America, the Indebtedness (as that term is defined below) of
INDUSTRIAL DATA SYSTEMS CORPORATION, INDUSTRIAL DATA SYSTEMS, INC., THERMAIRE,
INC. dba THERMAL CORPORATION, CONSTANT POWER MANUFACTURING, INC. and IDS
ENGINEERING, INC. ("Borrower") to Lender on the terms and conditions set forth
in this Guaranty.

DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:

      Borrower. The word "Borrower" means INDUSTRIAL DATA SYSTEMS CORPORATION,
      INDUSTRIAL DATA SYSTEMS, INC., THERMAIRE, INC. dba THERMAL CORPORATION,
      CONSTANT POWER MANUFACTURING, INC. and IDS ENGINEERING, INC..

      Guarantor. The word "Guarantor" means WILLIAM A. COSKEY AND HULDA L.
      COSKEY.

      Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for
      the benefit of Lender dated April 24, 2000.

      Indebtedness. The word "Indebtedness" means the Note, including (a) all
      principal, (b) all interest, (c) all late charges, (d) all loan fees and
      loan charges, and (e) all collection costs and expenses relating to the
      Note or to any Collateral for the Note. Collection costs and expenses
      include without limitation all of Lender's attorneys' fees and Lender's
      legal expenses, whether or not suit is instituted, and attorneys' fees and
      legal expenses for bankruptcy proceedings (including efforts to modify or
      vacate any automatic stay or injunction), appeals, and any anticipated
      post-judgement collection services.

      Lender. The word "Lender" means THE FROST NATIONAL BANK, its successors
      and assigns.

      Note. The word "Note" means the promissory note or credit agreement dated
      April 24, 2000, in the original principal amount of $1,250,000.00 from
      Borrower and any co-borrowers to Lender, together with all renewals of,
      extensions of, modifications of, refinancings of, consolidations of, and
      substitutions for the promissory note or agreement. Notice to Gaurantor:
      The Note evidences a revolving line of credit from Lender to Borrower.

      Related Documents. The words "Related Documents" mean and include without
      limitation all promissory notes, credit agreements, loan agreements,
      environmental agreements, guaranties, security agreements, mortgages,
      deeds of trust, and all other instruments, agreements and documents,
      whether now or hereafter existing, executed in connection with the
      Indebtedness.

MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time the sum of the principal amount of $625,000.00, plus
all interest thereon, plus all of Lender's costs, expenses, and attorneys' fees
incurred in connection with or relating to (a) the collection of the
Indebtedness, (b) the collection and sale of any collateral for the Indebtedness
or this Guaranty, or (c) the enforcement of this Guaranty. Attorneys' fees
include, without limitation, attorneys' fees whether or not there is a lawsuit,
and if there is a lawsuit, any fees and costs for trial and appeals.

The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided below
to the contrary) affect or invalidate any such other guaranties. The liability
of Guarantor will be the aggregate liability of Guarantor under the terms of
this Guaranty and any such other unterminated guaranties.

NATURE OF GUARANTY. Guarantor intends to guarantee at all times the performance
and prompt payment when due, whether at maturity or earlier by reason of
acceleration or otherwise, of all Indebtedness within the limits set forth in
the preceding section of this Guaranty. This Guaranty covers a revolving line
of credit and guarantor understands and agrees that this guarantee shall be open
and continuous until the line of credit is terminated and the Indebtedness is
paid in full, as provided below.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness shall have
been fully and finally paid and satisfied and all other obligations of Guarantor
under this Guaranty shall have been performed in full. Release of any other
guarantor or termination of any other guaranty of the Indebtedness shall not
affect the liability of Guarantor under this Guaranty. A revocation received by
Lender from any one or more Guarantors shall not affect the liability of any
remaining Guarantors under this Guaranty. This Guaranty covers a revolving line
of credit and it is specifically anticipated that fluctuations will occur in the
aggregate amount of Indebtedness owing from Borrower to Lender. Guarantor
specifically acknowledges and agrees that fluctuations in the amount of
Indebtedness, even to zero dollars ($0.00), shall not constitute a termination
of this Guaranty. Guarantor's liability under this Guaranty shall terminate only
upon (a) termination in writing by Borrower and Lender of the line of credit,
(b) payment of the Indebtedness in full in legal tender, and (c) payment in full
in legal tender of all other obligations of Guarantor under this Guaranty.

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, without notice
or demand and without lessening or otherwise affecting Guarantor's liability
under this Guaranty, from time to time: (a) to make one or more additional
secured or unsecured loans to Borrower, to lease equipment or other goods to
Borrower, or otherwise to extend additional credit to Borrower; (b) to alter,
compromise, renew, extend, accelerate, or otherwise change one or more times the
time for payment or other terms of the Indebtedness or any part of the
Indebtedness,including increases and decreases of the rate of interest on the
indebtedness; extensions may be repeated and may be for longer than the original
loan term; (c) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (d) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (e) to determine how, when and what application
of payments and credits shall be made on the Indebtedness; (f) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(g) to sell, transfer,

<PAGE>

Loan No 9001                  COMMERCIAL GUARANTY                         Page 2
                                  (Continued)
======================   ==============================   ======================

assign, or grant participations in all or any part of the indebtedness; and (h)
to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (a) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(b) this Guaranty is executed at Borrower's request and not aT the request of
Lender; (c) Guarantor has full power, right and authority to enter into this
Guaranty; (d) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (e) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (f) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present the financial condition of Guarantor as
of the dates the financial information is provided; (g) no material adverse
change has occurred in Guarantor's financial condition since the date of the
most recent financial statements provided to Lender and no event has occurred
which may materially adversely affect Guarantor's financial condition; (h) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(i) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (j) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower's financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy within Lender's power; or (g) to commit any act or omission of any
kind, or at any time, with respect to any matter whatsoever.

If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.

Guarantor waives all rights of Guarantor under Chapter 34 of the Texas Business
and Commerce Code. Guarantor also waives any and all rights or defenses arising
by reason of (a) any "one action" or "anti-deficiency" law or any other law
which may prevent Lender from bringing any action, including a claim for
deficiency, against Guarantor, before or after Lender's commencement or
completion of any foreclosure action, either judicially or by exercise of a
power of sale; (b) any election of remedies by Lender which destroys or
otherwise adversely affects Guarantor's subrogation rights or Guarantor's rights
to proceed against Borrower for reimbursement, including without limitation, any
loss of rights Guarantor may suffer by reason of any law limiting, qualifying,
or discharging the Indebtedness; (c) any disability or other defense of
Borrower, of any other guarantor, or of any other person, or by reason of the
cessation of Borrower's liability from any cause whatsoever, other than payment
in full in legal tender, of the Indebtedness; (d) any right to claim discharge
of the Indebtedness on the basis of unjustified impairment of any collateral for
the Indebtedness; (e) any statute of limitations, if at any time any action or
suit brought by Lender against Guarantor is commenced there is outstanding
Indebtedness of Borrower to Lender which is not barred by any applicable statute
of limitations; or (f) any defenses given to guarantors at law or in equity
other than actual payment and performance of the Indebtedness. If payment is
made by Borrower, whether voluntarily or otherwise, or by any third party, on
the Indebtedness and thereafter Lender is forced to remit the amount of that
payment to Borrower's trustee in bankruptcy or to any similar person under any
federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of enforcement of this
Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.

LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender by
law, Lender shall have, with respect to Guarantor's obligations to Lender under
this Guaranty and to the extent permitted by law, a contractual security
interest in and a right of setoff against, and Guarantor hereby assigns,
conveys, delivers, pledges, and transfers to Lender all of Guarantor's right,
title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
Lender, whether held in a general or special account or deposit, whether held
jointly with someone else, or whether held for safekeeping or otherwise,
excluding however all IRA, Keogh, and trust accounts. Every such security
interest and right of setoff may be exercised without demand upon or notice to
Guarantor. No security interest or right of setoff shall be deemed to have been
waived by any act or conduct on the part of Lender or by any neglect to exercise
such right to setoff or to enforce such security interest or by any delay in so
doing. Every right of setoff and security interest shall continue in full force
and effect until such right of setoff or security interest is specifically
waived or released by an instrument in writing executed by Lender.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR.  Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.

<PAGE>

04-24-2000                     COMMERCIAL GUARANTY                        Page 3
Loan No 9001                        (Continued)
================================================================================

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:

     Amendments. This Guaranty, together with any Related Documents, constitutes
     the entire understanding and agreement of the parties as to the matters set
     forth in this Guaranty. No alteration of or amendment to this Guaranty
     shall be effective unless given in writing and signed by the party or
     parties sought to be charged or bound by the alteration or amendment.

     Applicable Law. This Guaranty has been delivered to Lender and accepted by
     Lender in the State of Texas. If there is a lawsuit, and if the transaction
     evidenced by this Guaranty occurred in Bexar County, Guarantor agrees upon
     Lender's request to submit to the jurisdiction of the courts of Bexar
     County, State of Texas. This Guaranty shall be governed by and construed in
     accordance with the laws of the State of Texas and applicable Federal laws.

     Attorneys' Fees. In addition to Guarantor's guaranty of Borrower's Note as
     provided above, Lender may hire an attorney to help enforce this Guaranty
     if Guarantor does not pay, and Guarantor will pay Lender's reasonable
     attorneys' fees. Guarantor also will pay Lender all other amounts actually
     incurred by Lender as court costs, lawful fees for filing, recording, or
     releasing to any public office any instrument securing this Guaranty; the
     reasonable cost actually expended for repossessing, storing, preparing for
     sale, and selling any security; and fees for noting a lien on or
     transferring a certificate of title to any motor vehicle offered as
     security for this Guaranty.

     Notices. All notices required to be given by either party to the other
     under this Guaranty shall be in writing, may be sent by telefacsimile
     (unless otherwise required by law), and shall be effective when actually
     delivered or when deposited with a nationally recognized overnight courier,
     or when deposited in the United States mail, first class postage prepaid,
     addressed to the party to whom the notice is to be given at the address
     shown above or to such other addresses as either party may designate to the
     other in writing. If there is more than one Guarantor, notice to any
     Guarantor will constitute notice to all Guarantors. For notice purposes,
     Guarantor agrees to keep Lender informed at all times of Guarantor's
     current address.

     Interpretation. In all cases where there is more than one Borrower or
     Guarantor, then all words used in this Guaranty in the singular shall be
     deemed to have been used in the plural where the context and construction
     so require; and where there is more than one Borrower named in this
     Guaranty or when this Guaranty is executed by more than one Guarantor, the
     words "Borrower" and "Guarantor" respectively shall mean all and any one or
     more of them. The words "Guarantor," "Borrower," and "Lender" include the
     heirs, successors, assigns, and transferees of each of them. Caption
     headings in this Guaranty are for convenience purposes only and are not to
     be used to interpret or define the provisions of this Guaranty. If a court
     of competent jurisdiction finds any provision of this Guaranty to be
     invalid or unenforceable as to any person or circumstance, such finding
     shall not render that provision invalid or unenforceable as to any other
     persons or circumstances, and all provisions of this Guaranty in all other
     respects shall remain valid and enforceable. If any one or more of Borrower
     or Guarantor are corporations or partnerships, it is not necessary for
     Lender to inquire into the powers of Borrower or Guarantor or of the
     officers, directors, partners, or agents acting or purporting to act on
     their behalf, and any Indebtedness made or created in reliance upon the
     professed exercise of such powers shall be guaranteed under this Guaranty.

     Waiver. Lender shall not be deemed to have waived any rights under this
     Guaranty unless such waiver is given in writing and signed by Lender. No
     delay or omission on the part of Lender in exercising any right shall
     operate as a waiver of such right or any other right. A waiver by Lender of
     a provision of this Guaranty shall not prejudice or constitute a waiver of
     Lender's right otherwise to demand strict compliance with that provision or
     any other provision of this Guaranty. No prior waiver by Lender, nor any
     course of dealing between Lender and Guarantor, shall constitute a waiver
     of any of Lender's rights or of any of Guarantor's obligations as to any
     future transactions. Whenever the consent of Lender is required under this
     Guaranty, the granting of such consent by Lender in any instance shall not
     constitute continuing consent to subsequent instances where such consent is
     required and in all cases such consent may be granted or withheld in the
     sole discretion of Lender.

FACSIMILE DOCUMENTS AND SIGNATURES. For purposes of negotiating and finalizing
this document, if this document is transmitted by facsimile machine ("fax"), it
shall be treated for all purposes as an original document. Additionally, the
signature of any party on this document transmitted by way of a fax machine
shall be considered for all purposes as an original signature. Any such faxed
document shall be considered to have the same binding legal effect as an
original document. At the request of any party, any faxed document shall be
re-executed by each signatory party in an original form.

WAIVER OF RIGHT TO TRIAL BY JURY. THE PARTIES TO THIS AGREEMENT HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE
PARTIES HERETO AGAINST THE OTHER TO ENFORCE THIS AGREEMENT, TO COLLECT DAMAGES
FOR THE BREACH OF THIS AGREEMENT, OR WHICH IN ANY OTHER WAY ARISE OUT OF, ARE
CONNECTED TO OR ARE RELATED TO THIS AGREEMENT OR THE SUBJECT MATTER OF THIS
AGREEMENT. ANY SUCH ACTION SHALL BE TRIED BY THE JUDGE WITHOUT A JURY.

ARBITRATION. The parties to this agreement agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
arising from the Note or otherwise, including without limitation contract and
tort disputes, shall be arbitrated pursuant to the Commercial Arbitration Rules
of the American Arbitration Association, upon written request of either party.
The party that requests arbitration has the burden to initiate the arbitration
proceedings pursuant to any by complying with the Commercial Arbitration Rules
of the American Arbitration Association and shall pay all associated
administrative and filing fees. The arbitration shall be conducted in the City
of San Antonio, Bexar County, Texas, and administered by the American
Arbitration Association. All arbitration hearings will be commenced within sixty
(60) days of the written request for arbitration, and if the arbitration hearing
is not commenced within the sixty (60) days, the party that requested
arbitration shall have waived its election to arbitrate. No act to take or
dispose of any collateral securing the Note shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising any
rights relating to personal property; including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act, or exercise of any right, concerning
any collateral securing the Note, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral securing the Note,
shall also be arbitrated, provided however that no arbitrator shall have the
right or the power to enjoin or restrain any act of any party. Judgment upon any
award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in the Note shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and enforcement
of this arbitration provision.
<PAGE>
                                    COMMERCIAL GUARANTY              Page 4
Loan No 9001                            (Continued)
==========================  ====================================  =============

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED APRIL 24, 2000.

GUARANTOR:

/s/ William A. Coskey
-----------------------------------------
WILLIAM A. COSKEY AND HULDA L. COSKEY

/s/ Hulda L. Coskey
================================================================================
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver.3.28c(c) 2000 CFI ProServices, Inc.
All rights reserved. [TX-E20 E3.28 31054421.LN C17.OVL]

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