Document:

CITY OF AMES
                              ECONOMIC DEVELOPMENT
                           REVOLVING LOAN FUND PROGRAM
                                 LOAN AGREEMENT
                          (BIOFORCE NANOSCIENCES, INC.)

                              ARTICLE 1.0 - GENERAL

      1.1 Identification of Parties. This Agreement is entered into by and
between the City of Ames, Iowa (hereafter referred to as the "City") and
Bioforce Nanosciences, Inc., a Delaware Corporation, (hereinafter referred to as
the "Borrower").

      1.2 Statement of Purpose. WHEREAS, as part of its policy to foster
economic development, the City has adopted a program of financial assistance to
selected business enterprises by means of loans from the City made in accordance
with an adopted loan policy known as THE REVOLVING LOAN FUND; and,

      WHEREAS, the City has agreed to loan up to the amount of Fifty Thousand
Dollars ($50,000) to the Borrower to assist in the purchase of working capital;
and,

      WHEREAS, the Borrower has made application to the City of Ames, Iowa, for
this loan; and

      WHEREAS, the Borrower has qualified and been approved for such a loan and
has agreed to the conditions of the receipt of such a loan;

      NOW, THEREFORE, the parties hereto, in consideration of the premises, do
agree as follows:

      1.3 The Loan. The City agrees, upon the terms and condition hereinafter
set forth, to make loans of money to the Borrower in a total amount not to
exceed $50,000 in order to assist in the financing of the project described in
Article 2.2 of this Agreement. The obligation of the Borrower to repay the loan
shall be evidenced by a Promissory Note of the Borrower to the City in the
amount of $50,000, setting forth a five year schedule of principal and interest
payments, to be in the form attached hereto as Attachment "A". In the event the
Borrower fails to receive and/or spend the fill face amount of any loan as set
out herein and in said Promissory Note, then the amount of the loan shall be
reduced accordingly.

      1.4 Reports. The Borrower shall submit the following reports:

          Report                                Due Date
          ------                                --------
          Quarterly Finance & Progress Report   10th of the month following
                                                  the end of each quarter
          Final Progress Report                 Within 30 days of project
                                                  completion

      1.5 Assurances. The representations appearing in the Borrower's
application to the City for the loan are incorporated herein and made a part of
this agreement

                                  Page 1 of 8
<PAGE>

                        ARTICLE 2.0 - BORROWER'S PROJECT

      2.1 Statement of Work and Services. The Borrower shall perform in a
satisfactory and proper manner, as determined by the City, the activities
described in the approved application, Attachment "B" to this Agreement. This
Attachment is hereby made a part of this Agreement by reference. In addition,
Borrower's activities shall conform to the approved Project Budget form in
Attachment "B" to this Agreement, and the approved Project Schedule in
Attachment "B" to this Agreement.

      2.2 Project Description. As more specifically described in Borrower's
approved application to the City, the Project shall be:

                    See Borrower's Loan Application Attached

      2.3 Conveyance or Disposition of Project. The Borrower shall not sell,
transfer, convey, lease or otherwise dispose of the Project or of any part
thereof, without the consent of the City until the date on which this loan has
been fully repaid.

      2.4 Cost Sufficiency. The City does not make any warranty, either
expressed or implied, that the proceeds of the loan available for payment of the
costs of the Project will be sufficient to pay all the costs which will be
incurred in that connection. The City is under no obligation to advance funds in
addition to those specified in this agreement.

ARTICLE 3.0 - BORROWER'S CONTRIBUTION TO THE PROJECT

      3.1 Source(s)  of Other Contributions. (as stated in Borrowers Loan
Application)

      3.2 The obligation of the Borrower to pay the principal of and interest on
this loan and to perform its other obligations as described within this loan
agreement will be secured by a security interest in and to certain property as
referenced on the accompanying UCC-1 document, now owned or hereafter acquired
by Borrower, together with the proceeds, products, increase, issue, accessions,
attachments, accessories, parts, additions, repairs, replacements and
substitutes of to and or all of the foregoing.

                         ARTICLE 4.0 TERMS OF THE LOAN

      4.1 Maximum Amount of Loan. It is expressly understood and agreed that the
maximum amount to be loaned to the Borrower by the Lender shall be $50,000.

      4.2 Loan Rate. The Lender and Borrower agree that all finds loaned to
Borrower shall be at an interest rate of two and one hundred twenty-fifth
percent (2.125%), which is half of the prime rate in effect on the date the City
Council authorized the loan, with a principle and interest payment due on the
first day of each month from and after the date of this Agreement.

      4.3 Loan Term. The Lender and Borrower agree that the term of the loan
shall be five (5) years.

      4.4 Prepayment of Loan. The outstanding principle of the loan may be
prepaid by the Borrower at any time without penalty.

      4.5 Penalty. If, at the end of two years from the effective date of this
agreement, the full-time equivalent positions of employment stated in paragraph
9.9 have not been created and retained for the benefit of the City of Ames, a
penalty of up to 30% of the loan balance after the 24th payment

                                  Page 2 of 8
<PAGE>

on the amortization scheduled stated in the Promissory Note for this loan
agreement shall then be due and payable in accordance with the graduated penalty
chart below:

                Percent Jobs Created            Percent Penalty
                --------------------            ---------------
                      0 - 49.9%                        30%
                    50% - 59.9%                        25%
                    60% - 69.9%                        20%
                    70% - 79.9%                        15%
                    80% - 89.9%                        10%
                    90% - 99.9%                         5%

The penalty shall be due and payable immediately.

         ARTICLE 5.0 - CONDITIONS OF PAYMENT OF LOAN FUNDS TO RECIPIENT

      5.1 Requisition for Payment.

            a. Payments to the Borrower. All payments to the Borrower shall be
subject to the receipt by the City of a requisition for payment. The requisition
shall be made according to the format specified by the City.

            b. Supporting Evidence to Accompany Requisition. The Borrower shall
submit to the City such supporting evidence as may be reasonably required by the
City to substantiate all payments which are requested and to substantiate all
payments then made with respect to the project. In addition, the City may
require the Borrower to secure and provide evidence to the City of lien waivers
from any contractor or subcontractor for all work done and for all materials
furnished by them for the project.

      5.2 Time of Requisitions. Borrower shall requisition loan funds only as
needed.

      5.3 Use of Loan Proceeds. Proceeds of the loan are to be disbursed in
accordance with Article 2.1. Borrower understands and agrees that loan proceeds
shall not be spent on any other purpose(s) or projects(s) than that described
in Article 2.1.

      5.4 Suspension of Payments. The City shall have the right to suspend,
withhold, or delay loan payments to the Borrower if it is determined that the
Borrower's project has been changed, interrupted, or significantly delayed or if
the Borrower is found to be not in compliance with any provision of this
Agreement.

      5.5 Promissory Note Required. The City shall not provide loan funds to the
Borrower prior to the completion and execution of the promissory note,
Attachment "A" to this Agreement.

                          ARTICLE 6.0 - LOAN REPAYMENT

      6.1 Repayment Schedule. Repayment of the loan shall be made by the
Borrower as specified in Attachment "A", the Promissory Note.

      6.2 Default. If any of the following events ("Event of Default") shall
occur and be continuing, the City may declare the Borrower to be in default:

            a. Any representation or warranty made by the Borrower under or in
connection with this Agreement shall prove to have been incorrect in any
material respect when made; or

                                  Page 3 of 8
<PAGE>

            b. The Borrower shall fail to perform or observe any other term or
condition contained in this Agreement and any such failure shall remain
unremedied for thirty (30) days after written notice thereof shall have been
given to the Borrower by the City; or

            c. Execution shall have been levied against the project or any lien
creditors sued to enforce a judgment against the project, or such other
proceeding shall have been brought and shall continue unstayed and in effect for
a period of more than thirty (30) consecutive calendar days; or

            d. The Borrower shall sell, transfer, lease or convey the project,
or any part thereof, except as herein provided, without the prior written
consent of the City.

            e. If Borrower's Project related business leaves Ames, Iowa before
five years from the date of this agreement, then liquidated damages in the
amount of $50,000.00 are due and payable to the Lenders along with the balance
of principal and interest due on the loan. Said damages pertain to lost economic
development.

      6.3 Actions Upon a Declaration of Default. Upon declaration of default by
the City, the City may:

            a. By notice to the Borrower, declare the loan payable under the
Promissory Note and this Agreement to be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind, all of which are
hereby expressly waived by. the Borrower;

            b. Take whatever action at law or in equity may appear necessary or
desirable to collect the payments and other amounts then due and thereafter to
become due or to enforce performance and observance of any obligation, agreement
or covenant of the Borrower under this Agreement. No remedy herein conferred
upon or reserved to the City is intended to be exclusive of any other remedy or
remedies, and each and every such remedy shall be cumulative, and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute.

                    ARTICLE 7.0 - ADMINISTRATIVE REQUIREMENTS

      7.1 Administrative Costs. The Borrower agrees that no loan proceeds shall
be used for administrative expenses, except for that part used for working
capital purposes that includes administrative expenses.

      7.2 Accounts and Records. The Borrower shall maintain books, records,
documents and other evidence pertaining to all costs and expenses incurred and
revenues acquired under this Agreement to the extent and in such detail as will
properly reflect all costs, direct and indirect, of labor, materials, equipment,
supplies, services, and other costs and expenses of whatever nature, for which
payment is made with the proceeds of this loan.

      7.3 Inspection of Records. Any time during normal business hours, upon 24
hours notice by the City, and as frequently as is deemed necessary, the Borrower
shall make available to the City, for its examination, all of its records,
contracts, invoices, payrolls, personnel records, conditions of employment, and
all other matters covered by this Agreement.

      7.4 Monitoring by City. The City shall have the right to make scheduled
and unscheduled visits to the Borrower in order to monitor project performance
and compliance with this Agreement.

      7.5 Audit Requirements. Borrower shall have an audit of the project
conducted by a certified public accountant, to include all income and
expenditures of loan proceeds and local cash, if and when called for by the
City.

                                  Page 4 of 8
<PAGE>

                         ARTICLE 8.0 - OTHER CONDITIONS

      8.1 This agreement is, and the Promissory Note, other documents and
agreements required by the Agreement when delivered hereunder or pursuant
thereto shall be, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms.

      8.2 Neither the execution, delivery or performance of this Loan Agreement
or the Promissory Note, the consummation of the transactions contemplated
hereby, nor the fulfillment of or compliance with the terms and conditions of
this Loan Agreement conflicts with or results in a breach of any of the terms,
conditions or provisions of any restriction in any organizational document or
any agreement or instrument to which the Borrower is now a party or by which the
Borrower is bound, or constitutes a default under any of the foregoing, or
results in the creation or imposition of any lien, charge or encumbrance
whatsoever upon any of the property or assets of the Borrower under the terms of
any instrument or agreement, other than as provided in this Loan Agreement.

      8.3 There is no litigation or proceeding pending, or to the knowledge of
the Borrower threatened, against the Borrower affecting in any manner whatsoever
the right of the Borrower to execute this Agreement or the other agreements
required to be executed by the Borrower under the Agreement or the ability of
the Borrower to pay the payments required hereunder or to otherwise comply with
the Borrower's obligations contained herein or therein.

      8.4 The Borrower will comply in all material respects with all applicable
laws, rules, ordinances, regulations and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon the Borrower or upon the
Borrower's property except to the extent contested in good faith.

      8.5 The Borrower agrees that the City shall have no responsibility nor
incur any expense for maintenance or preservation of the Project or for the
payment of any taxes, assessments or other governmental charges assessed or
levied with respect to the Project.

                            ARTICLE 9 - MISCELLANEOUS

      9.1 Agreement Coverage.

            a. This instrument, and any referenced attachments hereto or
documents referred to herein, contains the entire agreement between the parties
and any statements, inducements or promises not contained herein shall not be
binding upon said parties. This Agreement shall be binding upon the successors
in interest of the respective parties.

            b. If any of the provisions herein shall be in conflict with the
laws of the State of Iowa, or shall be declared to be invalid by any court of
record of this state, such invalidity shall be construed to affect only such
portions as are declared invalid or in conflict with the law and such remaining
portion or portions of the agreement shall remain in effect and shall be
construed as if such invalid or conflicting portion of such agreement were not
contained herein.

      9.2 Term of the Agreement. This Agreement shall be in full force and
effect from the date hereof and shall continue in effect so long as the loan is
outstanding and unpaid.

      9.3 Maintenance of the Project and Insurance. The Borrower covenants that,
so long as the loan is outstanding and unpaid, the Borrower shall keep, or cause
to be kept, the Project in as good repair and condition, as same may be, or may
be hereafter placed upon completion, ordinary wear and tear only excepted; and
shall not suffer or commit waste or damage upon the Project. In addition, the
Borrower maybe required to keep in force insurance, premiums therefore to be
prepaid

                                  Page 5 of 8
<PAGE>

without notice or demand, against loss by fire, tornado, and other hazards,
casualties, and contingencies as the City may require on the Project, in an
amount not less than the full insurable value of the Project, or not less than
the unpaid balance of principal on the loan with such insurance payable to the
Borrower and the City as their interests may appear. The Borrower maybe required
to deposit such policies with proper riders with the City.

      9.4 Amendment of this Agreement. The City or the Borrower may, during the
duration of this Agreement, deem it necessary to make alterations to the
provisions of this Agreement. Any changes to this Agreement, which are approved
by the City, shall be incorporated into this Agreement. The provisions of the
amendment shall be in effect as of the date of the amendment unless otherwise
specified within the amendment. A waiver of any condition of this Agreement must
be in writing from the duly authorized official of the City.

      9.5 Indemnity, Fees and Expenses.

            a. The Borrower will indemnify and save harmless the City and
its officers and employees from and against any and all losses, by it or them
while it or they are acting in good faith to carry out the transactions
contemplated by this Agreement or to safeguard its or their interests or
ascertain, determine or carry out its or their obligations under this Agreement
or any law or contract applicable to said transaction.

            b. The Borrower shall, upon demand, pay to the City the amount of
any and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which the City may incur in
connection with the exercise or enforcement of any of the rights of the City
hereunder, the failure by the Borrower to perform or observe any of the
provisions hereof, the collection of payments due under this Agreement, and any
other reasonable expenses of the City related to the Project or this financing
(including reasonable attorney's fees) which are not otherwise expressly
required to be paid by the Borrower under the terms of this Agreement.

            c. The Borrower agrees to pay all appraisal fees, survey fees,
recording fees, license and permit fees and insurance premiums related to
Borrower's Project.

            d. It is the intention of the parties that the City shall not incur
pecuniary liability by reason of the terms of this Agreement and the Borrower
shall indemnify and hold harmless the City (including any person at any time
serving as an officer or employee of the City) against all claims by or on
behalf of any person, firm or corporation, arising out of the same, and all
costs and expenses incurred in connection with any such claim or in connection
with any action or proceeding brought thereon.

      The obligation of the parties under this Section shall survive the
termination of this Agreement.

      9.6 Binding Effect: Governing Law. This Agreement shall be binding upon
and inure to the benefit of the Borrower and the City and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the City. This Agreement shall also inure to the benefit of the City.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Iowa.

      9.7 Obligations of the Borrower Hereunder Unconditional. The obligations
of the Borrower to make the payments required in Attachment "A" and other
articles hereof and to perform and observe the other agreements contained herein
shall be absolute and unconditional and shall not be subject to any defense or
any right of set-off, counterclaim or recoupment arising out of any breach by
the City of any obligation to the Borrower, whether hereunder or otherwise, or
out of any indebtedness or liability at any time owing to the Borrower by the
City and until such time as the principal shall have been fully paid or
provision for the payment thereof shall have been made in

                                  Page 6 of 8
<PAGE>

accordance with the Agreement, the Borrower (i) will not suspend or discontinue
any payments provided for in Attachment "A" hereof, (ii) will perform and
observe all other agreements contained in this Agreement, and (iii) shall not
terminate this Agreement for any cause, it being the intention of the parties
that the payments required hereunder will he paid in full when due without any
delay or diminution whatsoever.

      9.8 Waivers. No waiver by the City of any default hereunder shall operate
as a waiver of any other default or of the same default on a future occasion. No
delay on the part of the City in exercising any right or remedy hereunder shall
operate as a waiver thereof. No single or partial exercise of-any right or
remedy by the City shall preclude future exercise thereof or the exercise of any
other right or remedy.

      9.9 Additional Provisions. The following items or requirements are also
agreed to:

            a. The Borrower shall create and retain not less than thirty
(30)permanent full-time jobs located in the City of Ames.

            b. Loan proceeds shall not be advanced nor shall loan proceeds be
used to reimburse project expenses prior to approval of a loan agreement between
the City and Borrower.

      9.10 Suspension and Termination of This Agreement

            a. Suspension. If the Borrower fails to comply with the conditions
of this Agreement, the City may, after notice to the Borrower, suspend the
Agreement and withhold further payments or prohibit the Borrower from incurring
additional obligations of funds, pending corrective action by the Borrower or a
decision to terminate. The City may determine to allow such necessary and proper
costs which the Borrower could not reasonably avoid during the period of
suspension.

            b. Termination for Cause. The City may terminate this Agreement in
whole, or in part, at any time before the date of completion, whenever it is
determined that the Borrower has failed to comply with the conditions of the
Agreement. The City shall promptly notify the Borrower in writing of the
determination and the reasons for the termination, together with the effective
date. Payments made to Borrower or recoveries by the City under Agreements
terminated for cause shall be in accord with the legal rights and liabilities of
the parties. Payments and recoveries may include, but are not limited to the
following: Payments may be allowed for costs determined to be in compliance with
this Agreement up to the date of termination, based on accepted audits. The
Borrower shall return to the City all unspent funds within one week of notice of
termination. Further, any costs previously paid by the City which are
subsequently determined to be unallowable through audit shall be returned to the
City within thirty (30) days of such determination.

      9.11 Litigation. The Borrower agrees to pay the costs of any litigation
arising from the failure of the Borrower to comply with this Agreement or
resulting from the negligence or incompetence of the Borrower. Furthermore, the
Borrower shall indemnify and save harmless the City from suits, actions or
claims of any character brought for or on account of any injuries or damages
received by any person or property resulting from operations of the Borrower or
any persons working under him, carrying out the terms of this Agreement.

      9.12 Resolution of Disagreement. In the event of any disagreement between
the Borrower and the City relating to the requirements of this agreement, the
decision of the City shall prevail. However, the City will consider reasonable
proposals for alternative performance or payment deemed by the City to be of
equal or greater value compared to the requirements of this agreement.

                                  Page 7 of 8
<PAGE>

      IN WITNESS THEREOF, the parties hereto have executed this Agreement on the
day and year last specified below:

BIOFORCE NANOSCIENCES, INC.                     CITY OF AMES, IOWA

By: /s/ Laurence Russ                           By: /s/ Ted Tedesco
    -------------------------------                 ----------------------------
    Laurence Russ, President & CEO                  Ted Tedesco, Mayor

Date: 11 Jan 05                                 Date: 1-28-05
      -----------------------------                   --------------------------

Attest: /s/ Patricia Newbanks                   Attest: /s/ Diane Voss
        ---------------------------                     ------------------------
                                                        Diane Voss, City Clerk

                                  Page 8 of 8ECONOMIC DEVELOPMENT
                        COMMUNITY INVESTMENT FUND PROGRAM
                                 LOAN AGREEMENT
                          (BIOFORCE NANOSCIENCES, INC.)

                              ARTICLE 1.0 - GENERAL

      1.1 Identification of Parties. This Agreement is entered into by and
between the City of Ames, Iowa and the Ames Chamber of Commerce, jointly, as
Lenders (hereafter referred to as the "Lenders") and Bioforce Nanosciences, Inc.
(hereinafter referred to as the "Borrower").

      1.2 Statement of Purpose. WHEREAS, as part of its policy to foster
economic development, the Lenders have adopted a program of financial assistance
to selected business enterprises by means of loans made in accordance with an
adopted loan policy known as THE COMMUNITY INVESTMENT FUND; and,

      WHEREAS, the Lenders have each agreed to loan up to the amount of
Twenty-five Thousand dollars ($25,000) for a total loan of $50,000 to the
Borrower to assist in a certain project; and,

      WHEREAS, the Borrower has made application to the City of Ames, Iowa, for
this loan; and

      WHEREAS, the Borrower has qualified and been approved for such a loan and
has agreed to the conditions of the receipt of such a loan;

      NOW, THEREFORE, the parties hereto, in consideration of the premises, do
agree as follows:

      1.3 The Loan. The Lenders agree, upon the terms and condition hereinafter
set forth, to make a loan of money to the Borrower in a total amount not to
exceed $50,000 in order to assist in the financing of the project described in
Article 2.2 of this Agreement. The obligation of the Borrower to repay the loan
shall be evidenced by a Promissory Note of the Borrower to the Lenders in the
amount of $50,000, setting forth a five year schedule of principal and interest
payments, to be in the form attached hereto as Attachment A. In the event the
Borrower fails to receive and/or spend the full face amount of any loan as set
out herein and in said Promissory Note, then the amount of the loan shall be
reduced accordingly.

      1.4 Reports. The Borrower shall submit the following reports:

         Report                                   Due Date
         ------                                   --------
         Quarterly Finance & Progress Report      10th of the month following
                                                  the end of each quarter
         Final Progress Report                    Within 30 days of project
                                                  completion

      1.5 Assurances. The representations appearing in the Borrower's
application to the Lenders for the loan are incorporated herein and made a part
of this agreement.

                                  Page 1 of 8
<PAGE>

                        ARTICLE 2.0 - BORROWER'S PROJECT

      2.1 Statement of Work and Services. The Borrower shall perform in a
satisfactory and proper manner, as determined by the Lenders, the activities
described in the approved application.

      2.2 Project Description. As described in Borrower's approved loan
application attached.

      2.3 Conveyance or Disposition of Project. The Borrower shall not sell,
transfer, convey, lease or otherwise dispose of the Project or of any part
thereof, without the consent of the Lenders until the date on which this loan
has been fully repaid.

      2.4 Cost Sufficiency. The Lenders do not make any warranty, either
expressed or implied, that the proceeds of the loan available for payment of the
costs of the Project will be sufficient to pay all the costs which will be
incurred in that connection. The Lenders are under no obligation to advance
funds in addition to those specified in this agreement.

            ARTICLE 3.0 - BORROWER'S CONTRIBUTED] [ON TO THE PROJECT

      3.1 Source(s) of Other Contributions. (as stated in Borrowers Loan
Application)

      3.2 The obligation of the Borrower to pay the principal of and interest on
this loan and to perform its other obligations as described within this loan
agreement will be secured by a security interest in and to certain property now
owned or hereafter acquired by Borrower together with the proceeds, products,
increase, issue, accessions, attachments, accessories, parts, additions,
repairs, replacements and substitutes of, to any and or all of the foregoing.

                        ARTICLE 4.0 - TERMS OF THE LOAN

      4.1 Maximum Amount of Loan. It is expressly understood and agreed that the
maximum amount to be loaned to the Borrower by the Lender shall be $50,000.

      4.2 Loan Rate. The Lenders and Borrower agree that all funds loaned to
Borrower shall be at an interest rate of Two and one hundred twenty-fifth
percent(2.125%), with a principle and interest payment due on the first day of
each month from and after the date of this Agreement.

      4.3 Loan Term. The Lender and Borrower agree that the term of the loan
shall be five years.

      4.4 Prepayment of Loan. The outstanding principle of the loan may be
prepaid by the Borrower at any time without penalty.

      4.5 Penalty. If, at the end of two years from the effective date of this
agreement, the full-time equivalent positions of employment stated in paragraph
9.9 have not been created and retained for the benefit of the City of Ames, a
penalty of up to 30% of the loan balance after the 24th payment on the
amortization schedule stated in the Promissory Notice of this loan agreement
shall then be due and payable in accordance with the graduated penalty charge
below:

                                  Page 2 of 8
<PAGE>

                Percent Jobs Created            Percent Penalty
                     0 - 49.9%                         30%
                   50% - 59.9%                         25%
                   60% - 69.9%                         20%
                   70% - 79.9%                         15%
                   80% - 89.9%                         10%
                   90% - 99.9%                          5%

The penalty shall be due and payable immediately.

         ARTICLE 5.0 - CONDITIONS OF PAYMENT OF LOAN FUNDS TO RECIPIENT

      5.1 Requisition for Payment.

            a. Payments to the Borrower. All payments to the Borrower shall be
subject to the receipt by the Lenders of a requisition for payment. The
requisition shall be made according to the format specified by the Lenders. Loan
proceeds shall be disbursed to the Borrower by means of two checks, each in the
amount of $25,000, one by the City of Ames, the other by the Ames Chamber of
Commerce.

            b. Supporting Evidence to Accompany Requisition. The Borrower shall
submit to the Lenders such supporting evidence as may be reasonably required by
the Lenders to substantiate all payments which are requested and to substantiate
all payments then made with respect to the project. In addition, the Lenders may
require the Borrower to secure and provide evidence to the Lenders of lien
waivers from any contractor or subcontractor for all work done and for all
materials furnished by them for the project.

      5.2 Time of Requisitions. Borrower shall requisition loan funds only as
needed.

      5.3 Use of Loan Proceeds. Proceeds of the loan are to be disbursed in
accordance with Article 2.1. Borrower understands and agrees that loan proceeds
shall not be spent on any other purpose(s) or projects(s) than that described in
Article 2.1.

      5.4 Suspension of Payments. The Lenders shall have the right to suspend,
withhold, or delay loan payments to the Borrower if it is determined that the
Borrower's project has been changed, interrupted, or significantly delayed or if
the Borrower is found to be not in compliance with any provision of this
Agreement.

      5.5 Promissory Note Required. The Lenders shall not provide loan funds to
the Borrower prior to the completion and execution of the promissory note,
Attachment "A" to this Agreement.

                          ARTICLE 6.0 - LOAN REPAYMENT

      6.1 Repayment Schedule. Repayment of the loan shall be made by the
Borrower to the Lenders as specified in Attachment "A", the Promissory Note.

      6.2 Default. If any of the following events ("Event of Default") shall
occur and be continuing, the Lenders may declare the Borrower to be in default:

            a. Any representation or warranty made by the Borrower under or in
connection with this agreement shall prove to have been incorrect in any
material respect

                                  Page 3 of 8
<PAGE>

when made; or

            b. The Borrower shall fail to perform or observe any other term or
condition contained in this Agreement and any such failure shall remain
unremedied for thirty (30) days after written notice thereof shall have been
given to the Borrower by the Lenders; or

            c. Execution shall have been levied against the project or any lien
creditors sued to enforce a judgment against the project, or such other
proceeding shall have been brought and shall continue unstayed and in effect for
a period of more than thirty (30) consecutive calendar days; or

            d. The Borrower shall sell, transfer, lease or convey the project,
or any part thereof, except as herein provided, without the prior written
consent of the Lenders.

            e. If Borrower's Project related business leaves Ames, Iowa before
five years from the date of this agreement, then liquidated damages in the
amount of $50,000.00 are due and payable to the Lenders along with the balance
of principal and interest due on the loan. Said damages pertain to lost economic
development.

      6.3 Actions Upon a Declaration of Default. Upon declaration of default by
the Lenders, the Lenders may:

            a. By notice to the Borrower, declare the loan payable under the
Promissory Note and this Agreement to be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind, all of which are
hereby expressly waived by the Borrower;

            b. Take whatever action at law or in equity may appear necessary or
desirable to collect the payments and other amounts then due and thereafter to
become due or to enforce performance and observance of any obligation, agreement
or covenant of the Borrower under this Agreement. No remedy herein conferred
upon or reserved to the Lenders is intended to be exclusive of any other remedy
or remedies, and each and every such remedy shall be cumulative, and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute.

      6.4 Form of Payments. All payment of principal, interest, or penalty,
hereunder, or under the Promissory Note, shall be by two checks, each for one
half the amount due, made payable to the City of Ames and to the Ames Chamber of
Commerce, respectively.

                   ARTICLE 7.0 - ADMINISTRATIVE REQUIREMENTS

      7.1 Administrative Costs. The Borrower agrees that no. loan proceeds shall
be used for administrative expenses, except for that part used for working
capital purposes that includes administrative expenses.

      7.2 Accounts and Records. The Borrower shall maintain books, records,
documents and other evidence pertaining to all costs and expenses incurred and
revenues acquired under this Agreement to the extent and in such detail as will
properly reflect all costs, direct and indirect, of labor, materials, equipment,
supplies, services, and other costs and expenses of whatever nature, for which
payment is made with the proceeds of this loan.

      7.3 Inspection of Records. Any time during normal business hours, upon 24
hours notice by the Lenders, and as frequently as is deemed necessary, the
Borrower shall make available to the Lenders, for its examination, all of its
records, contract, invoices,

                                  Page 4 of 8
<PAGE>

payrolls, personnel records, conditions of employment, and all other matters
covered by this Agreement.

      7.4 Monitoring by Lenders. The Lenders shall have the right to make
scheduled and unscheduled visits to the Borrower in order to monitor project
performance and compliance with this Agreement.

      7.5 Audit Requirements. Borrower shall have an audit of the project
conducted by a certified public accountant, to include all income and
expenditures of loan proceeds and local cash, if and when called for by the
Lenders.

                         ARTICLE 8.0 - OTHER CONDITIONS

      8.1 This agreement is, and the Promissory Note, other documents and
agreements required by the Agreement when delivered hereunder or pursuant
thereto shall be, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms.

      8.2 Neither the execution, delivery or performance of this Loan Agreement
or the Promissory Note, the consummation of the transactions contemplated
hereby, nor the fulfillment of or compliance with the terms and conditions of
this Loan Agreement conflicts with or results in a breach of any of the terms,
conditions or provisions of any restriction in any organizational document or
any agreement or instrument to which the Borrower is now a party or by which the
Borrower is bound, or constitutes a default under any of the foregoing, or.
results in the creation or imposition of any lien, charge or encumbrance
whatsoever upon any of the property or assets of the Borrower under the terms of
any instrument or agreement, other than as provided in this Loan Agreement.

      8.3 There is no litigation or proceeding pending, or to the knowledge of
the Borrower threatened, against the Borrower affecting in any manner whatsoever
the right of the Borrower to execute this Agreement or the other agreements
required to be executed by the Borrower under the Agreement or the ability of
the Borrower to pay the payments required hereunder or to otherwise comply with
the Borrower's obligations contained herein or therein.

      8.4 The Borrower will comply in all material respects with all applicable
laws, rules, ordinances, regulations and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon the Borrower or upon the
Borrower's property except to the extent contested in good faith.

      8.5 The Borrower agrees that the Lenders shall have no responsibility nor
incur any expense for maintenance or preservation of the Project or for the
payment of any taxes, assessments or other governmental charges assessed or
levied with respect to the Project.

                           ARTICLE 9 - MISCELLANEOUS

      9.1 Agreement Coverage.

            a. This instrument, and any referenced attachments hereto or
documents referred to herein, contains the entire agreement between the parties
and any statements,

                                  Page 5 of 8
<PAGE>

inducements or promises not contained herein shall not be binding upon said
parties. This Agreement shall be binding upon the successors in interest of the
respective parties.

            b. If any of the provisions herein shall be in conflict with the
laws of the State of Iowa, or shall be declared to be invalid by any court of
record of this state, such invalidity shall be construed to affect only such
portions as are declared invalid or in conflict with the law and such remaining
portion or portions of the agreement shall remain in effect and shall be
construed as if such invalid or conflicting portion of such agreement were not
contained herein.

      9.2 Term of the Agreement. This Agreement shall be in full force and
effect from the date hereof and shall continue in effect so long as the loan is
outstanding and unpaid or unforgiven.

      9.3 Maintenance of the Project and Insurance. The Borrower covenants that,
so long as the loan is outstanding and unpaid, the Borrower shall keep, or cause
to be kept, the Project in as good repair and condition, as same may be, or may
be hereafter placed upon completion, ordinary wear and tear only excepted; and
shall not suffer or commit waste or damage upon the Project. In addition, the
Borrower may be required to keep in force insurance, premiums therefore to be
prepaid without notice or demand, against loss by fire, tornado, and other
hazards, casualties, and contingencies as the Lenders may require on the
Project, in an amount not less than the full insurable value of the Project, or
not less than the unpaid balance of principal on the loan with such insurance
payable to the Borrower and the Lenders as their interests may appear. The
Borrower may be required to deposit such policies with proper riders with the
Lenders.

      9.4 Amendment of this Agreement. The Lenders or the Borrower may, during
the duration of this Agreement, deem it necessary to make alterations to the
provisions of this Agreement. Any changes to this Agreement, which are provided
by the Lenders, shall be incorporated into this Agreement. The provisions of the
amendment shall be in effect as of the date of the amendment unless otherwise
specified within the amendment. A waiver of any condition of this Agreement must
be in writing from the duly authorized official of the Lenders.

      9.5 Indemnity, Fees and Expenses.

            a. The Borrower will indemnify and save harmless the Lenders and
their officers and employees from and against any and all losses, by it or them
while it or they are acting in good faith to carry out the transactions
contemplated by this Agreement or to safeguard its or their interests or
ascertain, determine or carry out its or their obligations under this Agreement
or any law or contract applicable to said transaction.

            b. The Borrower shall, upon demand, pay to the Lenders the amount of
any and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which the Lenders may incur in
connection with the exercise or enforcement of any of the rights of the Lenders
hereunder, the failure by the Borrower to perform or observe any of the
provisions hereof, the collection of payments due under this Agreement, and any
other reasonable expenses of the Lenders related to the Project or this
financing (including reasonable attorney's fees) which are not otherwise
expressly required to be paid by the Borrower under the terms of this Agreement.

            c. The Borrower agrees to pay all appraisal fees, survey fees,
recording fees, license and permit fees and insurance premiums related to
Borrower's Project.

                                  Page 6 of 8
<PAGE>

            d. It is the intention of the parties that the Lenders shall not
incur pecuniary liability by reason of the terms of this Agreement and the
Borrower shall indemnify and hold harmless the Lenders (including any person at
any time serving as an officer or employee of the Lenders) against all claims by
or on behalf of any person, firm or corporation, arising out of the same, and
all costs and expenses incurred in connection with any such claim or in
connection with any action or proceeding brought thereon.

      The obligation of the parties under this Section shall survive the
termination of this Agreement.

      9.6 Binding Effect: Governing Law. This Agreement shall be binding upon
and inure to the benefit of the Borrower and the Lenders and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lenders. This Agreement shall also inure to the benefit of the
Lenders. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Iowa.

      9.7 Obligations of the Borrower Hereunder Unconditional. The obligations
of the Borrower to make the payments required in Attachment "A" and other
articles hereof and to perform and observe the other agreements contained herein
shall be absolute and unconditional and shall not be subject to any defense or
any right of set-off, counterclaim or recoupment arising out of any breach by
the Lenders of any obligation to the Borrower, whether hereunder or otherwise,
or out of any indebtedness or liability at anytime owing to the Borrower by the
Lenders and until such time as the principal shall have been fully paid or
provision for the payment thereof shall have been made in accordance with the
Agreement, the Borrower (i) will riot suspend or discontinue any payments
provided for in Attachment "A" hereof, (ii) will perform and observe all other
agreements contained in this Agreement, and (iii) shall not terminate this
Agreement for any cause, it being the intention of the parties that the payments
required hereunder will be paid in full when due without any delay or diminution
whatsoever.

      9.8 Waivers. No waiver by the Lenders of any default hereunder shall
operate as a waiver of any other default or of the same default on a future
occasion. No delay on the part of the Lenders in exercising any right or remedy
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right or remedy by the Lenders shall preclude future exercise thereof or the
exercise of any other right or remedy.

      9.9 Additional Provisions. The following items of requirements are also
agreed to:

            a. The Borrower shall create and retain not less than thirty (30)
permanent full-time jobs located in the City of Ames.

            b. Loan proceeds shall not be advanced nor shall loan proceeds be
used to reimburse project expenses prior to approval of a loan agreement between
the Lenders and Borrower.

      9.10 Suspension and Termination of This Agreement

            a. Suspension. If the Borrower fails to comply with the conditions
of this Agreement, the Lenders may, alter notice to the Borrower, suspend the
Agreement and withhold further payments or prohibit the Borrower from incurring
additional obligations of funds, pending corrective action by the Borrower or a
decision to terminate. The Lenders may determine to allow such necessary and
proper costs which the Borrower could not

                                  Page 7 of 8
<PAGE>

reasonably avoid during the period of suspension.

            b. Termination for Cause. The Lenders may terminate this Agreement
in whole, or in part, at any time before the date of completion, whenever it is
determined that the Borrower has failed to comply with the conditions of the
Agreement after notice and reasonable opportunity to cure. The Lenders shall
promptly notify the Borrower in writing of the determination and the reasons for
the termination, together with the effective date. Payments made to Borrower or
recoveries by the Lenders under Agreements terminated for cause shall be in
accord with the legal rights and liabilities of the parties. Payments and
recoveries may include, but are not limited to the following: Payments may be
allowed for costs determined to be in compliance with this Agreement up to the
date of termination, based on audits approved by Lenders. The Borrower shall
return to the Lenders all unspent funds within one week of notice of
termination. Further, any costs previously paid by the Lenders which are
subsequently determined to be unallowable through audit shall be returned to the
Lenders within thirty (30) days of such determination.

      9.11 Litigation. The Borrower agrees to pay the costs of any litigation
arising from the failure of the Borrower to comply with this Agreement or
resulting from the negligence or incompetence of the Borrower. Furthermore, the
Borrower shall indemnify and save harmless the Lenders from suits, actions or
claims of any character brought for or on account of any injuries or damages
received by any person or property resulting from operations of the Borrower or
any persons working under him, carrying out the terms of this Agreement.

      IN WITNESS THEREOF, the parties hereto have executed this Agreement on the
day and year last specified below:

AMES CHAMBER OF COMMERCE                        THE CITY OF AMES IOWA

By: /s/ David Marks                             By: /s/ Ted Tedesco
    -------------------------------                 ----------------------------
                                                    Ted Tedesco, Mayor

Attest: /s/ Maria Blanco                        Attest: /s/ Diane Voss
        ---------------------------                     ------------------------
                                                        Diane Voss, City Clerk

Date: 2-24-05                                   Date: Jan. 28, 2005
      -----------------------------                   --------------------------

BIOFORCE NANOSCIENCES, INC.

By: /s/ Laurence Russ                           Date: 11 Jan 05
    -------------------------------
    Laurence Russ, President & CEO

                                  Page 8 of 8

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