Document:

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                                  EXHIBIT 10.6

                           CONSTRUCTION LOAN AGREEMENT

          This agreement ("Agreement") is made and entered into this 5/th/ day
of February, 2004, by and among NORTH AMERICAN TECHNOLOGIES GROUP, INC.
("NATK"), a Delaware corporation, TIETEK TECHNOLOGIES, INC. ("TTT"), a Texas
corporation, and TIETEK LLC ("TieTek"), a Delaware limited liability company,
and TIE INVESTORS, LLC ("Tie Investors"), a Texas limited liability company.
NATK, TTT and TieTek are hereinafter collectively, and jointly and severally,
called "Borrower," and Tie Investors is hereinafter called "Lender."

                              W I T N E S S E T H:

          WHEREAS, Borrower has obtained from Lender a Commitment (as
hereinafter defined) for a Loan; and

          WHEREAS, Borrower and Lender wish to enter into this Agreement in
order to set forth the terms and conditions of the disbursement of the Loan to
be made in accordance with the Commitment;

          NOW, THEREFORE, in consideration of the mutual promises hereinafter
contained and of other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Lender hereby agree as follows:

                                   ARTICLE I.

                                   DEFINITIONS
                                   -----------

          1.1.  Defined Terms. As used in this Agreement, the following terms
shall have the meanings shown:

                (a)  "Assets." Each and all of the following property, rights,
     or interests of Borrower as each such term is defined in the Uniform
     Commercial Code as adopted and currently in force in the state of Texas,
     including, but not limited to, any such property, rights or interests
     acquired by Borrower after the date hereof, but excluding the Excluded
     Assets (as hereinafter defined): (i) accounts; (ii) chattel paper (whether
     tangible or electronic); (iii) commercial tort claims; (iv) deposit
     accounts; (v) documents; (vi) equipment; (vii) financial assets; (viii)
     fixtures; (ix) general intangibles; (x) goods; (xi) instruments; (xii)
     insurance claims and proceeds; (xiii) inventory; (xiv) investment property;
     (xv) letter of credit rights; (xvi) payment intangibles; (xvii) promissory
     notes; and (xviii) intellectual property; and all proceeds of the
     foregoing. The term "Assets" also includes all patents (issued and applied
     for), copyrights, trademarks, trade names,

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     licenses, trade secrets and processes, and other intellectual property of
     Borrower, including, without limitation, U.S. Patent No. 5,886,078 dated
     March 23, 1999, U. S. Patent Published Application No. 20020123553 dated
     March 5, 2001, Trademark "TieTek", Registration No. 2467881, issued July
     10, 2001, and all other such rights and properties described in NATK's
     Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002,
     including any additions and substitutions thereto.

                (b)  "Assignment of Leases and Rents." That certain Assignment
     of Leases and Rents dated of even date herewith and executed by TieTek LLC
     as Assignor in favor of Tie Investors as Assignee.

                (c)  "Bridge Loan." That certain loan in the original principal
     amount of Two Million One Hundred Thousand Dollars ($2,100,000) made by Tie
     Investors to NATK, TieTek Technologies and TieTek pursuant to that certain
     loan agreement between those parties dated August 15, 2003, as evidenced by
     the Bridge Loan Note.

                (d)  "Bridge Loan Note." That certain promissory note dated
     August 15, 2003, in the original principal amount of Two Million One
     Hundred Thousand Dollars ($2,100,000) executed by NATK, TieTek
     Technologies, and TieTek in favor of Tie Investors.

                (e)  "Business." The manufacture and production of composite
     railroad ties (and other such products manufactured by using the same or
     related technology) using licensed trade secrets, processes, and other
     intellectual property of Borrower, including, without limitation, the
     intellectual property listed on Schedule 1.1(e).

                (f)  "Closing Costs." All costs of closing the Loan and all
     expenses of Lender with respect thereto, as more specifically described in
     Article IV, Section 4.1(n).

                (g)  "Closing Date" shall mean the date upon which Borrower and
     Lender have executed and delivered this Agreement.

                (h)  "Commitment." A letter agreement dated December 19, 2003.

                (i)  "Deed of Trust." A Deed of Trust, Security Agreement,
     Assignment of Rents and Fixture Filing of even date herewith, conveying the
     Premises to the Trustee named therein and granting a security interest in
     certain property and rights to secure payment of the Note.

                (j)  "Default or Event of Default." Default or Event of Default
     shall mean any of the events specified in Article VI of this Agreement.

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                (k)  "Disbursal Schedule." The schedule of estimated
     disbursements of the proceeds of the Loan agreed upon in writing by Lender
     and Borrower or as modified from time to time upon written approval from
     Lender.

                (l)  "Excluded Assets." The specific assets of NATK which are
     set forth on Schedule 1.1(l).

                (m)  "Fifth Advance." The fifth installment of the Loan funded
     by the Lender in the amount of One Million Dollars ($1,000,000).

                (n)  "Financing Statement." One or more Financing Statements
     executed by Borrower in favor of Lender, perfecting the security interest
     in the Assets created by the Security Agreement and the Patent Security
     Agreement.

                (o)  "First Advance." The first installment of the Loan funded
     by the Lender[DLI] in the amount of Two Million One Hundred Eighty-nine
     Thousand Three Hundred Seventy-Five Dollars ($2,189,375).

                (p)  "Fourth Advance." The fourth installment of the Loan funded
     by the Lender in the amount of Four Hundred Thousand Dollars ($400,000).

                (q)  "Governmental Authority." The United States, the state, the
     county, and the city, or any other political subdivision in which the
     Premises is located, and any other political subdivision, agency or
     instrumentality exercising jurisdiction over the Borrower, the Business, or
     the Premises.

                (r)  "Governmental Requirements." All laws, ordinances,
     statutes, codes, rules, regulations, orders and decrees of any Governmental
     Authority applicable to the Borrower, the Business, or the Premises.

                (s)  "Improvements." An industrial complex comprised of six (6)
     buildings of approximately 189,449 square feet and appurtenant improvements
     located on the Land.

                (t)  "Land." The real property described in Exhibit A attached
     hereto and made a part hereof.

                (u)  "Lien" shall mean any interest in Property securing an
     obligation owed to, or a claim by, a Person other than the owner of the
     Property, whether such interest is based on contract, constitutional,
     common, or statutory law, and including, but not limited to, the lien or
     security interest arising from a mortgage, encumbrance, pledge, security
     agreement, conditional sale, or trust receipt, or a lease, consignment or
     bailment for security purposes. The term "Lien" shall include reservations,
     exceptions, encroachments, easements, rights of way, covenants, conditions,
     restrictions, liens and other statutory, constitution, or common law rights
     of landlords, leases and other title

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     exceptions and encumbrances affecting Property. For the purposes of this
     Agreement, any Borrower shall be deemed to be the owner of any Property
     which it has acquired or holds subject to a conditional sale agreement,
     financing lease, or other arrangement pursuant to which title to the
     Property has been retained by or vested in some other Person for security
     purposes.

                (v)  "Loan." A loan advanced in multiple disbursements as set
     forth herein in the aggregate maximum principal amount of Fourteen Million
     Dollars ($14,000,000) from Lender to Borrower, secured by a first lien on
     the Assets and a Deed of Trust Mortgage and Security Agreement on the
     Premises.

                (w)  "Loan Documents." This Agreement, the Note, the Deed of
     Trust, the Security Agreement, the Patent Security Agreement, the
     Intercreditor Agreement, the Voting Agreement, the Non-Compete Agreement,
     the NATK Royalty Agreement, the TieTek Royalty Agreement, the Membership
     Interest Pledge Agreements, the Solvency Certificates, and any other
     documents to be executed by Borrower or any of their respective
     shareholders pertaining to the Loan.

                (x)  "NATK." North American Technologies Group, Inc., a Delaware
     corporation.

                (y)  "Note." A promissory note of even date herewith in
     substantially the form of Exhibit B attached hereto payable to the order of
     Lender and in the principal amount of the Loan.

                (z)  "Patent Security Agreement." An agreement substantially in
     the form of Exhibit C attached hereto granting to Lender a first lien on
     all of Borrower's intellectual property, including, but not limited to, all
     trademarks, copyrights, licenses, and patents (issued and applied for).

                (aa) "Person" shall mean any individual, partnership, firm,
     corporation (including, but not limited to, Borrower), association, joint
     venture, trust or other entity, or any government or political subdivision
     or agency, department or instrumentality thereof.

                (bb) "Premises." The Land and the Improvements.

                (cc) "Property" shall mean any interest in any kind of property
     or asset, whether real, personal or mixed, or tangible or intangible,
     including, without limitation, the Assets and the Premises.

                (dd) "SEC Reports." The NATK 10QSB filed in November 2003 with
     the Securities and Exchange Commission.

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                (ee) "Second Advance." The second installment of the Loan funded
     by the Lender in the amount of Four Million Two Hundred Fifty Thousand
     Seven Hundred Eighty-seven Dollars ($4,250,787).

                (ff) "Security Agreement." An agreement substantially in the
     form of Exhibit D attached hereto granting to Lender a first lien on all of
     the Assets.

                (gg) "Seventh Advance." The seventh installment of the Loan
     funded by the Lender in the amount as determined in accordance with Section
     5.1(g).

                (hh) "Sixth Advance." The sixth installment of the Loan funded
     by Lender in the amount of One Million Dollars ($1,000,000).

                (ii) "Solvent" shall mean with respect to any Person on a
     particular date, the condition that, on such date, (i) the fair value of
     the property of such Person is greater than the total amount of
     liabilities, including, without limitation, contingent liabilities, of such
     Person; (ii) the present fair salable value of the assets of such Person is
     not less than the amount that will be required to pay the probable
     liabilities of such Person on its debts as they become absolute and
     matured; (iii) such Person does not intend to, and does not believe that it
     will, incur debts or liabilities beyond such Person's ability to pay as
     such debts and liabilities mature; and (iv) such Person is not engaged in
     business or a transaction, and is not about to engage in business or a
     transaction, for which such Person's property would constitute an
     unreasonably small amount of capital.

                (jj) "Third Advance." The third installment of the Loan funded
     by the Lender in the amount of Two Hundred Fifty Thousand Dollars
     ($250,000).

                (kk) "Tie Investors." Tie Investors, LLC, a Texas limited
     liability company.

                (ll) "TieTek." TieTek LLC, a Delaware limited liability company.

                (mm) "TTT." TieTek Technologies, Inc., a Texas corporation.

                (nn) "Title Company." Republic Title of Texas Inc. located at
     6348 Gaston Avenue, Dallas, Texas 75214.

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                                   ARTICLE II.

                                    THE LOAN.
                                    ---------

          2.1.  The Loan. Subject to and upon the terms, conditions and
limitations contained in this Agreement and relying on the representations and
warranties contained in this Agreement and the other Loan Documents, Lender
agrees to lend, and Borrower agrees to borrow and take down, the Loan, to be
evidenced by the Note. All proceeds of the Loan shall be advanced against the
Note as provided in Article V hereof and shall be used by Borrower for the
specific purposes provided in Article V. The principal amount actually owing on
the Note from time to time shall be the aggregate of all advances theretofore
made by the Lender against the Note less all payments theretofore made on the
principal of the Note. The Loan shall bear interest as set forth in the Note.
Principal and interest shall be due and payable as set forth in the Note.
Amounts borrowed and repaid hereunder shall not be reborrowed.

          2.2.  Security for the Loan. The Loan, as evidenced by the Note, shall
be secured by (i) the Deed of Trust; (ii) the Security Agreement; (iii) the
Patent Security Agreement; and (iv) the Membership Interest Pledge Agreements.

          2.3.  Schedule of Disbursements. Disbursement of the proceeds of the
Loan is to be made by Lender to Borrower in accordance with the Disbursal
Schedule.

          2.4.  Final Disbursement. Lender shall have no obligation to make any
disbursement of the Loan after expiration of the Interim Loan Period as that
term is defined in the Note.

                                  ARTICLE III.

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

          3.1.  Representations and Warranties of Borrower. Borrower hereby
represents and warrants to Lender that:

                (a)  Status and Authority of North American Technologies Group,
          Inc. NATK is a Delaware corporation duly organized and existing under
          the laws of the state of Delaware and has the power, authority and
          legal right to carry on the business now being conducted by it and to
          enter into, and to engage in the transactions contemplated by, the
          Loan Documents. The execution and delivery of the Loan Documents and
          the performance and observance of the provisions thereof have been
          authorized in accordance with the certificate of incorporation and
          bylaws of NATK and will have been duly authorized by all necessary
          actions of the board of directors and shareholders of NATK as
          contemplated in the Voting Agreement.

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                (b)  Status and Authority of TieTek Technologies, Inc. TTT is a
          Texas corporation duly organized and existing under the laws of the
          state of Texas and has the power, authority and legal right to carry
          on the business now being conducted by it and to enter into, and to
          engage in the transactions contemplated by, the Loan Documents. The
          execution and delivery of the Loan Documents and the performance and
          observance of the provisions thereof have been authorized in
          accordance with the articles of incorporation and bylaws of TTT and
          have been duly authorized by all necessary actions of the board of
          directors and shareholders of TTT.

                (c)  Status and Authority of TieTek LLC. TieTek is a limited
          liability company duly organized and existing under the laws of the
          state of Delaware and has the power, authority and legal right to own
          the Premises, to carry on the business now being conducted by it and
          to enter into, and to engage in the transactions contemplated by, the
          Loan Documents. The execution and delivery of the Loan Documents and
          the performance and observance of the provisions thereof have been
          authorized in accordance with all applicable laws and in accordance
          with the Regulations of TieTek and have been duly authorized by all
          necessary actions of the governing board and members of TieTek.

                (d)  Validity of Loan Documents. The Loan Documents are in all
          respects legal, valid and binding according to their terms, and the
          Deed of Trust grants to Lender a valid and enforceable first lien upon
          and security interest in the Premises and fixtures of Borrower located
          on or to be located thereon, and the Security Agreement and the Patent
          Security Agreement, collectively, grant to Lender a valid and
          enforceable first lien upon, and security interest in, the Assets.

                (e)  Ownership of Assets. The Assets constitute all the assets
          necessary for or used in the operation of the Business. Borrower has
          good, indefeasible title to the Assets, free and clear of all liens
          and encumbrances, except those listed on Schedule 3.1(g).

                (f)  Subsidiaries. TTT and TieTek are the only subsidiaries of
          NATK which own or have rights to assets necessary for or used in the
          operation of the Business by Borrower.

                (g)  Priority of Lien on Personalty. Except as set forth on
          Schedule 3.1(g) attached hereto, no security interest (except in favor
          of Lender) exists with respect to any Assets of Borrower.

                (h)  Conflicting Transactions of Borrower. The consummation of
          the transactions hereby contemplated and the performance of the
          obligations of Borrower under and by virtue of the Loan Documents will
          not result in any breach of, or constitute a default under, any
          mortgage, deed of trust, lease, loan or credit

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          agreement, corporate charter, bylaws, or other instrument to which
          Borrower is a party or by which it or the Property may be bound or
          affected.

                (i)  Pending Litigation. Other than set forth in the SEC
          Reports, there are no material actions, suits or proceedings pending,
          or to the knowledge of Borrower threatened, against or affecting
          Borrower, the Property, or involving the validity or enforceability of
          any of the Loan Documents or the priority of the Liens thereof, at law
          or in equity, or before or by any Governmental Authority; and to
          Borrower's knowledge, it is not in default with respect to any order,
          writ, injunction, decree or demand of any court or any Governmental
          Authority.

                (j)  No Prior Work. Except as set forth on Schedule 3.1(j), no
          work or construction has been commenced on the Land, and no materials
          have been delivered to the Land which could in either case result in
          the imposition of a mechanic's or materialmen's lien on the Premises.

                (k)  Violations of Governmental Requirements. Borrower has no
          knowledge of any violations or notices of violations of any
          Governmental Requirements.

                (l)  No Consents Necessary. No consent of any other person,
          entity, or party, and no consent, license, approval or authorization
          of, or registration or declaration with, any Governmental Authority is
          required in connection with the execution, delivery, performance,
          validity or enforceability of the transactions contemplated by this
          Agreement or the Loan Documents.

                (m)  Condition of Premises. The Premises is not now damaged or
          injured as a result of any fire, explosion, accident, flood or other
          casualty.

                (n)  Financial Statements. The financial statements and the
          information regarding Borrower heretofore delivered to Lender are true
          and correct in all material respects, having been prepared in
          accordance with generally accepted accounting principles applied on a
          consistent basis throughout the period covered thereby, and fairly
          present the financial condition of Borrower as of the date thereof. No
          material adverse change has occurred in the financial condition of
          Borrower reflected therein since the date thereof.

                (o)  Commissions. Any brokerage commissions, finder's fees or
          similar payments due third parties (hereinafter "Commissions") in
          connection with the transaction contemplated hereby have been paid in
          full and any such Commissions coming due in the future will be
          promptly paid by Borrower, except as set forth in a Finder's Fee
          Agreement by and among Borrower, Lender, and Sponsor Investments, LLC
          of even date with this Agreement. Borrower agrees to and shall
          indemnify Lender from any liability, claims or losses arising by
          reason of any such Commissions. This provision shall survive the
          repayment of the Loan

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          made in connection herewith and shall continue in full force and
          effect so long as the possibility of such liability, claims or losses
          exists.

                (p)  No Homestead. The Land and Improvements thereon do not and
          will not constitute the residential or business homestead of Borrower.

                (q)  Solvency. Borrower is, and after giving effect to each
          disbursement of the Loan will be, Solvent.

                (r)  Taxes; Governmental Charges. Borrower has filed all tax
          returns and reports required to be filed and has paid all taxes,
          assessments, fees and other governmental charges levied upon any of
          them or upon any of their respective Properties or income which are
          due and payable, including interest and penalties, except (i) to the
          extent the same are being contested in good faith by appropriate
          actions or proceedings and for which adequate reserves for the payment
          thereof as required by generally accepted accounting principles have
          been provided, or (ii) to the extent the failure to file such returns
          or pay such taxes could not reasonably be expected to have a material
          adverse effect.

                (s)  Capital Structure. Schedule 3.1(s) hereto accurately
          reflects, as of the date hereof, the authorized, issued and
          outstanding equity of TTT and TieTek, including the names of (and
          number and class of units or other equity securities held by) the
          record and beneficial owners of such securities. Except as set forth
          in Schedule 3.1(s) hereto, as of the date hereof, there are no
          outstanding shareholders or members agreements, voting agreements or
          other agreements of any nature which in any way restrict or effect the
          transfer, pledge or voting of any of the equity securities of TTT or
          TieTek or subject any of such securities to any put, call, redemption
          obligation or similar right or obligation of any nature.

                (t)  No Legal Bar or Resultant Lien. The execution, delivery and
          performance of the Loan Documents do not and will not violate or
          create a default under any provisions of the articles or certificate
          of incorporation, certificate of limited partnership, articles or
          certificate of organization, bylaws, partnership agreement,
          regulations or other organizational documents of NATK, TTT or TieTek
          or any contract, agreement, instrument or governmental requirement to
          which any of them is subject, or (except as contemplated in the Loan
          Documents) result in the creation or imposition of any Lien upon any
          Properties of any of them.

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                                   ARTICLE IV.

                              COVENANTS OF BORROWER
                              ---------------------

          4.1.  Covenants of Borrower. Borrower hereby covenants and agrees with
Lender as follows:

                (a)  Loan Documents. Borrower shall permit no default under the
          terms of the Loan Documents beyond the expiration of any applicable
          grace, notice, or cure period.

                (b)  Title Insurance. Borrower shall furnish to Lender, at
          Borrower's expense, a mortgagee title insurance policy (herein called
          the "Mortgagee Title Policy") showing Lender as the insured
          thereunder, in the amount of Four Million Two Hundred Thousand Dollars
          ($4,200,000) and in form and substance and written by the Title
          Company on behalf of an underwriter satisfactory to Lender insuring a
          valid first lien upon the Premises by virtue of the Deed of Trust and
          containing no exceptions except those specifically approved in writing
          by Lender. If the underwriter issuing the Mortgagee Title Policy
          becomes insolvent or is placed in receivership or for any other reason
          such Mortgagee Title Policy becomes unforceable, Borrower shall
          furnish Lender, at Borrower's expense, another mortgagee title
          insurance policy in the amount of, and in substitution for, the
          original Mortgagee Title Policy and meeting the above requirements.

                (c)  Insurance. Borrower shall obtain and maintain such
          insurance or evidence of insurance as Lender may reasonably require,
          together with endorsements to the policies naming Lender as a loss
          payee or an additional insured, as applicable, and containing
          provisions that such policies will not be canceled without thirty (30)
          days' prior written notice having been given by the insurance company
          to Lender (unless a shorter time is prescribed by applicable insurance
          regulations), including, but not limited to, the following:

                     (i)   Hazard Insurance. Fire and extended coverage
                           insurance, and such other hazard insurance insuring
                           the Premises as Lender may reasonably require, such
                           insurance to be obtained immediately and to be kept
                           in full force and effect at all times thereafter
                           until the payment in full of the Loan evidenced by
                           the Note.

                     (ii)  Commercial General Liability and Workmen's
                           Compensation Insurance. A certificate from an
                           insurance company indicating the Borrower is covered
                           to Lender's reasonable satisfaction by public
                           liability and workmen's compensation insurance.

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                     (iii) Other Insurance. Such other insurance as may be
                           required by the Deed of Trust.

                (d)  Collection of Insurance Proceeds. Borrower shall cooperate
          with Lender in obtaining for Lender the benefits of any insurance or
          other proceeds lawfully or equitably payable to it in connection with
          the transactions contemplated hereby and the collection of any
          indebtedness or obligation of Borrower to Lender incurred hereunder
          (including the payment by Borrower of the expense of an independent
          appraisal on behalf of Lender in case of a fire or other casualty
          affecting the Premises).

                (e)  Vouchers. Borrower shall deliver to Lender, upon written
          demand, true copies of any contracts, bills of sale, statements,
          receipted vouchers or agreements under which Borrower claims title to
          any materials, fixtures or articles incorporated in the Improvements
          or otherwise subject to the lien of the Deed of Trust.

                (f)  Liens. Borrower will not install nor otherwise incorporate
          in the Improvements any materials, equipment or fixtures under any
          conditional sales agreements or security agreement whereby the right
          is reserved or accrued to anyone to remove or repossess any such
          items. Borrower will not cause or permit any lien or claim for lien
          for any labor and/or material to be filed or to become valid or
          effective against the Premises; provided, however, that the existence
          of any unperfected and unrecorded mechanic's lien shall not constitute
          a violation of this subsection if payment is not yet due for the work
          giving rise to the lien. Notwithstanding the foregoing, Borrower may,
          in good faith, by appropriate proceedings, contest the validity,
          applicability or amount of any asserted mechanic's or materialmen's
          lien, and pending such contest Borrower shall not be deemed in default
          hereunder if Borrower provides Lender with security reasonably
          satisfactory to Lender and if Borrower promptly causes to be paid any
          amount adjudged by a court of competent jurisdiction to be due, with
          all costs and interest thereon, promptly after such judgment;
          provided, however, that in any event, each such contest shall be
          concluded and the lien, interest and costs shall be paid, bonded
          around or otherwise removed upon completion of construction.

                (g)  Estoppel Certificate. Borrower shall deliver to Lender,
          promptly after a written request therefor by Lender, but no more often
          than twice per calendar year, an estoppel certificate, duly
          acknowledged, stating the amount advanced to Borrower under this
          Agreement and the amounts due on the Note and whether any offsets or
          defenses exist under or against the Note.

                (h)  Cooperation Regarding Financial Condition. Borrower shall
          cooperate with Lender and its representatives to the end that Lender
          shall be fully apprised regarding Borrower's continuing financial
          condition and, upon written

<PAGE>

          request of Lender or any of its representatives, will furnish Lender
          or such representatives such documents, instruments, financial
          statements or other information as are required to be furnished
          pursuant to the terms of the Deed of Trust. Borrower shall maintain
          such documents, instruments and financial statements which relate to
          its financial condition.

                (i)  Indemnity of Lender. Borrower shall indemnify and hold
          harmless Lender (for purposes of this subsection, the term "Lender"
          shall include the directors, officers, employees and agents of Lender
          and any persons or entities owned or controlled by, owning or
          controlling, or under common control or affiliated with Lender) from
          and against, and reimburse them for, all claims, demands, liabilities,
          losses, damages, causes of action, judgments, penalties, costs and
          expenses (including, without limitation, reasonable attorney's fees)
          which may be imposed upon, asserted against or incurred or paid by
          them by reason of, on account of or in connection with any bodily
          injury or death or property damage occurring in or upon or in the
          vicinity of the Premises through any cause whatsoever or asserted
          against them on account of any act performed or omitted to be
          performed hereunder or on account of any transaction arising out of or
          in any way connected with the Premises or with this Agreement or any
          other Loan Document. WITHOUT LIMITATION, IT IS THE INTENTION OF
          BORROWER AND BORROWER AGREES THAT THE FOREGOING INDEMNITIES SHALL
          APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO CLAIMS, DEMANDS,
          LIABILITIES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES,
          COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE
          ATTORNEY'S FEES) WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT
          OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY OR ANY
          STRICT LIABILITY. HOWEVER, SUCH INDEMNITIES SHALL NOT APPLY TO ANY
          INDEMNIFIED PARTY TO THE EXTENT THE SUBJECT OF THE INDEMNIFICATION IS
          CAUSED BY OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
          OF SUCH INDEMNIFIED PARTY. The foregoing indemnities shall survive the
          termination of this Agreement, the foreclosure of the Security
          Agreement or the Patent Security Agreement or the Membership Interest
          Pledge Agreements or conveyance in lieu of foreclosure and the
          repayment of the Loan and the discharge and release of the Loan
          Documents. Any amount to be paid hereunder shall be subject to and
          governed by the provisions of Section 7.2 hereof.

                (j)  Protection of Intellectual Property. Borrower shall take
          all steps required to preserve and protect all of its patents, patent
          applications, licenses, trademarks, trade names, and all other
          intellectual or other similar property, including, but not limited to,
          timely paying all royalties, license fees, filing fees or registration
          fees, and diligently defending all threats of infringement thereon and
          challenges to the validity thereof.

<PAGE>

                (k)  Insurance Coverage. Borrower will furnish to Lender, upon
          request, a summary of the insurance coverages of Borrower in form and
          substance reasonably satisfactory to Lender; upon renewal of any such
          insurance policy, a copy of an insurance certificate summarizing the
          terms of such policy; and upon request of Lender, copies of the
          applicable policies.

                (l)  Other Information. Borrower will furnish to Lender, with
          reasonable promptness, such other information about the business and
          affairs and financial condition of Borrower as Lender may reasonably
          request from time to time, including, without limitation, monthly
          accounts receivable aging and reconciliation, accounts payable aging
          and reconciliation, sales reports and inventory designations.

                (m)  Expenses and Approval of Documents. Borrower shall pay all
          costs of closing the Loan and all expenses of Lender with respect
          thereto (the "Closing Costs"), including, but not limited to,
          reasonable legal fees (including reasonable legal fees incurred by
          Lender subsequent to the closing of the Loan but incurred in
          connection with the disbursement, administration, collection or
          transfer of the Loan), title insurance premiums and other charges of
          the Title Company issuing the Mortgagee Title Policy, all
          environmental consulting fees and all other fees and expenses related
          to the environmental due diligence performed by Lender with respect to
          the Premises (including reasonable attorneys' fees), appraisal fees,
          consulting architect fees, consulting inspection fees, advances,
          recording expenses, surveys, intangible taxes, expenses of foreclosure
          (including reasonable attorneys' fees) and similar items, and shall
          allow all closing papers, Loan Documents and other legal matters to be
          subject to the approval of Lender's attorneys.

                (n)  Additional Documents. Borrower shall:

                     (i)   Regarding Preservation of Security. Sign and deliver
                           to Lender such documents, instruments, assignments
                           and other writings, and do such other acts as are
                           reasonably necessary to preserve and protect the
                           collateral at any time securing or intended to secure
                           the Note, as Lender may reasonably require; and

                     (ii)  Regarding this Agreement. Promptly do and execute, at
                           its expense, all and such further lawful and
                           reasonable acts, conveyances and assurances for the
                           better and more effective carrying out of the intents
                           and purposes of the Loan Documents, including this
                           Agreement, or to correct any omissions in the Loan
                           Documents, including this Agreement, or to further
                           evidence and more fully describe the collateral, or
                           to more fully state the security obligations set out
                           herein or

<PAGE>

                           in any of the Loan Documents, or to perfect, protect
                           or preserve any Liens created pursuant to any of the
                           Loan Documents, or to make any recording, to file any
                           notices, or obtain any consents, all as Lender shall
                           reasonably require from time to time (provided that
                           Borrower shall not be required to increase its
                           obligations in connection with the Loan).

                                   ARTICLE V.

                                  LOAN FUNDING
                                  ------------

          5.1.  Loan Funding. The Loan shall be funded in seven (7) or more
installments (each referred to as an "Advance") as follows:

                (a)  The First Advance in the amount of Two Million One Hundred
     Eighty-nine Thousand Three Hundred Seventy-five Dollars ($2,189,375) shall
     be used solely for the purpose of repaying the principal and all accrued
     interest on the Bridge Loan and shall be disbursed to Lender on the Closing
     Date.

                (b)  The Second Advance in the amount of Four Million Two
     Hundred Fifty Thousand Seven Hundred Eighty-seven Dollars ($4,250,787)
     shall be used solely for the purpose of reimbursing NATK for costs incurred
     in connection with the Business and shall be disbursed to NATK by wire
     transfer on the Closing Date.

                (c)  The Third Advance in the amount of Two Hundred Fifty
     Thousand Dollars ($250,000) shall be used solely for the purpose of paying
     Lender's Closing Costs, other than Lender's Closing Costs attributable to
     environmental due diligence performed by or at Lender's request in
     connection with the Loan (the "Environmental Closing Costs") and shall be
     disbursed to Lender on the Closing Date.

                (d)  The Fourth Advance in the amount of Four Hundred Thousand
     Dollars ($400,000) shall be used solely for the purpose of allowing
     Borrower to recoup its equity in the Premises and shall be disbursed to
     Borrower by wire transfer on the Closing Date.

                (e)  The Fifth Advance in the amount of One Million Dollars
     ($1,000,000) shall be used solely for working capital for new plant
     operations at the Premises and shall be disbursed to Borrower by wire
     transfer on the Closing Date.

                (f)  The Sixth Advance in the amount of One Million Dollars
     ($1,000,000) shall be used solely for payments on the new equipment,
     engineering and construction as specified on Schedule 5.1(e) attached
     hereto (the "New Equipment") and shall be disbursed to Borrower.

<PAGE>

                (g)  The Seventh Advance shall be an amount equal to the
     Environmental Closing Costs incurred by Lender and shall be disbursed to
     Lender on the 30/th/ day after the Closing Date.

                (h)  All subsequent advances which, in the aggregate, shall not
     exceed the remaining principal balance of the Loan which has not previously
     been disbursed, shall be used by Borrower for its operating expenses,
     interest payments, capital requirements to complete the purchase of all
     equipment, and such other purposes related to the Business as may
     reasonably be requested by Borrower and approved by Lender and shall be
     disbursed to Borrower by wire transfer within three (3) days after approval
     thereof by Lender.

          5.2.  Conditions Precedent to Loan Funding. Except as otherwise
provided herein, the following shall be conditions precedent to Lender's
obligations to make the First Advance under the Loan and any other Advance under
the Loan:

                (a)  Representations and Warranties. On the date of each Advance
     (each such date hereinafter called a "Loan Funding Date"), all of
     Borrower's representations and warranties contained herein or in any other
     Loan Document or in the Commitment shall be true and correct in all
     material respects.

                (b)  Covenants and Agreements. On each Loan Funding Date,
     Borrower shall have performed each covenant and agreement to be performed
     by it on or before the Loan Funding Date pursuant to this Agreement, any
     other Loan Document or the Commitment, within the time specified.

                (c)  Execution of Deed of Trust, Assignment of Leases and
     Rents,Security Agreement, and Patent Security Agreement. Borrower shall
     have executed and delivered to Lender, the Deed of Trust, the Assignment of
     Leases and Rents, the Security Agreement, and the Patent Security
     Agreement.

                (d)  Execution of Intercreditor Agreement. Avalanche Resources,
     Ltd. shall have executed and delivered to Lender an intercreditor agreement
     (the "Intercreditor Agreement") substantially in the form of Exhibit E
     attached hereto acknowledging that any and all liens and security interests
     held by Avalanche Resources, LTD in the Assets are subordinate to the
     liens, rights, remedies and powers granted to Lender pursuant to this
     Agreement and the Loan Documents.

                (e)  Execution and Recording of Loan Documents. Borrower shall
     have delivered to Lender evidence, in form satisfactory to Lender, that the
     Loan Documents have each been duly executed and constitute valid, binding
     documents, enforceable in accordance with their respective terms and have
     been, or are being, filed or recorded, as appropriate, in all proper
     offices.

<PAGE>

                (f)  Mortgagee Title Policy. Borrower shall have furnished
     Lender with the Mortgagee Title Policy.

                (g)  Insurance. Borrower shall have obtained the insurance and
     delivered the policies and certificates to Lender as required by Subsection
     4.1(c) above.

                (h)  Regulations of TieTek LLC. TieTek Technologies and Sponsor
     Investments, LLC shall have executed and delivered to Lender the
     Regulations of TieTek LLC in the form attached hereto as Exhibit F, along
     with evidence satisfactory to Lender of the due authority thereof.

                (i)  Voting Agreement. Avalanche Resources LTD, Henry W.
     Sullivan, and Mark Neuhaus shall have executed and delivered to Lender the
     Voting Agreement in the form attached hereto as Exhibit G, along with
     evidence satisfactory to Lender of the due authority thereof.

                (j)  Legal Opinion. Lender shall have received a legal opinion
     in the form attached hereto as Exhibit H from Boyer & Ketchand, legal
     counsel to Borrower regarding the consummation, validity and enforceability
     of the Loan Documents and the Regulations of TieTek LLC.

                (k)  Non-Compete Agreement. NATK, TTI, Lender, and TieTek shall
     have executed and delivered to Lender a non-compete agreement in the form
     attached hereto as Exhibit I.

                (l)  TieTek Royalty Agreement. Borrower shall have delivered to
     Lender a royalty agreement in the form attached hereto as Exhibit J (the
     "TieTek Royalty Agreement"), duly executed by all parties thereto.

                (m)  NATK Royalty Agreement. Borrower shall have delivered to
     Lender a royalty agreement in the form attached hereto as Exhibit K (the
     "NATK Royalty Agreement"), duly executed by all parties thereto.

                (n)  Membership Interest Pledge Agreements. TTT shall have
     delivered to Lender the Membership Interest Agreements in favor of Lender
     and Sponsor Investments, LLC in the forms attached hereto as Exhibit L (the
     "Membership Interest Pledge Agreements"), duly executed by all parties
     thereto.

                (o)  Solvency Certificates. Borrower shall have executed and
     delivered to Lender solvency certificates in the form attached hereto as
     Exhibit M (the "Solvency Certificates"), duly executed by all parties
     thereto.

<PAGE>

                (p)  Other Documents. Borrower shall have executed and delivered
     to Lender such other documents and certificates as Lender or Lender's
     counsel may reasonably request.

                                   ARTICLE VI

                                    DEFAULTS
                                    --------

          6.1.  Event of Default. An "Event of Default" shall be deemed to have
occurred hereunder if:

                (a)  Payments. (i) Borrower shall fail to pay when due any
          principal of the Loan or the Note, or any fee or any other amount
          payable hereunder or under the any other Loan Document; or (ii)
          Borrower shall fail to pay when due any interest on the Loan or the
          Note and such failure to pay shall continue unremedied for a period of
          five (5) days;

                (b)  Default Under Loan Documents. Any default or event of
          default occurs under any of the Loan Documents (taking into account
          all applicable grace periods); or

                (c)  Breach of Covenant. Borrower, NATK or TieTek Technologies
          breaches or fails timely and properly to observe, keep or perform any
          covenant, agreement, warranty or condition herein, or in any other
          Loan Document required to be observed, kept or performed by such
          entity, other than those referred to in any other subsection hereof,
          if such failure continues for twenty (20) days after receipt of
          written notice and demand for the performance of such covenant,
          agreement, warranty or condition; or

                (d)  Breach of Representation. Any representation contained
          herein or in any other Loan Documents is false or misleading in any
          material respect; or

                (e)  Filing of Liens Against the Assets. Any lien other than
          those listed on Schedule 3.1(g) shall be filed against the Assets and
          shall not be removed within twenty (20) days after such filing; or

                (f)  Filing of Lien Against the Premises. Any lien, mortgage,
          deed of trust, or other encumbrance shall be filed against the
          Premises or against any other real property now owned or hereafter
          acquired by Borrower.

                (g)  Litigation. Any suit shall be filed against Borrower, which
          if not dismissed within thirty (30) days and if adversely determined,
          could substantially impair the ability of Borrower to perform each and
          every one of its obligations under and by virtue of the Loan
          Documents; or

<PAGE>

                (h)  Levy Upon the Premises or the Assets. A levy be made under
          any process on, or a receiver be appointed for, the Premises, any of
          the Assets, or any other property of Borrower, and such levy or
          appointment shall not be removed or dismissed within thirty (30) days;
          or

                (i)  Acceleration of Other Debts. Borrower does, or omits to do,
          any act, or any event occurs, as a result of which any material
          obligation of Borrower, not arising hereunder, is declared immediately
          due and payable by the holder thereof; or

                (j)  Assignment for Benefit of Creditors or Other Actions. Any
          of the following occurs: (i) Borrower shall make an assignment for the
          benefit of creditors or be unable to pay its debts generally as they
          become due; (ii) Borrower shall petition or apply to any tribunal for
          the appointment of a trustee, receiver, or liquidator of it, or of any
          substantial part of its assets, or shall commence any proceedings
          relating to Borrower under any bankruptcy, reorganization, compromise,
          arrangement, insolvency, readjustment of debts, conservatorship,
          moratorium, dissolution, liquidation or other debtor relief laws of
          any jurisdiction, whether now or hereafter in effect; or (iii) any
          such petition or application shall be filed, or any such proceedings
          shall be commenced, against Borrower and Borrower consents thereto or
          the same is not dismissed or otherwise discharged within thirty (30)
          days, or an order, judgment or decree shall be entered appointing any
          such trustee, receiver or liquidator, or approving the petition in any
          such proceedings; or

                (k)  Challenge to Validity of Loan Documents. Borrower, or any
          affiliate of Borrower, or any other party related to Borrower shall
          challenge the validity or enforceability of any of the Loan Documents.

                                   ARTICLE VII

                                    REMEDIES
                                    --------

          7.1   Remedies. Upon the occurrence of any one or more of the events
of default set out in Article VI hereof, Lender shall at its option be entitled
to proceed to exercise any of the following remedies:

                (a)  Borrower agrees that the occurrence of such event of
          default shall constitute a default under each of the Loan Documents,
          thereby entitling Lender (i) to exercise any of the various remedies
          therein provided including the acceleration of the indebtedness
          evidenced by the Note and the foreclosure of the Deed of Trust, the
          Security Agreement, and the Patent Security Agreement; and (ii)
          cumulatively to exercise all other rights, options and privileges
          provided by law.

<PAGE>

                (b)  Lender may declare all indebtedness secured by the Deed of
          Trust, the Security Agreement, and the Patent Security Agreement
          immediately due and payable, and Lender shall be released from all
          obligations, including all funding obligations, to Borrower under this
          Agreement, provided, that upon the occurrence of any Event of Default
          described in Section 6.1(i), all obligations, including all funding
          obligations, of Lender to Borrower shall automatically and immediately
          expire, and all obligations shall automatically become immediately due
          and payable without notice or demand of any kind.

                (c)  Lender shall have the right at any time and from time to
          time, without notice to Borrower (any such notice being expressly
          waived), to set-off and apply any and all deposits (general or
          special, time or demand, provisional or final) at any time held, and
          any other indebtedness at any time owing by Lender to or for the
          credit or the account of Borrower, against any and all of the
          indebtedness of Borrower evidenced by the Note or this Agreement
          and/or secured by the Deed of Trust, the Security Agreement, and the
          Patent Security Agreement, irrespective of whether or not Lender shall
          have made any demand under this Agreement or the Note and although
          such indebtedness may be unmatured. Lender agrees to notify Borrower
          promptly after any such set-off and application, provided that the
          failure to give such notice shall not affect the validity of such
          set-off and application. The rights of Lender under this subsection
          are in addition to any other rights and remedies (including, without
          limitation, other rights of set-off) which Lender may have under the
          Note or the other Loan Documents or otherwise.

          7.2.  Failure to Perform. If Borrower fails to perform any act or to
take any action or to pay any amount provided to be paid by it under the
provisions of any of the covenants and agreements contained in this Agreement or
in any other Loan Document, Lender may, but shall not be obligated to, perform
or cause to be performed such act or take such action or pay such money, and any
expenses so incurred by Lender and any money so paid by Lender shall be an
advance against the Note and shall bear interest from the date of making such
payment until paid at the Default Rate (as defined in the Note) and shall be
part of the indebtedness secured by the Deed of Trust, the Security Agreement,
and the Patent Security Agreement, and Lender, upon making any such payment,
shall be subrogated to all rights of the person, corporation or body politic
receiving such payment.

          7.3   Notice to NATK. Notwithstanding anything herein to the contrary,
Lender shall not foreclose upon the Assets or the Premises without giving
forty-five (45) days' advance written notice thereof to NATK.

<PAGE>

                                  ARTICLE VIII

                             POST-CLOSING COVENANTS
                             ----------------------

          8.1   Post-Closing Covenants of NATK and TTT.

                (a) Within ninety (90) days after the Closing Date, Borrower
          shall deliver the following documents to Lender (collectively, the
          "Post-Closing Documents"):

                    (i)   The Transfer Documents as hereinafter defined. As used
                          herein, "Transfer Documents" shall mean those
                          assignments, bills of sale and assignments of patent
                          properly executed by NATK and/or or TTT pursuant to
                          which all of the Assets pledged to Lender pursuant
                          hereto which were owned by NATK and/or TTT on the
                          Closing Date were transferred to TieTek LLC which
                          Transfer Documents shall contain such representations,
                          warranties and indemnities with respect thereto and in
                          favor of Lender as Lender, in its sole discretion,
                          shall deem satisfactory;

                    (ii)  Evidence of compliance with all applicable laws,
                          statutes and regulations and the bylaws, charters, and
                          governing documents of NATK and/or TTT, as the case
                          may be, in the form of certified copies of director
                          resolutions approving the Loan Agreement, all Loan
                          Documents, all transactions contemplated in the Loan
                          Agreement, the Transfer Documents, and all documents
                          contemplated in the Transfer Documents, including the
                          granting of the option to Sponsor Investments, LLC
                          (the "Sponsor Option");

                    (iii) Evidence of shareholder approval (including
                          resolutions certified by the Secretary of NATK) of the
                          Loan, the transfer of the Assets to TieTek, the
                          granting of the Sponsor Option, and related
                          transactions;

                    (iv)  A balance sheet certified by the auditors of TieTek
                          reflecting the assets and liabilities of TieTek upon
                          completion of the transfers contemplated in the
                          Transfer Documents;

                    (v)   Legal opinion of Boyer & Ketchand opining as to the
                          legality and enforceability of the Transfer Documents
                          (in such form as Lender, in its sole discretion, shall
                          deem

<PAGE>
                          satisfactory); and

                    (vi)  Any other documentation requested by Lender's counsel.

               (b)  Failure to deliver any of the Post-Closing Documents to
          Lender within ninety (90) days after the Closing shall constitute an
          Event of Default under the Loan.

          8.2   Post-Closing Covenants of Lender. Provided that Lender receives
from Borrower all of the Post-Closing Documents within ninety (90) days after
the Closing Date, then as soon as practicable but not later than one hundred
twenty (120) days after the Closing Date, Lender shall execute and deliver to
NATK and TTT documents releasing NATK and TTT from their respective obligations
under the Note, the Security Agreement, and the Patent Security Agreement (the
"Release Documents").

                                   ARTICLE IX

                              GENERAL CONDITIONS
                              ------------------

          9.1.  Rights of Third Parties. All conditions of Lender's obligations
hereunder, including the obligation to make advances, are imposed solely and
exclusively for the benefit of Lender and its successors and assigns and no
other person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Lender will make
advances or refuse to make advances in the absence of strict compliance with any
or all thereof and no other person shall, under any circumstances, be deemed to
be a beneficiary of such conditions, any and all of which may be freely waived
in whole or in part by Lender at any time if in its sole discretion it deems it
desirable to do so.

          9.2.  Waivers. No waiver of or consent to any departure from any
provision hereof shall be effective unless in writing and signed by Lender and
shall be effective only in the specific instance for the purpose for which given
and to the extent specified in such writing. No advance of Loan proceeds
hereunder shall constitute a waiver of any of the conditions to Lender's
obligation to make further advances nor, in the event Borrower fails to satisfy
any such condition, shall any advance have the effect of precluding Lender from
thereafter declaring such failure to be an event of default. No waiver of any
default hereunder shall affect or constitute a waiver of any later default. No
delay or omission of Lender to exercise any right or remedy upon the happening
of any event of default shall impair any such right or remedy or be deemed to be
a waiver of such event of default.

          9.3.  Evidence of Satisfaction of Conditions. Any condition of this
Agreement which requires the submission of evidence of the existence or
nonexistence of a specified fact or facts implies as a condition the existence
or nonexistence, as the case may be, of such fact or facts, and Lender shall, at
all times, be free independently to establish to its reasonable satisfaction and
in its discretion such existence or nonexistence.

<PAGE>

          9.4.  Assignment by Borrower. Anything to the contrary herein
notwithstanding, Borrower shall have no right to assign its rights hereunder or
the proceeds of the Loan without the written consent of Lender and any such
assignment or purported assignment shall, at Lender's option, relieve Lender
from all further obligations hereunder and shall constitute a default under this
Agreement.

          9.5.  Successors and Assigns Included in Parties. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors and assigns of such party shall be included and all
covenants and agreements contained in this Agreement by or on behalf of the
Borrower or by or on behalf of Lender shall bind and inure to the benefit of
their respective heirs, legal representatives, successors and assigns, whether
so expressed or not.

          9.6.  Exercise of Rights and Remedies. All rights and remedies of
Lender hereunder or under the Note or under any other Loan Document shall be
separate, distinct and cumulative and no single, partial or full exercise of any
right or remedy shall exhaust the same or preclude Lender from thereafter
exercising in full or in part the same right or remedy or from concurrently or
thereafter exercising any other right or remedy which Lender may have hereunder,
under the Note or any other Loan Document, or at law or in equity, and each and
every such right and remedy may be exercised at any time or from time to time.

          9.7.  Headings. The headings of the sections and subsections of this
Agreement are for the convenience of reference only, are not to be considered a
part hereof and shall not limit or otherwise affect any of the terms hereof.

          9.8.  Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
THE PARTIES' RIGHTS AND OBLIGATIONS HEREUNDER AND THEREUNDER SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO TEXAS' PRINCIPLES OF CONFLICTS
OF LAW) AND THE LAW OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN SUCH
STATE. BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY TEXAS OR FEDERAL COURT SITTING IN DALLAS, TEXAS, OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS.

          9.9.  Supplement to Deed of Trust, Security Agreement, and Patent
Security Agreement. The provisions of this Agreement are not intended to
supersede the provisions of the Deed of Trust, the Security Agreement, or the
Patent Security Agreement, but shall be construed as supplemental thereto. In
the event of any inconsistency between the provisions hereof and said documents,
it is intended that, during the applicability of this Agreement, this Agreement
shall be controlling.

<PAGE>

          9.10. Usury. Lender and Borrower intend in the execution of the Note,
this Agreement and all other instruments now or hereafter securing the Note or
executed in connection therewith or under any other written or oral agreement by
Borrower in favor of Lender to contract in strict compliance with applicable
usury law. In furtherance thereof, Lender and Borrower stipulate and agree that
none of the terms and provisions contained in the Note, this Agreement or any
other instrument securing the Note or executed in connection herewith, or in any
other written or oral agreement by Borrower in favor of Lender, shall ever be
construed to create a contract to pay for the use, forbearance or detention of
money, interest at a rate in excess of the maximum interest rate permitted to be
charged by applicable law; neither Borrower nor any endorsers or other parties
now or hereafter becoming liable for payment of the Note or the other
indebtedness secured by the Loan Documents shall ever be obligated or required
to pay interest on the Note or on indebtedness arising under any instrument
securing the Note or executed in connection therewith, or in any other written
or oral agreement by Borrower in favor of Lender, at a rate in excess of the
maximum interest that may be lawfully charged under applicable law; and that the
provisions of this section shall control over all other provisions of the Note,
this Agreement and any other instruments now or hereafter securing the Note or
executed in connection herewith or any other oral or written agreements which
may be in apparent conflict herewith. Lender expressly disavows any intention to
charge or collect excessive unearned interest or finance charges in the event
the maturity of the Note is accelerated. If the maturity of the Note shall be
accelerated for any reason or if the principal of the Note is paid prior to the
end of the term of the Note, and as a result thereof the interest received for
the actual period of existence of the Loan exceeds the applicable maximum lawful
rate, Lender shall, at its option, either refund to Borrower the amount of such
excess or credit the amount of such excess against the principal balance of the
Note then outstanding and thereby shall render inapplicable any and all
penalties of any kind provided by applicable law as a result of such excess
interest. In the event that Lender shall contract for, charge or receive any
amounts and/or any other thing of value which are determined to constitute
interest which would increase the effective interest rate on the Note or the
other indebtedness secured by the Loan Documents to a rate in excess of that
permitted to be charged by applicable law, an amount equal to interest in excess
of the lawful rate shall, upon such determination, at the option of Lender, be
either immediately returned to Borrower or credited against the principal
balance of the Note then outstanding or the other indebtedness secured by the
Loan Documents, in which event any and all penalties of any kind under
applicable law as a result of such excess interest shall be inapplicable. By
execution of this Agreement, Borrower acknowledges that it believes the Loan to
be non-usurious and agrees that if, at any time, Borrower should have reason to
believe, that the Loan is in fact usurious, it will give Lender notice of such
condition and Borrower agrees that Lender shall have ninety (90) days after
receipt of such notice in which to make appropriate refund or other adjustment
in order to correct such condition if in fact such exists. The term "applicable
law" as used in this section shall mean the laws of the state of Texas or the
laws of the United States, whichever laws allow the greater rate of interest, as
such laws now exist or may be changed or amended or come into effect in the
future.

          9.11. Invalid Provisions to Affect No Others. If fulfillment of any
provision hereof or any transaction related hereto at the time performance of
such provisions shall be due, shall involve transcending the limit of validity
prescribed by law, then ipso facto the obligation to

<PAGE>

be fulfilled shall be reduced to the limit of such validity; and if any clause
or provisions herein contained operates or would prospectively operate to
invalidate this Agreement in whole or in part, then such clause or provision
only shall be held for naught, as though not herein contained, and the remainder
of this Agreement shall remain operative and in full force and effect.

          9.12. Number and Gender. Whenever the singular or plural number,
masculine or feminine or neuter gender is used herein, it shall equally include
the other.

          9.13. Amendments. Neither this Agreement nor any provision hereof may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.

          9.14. Notice. Any notice or communication required or permitted
hereunder shall be given in writing, sent by (a) personal delivery, or (b)
expedited delivery service with proof of delivery, or (c) United States Mail,
postage prepaid, registered or certified mail, addressed as follows:

                To Lender:     5949 Sherry Lane, Suite 1900
                ---------      Dallas, TX 75225
                               Attention: John H. Washburn
                               Telephone: 214-210-5000
                               Fax: 214-210-5087

                    with copy to:     Sammons Corporation
                    ------------      5949 Sherry Lane, Suite 1900
                                      Dallas, TX 75225
                                      Attention: Legal Department
                                      Telephone: 214-210-5000
                                      Fax: 214-210-5087

                To Borrower:   14315 West Hardy Road
                -----------    Houston, TX 77060
                               Telephone: 218-847-0029
                               Fax: 281-847-1791

                    with copy to:     Boyer & Ketchand
                    ------------      Nine Greenway Plaza, Suite 3100
                                      Houston, TX 77046
                                      Attention: David A. Jones, Jr.
                                      Telephone: 713-871-2025
                                      Fax: 713-871-2024

or to such other address or to the attention of such other person as hereafter
shall be designated in writing by the applicable party sent in accordance
herewith. Any such notice or communication shall be deemed to have been given
either at the time of personal delivery or, in the case of

<PAGE>

delivery service or mail, as of the date of first attempteddelivery at the
address and in the manner provided herein.

          9.15. Legal Proceedings. Lender shall have the right to commence,
appear in, or to defend any action or proceeding purporting to affect the rights
or duties of the parties hereunder or the payment of any funds, and in
connection therewith pay necessary expenses, employ counsel and pay its
reasonable fees. Any such expenditures shall be considered additional advances
hereunder and shall bear interest at the rate payable under the Note for
installments of principal and/or interest after maturity shall be secured by the
Loan Documents and shall be paid by Borrower to Lender upon demand.

          9.16. Assignment by Lender. Lender shall have the right to assign any
portion of this Agreement and/or the Loan and to disseminate to such lender any
information it has pertaining to the Loan, including without limitation,
complete and current credit information on Borrower and any of its principals.
In the event of such an assignment, Borrower will agree to such modifications to
this Agreement as will facilitate such assignment, provided that such
modifications will be at Lender's expense and will not add to the obligations of
Borrower. It is understood that any assignment by Lender will not result in
additional cash expense to Borrower. Neither the shareholders, nor the trustees
of a real estate investment trust assignee shall be personally liable for the
obligations of such trust and Borrower will agree to look solely to the trust
property for the payment of any claim hereunder.

          9.17  Participations and Assignments by Lender. Lender shall have the
right to assign or grant participating interests in any portion of this
Agreement and/or the Loan and to disseminate to such lender any information it
has pertaining to the Loan, including without limitation, complete and current
credit information on Borrower and any of its principals. In the event of such
sale of participation or assignment, Borrower will agree to such modifications
to this Agreement as will facilitate such sale of participation or assignment,
provided that such modifications will be at Lender's expense and will not add to
the obligations of Borrower. It is understood that any sale of participation or
assignment by Lender will not result in additional cash expense to Borrower.
Neither the shareholders, nor the trustees of a real estate investment trust
assignee shall be personally liable for the obligations of such trust and
Borrower will agree to look solely to the trust property for the payment of any
claim hereunder. Borrower acknowledges that Lender and any successor lender may
enter into a separate agreement regarding the rights, duties and obligations of
Lender and other matters pertaining thereto without Borrower's consent,
provided, that no consent or agreement by Borrower shall be required to amend,
modify, change, restate, waive, supplement, discharge, cancel or terminate any
provision of this Agreement so long as no additional duties are required to be
assumed by Borrower. Each successor lender shall have all of the rights and
benefits with respect to the obligations, Note, collateral and/or Loan Documents
held by it as fully as if the original holder thereof, and either Lender or any
successor lender may be designated as the sole agent to manage the transactions
and obligations contemplated therein.

          9.18. Lender Not a Joint Venturer. Notwithstanding anything to the
contrary herein contained, Lender, by entering into this Agreement or by any
action taken pursuant hereto,

<PAGE>

will not be deemed a partner or joint venturer with Borrower. Further, this
Agreement shall not be deemed to create a fiduciary relationship between Lender
and Borrower.

          9.19. Agent. Lender and its successors and assigns hereby (i)
designate and appoint Tie Investors, and its successors and assigns, to act as
agent for Lender and its successors and assigns under this Agreement and all
other Loan Documents; (ii) irrevocably authorize Tie Investors to take all
actions on its behalf under the provision of this Loan Agreement and all other
Loan Documents; and (iii) to exercise all such powers and rights, and to perform
all such duties and obligations hereunder and thereunder. Tie Investors, on
behalf of Lender, shall hold all collateral, payments of principal and interest,
fees, charges and collections received pursuant to this Agreement and all other
Loan Documents. Borrower acknowledges that Lender and its successors and assigns
transfer and assign to Tie Investors the right to act as Lender's agent to
enforce all rights and perform all obligations of Lender contained herein and in
all of the other Loan Documents. Borrower shall within ten (10) days after
Lender's reasonable request, take such further actions, obtain such consents and
approvals and duly execute and deliver such further agreements, amendments,
assignments, instructions or documents as Lender may request to evidence the
appointment and designation of Tie Investors as agent for Lender and other
financial institutions from time to time party hereto and to the other Loan
Documents.

          9.20. Survival of Covenants. All covenants of either party contained
herein shall continue and survive until the Loan has been fully paid and
discharged.

          9.21. Time Is of the Essence. Time is of the essence of this
Agreement.

          9.22. Waiver of Judicial Procedural Matters. BORROWER HEREBY EXPRESSLY
AND UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING
BROUGHT BY LENDER IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS, ANY AND EVERY
RIGHT IT MAY HAVE TO (I) INJUNCTIVE RELIEF, (II) A TRIAL BY JURY, (III)
INTERPOSE ANY COUNTERCLAIM THEREIN (OTHER THAN A COMPULSORY COUNTERCLAIM) AND
(IV) HAVE THE SAME CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR
PROCEEDING. Nothing herein contained shall prevent or prohibit Borrower from
instituting or maintaining a separate action against Lender with respect to any
asserted claim.

          9.23. Joint and Several Liability. Each Borrower acknowledges that it
is jointly and severally liable for all of the obligations under the Loan
Documents. Each Borrower expressly understands, agrees and acknowledges that (i)
Borrowers are affiliated entities by common ownership; (ii) each Borrower
desires to have the availability of one common credit facility instead of
separate credit facilities; (iii) each Borrower has requested that Lender extend
such a common credit facility on the terms herein provided; (iv) Lender will be
lending against, and relying on a lien upon, all of each Borrower's assets even
though the proceeds of any particular loan made hereunder may not be advanced
directly to a particular Borrower; (v) each Borrower will nonetheless benefit by
the making of all such loans by Lender and the availability of a single credit
facility of a size greater than each could independently warrant; and (vi) all
of the representations, warranties, covenants, obligations, conditions,
agreements and other terms

<PAGE>

contained in the Loan Documents shall be applicable to and shall be binding upon
each Borrower.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
                            SIGNATURE PAGE FOLLOWS.]

<PAGE>

          IN WITNESS WHEREOF, Borrower and Lender have hereunto caused these
               presents to be executed on the date first above written.

                                        BORROWER:

                                        NORTH AMERICAN TECHNOLOGIES
                                        GROUP, INC., a Delaware corporation

                                        By: /s/ Kevin C. Maddox
                                        Name:   Kevin C. Maddox
                                        Its: Chief Executive Officer

                                        TIETEK TECHNOLOGIES, INC., a Texas
                                        corporation

                                        By: /s/ Henry W. Sullivan
                                        Name:   Henry W. Sullivan
                                        Its: President

                                        TIETEK LLC, a Delaware limited liability
                                        company

                                        By: /s/ Henry W. Sullivan
                                        Name:   Henry W. Sullivan
                                        Its:  President

                                        LENDER:

                                        TIE INVESTORS, LLC, a Texas limited
                                        liability company

                                        By:  SAMMONS VPC, INC., a Delaware
                                             corporation, Manager

                                             By: /s/ John H. Washburn
                                              John H. Washburn, Vice President

<PAGE>

                         LIST OF EXHIBITS AND SCHEDULES

Exhibit A    Land
Exhibit B    Note
Exhibit C    Patent Security Agreement
Exhibit D    Security Agreement
Exhibit E    Intercreditor Agreement
Exhibit F    Regulations of TieTek LLC
Exhibit G    Voting Agreement
Exhibit H    Legal Opinion
Exhibit I    Non-Compete Agreement
Exhibit J    TieTek Royalty Agreement
Exhibit K    NATK Royalty Agreement
Exhibit L    Membership Interest Pledge Agreements
Exhibit M    Solvency Certificates

Schedule 1.1(e)    Intellectual Property
Schedule 1.1(l)    Excluded Assets
Schedule 3.1(g)    Liens
Schedule 3.1(j)    No Prior Work
Schedule 3.1(s)    Capital Structure
Schedule 5.1(e)    New Equipment

<PAGE>

                                 SCHEDULE 1.1(e)
                                       TO
                           CONSTRUCTION LOAN AGREEMENT

                              Intellectual Property
                              ---------------------

Issued U.S. Patents of Debtor:

Patent No.                         Issue Date                   Title

5,886,078                        March 23, 1999          Polymeric Compositions
                                                         and methods for making
                                                         construction materials
                                                         from them

Pending U.S. Patent Applications of Debtor:

Published Application No.        Application Date               Title
-------------------------
20020123553                       March 5, 2001          Railroad Tie and method
                                                         for making same

Registered Trademarks and Trade Names:

Registration No.                   Issue Date                    Mark
----------------
2467881                           July 10, 2001                 TieTek

<PAGE>

                                 SCHEDULE 1.1(l)
                                       TO
                           CONSTRUCTION LOAN AGREEMENT

                                 Excluded Assets
                                 ---------------

Excluded Assets shall mean all of the following assets of NATK: (i) cash; (ii)
securities (investment and stock of subsidiaries [other than TieTek]); (iii)
patents and other proprietary rights not pertaining or related to the Business;
(iv) contracts unrelated to the Business; (v) except contracts or contract
rights related to the Business permitted to be conducted by NATK as contemplated
in Sections 6.05 and 6.06 of the Regulations of TieTek LLC; (vi) corporate books
and records and furniture; (vii) claims unrelated to the operation of the
Business; and (viii) any other assets of NATK unrelated to the Business.

<PAGE>

                                 SCHEDULE 3.1(g)
                                       TO
                           CONSTRUCTION LOAN AGREEMENT

                                      Liens
                                      -----

Creditor                    Second Collateral       Financing Statement No.
-----------------------     -----------------       -----------------------
Toyota Motor Company        4 forklifts                     498810
                                                            498809
                                                            583055
                                                            583056

Fidelity Leasing, Inc.      Air Compressor                  01-23898

Avalanche Resources, LTD has subordinated its lien(s) evidenced by Financing
Statement Nos. 30020419605 (with respect to assets of NATK) and 30611460 (with
respect to assets of TieTek, Inc.) to the lien(s) ofLender pursuant to that
certain Intercreditor Agreement among Lender, Borrower, and Avalanche Resources,
LTD dated of even date herewith.

<PAGE>

                                 SCHEDULE 3.1(j)
                                       TO
                           CONSTRUCTION LOAN AGREEMENT

                                  No Prior Work
                                  -------------

Project construction has begun, including cleanup, foundation preparation to
receive heavy equipment, maintenance on the sprinkler system, upgrading the
electrical work, isolating an area for raw materials storage, and shipping
material to the site.

<PAGE>

                                 SCHEDULE 3.1(s)
                                       TO
                           CONSTRUCTION LOAN AGREEMENT

                                Capital Structure
                                -----------------

TieTek LLC has 1,000 Class A Membership Interests owned by TieTek Technologies,
Inc., and one Class B Membership Interest owned by Sponsor Investments, LLC, a
Texas limited liability company. The Regulations of TieTek LLC contain
provisions which restrict or affect the transfer, pledge, or voting of the
membership interests and subject such interests to certain obligations and
rights on transfer. TTT has one class of common stock consisting of 1,000
shares, all of which are owned by NATK.

<PAGE>

                                 SCHEDULE 5.1(e)
                                       TO
                           CONSTRUCTION LOAN AGREEMENT

                                  New Equipment
                                  -------------

Raw Material-Silos/Bins/Controls                                     $ 1,201,000
Mixing-2 Banburys/2 Extruders                                          1,314,000
Molding-2 Systems                                                      2,130,000
Chiller                                                                   80,000
X-Ray/Quality                                                            250,000
Texturing                                                                280,000
Tie Logistics                                                            125,000
Shredder                                                                 150,000
Site (elec., found, air)                                                 960,000
Building                                                                 150,000
Engineering                                                              350,000
Installation                                                             850,000
Permitting                                                                50,000
Ventilation/Env.                                                         110,000
                                                                     -----------<PAGE>

                                  EXHIBIT 10.7

                                   REGULATIONS

                                       OF

                                   TIETEK LLC

                      A Delaware Limited Liability Company

                    Date of Adoption: As of February 5, 2004

TIETEK L.L.C. SHALL NOT BE, AND SHALL NOT BE CONSTRUED TO BE, A PARTNERSHIP OR
JOINT VENTURE, AND NO MEMBER OR MANAGER SHALL BE, OR SHALL BE CONSTRUED TO BE, A
PARTNER OR JOINT VENTURER OF ANY OTHER MEMBER OR MANAGER FOR ANY PURPOSES OTHER
THAN FEDERAL AND STATE TAX PURPOSES, AND THESE REGULATIONS MAY NOT BE CONSTRUED
TO SUGGEST OTHERWISE.

<PAGE>

                                  REGULATIONS
                                       OF
                                   TIETEK LLC
                      A Delaware Limited Liability Company

ARTICLE I DEFINITIONS..........................................................1

   1.01  Definitions...........................................................1
   1.02  Construction..........................................................8

ARTICLE II ORGANIZATION........................................................8

   2.01  Formation.............................................................8
   2.02  Name..................................................................8
   2.03  Registered Office; Registered Agent;
         Principal Office in the United States; Other Offices..................8
   2.04  Purposes..............................................................9
   2.05  Foreign Qualification.................................................9
   2.06  Term..................................................................9
   2.07  Mergers and Interest Exchanges........................................9
   2.08  No State-Law Partnership..............................................9

ARTICLE III MEMBERSHIP.........................................................9

   3.01  Members...............................................................9
   3.02  Rights of and Restrictions on Members.................................9
   3.03  Representations and Warranties of the Members........................10
   3.04  Additional Members...................................................10
   3.05  Information..........................................................10
   3.06  Meetings.............................................................11
   3.07  Votes of Class A Members; Quorum; and Effect of Vote.................11
   3.08  Notice of Meetings...................................................11
   3.09  Actions Without a Meeting............................................11

ARTICLE IV INITIAL CLASSES OF MEMBERSHIP INTERESTS/CAPITAL CONTRIBUTIONS......12

   4.01  Initial Classes of Membership Interests and Capital Contributions....12
   4.02  Subsequent Capital Contributions/Obligations of Members..............13
   4.03  Advances by Members..................................................13
   4.04  Capital Accounts.....................................................13
   4.05  Interest.............................................................15
   4.06. Withdrawal of Capital................................................15
   4.07. Negative Capital Accounts............................................15
   4.08. Resignation..........................................................15

<PAGE>

ARTICLE V ALLOCATIONS AND DISTRIBUTIONS.......................................15

   5.01  Allocation of Net Income and Net Loss................................15
   5.02  Section 704(c) Allocations...........................................18
   5.03  Distributions........................................................19
   5.04  Computation and Determination........................................20
   5.05  Fiscal Year and Company Books........................................21

ARTICLE VI MANAGERS...........................................................21

   6.01  Management of the Company by the Board...............................21
   6.02  Election of Managers.................................................22
   6.03  Powers of the Board..................................................23
   6.04  Performance of Duties; Liability of Managers.........................25
   6.05  Competing Activities.................................................26
   6.06  New Business Opportunities...........................................26
   6.07  Transactions between the Company and the Managers and Affiliate......26
   6.08  Payments to Managers.................................................27
   6.09  Officers.............................................................27
   6.10  Public Company Duties and Responsibilities...........................27

ARTICLE VII BUY/SELL AGREEMENT................................................29

   7.01  Buy/Sell.............................................................29
   7.02  Acceptance of Buy/Sell Offer.........................................29
   7.03  Closing of Purchase Pursuant to Buy/Sell Offer.......................29

ARTICLE VIII TRANSFERS........................................................29

   8.01  Restrictions on Transfers............................................29
   8.02  Permitted Transfers..................................................30
   8.03  Conditions to Permitted Transfers....................................30
   8.04  Right of First Refusal...............................................30
   8.05  Prohibited Transfers.................................................32
   8.06  Rights of Unadmitted Assignees.......................................32
   8.07  Admission of Substitute Members......................................33
   8.08  Legend...............................................................33
   8.09  Distributions and Allocations in Respect of Transferred Interests....34

ARTICLE IX TAG-ALONG PROVISIONS...............................................35

   9.01  Tag-Along............................................................35
   9.02  Distribution of Sale Proceeds........................................35

ARTICLE X INDEMNIFICATION.....................................................35

   10.01 Right to Indemnification.............................................35

<PAGE>

   10.02 Advance Payment......................................................36
   10.03 Appearance as a Witness..............................................36
   10.04 Nonexclusivity of Rights.............................................36
   10.05 Insurance............................................................36
   10.06 Member Notification..................................................37
   10.07 Savings Clause.......................................................37

ARTICLE XI TAXES, BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS..................37

   11.01 Tax Returns..........................................................37
   11.02 Tax Elections........................................................37
   11.03 Tax Matters Partner..................................................38
   11.04 Maintenance of Books.................................................38
   11.05 Reports..............................................................38
   11.06 Accounts.............................................................38

ARTICLE XII DISSOLUTION, LIQUIDATION, AND TERMINATION.........................38

   12.01 Dissolution Events...................................................39
   12.02 Winding Up...........................................................39
   12.03 Deficit Capital Accounts; Related Items..............................40
   12.04 Rights of Members....................................................41
   12.05 Notice of Dissolution/Termination....................................41
   12.06 Allocations During Period of Liquidation.............................41
   12.07 The Liquidator.......................................................41
   12.08 Form of Liquidating Distributions....................................42

ARTICLE XIII GENERAL PROVISIONS...............................................42

   13.01 Notices..............................................................42
   13.02 Entire Agreement; Supersedure........................................42
   13.03 Effect of Waiver of Consent..........................................42
   13.04 Binding Effect.......................................................43
   13.05 Governing Law; Severability..........................................43
   13.06 Further Assurances...................................................43
   13.07 Waiver of Certain Rights.............................................43
   13.08 Indemnification......................................................43
   13.09 Notice to Members of Provisions of these Regulations.................43
   13.10 Counterparts.........................................................43
   13.11 Mediation............................................................43
   13.12 Arbitration..........................................................46

<PAGE>

                                   TIETEK LLC
                                   REGULATIONS
                                   -----------

     These Regulations of TieTek LLC, a Delaware limited liability company (the
"Company"), dated effective as of January 1, 2004 (the "Regulations"), are
hereby (a) adopted by the Managers (as defined below), and (b) executed and
agreed to, for good and valuable consideration, by TieTek Technologies, Inc., a
Texas corporation ("TieTek" or the "Class A Member", as the context requires),
and Sponsor Investments, LLC, a Texas limited liability company (the "Class B
Member").

                                  INTRODUCTION

     A.   The Company was initially incorporated on August 13, 2003 as a
corporation organized under the laws of the state of Delaware and the DGCL, and
subsequently converted into a limited liability company in accordance with the
provisions of the Act and the DGCL by filing a Certificate of Conversion and a
Certificate of Formation with the Secretary of State of the State of Delaware on
February 5, 2004;

     B.   The Class A Member has agreed to contribute effective as of January 1,
2004 certain operating assets, including the Houston Plant and Marshall Plant,
subject to the liabilities applicable thereto, to the Company in exchange for
the issuance to it of all of the Class A Membership Interests in the Company, a
schedule of which assets, liabilities and the Agreed Value thereof are set forth
as Schedule A;

     C.   The Class B Member has made a cash capital contribution of $5,000 and
caused Tie Investors, LLC, a Texas limited liability company (the "Lender"), to
enter into that certain Loan Agreement with the Company dated February 5, 2004
and various related Loan Documents, as defined in the Loan Agreement
(collectively, the "Loan Documents"), pursuant to which the Lender will provide
the Company with a loan of up to $14 million to finance the acquisition and
development of the Plants, and, in partial consideration therefor, the Class A
Member and the Class B Member have agreed to issue to the Class B Member the
Class B Membership Interest as set forth in the following Regulations of the
Company and to set forth additional agreements among the Members.

                                    ARTICLE I
                                   DEFINITIONS

     1.01   Definitions. As used in these Regulations, the following terms have
the following meanings:

     "Act" shall mean the Delaware Limited Liability Company Act, 6 Del. C.
Section 18-101, et seq, as amended from time to time (or any corresponding
provisions of succeeding law).

     "Accepting Offerees" shall have the meaning given that term in Section
8.04(d).

     "Acquisition Assets" shall have the meaning given that term in Section
6.05.

                                      - 1 -

<PAGE>

     "Additional Future Loan" shall have the meaning given that term in Section
4.02.

     "Adjusted Capital Account" means, with respect to any Member, such Member's
Capital Account as of any relevant date after giving effect to the following
adjustments:

            (i)    Credit to such Capital Account any amounts which such Member
     is deemed to be obligated to restore pursuant to Treasury Regulations
     Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5); and

            (ii)   Debit to such Capital Account the items described in
     Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

     "Adjusted Capital Account Deficit" means, with respect to any Member, the
deficit balance, if any, in such Member's Adjusted Capital Account as of the end
of the relevant Fiscal Year. The foregoing definition of "Adjusted Capital
Account Deficit" is intended to comply with the provisions of Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) and 1.704-2, and shall be interpreted
consistently therewith.

     "Adjusted Property" shall mean any property the Carrying Value of which has
been adjusted pursuant to Section 5.02(a).

     "Affiliate" shall mean, in respect of any specified Person: (i) any other
Person that, directly or indirectly, Controls, is Controlled by, or is under
common Control with, such specified Person, including a director, partner,
manager, executive officer or employee of such Person and any parent or
subsidiary company, (ii) any sibling, spouse or child of such specified Person,
or (iii) a trust created for the benefit of an immediate family member of such
specified Person.

     "Agreed Value" shall mean the cost of property, net of the liabilities
attributable thereto, contributed by the Class A Member upon organization of the
Company as described on Schedule A hereto and the fair market value of property
contributed in the future, such value of property contributed in the future to
be determined in any manner deemed reasonable by the Board.

     "Authorized Individuals" shall have the meaning given that term in Section
13.11.

     "Bankruptcy" means, with respect to the Company, a "Voluntary Bankruptcy"
or an "Involuntary Bankruptcy." A "Voluntary Bankruptcy" means, with respect to
the Company, (i) the inability of the Company generally to pay its debts as such
debts become due, or an admission in writing by the Company of its inability to
pay its debts generally or a general assignment by the Company for the benefit
of creditors, (ii) the filing of any petition or answer by the Company seeking
to adjudicate itself as bankrupt or insolvent, or seeking for itself any
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of the Company or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking,
consenting to, or acquiescing in the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for the
Company or for any substantial part of its Property or (iii) corporate action
taken by the Company to authorize any of the actions set forth above. An
"Involuntary Bankruptcy" means, with respect to any Person, without the consent
or acquiescence of the Company, the entering of

                                      - 2 -

<PAGE>

an order for relief or approving a petition for relief or reorganization or any
other petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or other similar relief under any present
or future bankruptcy, insolvency or similar statute, law or regulation, or the
filing of any such petition against the Company which petition shall not be
dismissed within ninety (90) days, or without the consent or acquiescence of the
Company, the entering of an order appointing a trustee, custodian, receiver or
liquidator of the Company or of all or any substantial part of the Property of
the Company which order shall not be dismissed within ninety (90) days.

     "Board" shall have the meaning set forth in Section 6.01(a).

     "Book-Tax Disparities" shall mean the difference between a Member's Capital
Account balance, as maintained pursuant to Section 4.04 and such balance had the
Capital Account been maintained strictly in accordance with tax accounting
principles (such disparities reflecting the difference between the Carrying
Value of Adjusted Properties, as adjusted from time to time, and the adjusted
basis thereof for Federal income tax purposes).

     "Business" shall mean the business of the Company as conducted from time to
time including, but not limited to, the business of manufacturing and
distributing structural composite products including, but not limited to,
railroad and transit authority cross-ties, products for guardrails, marine
pilings and bridge components.

     "Business Day" shall mean any day other than a Saturday, a Sunday, or a
holiday on which national banking associations in the State of Texas are closed.

     "Buy/Sell Offer" shall have the meaning given that term in Section 7.01.

     "Buy/Sell Period" shall have the meaning given that term in Section 7.01.

     "Capital Account" shall have the meaning given that term in Section
4.04(a).

     "Capital Contribution" shall mean the total value of cash and the Agreed
Value of property contributed by a Member to the capital of the Company.

     "Carrying Value" shall mean the adjusted value of the Company property
determined in accordance with the accounting rules for the maintenance of
capital accounts as described in Section 4.04.

     "Certificate shall have the meaning set forth in Section 2.01.

     "Class A Member" shall, until exercise of the Option, mean TieTek and after
exercise of the Option, TieTek and the Class B Member.

     "Class A Membership Interest" means a Membership Interest established under
Section 4.01(a) of these Regulations.

                                      - 3 -

<PAGE>

     "Class B Member" shall mean Sponsor Investments, LLC, a Texas limited
liability company, or its assignee, as permitted herein.

     "Class B Membership Interest" means a Membership Interest established under
Section 4.01(b) of these Regulations.

     "Code" shall mean the Internal Revenue Code of 1986 and any successor
statute, as amended from time to time.

     "Company" shall mean TieTek L.L.C., a Delaware limited liability company.

     "Company Affiliates" shall have the meaning given that term in Section
13.11.

     "Company Firm Offer" shall have the meaning given that term in Section
8.04(b).

     "Company Offer Notice" shall have the meaning given that term in Section
8.04(b).

     "Company Offer Period" shall have the meaning given that term in Section
8.04(c).

     "Contributed Property" shall mean property other than cash originally
contributed or deemed to be contributed to the Company by a Member in exchange
for its Membership Interest in the Company.

     "Control" means (i) ownership of fifty percent (50%) or more of the
outstanding securities, or an equivalent beneficial ownership interest, of the
owned Person; or (ii) the ability, directly or indirectly, to exercise fifty
percent (50%) or more of the voting rights of the controlled Person.

     "Declining Member" shall have the meaning given that term in Section 6.06.

     "Dispose," "Disposing," or "Disposition" shall mean a sale, assignment,
transfer, exchange, mortgage, pledge, grant of a security interest, or other
disposition or encumbrance (including, without limitation, by operation of law),
or the acts thereof.

     "Dispute" shall have the meaning given that term in Section 13.11.

     "Disputing Party" shall have the meaning given that term in Section 13.11.

     "Dissolution Event" shall have the meaning given that term in Section
12.01.

     "Distributable Cash" shall mean, with respect to any period, all cash
revenues and receipts of the Company during such period, and reserves set aside
during prior periods and no longer needed for the Company's business, less the
sum of (i) all amounts expended by the Company pursuant to these Regulations
during such period and (ii) such working capital and cash reserves or other
retained amounts as the Board reasonably determines to be necessary for the
proper operation of the Company business.

                                      - 4 -

<PAGE>

     "DGCL" shall mean the Delaware General Corporation Law.

     "Effective Date" shall mean the date on which these Regulations are adopted
and the Company begins operations.

     "First Appraiser" shall have the meaning given that term in Section
9.03(b).

     "GAAP" shall mean generally accepted accounting principles, consistently
applied.

     "Houston Plant" shall mean the leased tract of land and ancillary building
and equipment located in Houston, Texas being used in the conduct of the
Business.

     "Initiating Party" shall have the meaning given that term in Section 13.11.

     "Lender" shall have the meaning given that term in the Introduction.

     "Liquidator" shall have the meaning given that term in Section 12.07(a).

     "Loan" shall mean the $14 million loan to the Company to be obtained from
the Lender to finance construction of the plant and acquisition of plant
equipment (or refinance a bridge loan and reimbursement to the Class A Member of
costs or expenses previously incurred for the Marshall Plant and related
equipment, together with inventory, raw materials and supplies and other
properly reimbursable items related to the Business) and related working capital
and interim interest.

     "Loan Documents" shall have the meaning given that term in the
Introduction.

     "Mandatory Distribution" shall have the meaning given that term in Section
5.03(d).

     "Manager" shall mean any Person named in the Certificate of the Company and
any Person hereafter elected as a Manager of the Company as provided in these
Regulations, but does not include any Person who has ceased to be a Manager of
the Company.

     "Market Value" shall have the meaning given that term in Section 9.03.

     "Marshall Plant" means the tract of land and ancillary building and
equipment located in Harrison County, seven miles north of the courthouse in
Marshall, Texas, being constructed to be used in the conduct of the Business.

     "Member" shall mean each of the Persons executing these Regulations as the
Class A Member and as the Class B Member or hereafter admitted to the Company as
a Member as provided in these Regulations, but does not include any Person who
has ceased to be a Member in the Company.

     "Member Firm Offer" shall have the meaning given that term in Section
8.04(b).

                                      - 5 -

<PAGE>

     "Member Offer Notice" shall have the meaning given that term in Section
8.04(b).

     "Member Offer Period" shall have the meaning given that term in Section
8.04(c).

     "Member Nonrecourse Debt" means any nonrecourse debt (as defined in
Treasury Regulations Section 1.704-2(b)(4)) of the Company for which any Member
bears the economic risk of loss, in accordance with Treasury Regulations
Sections 1.704-2(b)(4) and 1.752-2.

     "Member Nonrecourse Debt Minimum Gain" means, for each Member, the amount
of Minimum Gain for the Fiscal Year or other period attributable to such
Member's Member Nonrecourse Debt, determined in accordance with Treasury
Regulations Section 1.704-2(i)(3).

     "Member Nonrecourse Deductions" means any Losses or other losses or
deductions of the Company that must be allocated to a Member who bears the
economic risk of loss for the Member nonrecourse liability to which the Losses
or other losses or other deductions relate, determined in accordance with
Treasury Regulations Section 1.704-2(i)(1).

     "Membership Interest" shall mean an interest of a Member in the Company,
including, without limitation, rights to distributions (liquidating or
otherwise), allocations, information, and to consent or approve.

     "Minimum Gain" means, with respect to all nonrecourse liabilities of the
Company, the minimum amount of gain that would be realized by the Company if the
Company Disposed of the Company property subject to such liability in full
satisfaction thereof computed in accordance with Treasury Regulations Section
1.704-2(d).

     "NATK" shall mean North American Technologies Group, Inc., a Delaware
corporation and the parent of TieTek.

     "Net Agreed Value" shall mean the Agreed Value of any property contributed
to the Company, less the amount of debt to which such property is subject or the
amount of debt assumed in connection with such contribution.

     "New Business Opportunity" shall have the meaning given that term in
Section 6.06.

     "Net Income or Net Loss" shall mean, during any fiscal period of the
Company, the net income or net loss of the Company determined in accordance with
GAAP and the terms and conditions of this Agreement.

     "Nonrecourse Deductions" means, for each fiscal year or other period, an
amount of Company deductions that are characterized as "nonrecourse deductions"
under Treasury Regulations Section 1.704-2(c).

     "Offer Notice" shall have the meaning given that term in Section 9.01(a).

                                      - 6 -

<PAGE>

     "Offer Price" shall have the meaning given that term in Section 8.04(a).

     "Offered Interests" shall have the meaning given that term in Section 8.04.

     "Offerees" shall have the meaning given that term in Section 8.04(b).

     "Option" shall have the meaning given that term in Section 4.01(c).

     "Option Interests" shall have the meaning given that term in Section 9.01.

     "Option Period" shall have the meaning given that term in Section 4.01(c).

     "Option Purchase Price" shall have the meaning given that term in Section
4.01(c).

     "Participating Member" shall have the meaning given that term in Section
6.06.

     "Permitted Transfer" shall have the meaning given that term in Section
8.02.

     "Person" includes individuals, general partnerships, limited partnerships,
limited liability companies, corporations, trusts, estates, real estate
investment trust and any other association.

     "Plants" shall mean the Houston Plant and the Marshall Plant, collectively.

     "Prime Rate" shall mean the average prime rate of interest on money of
money center banks.

     "Procedure" shall have the meaning given that term in Section 13.11.

     "Proceeding" shall have the meaning given that term in Section 10.01.

     "Purchase Offer" shall have the meaning given that term in Section 8.04(a).

     "Purchaser" shall have the meaning given that term in Section 8.04(a).

     "Regulations" shall have the meaning given that term in the introductory
paragraph.

     "Responding Party" shall have the meaning given that term in Section 13.11.

     "Royalty Agreement" shall mean the TieTek Royalty Agreement of even date
herewith, by and among the Class A Member, the Class B Member and William T.
Aldrich, Henry W. Sullivan, and J. Denny Bartell as Co-Trustees for the benefit
of Dune Holdings, L.L.C., assignee of Gaia Holdings, Inc., and Thor Ventures,
L.L.C., the latter hereinafter collectively referred to as "Payee."

     "SEC" shall have the meaning given that term in Section 6.10.

                                      - 7 -

<PAGE>

     "Second Appraiser" shall have the meaning given that term in Section
9.03(b).

     "Securities Act" shall mean the Securities Act of 1933, as amended.

     "Securities Laws Requirements" shall have the meaning given that term in
Section 6.10.

     "Seller" shall have the meaning given that term in Section 8.04.

     "Sharing Ratio" with respect to any Member means a fraction (expressed as a
percentage), the numerator of which is the number of that Member's Class A
Membership Interests, and the denominator of which is the sum of the issued and
outstanding Class A Membership Interests of all Members.

     "Third Appraiser" shall have the meaning given that term in Section
9.03(b).

     "Treasury Regulations" shall mean the regulations promulgated by the IRS or
the Treasury Department under the Code, and any subsequent changes or amendments
thereto.

     "Unreturned Capital Contribution" shall mean the total cash Capital
Contribution of a Member, less all amounts distributed to such Member by the
Company pursuant to Section 5.03(a), as of the end of the preceding fiscal year.

Other terms defined herein have the meanings so given them.

     1.02   Construction. Whenever the context requires, the gender of all words
used in these Regulations includes the masculine, feminine and neuter. All
references to Articles and Sections refer to articles and sections of these
Regulations, and all references to Exhibits are to Exhibits attached hereto,
each of which is made a part hereof for all purposes.

                                   ARTICLE II
                                  ORGANIZATION

     2.01   Formation. The Company has been organized as a Delaware limited
liability company by the filing of the Certificate of Formation (the
"Certificate") under and pursuant to the Act.

     2.02   Name. The name of the Company is "TieTek LLC", and all Company
business must be conducted in that name or such other names that comply with
applicable law as the Managers may select from time to time.

     2.03   Registered Office; Registered Agent; Principal Office; Other
Offices. The registered office of the Company required by the Act to be
maintained in the State of Delaware will be the office of the registered agent
named in the Certificate or such other office (which need not be a place of
business of the Company) as the Managers may designate from time to time in the
manner provided by law. The principal office of the Company will be located at
14315 West Hardy Road, Houston, Texas 77060 or such other place as the Managers
may from

                                      - 8 -

<PAGE>

time to time designate by notice to the Members. The registered agent of the
Company in the State of Delaware will be the initial registered agent named in
the Certificate or such other Person or Persons as the Managers may designate
from time to time in the manner provided by law. The Company may maintain
offices at such other place or places within or outside the State of Delaware as
the Managers deem advisable.

     2.04   Purposes. The purposes for which this Company is organized are to
(i) exercise all powers necessary to, or reasonably connected with, the
operation of the Business that may be legally exercised by limited liability
companies under the Act, and (ii) to engage in all activities necessary,
customary, convenient or incidental to the foregoing.

     2.05   Foreign Qualification. Prior to the Company's conducting business in
any jurisdiction other than Delaware, the Managers have or will cause the
Company to comply, to the extent procedures are available and those matters are
reasonably within the control of the Managers, with all requirements necessary
to qualify the Company as a foreign limited liability company in that
jurisdiction.

     2.06   Term. The Company commenced doing business on the date the Secretary
of State of Delaware issued a Certificate of Formation and Certificate of
Conversion for the Company and will continue in existence in perpetuity unless
these Regulations specify to the contrary.

     2.07   Mergers and Interest Exchanges. The Company may be a party to a
merger or an interest exchange, subject to the requirements of Section 6.03
hereof.

     2.08   No State-Law Partnership. The Members intend that the Company not be
a partnership (including, without limitation, a limited partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than federal and state tax
purposes, and these Regulations may not be construed to suggest otherwise.

                                   ARTICLE III
                                   MEMBERSHIP

     3.01   Members. The Members of the Company are the Class A Member, the
Class B Member and Persons who are issued or acquire Membership Interests in
accordance with the terms of these Regulations and the Certificate as
contemplated in Sections 3.04 and 4.01.

     3.02   Rights of and Restrictions on Members. No Member will:

     (a)    Be personally liable for any of the debts, obligations or losses
(including deficits in its Capital Account) of the Company or the other Members,
anything to the contrary herein notwithstanding, except for a liability based
upon a violation by the Member of these Regulations;

     (b)    Be assessed or required to make any Capital Contributions other than
those

                                      - 9 -

<PAGE>

expressly agreed to in writing by such Member;

     (c)    Except as may be permitted in a written employment agreement by and
between a Member and the Company, have the authority or power to act for or on
behalf of the Company, to do any act that would be binding on the Company, or to
incur any expenditures on behalf of the Company.

     (d)    Be entitled to be paid any salary or to have a Company drawing
account;

     (e)    Be entitled to receive any interest on any Capital Contribution or
Capital Account;

     (f)    Be entitled to a partition of any property of the Company;

     (g)    Except as expressly provided to the contrary herein, be entitled to
priority over any Member, either as to a return of its Capital Contribution or
as to allocations of revenues, gains, costs, expenses, losses or distributions;
or

     (h)    Be entitled to a return of, or to a withdrawal of, all or any part
of its contributions to the Company, except to the extent that the Members may
be entitled to distributions pursuant to the express provisions of these
Regulations, and (unless otherwise provided) no Member shall have any right to
demand or receive property other than cash in return for its contributions, and
its right to receive cash shall be, and is hereby expressly limited and
controlled by the terms of these Regulations.

     3.03   Representations and Warranties of the Members. Each Member
represents that by reason of its business and financial experience, and the
business and financial experience of those Persons retained by it to advise it
with respect to this investment herein, each has such knowledge, sophistication
and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment and is able to
bear the economic risk of such investment.

     3.04   Additional Members. Additional Membership Interests may be issued to
Persons from time to time on such terms and conditions as the Members may
determine at the time of admission or as otherwise set forth herein, only by
unanimous consent of the Members.

     3.05   Information. (a) In addition to the other rights specifically set
forth in these Regulations, each Member is entitled to all information to which
that Member is entitled to have access pursuant to the Act under the
circumstances and subject to the conditions therein stated and unlimited access
to all Company books and records plants, assets, property, employees,
consultants and the like.

     (b)    The Members acknowledge that, from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member will hold in strict
confidence any information it receives regarding the Company that is identified
as being confidential (and if that information is provided in writing, that is
so marked)

                                     - 10 -

<PAGE>

and may not disclose it to any Person other than another Member or a Manager,
except for disclosures (i) compelled by law (but the Member must notify the
Managers promptly of any request for that information, before disclosing it if
practicable), (ii) to advisers or representatives of the Member or Persons to
whom any of that Member's Membership Interests may be Disposed as permitted by
these Regulations, but only if the recipients have agreed to be bound by the
provisions of this Section 3.05(b), (iii) information received pursuant to
licenses under patents such Member or an Affiliate or otherwise licensed to such
Member or an Affiliate as contemplated herein, or (iv) of information that
Member also has received from a source independent of the Company that the
Member reasonably believes obtained that information without breach of any
obligation of confidentiality. The Members acknowledge that breach of the
provisions of this Section 3.05(b) may cause irreparable injury to the Company
for which monetary damages are inadequate, difficult to compute, or both.
Accordingly, the Members agree that the provisions of this Section 3.05(b) may
be enforced by specific performance.

     3.06   Meetings. Special meetings of the Members may be held at any place,
either within or without the state of Delaware, selected by the Member or
Members calling the meeting. There shall be no regularly scheduled meeting of
the Members of the Company. A special meeting of the Members may be called by
any Member(s) holding an aggregate of ten percent (10%) or more of the then
issued and outstanding Class A Membership Interests. The Members holding Class B
Membership Interests shall not be entitled to call any special meeting of
Members.

     3.07   Votes of Class A Members; Quorum; and Effect of Vote. Each Class A
Member shall have a number of votes equal to the number of Class A Membership
Interests held by such Member; provided, however, that if, pursuant to the terms
of these Regulations, a Member is not entitled to vote on a specific matter,
then such Member's votes and Membership Interests not entitled to vote shall not
be considered for the purpose of determining whether a quorum is present, or
whether the requisite percentage approval by vote of the Members has been
obtained with respect to such specific matter. Members holding an aggregate of
fifty-one percent (51%) of the votes, (i.e. fifty-one percent (51%) of the Class
A Membership Interests entitled to vote) shall constitute a quorum at all
meetings of the Members. Notwithstanding there being a quorum present, unless
otherwise specifically indicated in these Regulations to the contrary, any
percentage vote needed to approve any action under these Regulations shall take
that percentage of all votes outstanding, regardless of the percentage of votes
attending a meeting or approving of the action at the meeting. The Class B
Membership Interests shall not have any voting rights whatsoever. The foregoing
sentence shall not in any respect limit the right of the Class B Member to
consent to or approve any matter required or permitted to be consented to by the
express terms of these Regulations.

     3.08   Notice of Meetings. Written notice of a meeting shall be given to
each Member entitled to vote not less than three (3) days nor more than thirty
(30) days before the date of the meeting, unless waived by all of the Members.
The notice shall state the place, date and hour of the meeting and the general
nature of the business to be transacted.

     3.09   Actions Without a Meeting. Any action that may be taken at any
meeting of Members may be taken without a meeting and without prior notice if a
consent in writing, setting

                                     - 11 -

<PAGE>

forth the action so taken, shall be signed and delivered to the Board by all of
the Class A Members. Any Member giving a written consent may revoke such consent
by a writing received by the Board prior to the time that the Board has received
written consents of all Members.

                                   ARTICLE IV
                    INITIAL CLASSES OF MEMBERSHIP INTERESTS;
                              CAPITAL CONTRIBUTIONS

     4.01   Initial Classes of Membership Interests and Capital Contributions.

     (a)    Class A Membership Interests. In consideration for the contributions
of the Class A Member to the capital of the Company, or agreement to make such
contributions, from and after the commencement of business by the Company,
including those assets and liabilities listed in Schedule A hereto, as of the
date hereof the Company has issued to the Class A Member 1,000 Class A
Membership Interests. The Company is authorized to issue only 1,000 Class A
Membership Interests.

     (b)    Class B Membership Interests. In consideration for arranging the
Loan, the provision of other related services and a cash capital contribution of
$5,000, the Company has issued to the Class B Member one Class B Membership
Interest. The Class B Member shall not be required to make any other
contribution of cash or other property to the Company. Except as set forth in
Section 6.02, he Class B Membership Interest shall have no rights to voting,
distributions (liquidating or otherwise) or allocations (other than as expressly
set forth herein), but shall have the right to receive information, designate
certain Board members and consent to or approve of certain actions as
hereinafter provided in these Regulations. The Class B Membership Interest shall
be cancelled upon the exercise of the Option by the Class B Member in accordance
with the provisions of Section 4.01(c) hereof. The Company shall be authorized
to issue only one Class B Membership Interest. Except as set forth in Section
6.02, the Class B Membership Interest and all ancillary rights and privileges of
the Class B Holder related to the Class B Membership Interest shall terminate
upon exercise of the Option, when the Class B Member shall become a Class A
Member and have all rights incident thereto. The rights of the Class B
Membership Interest shall be automatically cancelled at midnight,
centralstandard time, on December 31, 2010 if the Option has not been exercised
by the Class B Member on or prior to that time.

     (c)    Option of Class B Member. In consideration for the arrangement by
the Class B Member of the Loan, the agreement of the Class B Member to make, or
cause an Affiliate or other Person to make, any Additional Future Loans (as
defined in Section 4.02, below), and the provision of other related services,
the receipt of which is hereby acknowledged, the Class A member hereby grants to
the Class B Member, or its assignee, the irrevocable option (the "Option") to
purchase 499 of its Class A Membership Interests at any time beginning on the
second anniversary of the Effective Date and ending on the seventh anniversary
of the Effective Date (the "Option Period"), for an exercise price payable to
the Class A Member of four million nine hundred ninety five thousand dollars
($4,995,000), reduced (but not below $10) by (i) one-half (1/2) of the amount of
all cash payments by the Company to the Payee under the Royalty Agreement and
(ii) interest imputed on such cash payments at the Prime Rate plus 100 basis

                                     - 12 -

<PAGE>

points, compounded annually (net, the "Option Purchase Price"). In order to
exercise the Option, the Class B Member must pay to the Class A Member within
the Option Period, the Option Purchase Price in cash, and the Class A Member
hereby consents to and permits the automatic admission of the Class B Member as
a Substitute Member with respect to such 499 Class A Membership Interests
pursuant to Article 8.07 hereof. Upon the receipt by the Class B Member of a
certificate for 499 Class A Membership Interests from the Company, the Class B
Membership Interests held by the Class B Member shall be cancelled, and the
Company shall have only a single class of Membership Interests.

     (d)    Issuance of Interests. Upon the admission of additional Membership
Interests, the holders of such additional Membership Interests take their
Membership Interests subject to the rights of the existing interest holders only
upon the admission of such additional interests pursuant to section 3.04.

     4.02   Subsequent Capital Contributions/Obligations of Members. No Member
shall be obligated to contribute a total amount beyond that which the Member has
made or agreed to make pursuant to Section 4.01. At such time as the Loan is
paid in full, in the event that the Company, as determined by the Board, desires
to develop any additional plants or otherwise expand any existing plants, upon
the request of any Class A Member, the Class B Member agrees to arrange (or
cause an Affiliate to arrange) for the purpose of the financing of any future
plant, an additional loan or loans of up to $14 million per financing
("Additional Future Loans"), on the same substantive terms and conditions
(including the same interest rate), and secured by comparable collateral, as the
Loan. The obligation of the Class B Member as to Additional Future Loans shall
be an ongoing obligation for the financing of future plants or projects but only
as each successive Additional Future Loan is paid in full.

     4.03   Advances by Members. If the Company does not have sufficient cash to
pay its obligations, or desires to purchase services for its operations from one
of the Members, any Member(s) may, with the unanimous consent of the Managers
(in accordance with Section 6.07), advance all or part of the needed funds or
provide the needed services to, the Company, the reasonable value of which
services shall be reimbursed to the Member providing the services. Any advance
described in this Section 4.03 shall constitute a loan from the Member to the
Company, and shall bear interest at the Prime Rate from the date of the advance
until the date of payment, and shall not be deemed to be a Capital Contribution.

     4.04   Capital Accounts.

     (a)    Creation of Capital Accounts. The Company shall maintain for each
Member a separate capital account for each class of Membership Interest held by
such Member in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv) (a "Capital Account;" as context requires (whether or not
designated as such) such term shall mean the Capital Account of a Member for
such Class). A Capital Account shall be increased by (i) the amount of cash and
the Net Agreed Value of all property contributed or deemed contributed by such
Member to the Company pursuant to these Regulations and (ii) all amounts of
Company Net Income (including income and gain exempt from tax) computed in
accordance with Section 4.04(b) and allocated to such Member pursuant to Section
5.01 and decreased by (iii) the amount

                                     - 13 -

<PAGE>

of cash and the Net Agreed Value of all property distributed to such Member
pursuant to these Regulations and (iv) all items of Company Net Loss computed in
accordance with Section 4.04(b) and allocated to such Member pursuant to Section
5.01.

     (b)    Maintenance of Capital Accounts. For purposes of computing the
amount of any item of Net Income or Net Loss to be reflected in the Members'
Capital Accounts, the determination, recognition and classification for federal
income tax purposes (including any method of depreciation, depletion, cost
recovery or amortization used for such purposes) shall govern, provided that:

            (i)    In accordance with the requirements of Treasury Regulation
     Sections 1.704-1(b)(2)(iv)(d)(3) and 1.704-1(b)(2)(iv)(f)(3), any
     deductions for depreciation, cost recovery or amortization attributable to
     a Contributed Property shall be determined as if the adjusted basis of such
     property on the date it was acquired by the Company was equal to the Agreed
     Value of such property. Upon an adjustment pursuant to Section 4.04(b)(i)
     to the Carrying Value of any Company property subject to depreciation, cost
     recovery or amortization, any further deductions for such depreciation,
     cost recovery or amortization attributable to such property shall be
     determined as if the adjusted basis of such property was equal to the
     Carrying Value of such property immediately following such adjustment.

            (ii)   Any Net Income or Net Loss attributable to the taxable
     disposition of any property shall be determined by the Company as if the
     adjusted basis of such property as of such date of disposition was equal in
     amount to the Company's Carrying Value with respect to such property as of
     such date.

            (iii)  All fees and other expenses incurred by the Company to
     promote the sale of (or to sell) an interest in the Company that can
     neither be deducted nor amortized under Code Section 709 shall, for
     purposes of Capital Account maintenance, be treated as an item of deduction
     and shall be allocated among the Members pursuant to Article V hereof.

            (iv)   The computation of Net Income or Net Loss shall be made
     without regard to any election under Code Section 754 which may be made by
     the Company and, as to those items described in Code Section 705(a)(1)(B)
     or Section 705(a)-(2)(B), without regard to the fact that such items are
     not includable in gross income or are neither currently deductible nor
     capitalizable for federal income tax purposes.

            (v)    The foregoing provisions and the other provisions of these
     Regulations relating to the maintenance of Capital Accounts are intended to
     comply with the Treasury Regulations under Section704(b), and shall be
     interpreted and applied in a manner consistent with such Treasury
     Regulations. In making the increases and decreases to the Members' Capital
     Accounts in accordance with the Section704(b) of the Treasury Regulations,
     the Managers shall make such elections, tax allocations, and adjustments as
     are provided in the Section704(b) of the Treasury Regulations as may be
     necessary or appropriate to maintain the validity of the tax allocations
     set forth in these Regulations.

                                     - 14 -

<PAGE>

     (c)    Unrealized Gain and Loss; Carrying Value.

            (i)    Consistent with the provisions of Treasury Regulation
     Section 1.704-1(b)(2)(iv)(f), upon an issuance of additional Membership
     Interests in the Company for cash or other property, or the redemption of
     Membership Interests for cash or other property, the Capital Accounts of
     all Members and the Carrying Values of all Company properties may (at the
     election of the Board), immediately prior to such issuance or redemption,
     be adjusted (consistent with the provisions hereof), upwards or downward to
     reflect any Unrealized Gain or Unrealized Loss attributable to each Company
     property (as if such Unrealized Gain or Unrealized Loss had been recognized
     upon an actual sale of each such property, immediately prior to such
     issuance or redemption, and had been allocated to the Members, at such
     time, pursuant to Article V).

            (ii)   In addition, in accordance with Treasury Regulation
     Section1.704-1(b)(2)(iv)(e), immediately prior to the actual or deemed
     distribution of any Company property (other than cash), the Capital
     Accounts of all Members and the Carrying Values of all Company property
     shall be adjusted (consistent with the provisions hereof) upward or
     downward to reflect any Unrealized Gain or Unrealized Loss that would have
     been recognized upon an actual sale of such property, immediately prior to
     such distribution, and would have been allocated to the Members, at such
     time, pursuant to Article V.

     (d)    Certain Costs. Other expenditures that are neither deductible nor
capitalizable subject to depreciation, cost recovery allowances, depletion, or
amortization for federal income tax purposes (including, without limitation,
expenditures described in Code Section705(a)(2)(B) but excluding expenditures
for land, real property, and other similar assets) shall be treated as
deductible by the Company for purposes of this Section 4.04.

     4.05   Interest. No interest shall be paid by the Company on Capital
Contributions or Capital Accounts.

     4.06.  Withdrawal of Capital. Except as otherwise expressly provided
herein, a Member shall not be entitled to withdraw any part of its capital from
the Company during the term of the Company.

     4.07.  Negative Capital Accounts. No Member will have the obligation to the
Company to restore to zero any negative balance in its Capital Account.

     4.08.  Resignation. No Member may resign from the Company as a Member prior
to a dissolution and winding up pursuant to Article XII hereof other than upon a
transfer of any Membership Interest permitted hereunder.

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     5.01   Allocation of Net Income and Net Loss.

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     (a)    Allocation of Net Income. After giving effect to the special
allocations set forth in paragraph (c) below, Net Income and each separately
stated item of income or gain shall be allocated among the Members as follows:

            (i)    first, to the Members according to their Sharing Ratios
     until the cumulative amount of Net Income allocated pursuant to this
     Section 5.01(a)(i) for the current and all prior fiscal years equals the
     cumulative amount of Net Loss allocated pursuant to Section 5.01(b)(iii)
     for all prior years;

            (ii)   second, to the Members who were allocated Net Loss pursuant
     to Section 5.01(b)(ii) until the cumulative Net Income allocated pursuant
     to this Section 5.01(a)(ii) for the current and prior fiscal years equals
     the cumulative amount of Net Loss allocated pursuant to Section 5.01(b)(ii)
     for all prior fiscal years. Any allocation made pursuant to this Section
     5.01(a)(ii) shall be made to each Member in the ratio that the Net Loss
     allocated to such Member pursuant to 5.01(b)(ii) bears to the cumulative
     amount of Losses allocated pursuant to Section 5.01(b)(ii);

            (iii)  third to the Members to the extent of any Mandatory
     Distribution under Section 5.03(d); and

            (iv)   fourth, to the Members according to their Sharing Ratios.

            (v)    Notwithstanding paragraphs (i) through (iii) above to the
     contrary, for the fiscal year in which the Company sells all or
     substantially all of its assets, other than pursuant to a transaction
     pursuant to Section 721 of the Code concerning contributions to
     partnerships and the terms of which provide for the continuation of the
     Company as an owner of the successor entity (a "Capital Transaction"), Net
     Income shall be allocated as follows:

            (1)    first, Net Income other than Net Income from the Capital
     Transaction shall be allocated as provided in paragraphs (i) through (iii)
     above;

            (2)    second, Net Income from the Capital Transaction shall be
     allocated as provided in paragraphs (i) and (ii) above; and

            (3)    third, Net Income from the Capital Transaction shall be
     allocated among the Members according to their Sharing Ratios.

            (4)    If such sale is made in exchange for a promissory note or
     other deferred obligation ("Deferred Obligation"), all principal payments
     made pursuant to the Deferred Obligation shall be allocated in accordance
     with the provisions of this paragraph (iv) as if such payments were made in
     the Fiscal Year in which such Capital Transaction occurred. Payments of
     interest on any Deferred Obligation in any given Fiscal Period ("Capital
     Transaction Interest") shall be allocated among each Member in proportion
     to and to the extent of the Capital Transaction Interest received by such
     Member until the cumulative amount allocated to a Member equals the
     cumulative amount of Capital Transaction Interest received by such Member.

                                     - 16 -

<PAGE>

     (b)    Allocation of Net Loss. After giving effect to the special
allocations set forth in paragraph (c) below, Company Net Loss and each
separately stated item of loss or deduction shall be allocated among the
Interest Holders as follows:

            (i)    first, to the Members according to their Sharing Ratios
     until the Adjusted Capital Account equals zero;

            (ii)   second, any Loss not allocated pursuant to subparagraph (i)
     above shall, after allocating all Net Loss which can be allocated under
     subparagraph (i), be allocated among those Members with positive Adjusted
     Capital Accounts after the allocations in subparagraph (i) to the extent
     and in the ratio of their positive Adjusted Capital Account balances. Any
     amounts not allocated pursuant to this subparagraph (ii) shall be allocated
     pursuant to paragraph (iii) below; and

            (iii)  third, any remaining Net Loss shall be allocated among the
     Members according to their Sharing Ratios.

     (c)    Special Allocations. The following special allocations shall be made
in the following order of priority.

            (i)    Minimum Gain Chargeback. Notwithstanding any other
     provision of this Section, if there is a net decrease in Company Minimum
     Gain during any taxable year or other period for which allocations are
     made, the Members will be specially allocated items of Company income and
     gain for that period (and, if necessary, subsequent periods). The amount
     allocated to each Member under this Section 5.01(c)(i) shall be an amount
     equal to such Member's share of the net decrease in Company Minimum Gain
     during such year or other period determined in accordance with Treasury
     Regulations Section 1.704-2(g)(2). This Section 5.01(c)(i) is intended to
     comply with the Membership minimum gain chargeback requirements of the
     Treasury Regulations and the exceptions thereto and will be interpreted
     consistently therewith.

            (ii)   Nonrecourse Debt Minimum Gain Chargeback. Notwithstanding any
     other provision of this Section (other than subparagraph (i) which shall be
     applied first), if there is a net decrease in Member Nonrecourse Debt
     Minimum Gain during any taxable year or other period for which allocations
     are made, any Member with a share of such Member Nonrecourse Debt Minimum
     Gain attributable to such Member Nonrecourse Debt (determined under
     Treasury Regulations Section 1.704-(2)(i)(5)) as of the beginning of the
     year shall be specially allocated items of Company income and gain for that
     period (and, if necessary, subsequent periods) in proportion to the portion
     of such Member's share of the net decrease in the Member Nonrecourse Debt
     Minimum Gain with respect to such Member Nonrecourse Debt that is allocable
     to the disposition of Membership property subject to such Member
     Nonrecourse Debt. The items to be so allocated shall be determined in
     accordance with Regulations Section1.704-2(g). This Section is intended to
     comply with the Member nonrecourse debt minimum gain chargeback
     requirements of the Treasury Regulations and the exceptions thereto and
     shall be interpreted consistently therewith.

                                     - 17 -

<PAGE>

            (iii)  Qualified Income Offset. A Member who unexpectedly receives
     any adjustment, allocation or distribution described in Treasury
     Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) will be specially
     allocated items of Membership income and gain in an amount and manner
     sufficient to eliminate, to the extent required by the Treasury
     Regulations, the Adjusted Capital Account Deficit of the Member as quickly
     as possible.

            (iv)   Nonrecourse Deductions. Nonrecourse Deductions for any
     taxable year or other period for which allocations are made will be
     allocated among the Members in proportion to their Sharing Ratios.

            (v)    Member Nonrecourse Deductions. Notwithstanding anything to
     the contrary in this Agreement, any Member Nonrecourse Deductions for any
     taxable year or other period for which allocations are made will be
     allocated to the Member who bears the economic risk of loss with respect to
     the Member Nonrecourse Debt to which the Member Nonrecourse Deductions are
     attributable in accordance with Treasury Regulations Section 1.704-2(i).

            (vi)   Code Section 754 Adjustments. To the extent an adjustment to
     the adjusted tax basis of any Company asset under Code Sections 734(b) or
     743(b) is required to be taken into account in determining Capital Accounts
     under Treasury Regulations Section 1.704-1(b)(2)(iv)(m), the amount of the
     adjustment to the Capital Accounts will be treated as an item of gain (if
     the adjustment increases the basis of the asset) or loss (if the adjustment
     decreases the basis), and the gain or loss will be specially allocated to
     the Members in a manner consistent with the manner in which their Capital
     Accounts are required to be adjusted under Treasury Regulations Section
     1.704-1(b)(2)(iv)(m).

     5.02   Section 704(c) Allocations.

     (a)    In the case of a Contributed Property or Adjusted Property, items of
income, gain, loss, depreciation and cost recovery deductions attributable
thereto shall be allocated for federal income tax purposes among the Members as
follows:

            (i)    In the case of a Contributed Property, such items shall be
     allocated among the Members in a manner that takes into account the
     variation between the Agreed Value of such property and its adjusted basis
     at the time of contribution and that furthers the elimination of Book-Tax
     Disparities using the "traditional" method as defined in Treasury
     Regulations Section 1.704-3(b). Any item of residual gain or residual loss
     attributable to a Contributed Property shall be allocated among the Members
     in accordance with Section 5.01.

            (ii)   In the case of an Adjusted Property, such items shall (A)
     first, be allocated among the Members in a manner that is consistent with
     the principles of Code Section704(c), that takes into account the variation
     between the Carrying Value of such property and its adjusted tax basis at
     the time of its adjustment and that furthers the elimination of

                                     - 18 -

<PAGE>

     Book-Tax Disparities, and (B) second, in the event such property was
     originally a Contributed Property, be allocated among the Members in a
     manner consistent with the first sentence of paragraph (a)(i) above. Any
     items of residual gain or residual loss attributable to an Adjusted
     Property shall be allocated among the Members in accordance with Section
     5.01.

     (b)    It is intended that the allocations in this Section 5.02 effect an
income tax allocation to carry out the purposes for which Section 704 of the
Code. Notwithstanding the foregoing, the Managers shall have discretion to make
the allocations for purposes of determining the Members' taxable income and
adjustments to Capital Accounts in any reasonable manner consistent with the
intentions of the Members as reflected in the provisions of these Regulations
permitted or required by Code Section704 or by final Treasury Regulations
promulgated under Code Section704, including the discretion to make appropriate
amendments to these Regulations.

     5.03   Distributions.

     (a)    Distributions of Cash. Except as otherwise provided in Sections
5.03(c), (d) and (e) hereof, the Board shall determine the amount of
Distributable Cash, if any, at the end of each fiscal quarter, and not later
than the thirtieth day after the end of each fiscal quarter, and make a
determination of whether all or a portion of the Distributable Cash will be
distributed to the Members. In the event that the Board makes the determination
that any Distributable Cash will be distributed to the Members, such amount of
Distributable Cash will be distributed to the Members in accordance with their
respective Sharing Ratios not later than the forty-fifth (45th) day after the
end of the applicable fiscal quarter.

     (b)    Withholding of Certain Amounts. Notwithstanding anything else in
these Regulations, the Managers may withhold, in their discretion, from any
distribution of cash or property in kind to any Member, the following amounts:

            (i)    any amounts due from such Member to the Company or Managers
     pursuant to these Regulations to the extent not otherwise paid; and

            (ii)   any amounts required to pay or reimburse (x) the Company for
     payment of taxes properly attributable to such Member or (y) the Managers
     for any advances made by the Managers for such purpose.

Any amounts withheld pursuant to this Section 5.03(b) shall be applied by the
Managers to discharge the obligation in respect of which such amounts were
withheld.

     (c)    Minimum Tax Distributions. Within ninety (90) days of the close of
each fiscal year, the Company shall make a distribution of Distributable Cash to
each Member equal to such Member's Member Tax Liability for such fiscal year,
other than the year in which the Company liquidates.

            (i)    For purposes of these Regulations, "Member Tax Liability"
     for any fiscal

                                     - 19 -

<PAGE>

     year in which there is Net Income shall be the net income (as computed for
     federal and state income tax purposes) allocated to such Member pursuant to
     provisions contained in Article V hereof for such year multiplied by the
     Maximum Tax Rate for such fiscal year, reduced by the cumulative amount of
     cash previously distributed by the Company to the Member under Section
     5.03(a) during or after such fiscal year.

            (ii)   For purposes of these Regulations, "Maximum Tax Rate" shall
     mean the combined effective tax rate in effect from time to time with
     respect to a Member (using individual rates in the case of a Member that is
     an individual or a pass-through entity and corporate tax rates in the case
     of a Member that is taxed as a C Corporation) for federal and state income
     tax purposes, computed by taking into account the tax savings resulting
     from the deductibility of state income taxes to the extent permitted for
     federal income tax purposes.

            (iii)  Notwithstanding any provision herein to the contrary, any
     distributions under this Section 5.03(c) shall be made on a pro rata basis
     to all Members based upon their Sharing Ratios. In the event that the
     Maximum Tax Rates of the Members would result in distributions to the
     Members under this Section 5.03(c) that are not pro rata based upon the
     Member's Sharing Ratios, the distributions shall be adjusted using the
     highest Maximum Tax Rate of the Members such that the distributions under
     this Section 5.03(c) will be made to the Members on a pro rata basis.

     (d)    Mandatory Distributions. In addition to any amounts distributable
under Section 5.03(c), beginning with the fiscal year ending December 31, 2006
and in each fiscal year thereafter, the Company shall distribute to its Members
(unless otherwise agreed by the Members), within thirty (30) days of the end of
such fiscal year, a cash distribution in the amount of 25.05% of the Net Income,
determined prior to deduction of any payments made or required to be made under
the Service Agreement referred to in Section 6.07 hereof, of the Company for
that year (the "Mandatory Distribution"). The Mandatory Distribution shall be
distributed to the Members in accordance with their Sharing Ratios. In the event
of the exercise of the Option by the Class B Member, the Mandatory Distribution
for the year in which such exercise occurs and each succeeding year shall be
increased to 50% of Net Income.

     (e)    Limitations on Distributions. Notwithstanding anything contained
herein to the contrary, a Member may not receive a distribution from the Company
to the extent that, after giving effect to the distribution, all liabilities of
the Company, other than liability to Members and Affiliates on account of their
Capital Contributions and the Loan or any Future Additional Loan, would exceed
the fair value of the Company's assets, as determined by the Board in the
exercise of its reasonable discretion, or would violate any applicable law or
regulations, or to the extent that any covenant or provision of the Company's
Loan Documents would be violated.

     5.04   Computation and Determination. The Board may rely upon, and shall
have no liability to the other Members or the Company if they do rely upon, the
advice of the independent public accountants retained by the Company from time
to time with respect to all matters (including disputes with respect thereto)
relating to computations and determinations required to be made under this
Article V; provided such reliance by the Board is in good faith.

                                     - 20 -

<PAGE>

     5.05   Fiscal Year and Company Books. The Company's fiscal year will be the
calendar year. The Company's books will be kept on a GAAP basis, will be
maintained in the business office of the Company or in the office of its
accountants and will be available for inspection by the Members during
reasonable business hours. The Managers shall, at Company expense, engage
accountants to prepare tax returns for the Company.

                                   ARTICLE VI
                                    MANAGERS

     6.01   Management of the Company by the Board.

     (a)    Management by the Board. Subject to the provisions of these
Regulations relating to actions required to be approved by the Members, the
business, property and affairs of the Company shall be managed by, and all
powers of the Company shall be exercised by or under the direction of, the Board
of Managers (the "Board"). In any matter that requires corporate approval of the
Managers of the Company, unless otherwise provided herein, the affirmative vote
of a majority of all of the Managers shall be required to approve any such
proposed corporate action. No individual Manager shall have the power or
authority to bind the Company as to any matter, except to the extent expressly
authorized by resolution or other collective action of the Board, or as
contemplated in Section 6.09.

     (b)    Meetings of the Board. Special meetings of the Board may be called
by any Manager (there shall be no regularly scheduled meetings unless the Board
decides to schedule them). All meetings shall be held upon seven (7) days'
notice by mail, notice delivered personally or by telephone, telegraph or
facsimile, to the Managers setting forth the time and location of such meeting.
Notice of a special meeting shall also state the purpose or purposes for which
such meeting is called. Each notice of a Board meeting shall specify the matters
to be discussed at that meeting, and no decision may be taken at any Board
meeting on any matter not specified in the notice of that meeting unless
consented to by all Managers before or after the meeting (whether or not present
at the meeting). Notice of a meeting need not be given to any Manager who signs
a waiver of notice or a consent to holding the meeting (which waiver or consent
need not specify the purpose of the meeting) or an approval of the minutes
thereof, whether before or after the meeting, or who attends the meeting without
protesting, prior to its commencement, the lack of notice to such Manager. All
such waivers, consents and approvals shall be filed with the Company records or
made a part of the minutes of the meeting. A majority of the Managers present,
whether or not a quorum is present, may adjourn any meeting to another time. If
the meeting is adjourned for more than twenty-four (24) hours, notice of any
adjournment shall be given prior to the time of the adjourned meeting to the
Managers who are not present at the time of the adjournment. Meetings of the
Board may be held in Houston, Texas or such other place as may be approved by
the Board. Managers may participate in a meeting through use of conference
telephone or similar communications equipment, so long as all Managers
participating in such meeting can hear one another. Participation in a meeting
in such manner constitutes presence in person at such meeting. Any decision or
approval of the Board requires the affirmative vote of a majority of the entire
Board of Managers cast in favor of that decision (each Manager having one vote).

                                     - 21 -

<PAGE>

     (c)    Quorum. A quorum shall exist when a majority of the Managers are
present. A meeting at which a quorum is initially present may continue to
transact business, notwithstanding the withdrawal of Managers, but any action
taken must be approved by the requisite number of Managers, based on the
original quorum, adjusted upward for any Managers who later join the meeting,
for such meeting.

     (d)    Written Consent. Any action required or permitted to be taken by the
Board may be taken by the Board without a meeting if all of the Managers consent
in writing to such action. Such action by written consent shall have the same
force and effect as a vote at a duly constituted meeting of the Board.

     6.02   Election of Managers.

     (a)    Number, Term and Qualifications. The Board shall be comprised of
five members (each, a "Manager"), three designated by the Class B Member and two
designated by the Class A Member. Each of the Members agrees to vote or express
consent with respect to all of their respective Membership Interests in favor of
the election of a slate of Managers consisting of individuals meeting the
requirements of this Section 6.02. The number of Managers of the Company, and
the manner of designation and election of such Managers, may only be changed by
the unanimous vote of the Members and the written approval of the Class B
Member. Each Manager shall hold office until a successor shall have been
elected.

     (b)    Resignation. Any Manager may resign at any time by giving written
notice to the Company. The resignation of any Manager shall take effect three
(3) business days following receipt of that notice or at such later time as
shall be specified in the notice. Unless otherwise specified in the notice, the
acceptance of the resignation shall not be necessary to make it effective.

     (c)    Removal. Any Manager may be removed at any time, with or without
cause, by the vote of a majority of the Managers upon the request of the Member
entitled to designate such Manager. A Manager may not otherwise be removed,
other than for cause, as determined by a court of competent jurisdiction.

     (d)    Vacancies. If a vacancy occurs for any reason in the Board, the
Member who designated the Manager shall have the right to designate another
person to fill that vacancy, and the Manager so designated shall be elected by
the unanimous vote of the remaining Members.

     (e)    Committees. The Board may from time to time establish one or more
committees of the Board, which shall have such authority as shall be determined
from time to time by the Board. Each committee of the Board shall be comprised
of such number of Managers designated by the Class A Member and the Class B
Member as is proportionate to the ratio of the number of Managers then
designated by the respective Class A Member or Class B Member to the total
number of Managers then comprising the Board.

     (f)    Provisions Survive Exercise of the Option. The provisions of Section
6.02 with

                                     - 22 -

<PAGE>

respect to election of Managers shall survive and continue after the exercise of
the Option by the Class B Member, for so long as the Class B Member continues to
hold Class A Membership Interests.

     6.03   Powers of the Board.

     (a)    Powers of Board. Without limiting the generality of Section 6.01
hereof, but subject to Section 6.03(b), hereof and to the express limitations
set forth elsewhere in these Regulations (including, but not limited to Section
6.07), the Board, collectively (and specifically not its individual Managers)
shall have all necessary powers to manage and carry out the purposes, business,
property and affairs of the Company, including, without limitation, the power to
exercise on behalf and in the name of the Company all of the powers permitted
under the Act by a "Manager," as that term is defined in the Act. Such powers
shall include, but not be limited to the power:

            (i)     to enter into, execute, deliver, amend and perform any and
     all agreements, contracts, documents, certifications, and instruments
     binding the Company as may be necessary or convenient in connection with
     the ownership, management, maintenance, and operation of the Company's
     Business;

            (ii)    to acquire by purchase, lease or otherwise, any real or
     personal property which may be necessary, convenient or incidental to the
     accomplishment of the purposes of the Company;

            (iii)   to operate, maintain, finance, improve, construct, own,
     grant rights with respect to, sell, convey, assign, mortgage, license or
     lease any assets of the Company necessary, convenient or incidental to the
     accomplishment of the purposes of the Company;

            (iv)    to execute, in furtherance of any or all of the purposes of
     the Company, any lease, bill of sale, contract or other instrument
     purporting to convey, lease, license or encumber the assets of the Company;

            (v)     to sell, transfer, exchange or otherwise dispose of the
     assets of the Company as necessary, convenient or incidental to the
     accomplishment of the purposes of the Company;

            (vi)    to expend the capital and revenues of the Company in
     furtherance of the Business;

            (vii)   to pay all taxes, charges and assessments against the
     Company and its assets;

            (viii)  to open, maintain and close bank accounts, to designate and
     change signatories on such accounts, and to draw checks and other orders
     for the payment of monies;

                                     - 23 -

<PAGE>

            (ix)    to institute, prosecute, defend, settle, compromise and
     dismiss lawsuits or other judicial or administrative proceedings brought on
     behalf of, or against, the Company, any Manager or any Member in connection
     with activities arising out of, connected with, or incidental to these
     Regulations, and to engage counsel or others in connection therewith
     (subject in all respects to the provisions of Section 13.11);

            (x)     to deposit Company funds that, from time to time, are not
     required for the operation of the business of the Company in interest
     bearing bank, brokerage or money market fund accounts or to purchase
     commercial paper, treasury bills or other short-term instruments or
     interests as the Board deems necessary, appropriate or advisable;

            (xi)    to engage consultants, accountants, attorneys, managers and
     any and all other agents and assistants, both professional and
     non-professional, as the Board may deem necessary, appropriate or advisable
     in furtherance of the purposes of the Company, and to compensate such
     Persons for services rendered;

            (xii)   to contract on behalf of the Company for the employment and
     services of officers or employees and delegate to such Persons the duty to
     manage or supervise any of the assets or operations of the Company;

            (xiii)  to collect all sums due the Company;

            (xiv)   subject to the direction and approval of TieTek, to prepare
     and file all Company tax returns and to determine the accounting methods
     and conventions to be used in the preparation of the Company's financial
     statements and tax returns and make any and all elections under the tax
     laws of the United States, the several states and other relevant
     jurisdictions as to the treatment of items of income, gain, loss, deduction
     and credit of the Company, or any other method or procedure related to the
     preparation of the Company's financial statements and tax returns;

            (xv)    except as otherwise provided herein, to determine the timing
     and amount of any distributions to the Members (whether for cash or
     property);

            (xvi)   to prepare and modify any budgets for the Company;

            (xvii)  to prepare and file all reports and disclosure documents
     and to otherwise prepare and make such other filings as may be necessary or
     advisable in connection with the operation of the Company's Business;

            (xviii) to purchase such insurance as the Board, in its discretion,
     may determine; and

            (xix)   to take any and all other action that the Board may deem
     necessary, appropriate or desirable in furtherance of the purposes of the
     Company which is not inconsistent with the Act.

                                     - 24 -

<PAGE>

     (b)    Limitations on Power of Board. Notwithstanding anything stated
herein to the contrary, the Board shall not have authority hereunder to cause
the Company to engage in the following transactions without first obtaining the
unanimous vote or written consent of the Members:

            (i)    to do any act in contravention of these Regulations;

            (ii)   to possess the Company's property or assign, transfer,
     mortgage, pledge, or grant a security interest in and/or a deed of trust
     with respect to the Company's property for other than a Company purpose;

            (iii)  to enter into, amend, modify or waive any rights with respect
     to any contract, agreement or transaction with any Member;

            (iv)   to sell, transfer or otherwise dispose of all or
     substantially all of the assets of the Company;

            (v)    to refinance the Loan or any successor to such refinancing,
     except that to the extent that from time to time in the future refinancing
     for any Loan or Future Additional Loan is reasonably available from third
     party lenders which would result in the pay-off of any Loan or Future
     Additional Loan upon terms and conditions that are in the aggregate
     materially better to the Company than the terms and conditions of the Loan
     or any Future Additional Loan (after taking into consideration all costs
     and expenses of such refinancing), in which case only the vote or consent
     of the disinterested directors shall be required;

            (vi)   to merge or consolidate the Company with any other entity or
     change or reorganize the Company into any other legal form or take any
     action that would result in the Company no longer being taxed as a
     partnership for federal income tax purpose;

            (vii)  to file any petition or answer by the Company seeking to
     adjudicate itself as bankrupt or insolvent, or seeking for itself any
     liquidation, winding up, reorganization, arrangement, adjustment,
     protection, relief, or composition of the Company or its debts under any
     law relating to bankruptcy, insolvency or reorganization or relief of
     debtors, or seeking, consenting to, or acquiescing in the entry of an order
     for relief or the appointment of a receiver, trustee, custodian or other
     similar official for the Company or for any substantial part of its
     Property;

            (viii) to seek, consent to, or acquiesce in an Involuntary
     Bankruptcy of the Company; or

            (ix)   to take any corporate action by the Company to authorize any
     of the actions set forth above.

     6.04   Performance of Duties; Liability of Managers. A Manager shall not be
liable to

                                     - 25 -

<PAGE>

the Company or to any Member for any loss or damage sustained by the Company or
any Member as a result of his or her carrying out his or her duties of a Manager
in good faith, unless the loss or damage shall have been the result of fraud,
deceit, gross negligence, reckless or intentional misconduct, or a knowing
violation of law by the Manager.

     6.05   Competing Activities. (a) The holders of Membership Interests shall
cause the Managers elected by the respective holders, (b) the Company shall
cause the officers of the Company, and (c) the Members each agree for themselves
and their respective Affiliates, not to engage or invest in, independently or
with others, any activity involving the manufacturing and/or sale of structural
composite products expressly including but not limited to railroad and transit
authority cross-ties, products for guard rails, marine pilings and bridge
components; except that the Class A Member may acquire and operate for itself
any or all of the business, assets or technology of a certain company or
companies previously disclosed to the Class B Member (the "Acquisition Assets"),
so long as the Class A Member first offers to the Company the opportunity to
purchase that portion of the Acquisition Assets that would violate this covenant
at a fair price and, if such offer is not accepted, grants to the Company a
right of first refusal to purchase any of the Acquisition Assets so acquired in
the event the Class A Member receives a bona fide offer to purchase such
Acquisition Assets. The obligations under this Section 6.05 as to any
Acquisition Assets shall not in any respect be subject to or violateSection
6.06, and any activities of any Member or any Affiliate in compliance with
Section 6.06 shall in no respect be subject to or violate Section 6.05.

     6.06   New Business Opportunities. In the event any new business
opportunities become available to the Company, any Member or any Affiliate that
are either the building of additional railroad crosstie plants or the
manufacture of other related products using the patents or technology currently
owned by the Company (in either case a "New Business Opportunity"), the Company
will first seek traditional financing through the debt or equity markets. If
additional equity or debt is required to fully exploit the New Business
Opportunity, the Class A Member and Class B Member or an Affiliate of either
shall have the option of contributing such required equity or debt on a
50.1/49.9% basis, respectively. If within 30 days after notice to the Members of
the need for such financing, either Member declines to participate in providing
its pro rata portion of such financing (the "Declining Member"), the Member who
agreed to participate (the "Participating Member") may elect to provide the
portion of the financing declined by the Declining Member. The Declining Member
shall consent to the New Business Opportunity being assigned to, and exploited
by, another entity to be designated by the Participating Member, which entity
shall pay to the Company a fair royalty for the use of any patents or other
technology utilized by it in the exploitation of such New Business Opportunity.
If the Members are unable to agree on a fair royalty for such use, the royalty
paid shall be 5% of the gross proceeds received on the sale of goods
manufactured by the new entity, less applicable sales or use taxes. This Section
shall apply on a successive basis to each New Business Opportunity as it arises,
to ensure that each Member has an opportunity to participate in each New
Business Opportunity. Notwithstanding, any Member must elect to fully
participate in the full New Business Opportunity and shall not be able to
participate in only a portion of such New Business Opportunity.

     6.07   Transactions between the Company and the Managers, Members and
Affiliates.

                                     - 26 -

<PAGE>

Notwithstanding that it may constitute a conflict of interest, the Managers,
Members and their Affiliates may provide the Company with services (e.g.
accounting, legal, computer support, engineering, etc.) provided that such
services are reasonably necessary and are provided on a cost efficient basis. If
there is a dispute as to the whether such services are "reasonably necessary" or
being provided on a "cost efficient basis", such dispute shall be resolved in
accordance with Section 13.11. The Company and the Managers may also engage in
any other transaction with the Company so long as such transaction is not
expressly prohibited by these Regulations and so long as the terms and
conditions of such transaction are approved by all of the Managers. The Managers
and Members hereby unanimously consent to the Company entering into the Loan
Agreement and the transactions contemplated thereby and the Royalty Agreement.
The Company shall enter into a Service Agreement for the purpose of providing
that in the event that prior to the exercise of the Option there are any Minimum
Tax Distributions or Mandatory Distributions due and payable to the Class A
Member under Section 5.03, the Class B Member shall, in consideration of the
cash payment for the purchase of the Class B Interest, the arrangement by the
Class B Member of the Loan and its agreement to arrange Additional Future Loans,
and the provision of other related services, concurrently receive a cash service
or consulting fee in the amount of the Minimum Tax Distribution or Mandatory
Distribution paid to the Class A Member, which fee shall terminate upon exercise
of the Option.

     6.08   Payments to Managers. Each Manager shall be paid such Manager Fee as
shall be determined by the Board and be reimbursed for reasonable out-of-pocket
expenses for attending Board meetings and attending to other Company business.
Except as specified in these Regulations, no Manager is entitled to remuneration
for services rendered or goods provided to the Company in his or her capacity as
a Manager.

     6.09   Officers.

     (a)    Appointment of Officers. The Board, by vote or consent of the
Managers, may at any time appoint such officers as it deems necessary or
advisable for the operation of the business of the Company. Subject to approval
of all compensation in accordance with Section 6.07, Managers may serve as
officers. The officers shall serve at the pleasure of the Board, subject to all
rights, if any, of an officer under any contract of employment. Any individual
may hold any number of offices. The officers shall exercise such powers and
perform such duties as shall be determined from time to time by the Managers.

     (b)    Removal, Resignation and Filling of Vacancy of Officers. Subject to
the rights, if any, of an officer under a contract of employment, any officer
may be removed, either with or without cause, by vote of the Board (excluding
any member of the Board who is the subject of any removal attempt) at any time.
Any officer may resign at any time by giving notice to the Board. Any
resignation shall take effect upon receipt of that notice or at any later time
specified in that notice; and, unless otherwise specified in that notice, the
acceptance of the resignation shall not be necessary to make it effective. A
vacancy in any office because of death, resignation, removal, disqualification
or any other cause shall be filled by the Board.

     6.10   Public Company Duties and Responsibilities. NATK, the parent of the
Class A Member, as a publicly held company, is subject to federal and state
securities laws requirements

                                     - 27 -

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(collectively "Securities Law Requirements") that regulate the timely filing and
public disclosure of information regarding NATK and impose disclosure
requirements in offering documentation required for the offering and sale of
NATK securities. Because the operations of the Company will include most or
substantially all of the operations of NATK, NATK will be required for the
foreseeable future, among other things, to (a) include information regarding the
financial condition, operations and prospects of the Company and other material
information in its filings with the Securities and Exchange Commission and other
regulatory authorities (collectively, the "SEC"), (b) make public disclosure of
various information regarding the Company and (c) perform certain due diligence,
including obtaining information and certifications from Company Managers or
executive officers to enable it to fulfill its obligations under Securities Law
Requirements. The Managers shall be required to, and shall cause the executive
officers of the Company to, fully cooperate with NATK in fulfilling its
Securities Law Requirements. Specifically, the Managers shall, and shall cause
the executive officers of the Company to,

            (i)    provide on a timely basis the information and financial
     statements required to be included in the reports required to be filed by
     NATK under the Securities Exchange Act of 1934 (the "Exchange Act Reports")
     or registration statement or other documents filed under the Securities Act
     of 1933 and other filings, announcements or disclosures made in compliance
     with the Securities Law Requirements, which information shall be accurate
     and complete in all material respects;

            (ii)   execute and deliver to NATK or its auditors such
     representation letters, certifications, backup and other supporting
     information as the independent public accountants of NATK or its chief
     financial officer or chief executive officer may request regarding the
     Company's financial statements and the procedures employed in the
     preparation thereof;

            (iii)  certify to NATK, in a certification similar in form and
     content to that required to be provided by the chief executive and chief
     financial officer of NATK pursuant to Sections 302 and 906 of the
     Sarbanes-Oxley Act of 2002, the accuracy and completeness of the Company
     information provided to NATK and the procedures followed in the preparation
     thereof;

            (iv)   provide to NATK on a timely basis all information regarding
     material developments in the Company's business, operations, financial
     condition or prospects for purposes of NATK's determination whether public
     disclosure of such information is required or advisable;

            (v)    not publicly disclose any material information regarding the
     Company without the prior written consent of NATK (and adopt and implement
     reasonable written procedures to ensure that employees or agents of the
     Company do likewise);

            (vi)   not trade, or tip others to trade, in the securities of NATK
     while in possession of material nonpublic information regarding the Company
     or NATK or during the trading blackout windows imposed by NATK on its
     executive officers and directors (and adopt and implement reasonable
     written procedures to ensure that employees or agents of the

                                     - 28 -

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     Company do likewise); and

            (vii)  otherwise use reasonable efforts to assist NATK in complying
     with any future Securities Law Requirements.

                                   ARTICLE VII
                               BUY/SELL AGREEMENT

     7.01   Buy/Sell. For a one year period beginning on the effective date of
the exercise of the Option and ending on the first anniversary of such date,
either Member (the "Offering Member") may, on only one occasion, deliver to the
other Member (the "Offeree Member") a firm offer, in writing signed by the
Offering Member (the "Buy/Sell Offer"), to either (i) sell the Membership
Interests of the Offering Member to the Offeree Member or (ii) purchase the
Membership Interests of the Offeree Member, in both events at the same price per
Membership Interest, which shall be stated in the offer and which shall be
payable in cash. Such cash offer shall provide for the full repayment of any
outstanding indebtedness of the Company to each Member or Affiliate of such
Member. The Buy/Sell Offer shall be irrevocable until 11:59 P.M. local time at
the Company's principal place of business, on the sixtieth day following the day
upon which notice of the Buy/Sell Offer was delivered to the other Members (the
"Buy/Sell Period").

     7.02   Acceptance of Buy/Sell Offer. Prior to the expiration of the
Buy/Sell Period, the Offeree Member shall give written notice of its acceptance
of the Buy/Sell Offer to the Offering Member, indicating whether such Offeree
Member has elected to purchase the Membership Interests of the Offering Member
or sell its own Membership Interests. If the Offeree Member fails to give the
Offering Member notice of the manner of its acceptance of the Buy/Sell Offer
prior to the expiration of the Buy/Sell Period, the Offeree Member shall be
deemed to have accepted the Offering Member's Buy/Sell Offer to purchase the
Offeree Member's Membership Interest upon the terms and conditions set forth in
the Buy/Sell Offer.

     7.03   Closing of Purchase Pursuant to Buy/Sell Offer. The closing of the
sale of the Membership Interests pursuant to the Buy/Sell Offer shall take place
within one hundred eighty (180) days after (x) the Buy/Sell Offer is accepted or
rejected by the Offeree Member or (y) expiration of the Buy/Sell Period without
a response from the Offeree Member. The Offering Member and the Offeree Member
shall execute such documents and instruments as may be necessary or appropriate
and customary and usual to effect the sale of the Membership Interests elected
to be sold pursuant to the terms of the Buy/Sell Offer and this Article VII.

                                  ARTICLE VIII
                                   TRANSFERS

     8.01   Restrictions on Transfers. Except as otherwise permitted under these
Regulations, no Member shall Dispose of all or any portion of the Membership
Interests held by such Member.

                                     - 29 -

<PAGE>

     8.02   Permitted Transfers. Subject to the conditions and restrictions set
forth in Section 8.03 hereof, a Member may at any time Dispose of all or any
portion of the Membership Interests held by such Member to a Purchaser pursuant
to Section 8.04 or a Buyer pursuant to Section 9.01 or to an Affiliate who
agrees to become a party to these Regulations, any such Disposition described in
this Section 8.02 being referred to in these Regulations as a "Permitted
Transfer".

     8.03   Conditions to Permitted Transfers. A Disposition by a Member shall
not be treated as a Permitted Transfer unless and until the following conditions
are satisfied:

     (a)    Except in the case of a Disposition involuntarily by operation of
law, the transferor and transferee shall execute and deliver to the Company such
documents and instruments of conveyance as may be necessary or appropriate in
the opinion of counsel to the Board to effect such Disposition. In the case of a
Disposition of Membership Interests involuntarily by operation of law, the
Disposition shall be confirmed by presentation to the Company of legal evidence
of such Disposition, in form and substance satisfactory to counsel to the
Company. In all cases, the Company shall be reimbursed by the transferor and/or
transferee for all costs and expenses that it reasonably incurs in connection
with such Disposition.

     (b)    The transferor and transferee shall furnish the Company with the
transferee's taxpayer identification number, sufficient information to determine
the transferee's initial tax basis in the Membership Interests transferred, and
any other information reasonably necessary to permit the Company to file all
required federal and state tax returns and other legally required information
statements or returns. Without limiting the generality of the foregoing, the
Company shall not be required to make any distribution otherwise provided for in
these Regulations with respect to any transferred Membership Interests until it
has received such information.

     (c)    Except in the case of a Disposition of Membership Interests
involuntarily by operation of law, if required by the Company either (a) such
Membership Interests shall be registered under the Securities Act, and any
applicable state securities laws, or (b) the transferor shall provide an opinion
of counsel, which opinion and counsel shall be reasonably satisfactory to the
Company, to the effect that such Disposition is exempt from all applicable
registration requirements and that such Disposition will not violate any
applicable laws regulating the sale of securities.

     8.04   Right of First Refusal. In addition to the other limitations and
restrictions set forth in this Article VIII, except as permitted by Section
8.02, no Member shall Dispose of all or any portion of the Membership Interests
held by such Member (the "Offered Interests") unless such Member (the "Seller")
first offers to sell the Offered Interests pursuant to the terms of this Section
8.04.

     (a)    Limitation on Disposition. No Disposition may be made under this
Section 8.04 unless the Seller has received a bona fide written offer (the
"Purchase Offer") from a Person (the "Purchaser") to purchase the Offered
Interests for a purchase price (the "Offer Price") denominated and payable in
United States dollars or other consideration at closing or according

                                     - 30 -

<PAGE>

to specified terms, with or without interest, which offer shall be in writing
signed by the Purchaser and shall be irrevocable for a period ending no sooner
than the Business Day following the end of the Member Offer Period, as
hereinafter defined.

     (b)    Offer Notices. Prior to making any Disposition that is subject to
the terms of this Section 8.04, (i) the Seller shall give to the Company written
notice (the "Company Offer Notice") which shall include a copy of the Purchase
Offer and an offer (the "Company Firm Offer") to sell the Offered Interests to
the Company for the Offer Price or other reasonably equivalent consideration (in
the exclusive judgment of the Seller), payable according to the same terms as
those contained in the Purchase Offer, provided that the Company Firm Offer
shall be made without regard to the requirement of any earnest money or similar
deposit required of the Purchaser prior to closing, and without regard to any
security (other than the Offered Interests) to be provided by the Purchaser for
any deferred portion of the Offer Price, and (ii) if the Company shall not have
accepted the Company Firm Offer within the Company Offer Period, as defined
below, the Seller shall give to the other Members written notice (the "Member
Offer Notice") which shall include a copy of the Purchase Offer and an offer
(the "Member Firm Offer") to sell the Offered Interests to the other Members
(the "Offerees") for the Offer Price, payable according to the same terms as
those contained in the Purchase Offer, provided that the Member Firm Offer shall
be made without regard to the requirement of any earnest money or similar
deposit required of the Purchaser prior to closing, and without regard to any
security (other than the Offered Interests) to be provided by the Purchaser for
any deferred portion of the Offer Price.

     (c)    Offer Periods. The Company Firm Offer shall be irrevocable for a
period (the "Company Offer Period") ending at 11:59 P.M., local time at the
Company's principal place of business, on the thirtieth day following the day
upon which the Company Offer Notice was delivered to the Company, and the Member
Firm Offer shall be irrevocable for a period (the "Member Offer Period") ending
at 11:59 P.M., local time at the Company's principal place of business, on the
thirtieth day following the day upon which Member Offer Notice was delivered to
the Offerees.

     (d)    Acceptance of Firm Offer. At any time during the Company Offer
Period, the Company may accept the Company Firm Offer as to all of the Offered
Interests by giving written notice of such acceptance to the Seller. If the
Company does not accept the Company Firm Offer as to all of the Offered
Interests during the Company Offer Period, the Company Firm Offer shall be
deemed to be rejected in its entirety. In the event that the Company rejects the
Company Firm Offer, at any time during the Member Offer Period, any Offeree may
accept the Member Firm Offer as to all of the Offered Interests ("Accepting
Offerees"), by giving written notice of such acceptance to the Seller and each
other Offeree. In the event that Offerees, in the aggregate, accept the Member
Firm Offer with respect to all of the Offered Interests, the Member Firm Offer
shall be deemed to be accepted and each Accepting Offeree shall be deemed to
have accepted the Member Firm Offer as to that portion of the Offered Interests
that corresponds to the ratio of the number of Membership Interests held by such
Accepting Offeree to the aggregate number of Membership Interests held by all
Accepting Offerees, or in such other proportions as agreed to among such
Accepting Offerees. If Offerees do not accept the Member Firm Offer as to all of
the Offered Interests during the Offer Period, the Member Firm Offer shall be
deemed to be rejected in its entirety.

                                     - 31 -

<PAGE>

     (e)    Closing of Purchase Pursuant to Firm Offer. In the event that the
Company Firm Offer is accepted, the closing of the sale of the Offered Interests
shall take place within sixty days after the Company Firm Offer is accepted. The
Seller and the Company shall execute such documents and instruments as may be
necessary or appropriate to affect the sale of the Offered Interests pursuant to
the terms of the Company Firm Offer and this Article VIII. In the event that the
Member Firm Offer is accepted, the closing of the sale of the Offered Interests
shall take place within thirty days after the Member Firm Offer is accepted. The
Seller and all of the Accepting Offerees shall execute such documents and
instruments as may be necessary or appropriate to affect the sale of the Offered
Interests pursuant to the terms of the Member Firm Offer and this Article VIII.

     (f)    Sale Pursuant to Purchase Offer If Firm Offer Rejected. If neither
the Company Firm Offer nor the Member Firm Offer is accepted in the manner
hereinabove provided, the Seller may sell the Offered Interests to the Purchaser
at any time within sixty days after the last day of the Member Offer Period,
provided that such sale shall be made on terms no more favorable to the
Purchaser than the terms contained in the Purchase Offer and provided further
that such sale complies with other terms, conditions, and restrictions of these
Regulations that are not expressly made inapplicable to sales occurring under
this Section 8.04. In the event that the Offered Interests are not sold in
accordance with the terms of the preceding sentence, the Offered Interests shall
again become subject to all of the conditions and restrictions of this Section
8.04.

     8.05   Prohibited Transfers. Any purported Disposition of Interests of
Membership Interests that is not a Permitted Transfer, shall be null and void
and of no force or effect whatsoever; provided, however, that if the Company is
required by law to recognize a Disposition that is not a Permitted Transfer (or
if the Board, in its sole discretion and by unanimous vote of the Managers,
elects to recognize a Disposition that is not a Permitted Transfer), the
Membership Interests Disposed of shall be strictly limited to the transferor's
rights to allocations and distributions as provided by these Regulations with
respect to the transferred Membership Interests, which allocations and
distributions may be applied (without limiting any other legal or equitable
rights of the Company) to satisfy any debts, obligations, or liabilities for
damages that the transferor or transferee of such Membership Interests may have
to the Company.

     In the case of a Disposition or attempted Disposition of Membership
Interests that is not a Permitted Transfer, the parties engaging or attempting
to engage in such Disposition shall be liable to indemnify and hold harmless the
Company and the other Members from all cost, liability, and damage that any of
such indemnified Persons may incur (including, without limitation, incremental
tax liabilities, lawyers' fees and expenses) as a result of such Disposition or
attempted Disposition and efforts to enforce the indemnity granted hereby.

     8.06   Rights of Unadmitted Assignees. A Person who acquires Membership
Interests but who is not admitted as a Substitute Member pursuant to Section
8.07 shall be entitled only to allocations and distributions with respect to
such Membership Interests in accordance with these Regulations, and shall have
no right to any information or accounting of the affairs of the Company, shall
not be entitled to inspect the books or records of the Company, and shall not

                                     - 32 -

<PAGE>

have any of the rights of a Member under the Act or these Regulations.

     8.07   Admission of Substitute Members. Subject to the other provisions of
this Article VIII, a transferee of Membership Interests may be admitted to the
Company as a Substitute Member (a "Substitute Member") only upon satisfaction of
the conditions set forth in this Section 8.07:

     (a)    The Membership Interests with respect to which the transferee is
being admitted were acquired by means of a Permitted Transfer;

     (b)    The transferee of Membership Interests (other than, with respect to
clauses (i) and (ii) below, a transferee that was a Member prior to the
Disposition) shall, by written instrument in form and substance reasonably
satisfactory to the Board (and, in the case of clause (iii) below, the
transferor Member), (i) make representations and warranties to the Company and
each non-transferring Member equivalent to those set forth in Section 3.03, (ii)
accept and adopt the terms and provisions of these Regulations, and (iii) assume
the obligations of the transferor Member under these Regulations with respect to
the Membership Interests transferred. The transferor Member shall be released
from all such assumed obligations except (x) those obligations or liabilities of
the transferor Member arising out of a breach of these Regulations, (y) in the
case of a Disposition to any Person other than a Member or any of its Controlled
Affiliates, those obligations or liabilities of the transferor Member based on
events occurring, arising or maturing prior to the date of Disposition, and (z)
in the case of a Disposition to any of its Controlled Affiliates, any Capital
Contribution or other financing obligation of the transferor Member under these
Regulations;

     (c)    The transferee pays or reimburses the Company for all reasonable
legal, filing, and publication costs that the Company incurs in connection with
the admission of the transferee as a Member with respect to the transferred
Membership Interests; and

     (d)    Except in the case of a Disposition of Membership Interests
involuntarily by operation of law, if required by the Board, the transferee
(other than a transferee that was a Member prior to the Disposition) shall
deliver to the Company evidence of the authority of such Person to become a
Member and to be bound by all of the terms and conditions of these Regulations,
and the transferee and transferor shall each execute and deliver such other
instruments as the Board reasonably deems necessary or appropriate to effect,
and as a condition to, such Disposition, including amendments to the Certificate
or any other instrument filed with the State of Delaware or any other state or
governmental authority.

     8.08   Legend. Each Member hereby agrees that the following legend may be
placed upon any counterpart of these Regulations, the Certificate, any
certificate representing Membership Interests, or any other document or
instrument evidencing ownership of Membership Interests:

     THE MEMBERSHIP INTERESTS REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN
REGISTERED UNDER ANY SECURITIES LAWS AND THE TRANSFERABILITY OF SUCH INTERESTS
IS RESTRICTED. SUCH INTERESTS

                                     - 33 -

<PAGE>

MAY NOT BE SOLD, ASSIGNED, OR TRANSFERRED, NOR WILL ANY ASSIGNEE, VENDEE,
TRANSFEREE, OR ENDORSEE THEREOF BE RECOGNIZED AS HAVING ACQUIRED ANY SUCH
INTERESTS BY THE ISSUER FOR ANY PURPOSES, UNLESS (1) A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT WITH RESPECT TO SUCH INTERESTS SHALL THEN BE IN EFFECT
AND SUCH TRANSFER HAS BEEN QUALIFIED UNDER ALL APPLICABLE STATE SECURITIES LAWS,
OR (2) THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION
SHALL BE ESTABLISHED TO THE SATISFACTION OF COUNSEL TO THE COMPANY.

     THE INTERESTS REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO FURTHER
RESTRICTION AS TO THEIR SALE, TRANSFER, HYPOTHECATION, OR ASSIGNMENT AS SET
FORTH IN THE REGULATIONS OF THE COMPANY. SAID RESTRICTION PROVIDES, AMONG OTHER
THINGS, THAT MEMBERSHIP INTERESTS MAY NOT BE TRANSFERRED WITHOUT FIRST OFFERING
SUCH INTERESTS TO THE OTHER MEMBERS, AND THAT NO VENDEE, TRANSFEREE, ASSIGNEE,
OR ENDORSEE OF A MEMBER SHALL HAVE THE RIGHT TO BECOME A SUBSTITUTE MEMBER
WITHOUT THE CONSENT OF ALL OF THE MEMBERS, EXCLUSIVE OF THE MEMBER THAT IS
TRANSFERRING ITS INTERESTS AND ANY AFFILIATES THEREOF, WHICH CONSENT MAY BE
GIVEN OR WITHHELD IN THE SOLE AND ABSOLUTE DISCRETION OF THE MEMBERS. A COPY OF
THE REGULATIONS IS ON FILE AT THE REGISTERED OFFICE OF THE COMPANY, AND THE
COMPANY SHALL FURNISH A COPY THEREOF TO THE RECORD HOLDER HEREOF WITHOUT CHARGE
UPON WRITTEN REQUEST.

     8.09   Distributions and Allocations in Respect of Transferred Interests.
If any Membership Interests are Disposed of during any fiscal year in compliance
with the provisions of this Article VIII, Net Income and Net Losses, each item
thereof, and all other items attributable to the transferred Interests for such
fiscal year shall be divided and allocated between the transferor and the
transferee by taking into account their varying ownership of the transferred
Interests during the fiscal year in accordance with Code Section 706(d), based
upon an interim closing of the books or any other convention permitted by law
and approved by the Board and the transferor Member. All distributions on or
before the date of such Disposition shall be made to the transferor, and all
distributions thereafter shall be made to the transferee. Solely for purposes of
making such allocations and distributions, the Company shall recognize such
Disposition not later than the end of the calendar month during which it is
given notice of such Disposition; provided, however, that if the Company is
given notice of a Disposition at least ten Business Days prior to the
Disposition, the Company shall recognize such Disposition as of the date of such
Disposition and; provided, further, that if the Company does not receive a
notice stating the date such Interests were transferred and such other
information as the Board may reasonably require within thirty days after the end
of the fiscal year during which the Disposition occurs, then all such items
shall be allocated, and all distributions shall be made, to the Person who,
according to the books and records of the Company, was the owner of the
transferred Interests on the last day of such fiscal year. Neither the Company
nor any Member shall incur any liability for making allocations and
distributions in accordance with the provisions of this

                                     - 34 -

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Section 8.09, whether or not any Member or the Company has knowledge of any
Disposition of ownership of any Interests.

                                   ARTICLE IX
                              TAG-ALONG PROVISIONS

     9.01   Tag-Along. If a Member (the "Selling Group") shall determine to sell
or exchange (in a business combination, merger or other similar transaction with
respect to the Company, but excluding any such transaction with respect to any
member of the Selling Group or any Affiliate thereof) all, but not less than
all, of its Membership Interest in a bona fide arms-length transaction to a
third party (a "Buyer") who is not an Affiliate of a member of the Selling
Group, then, the Selling Group shall promptly deliver to the other Member
written notice (the "Option Notice") setting forth in detail the circumstances
of such transaction including, without limitation, the name and address of the
proposed transferee and the proposed consideration to be paid to the Selling
Group. Each Member shall have the right and option to participate with the
Selling Group in the sale of its Membership Interest upon the terms described in
the Option Notice by delivering written notice of its desire to so participate
to the Selling Group within ten (10) days after the date of the Option Notice.
Each Member shall be entitled to include all, but not less than all, of its
proportionate share of the Membership Interests to be sold in the proposed
transaction, subject to the terms and conditions thereof.

     9.02   Distribution of Sale Proceeds. The Members (including members of the
Selling Group) agree that notwithstanding anything contained to the contrary in
an agreement governing the purchase and sale of Membership Interests, upon the
consummation of any sale described in Section 9.01 hereof, the aggregate
purchase price paid for such Membership Interests shall be distributed among the
Members as provided in Article XIII as if the Company had sold all of its assets
for an amount equal to the Purchase Price plus the assumption of all liabilities
and thereafter liquidated. For purposes of this Section 9.02, the term "Members"
shall mean those Members that have participated in a sale under Sections 9.01
hereof.

                                    ARTICLE X
                                INDEMNIFICATION

     10.01  Right to Indemnification. Subject to the limitations and conditions
as provided in this Article X, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in such
a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was an officer, employee, agent or Manager of
the Company or is or was serving at the request of the Company as a Manager,
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic limited liability company,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise will be indemnified by the Company to the
fullest extent permitted by the Act, as the same exist or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than

                                     - 35 -

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said law permitted the Company to provide prior to such amendment) against
judgments, penalties (including excise and similar taxes and punitive damages),
fines, settlements and reasonable expenses (including, without limitation,
attorneys' fees) actually incurred by such Person in connection with such
Proceeding, and indemnification under this Article X will continue as to a
Person who has ceased to serve in the capacity which initially entitled such
Person to indemnity hereunder. The rights granted pursuant to this Article X
will be deemed contract rights, and no amendment, modification or repeal of this
Article X will have the effect of limiting or denying any such rights with
respect to actions taken or Proceedings arising prior to any such amendment,
modification or repeal. It is expressly acknowledged that the indemnification
provided in this Article X could involve indemnification for negligence or under
theories of strict liability. No indemnification shall be had hereunder for any
act or omission involving gross negligence, recklessness or willful misconduct
on the part of the Person seeking indemnification.

     10.02  Advance Payment. The right to indemnification conferred in this
Article X will include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Person of the type entitled to be indemnified
under Section 10.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding in advance of the final disposition of the Proceeding
and without any determination as to the Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding will be
made only upon delivery to the Company of a written affirmation by such Manager
of his or her good faith belief that he has met the standard of conduct
necessary for indemnification under this Article X and a written undertaking, by
or on behalf of such Person, to repay all amounts so advanced if it is
ultimately determined that such indemnified Person is not entitled to be
indemnified under this Article X or otherwise.

     10.03  Appearance as a Witness. Notwithstanding any other provision of this
Article X, the Company may pay or reimburse expenses incurred by a Manager in
connection with his appearance as a witness or other participation in a
Proceeding at a time when he is not a named defendant or respondent in the
Proceeding.

     10.04  Nonexclusivity of Rights. The right to indemnification and the
advancement and payment of expenses conferred in this Article X is not exclusive
of any other right which a Person indemnified pursuant to Article X may have or
hereafter acquire under any law (common or statutory), provision of the
Certificate or these Regulations, agreement, vote of Members or disinterested
Managers or otherwise.

     10.05  Insurance. The Company may purchase and maintain insurance, at its
expense, to protect itself and any Person who is or was serving as a Manager,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a Manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
expense, liability or loss, whether or not the Company would have the power to
indemnify such Person against such expense, liability or loss under this Article
X. Alternatively, NATK may extend to any person who is or was

                                     - 36 -

<PAGE>

serving as a Manager, officer, employee or agent of the Company, coverage under
NATK's director and officer insurance policy, but may limit the scope of the
indemnity available to the Managers, officers, employees or agents of the
Company. In the event that NATK extends such coverage, it shall promptly notify
the Company, and its managers, officers, employees and agents covered thereby,
of any actual or proposed change in such coverage.

     10.06  Member Notification. To the extent required by law, any
indemnification of or advance of expenses to a Manager in accordance with this
Article X will be reported in writing to the Members with or before the notice
or waiver of notice of the next Members' meeting or with or before the next
submission to Members of a consent to action without a meeting and, in any case,
within the 12-month period immediately following the date of the indemnification
or advance.

     10.07  Savings Clause. If this Article X or any portion hereof is
invalidated on any ground by any court of competent jurisdiction, then the
Company will nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article X as to costs, charges and expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative to the full extent permitted by any applicable
portion of this Article X that is not invalidated and to the fullest extent
permitted by applicable law.

                                   ARTICLE XI
                TAXES, BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS

     11.01  Tax Returns. For all periods ended (x) on or prior to the date of
the exercise of the Option, the Class A Member, and (y) after exercise of the
Option, the Managers, will cause to be prepared and filed all necessary federal
and state income tax returns for the Company, including making the elections
described in Section 11.02. Each Member will furnish to the Managers all
pertinent information in its possession relating to Company operations that is
necessary to enable the Company's income tax returns to be prepared and filed.

     11.02  Tax Elections. For all periods ended (x) on or prior to the date of
the exercise of the Option, the Class A Member, and (y) after exercise of the
Option, the Company may (at the election of the Board), make any of the
following elections on the appropriate tax returns; provided that neither the
Company, the Managers, nor any Member shall file an election to classify the
Company as an association taxable as a corporation for federal income tax
purposes:

     (a) to adopt the calendar year as the Company's fiscal year;

     (b) to adopt the accrual method of accounting to the extent permitted by
applicable law;

     (c) if a distribution of Company property as described in section 734 of
the Code occurs or if a transfer of Membership Interests as described in section
743 of the Code occurs, to elect, pursuant to section 754 of the Code, to adjust
the basis of Company properties;

     (d) to elect to amortize the organizational expenses of the Company and
the start-up
                                     - 37 -

<PAGE>

expenditures of the Company under section 195 of the Code ratably over a period
of 60 months as permitted by section 709(b) of the Code; and

     (e) any other election the Managers may unanimously deem appropriate and
in the best interests of the Members.

Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of these Regulations (including, without limitation,
Section 2.08) will be construed to sanction or approve such an election.

     11.03  Tax Matters Partner. The Class A Member will be the initial "tax
matters partner" of the Company pursuant to section 6231(a)(7) of the Code. At
any time and for any reason thereafter, the "tax matters partner" will be a
Member that is designated as such by all of the Members. Any Member who is
designated "tax matters partner" will take such action as may be necessary to
cause each other Member to become a "notice partner" within the meaning of
section 6223 of the Code. Any Member who is designated "tax matters partner"
will inform each other Member of all significant matters that may come to its
attention in its capacity as "tax matters partner" by giving notice thereof on
or before the fifth Business Day after becoming aware thereof and, within that
time, will forward to each other Member copies of all significant written
communications it may receive in that capacity. Any Member who is designated
"tax matters partner" may not take any action contemplated by sections 6222
through 6232 of the Code without the consent of all Members, but this sentence
does not authorize such Manager (or any other Manager) to take any action left
to the determination of an individual Member under sections 6222 through 6232 of
the Code.

     11.04  Maintenance of Books. The Company will keep books and records of
accounts and will keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The books of account for the Company will be
maintained in accordance with GAAP. The calendar year will be the accounting
year of the Company.

     11.05  Reports. On or before the 30th day following the end of each fiscal
year during the term of the Company, the Managers will cause each Member to be
furnished with financial statements, including a balance sheet, an income
statement, and a statement of changes in Members' capital of the Company for, or
as of the end of, that year. The Managers also may cause to be prepared or
delivered such other reports as any Member may request. The Company will bear
the costs of all these reports.

     11.06  Accounts. The Managers will establish and maintain one or more
separate bank and investment accounts and arrangements for Company funds in the
Company name with financial institutions and firms that the Managers determine.
The Managers may not commingle the Company's funds with the funds of any Member.

                                   ARTICLE XII
                    DISSOLUTION, LIQUIDATION AND TERMINATION

                                     - 38 -

<PAGE>

     12.01  Dissolution Events.

     (a)    Dissolution. The Company shall dissolve and shall commence winding
up and liquidating upon the first to occur of any of the following (each a
"Dissolution Event"):

            (i)    The unanimous vote of the Members and consent of the Class B
     Member to dissolve, wind up and liquidate the Company;

            (ii)   A judicial determination that an event has occurred that
     makes it unlawful, impossible or impractical to carry on the Business; or

            (iii)  The sale of all or substantially all of the assets of the
     Company is a single transaction or in a series of transactions pursuant to
     a plan of liquidation.

     The Members hereby agree that, notwithstanding any provision of the Act,
the Company shall not dissolve prior to the occurrence of a Dissolution Event.

     (b)    Reconstitution. If it is determined, by a court of competent
jurisdiction, that the Company has dissolved prior to the occurrence of a
Dissolution Event, then within an additional ninety days after such
determination (the "Reconstitution Period"), all of the Members may elect to
reconstitute the Company and continue its business on the same terms and
conditions set forth in these Regulations by forming a new limited liability
company on terms identical to those set forth in these Regulations. Unless such
an election is made within the Reconstitution Period, the Company shall
liquidate and wind up its affairs in accordance with Section 12.02 hereof. If
such an election is made within the Reconstitution Period, then:

            (i)    The reconstituted limited liability company shall continue
     until the occurrence of a Dissolution Event as provided in this Section
     12.01(a);

            (ii)   Unless otherwise agreed to by all of the holders of the
     issued and outstanding Membership Interests, the Certificate and these
     Regulations shall automatically constitute the Certificate and the
     Regulations of such new Company. All of the assets and liabilities of the
     dissolved Company shall be deemed to have been automatically assigned,
     assumed, conveyed and transferred to the new Company. No bond, collateral,
     assumption or release of any Member's or the Company's liabilities shall be
     required;

provided that the right of the Members to select successor Members and to
reconstitute and continue the Business shall not exist and may not be exercised
unless the Company has received an opinion of counsel that the exercise of the
right would not result in the loss of limited liability of any Member and
neither the Company nor the reconstituted limited liability company would cease
to be treated as a partnership for federal income tax purposes upon the exercise
of such right to continue.

     12.02  Winding Up. Upon the occurrence of (i) a Dissolution Event or (ii)
the
                                     - 39 -

<PAGE>

determination by a court of competent jurisdiction that the Company has
dissolved prior to the occurrence of a Dissolution Event (unless the Company is
reconstituted pursuant to Section 12.01(b) hereof), the Company shall continue
solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Members,
and no Member shall take any action that is inconsistent with, or not necessary
to or appropriate for, the winding up of the Company's business and affairs,
provided that all covenants contained in these Regulations and obligations
provided for in these Regulations shall continue to be fully binding upon the
Members until such time as the cash and property of the Company has been
distributed pursuant to this Section 12.02 and the Certificate has been canceled
pursuant to the Act. The Liquidator shall be responsible for overseeing the
winding up and dissolution of the Company, which winding up and dissolution
shall be completed within ninety days of the occurrence of the Dissolution Event
and within ninety days after the last day on which the Company may be
reconstituted pursuant to Section 12.01(b) hereof. The Liquidator shall take
full account of the Company's liabilities and property and shall cause such
property or the proceeds from the sale thereof (as determined pursuant to
Section 12.08), to the extent sufficient therefor, to be applied and
distributed, to the maximum extent permitted by law, in the following order:

     (a)    First, to creditors (including Members who are creditors, to the
extent otherwise permitted by law) in satisfaction of all of the Company's debts
and other liabilities (whether by payment or the making of reasonable provision
for payment thereof), other than liabilities for which reasonable provision for
payment has been made and liabilities for distribution to Members under the Act;
and

     (b)    Second, to the Members in accordance with the positive balance in
their Capital Accounts, after giving effect to all prior contributions,
distributions and all allocations for all periods.

     Except as provided in Section 12.07(b), no Member shall receive additional
compensation for any services performed pursuant to this Article XII.

     12.03  Deficit Capital Accounts; Related Items. (a) If any Member has a
deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all fiscal years, including the
fiscal year during which such liquidation occurs), such Member shall have no
obligation to make any contribution to the capital of the Company with respect
to such deficit, and such deficit shall not be considered a debt owed to the
Company or to any other Person for any purpose whatsoever.

     (b)    In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the Members pursuant to this
Article XII may be:

            (i)    Distributed to a trust established for the benefit of the
     Members for the purposes of liquidating Company assets, collecting amounts
     owed to the Company, and paying any contingent or unforeseen liabilities or
     obligations of the Company. The assets of any such trust shall be
     distributed to the Members from time to time, in the reasonable discretion
     of the Liquidator, in the same proportions as the amount distributed to
     such trust by the Company

                                     - 40 -

<PAGE>

would otherwise have been distributed to the Members pursuant to Section 12.02
hereof; or

            (ii)   Withheld to provide a reasonable reserve for Company
     liabilities (contingent or otherwise) and to reflect the unrealized portion
     of any installment obligations owed to the Company, provided that such
     withheld amounts shall be distributed to the Members as soon as
     practicable.

     12.04  Rights of Members. Except as otherwise provided in these
Regulations, each Member shall look solely to the property of the Company for
the return of its Capital Contribution and has no right or power to demand or
receive property other than cash from the Company. If the assets of the Company
remaining after payment or discharge of the debts or liabilities of the Company
are insufficient to return such Capital Contribution, the Members shall have no
recourse against the Company or any other Members or Member.

     12.05  Notice of Dissolution/Termination.

     (a)    In the event a Dissolution Event occurs or an event occurs that
would, but for the provisions of Section 12.01, result in a dissolution of the
Company, the Board shall, within thirty days thereafter, provide written notice
thereof to each of the Members and to all other parties with whom the Company
regularly conducts business (as determined in the discretion of the Board) and
shall publish notice thereof in a newspaper of general circulation in each place
in which the Company regularly conducts business (as determined in the
discretion of the Board).

     (b)    Upon completion of the distribution of the Company's property as
provided in this Article XII, the Company shall be terminated, and the
Liquidator shall cause the filing of the Certificate of Dissolution pursuant to
the Act and shall take all such other actions as may be necessary to terminate
the Company.

     12.06  Allocations During Period of Liquidation. During the period
commencing on the first day of the fiscal year during which a Dissolution Event
occurs and ending on the date on which all of the assets of the Company have
been distributed to the Members pursuant to Section 12.02 hereof (the
"Liquidation Period"), the Members shall continue to share Net Income and Net
Losses, gain, loss and other items of Company income, gain, loss or deduction in
the manner provided in these Regulations.

     12.07  The Liquidator.

     (a)    Definition. The "Liquidator" shall mean a Person appointed by a
majority of the Board to oversee the liquidation of the Company.

     (b)    Fees. The Company is authorized to pay a reasonable fee to the
Liquidator for its services performed pursuant to this Article XII and to
reimburse the Liquidator for its reasonable costs and expenses incurred in
performing those services.

     (c)    Indemnification. The Company shall indemnify, save harmless, and pay
all judgments and claims against such Liquidator or any officers, directors,
agents or employees of

                                     - 41 -

<PAGE>

the Liquidator relating to any liability or damage incurred by reason of any act
performed or omitted to be performed by the Liquidator, or any officers,
directors, agents or employees of the Liquidator in connection with the
liquidation of the Company, including reasonable attorneys' fees incurred by the
Liquidator, officer, director, agent or employee in connection with the defense
of any action based on any such act or omission, which attorneys' fees may be
paid as incurred, except to the extent such liability or damage is caused by the
fraud, intentional misconduct of, or a knowing violation of the laws by the
Liquidator which was material to the cause of action.

     12.08  Form of Liquidating Distributions. For purposes of making
distributions required by Section 12.02 hereof, the Liquidator may determine
whether to distribute all or any portion of the Company's property in-kind or to
sell all or any portion of the Company's property and distribute the proceeds
therefrom.

                                  ARTICLE XIII
                               GENERAL PROVISIONS

     13.01  Notices. Except as expressly set forth to the contrary in these
Regulations, all notices, requests, or consents provided for or permitted to be
given under these Regulations must be in writing and must be given either by
depositing that writing in the United States mail addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under these Regulations is
effective on receipt by the Person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to or made at the addresses given
for that Member on the signature page hereof, or such other address as that
Member may specify by notice to the other Members. Any notice, request, or
consent to the Company or the Managers must be given to the Managers at the
addresses set forth on the signature page hereof. Whenever any notice is
required to be given by law, the Certificate or these Regulations, a written
waiver thereof, signed by the Person entitled to notice, whether before or after
the time stated therein, will be deemed equivalent to the giving of such notice.

     13.02  Entire Agreement; Supersedure. These Regulations constitute the
entire agreement of the Members and their Affiliates relating to the Company and
supersede all prior contracts or agreements with respect to the Company, whether
oral or written, except that these Regulations shall not override or supersede
the Loan Documents.

     13.03  Effect of Waiver of Consent. A waiver or consent, express or
implied, to or of any breach or default by any Person in the performance by that
Person of its obligations with respect to the Company is not a consent or waiver
to or of any other breach or default in the performance by that Person of the
same or any other obligations of that Person with respect to the Company.
Failure on the part of a Person to complain of any act of any Person or to
declare any Person in default with respect to the Company, irrespective of how
long that failure continues, does not constitute a waiver by that Person of its
rights with respect to that default until the applicable statute of limitations
period has run.

                                     - 42 -

<PAGE>

     13.04  Binding Effect. Subject to the restrictions on Dispositions set
forth in these Regulations, these Regulations are binding on and shall inure to
the benefit of the Members and their respective heirs, legal representatives,
successors, and assigns.

     13.05  Governing Law; Severability. THESE REGULATIONS ARE GOVERNED BY AND
WILL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING
ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THESE REGULATIONS TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of these Regulations and (a)
any provision of the Certificate, or (b) any mandatory provision of the Act or
(to the extent such statutes are incorporated into the Act) the DGCL, the
application provision of the Certificate, the Act, or the DGCL will control. If
any provision of these Regulations or the application thereof to any Person or
circumstance is held invalid or unenforceable to any extent, the remainder of
these Regulations and the application of that provision to other Persons or
circumstances are not affected thereby and that provision will be enforced to
the greatest extent permitted by law.

     13.06  Further Assurances. In connection with these Regulations and the
transactions contemplated hereby, each Member will execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of these
Regulations and those transactions.

     13.07  Waiver of Certain Rights. Each Member irrevocably waives any right
it may have to maintain any action for dissolution of the Company or for
partition of the property of the Company.

     13.08  Indemnification. To the fullest extent permitted by law, each Member
will indemnify the Company, each Manager and each other Member and hold them
harmless from and against all losses, costs, liabilities, damages, and expenses
(including, without limitation, costs of suit and attorney's fees) they may
incur on account of any breach by that Member of these Regulations.

     13.09  Notice to Members of Provisions of these Regulations. By executing
these Regulations or acquiring or accepting Membership Interests hereunder, each
Member acknowledges that it has actual notice of all of the provisions of these
Regulations, including, without limitation, the restrictions on the transfer of
Membership Interests, and all of the provisions of the Certificate.

     13.10  Counterparts. These Regulations may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts will be construed together and constitute the same
instrument.

     13.11  Mediation.

     (a)    Agreement to Use Procedure. The Company, its Managers and its
Members (collectively "Company Affiliates") have agreed to these Regulations and
the related transactions in good faith and in the belief that they are mutually
advantageous to them. It is with that same

                                     - 43 -

<PAGE>

spirit of cooperation that they pledge to attempt to resolve any dispute
amicably without the necessity of litigation. Accordingly, they agree that, if
any dispute arises between any of them relating to the Company or these
Regulations (the "Dispute"), they will first utilize the procedures specified in
this Section (the "Procedure") and Section 13.12, prior to engaging in
litigation.

     (b)    Initiation of Procedure. The party seeking to initiate the Procedure
(the "Initiating Party") shall give written notice to the other parties or
potential parties, describing in general terms the nature of the Dispute, the
Initiating Party's claim for relief and identifying one or more individuals with
authority to settle the Dispute on such Party's behalf. The Party(s) receiving
such notice (the "Responding Party", whether one or more) shall have five (5)
business days within which to designate by written notice to the Initiating
Party, one or more individuals with authority to settle the Dispute on such
Party's behalf. The individuals so designated shall be known as the "Authorized
Individuals." The Initiating Party and the Responding Party shall collectively
be referred as the "Disputing Parties" or individually a "Disputing Party."

     (c)    Direct Negotiations. The Authorized Individuals shall be entitled to
make such investigation of the Dispute as they deem appropriate, but agree to
promptly, and in no event later than ten (10) days from the date of the
Initiating Party's written notice, meet to discuss resolution of the Dispute.
The Authorized Individuals shall meet at such times and places and with such
frequency as they may agree. If the Dispute has not been resolved within five
(5) days from the date of their initial meeting, the Disputing Parties shall
cease direct negotiations and shall submit the Dispute to mediation in
accordance with the procedure described below.

     (d)    Selection of Mediator. The Authorized Individuals shall have three
(3) business days from the date they submit the Dispute to mediation to submit
to each other a written list of acceptable qualified attorney-mediators not
affiliated with any of the parties or their Affiliates. Within three (3) days
from the date of receipt of such list, the Authorized Individuals shall rank the
mediators in numerical order of preference and exchange such rankings. If one or
more names are on both lists, the highest ranking person shall be designated as
the mediator. If no mediator has been selected under this procedure, the
Disputing Parties agree jointly to request a State or Federal District Judge of
their choosing (or if they cannot agree, the Local Administrative Judge for
Harris County, Texas), to supply within five (5) business days a list of
potential qualified attorney-mediators. Within three (3) business days of
receipt of the list, the Authorized Individuals shall again rank the proposed
mediators in numerical order of preference and shall simultaneously exchange
such list and shall select as the mediator the individual receiving the highest
combined ranking. If such mediator is not available to serve, they shall proceed
to contact the mediator who was next highest in ranking until they are able to
agree upon a mediator.

     (e)    Time and Place of Mediation. In consultation with the mediator
selected, the Authorized Individuals shall promptly designate a mutually
convenient time and place for the mediation. Unless circumstances require
otherwise, such time shall be not later than ten (10) days after selection of
the mediator.

     (f)    Exchange of Information. In the event any Disputing Party to this
Agreement has substantial need for information in the possession of another
Disputing Party to this Agreement

                                     - 44 -

<PAGE>

in order to prepare for the mediation, all Disputing Parties shall attempt in
good faith to agree to procedures for the expeditious exchange of such
information, with the help of the mediator if required.

     (g)    Summary of Views. At least three (3) days prior to the first
scheduled session of the mediation, each Disputing Party shall deliver to the
mediator and to the other Disputing Parties a concise written summary of its
views on the matter in Dispute, and such other matters required by the mediator.
The mediator may also request that a confidential issue paper be submitted by
each Disputing Party to him or her.

     (h)    Parties to be Represented. In the mediation, each Disputing Party
shall be represented by an Authorized Individual and may be represented by
counsel. In addition, each Disputing Party may, with permission of the mediator,
bring such additional Persons as needed to respond to questions, contribute
information, and participate in the negotiations.

     (i)    Conduct of Mediation. The mediator shall determine the format for
the meetings, designed to assure that both the mediator and the Authorized
Individuals have an opportunity to hear an oral presentation of each Disputing
Party's views on the matter in dispute, and that the authorized parties attempt
to negotiate a resolution of the matter in dispute, with or without the
assistance of counsel or others, but with the assistance of the mediator. To
this end, the mediator is authorized to conduct both joint meetings and separate
private caucuses with the Disputing Parties. The mediation session will be
private. The mediator will keep confidential all information learned in private
caucus with any Disputing Party unless specifically authorized by such Disputing
Party to make disclosure of the information to the other Disputing Party. The
Disputing Parties agree to sign a document agreeing that the mediator shall be
governed by the provisions of Chapter 154 of the Tex. Civ. Prac. & Rem. Code and
such other rules as the mediator shall prescribe. The Disputing Parties commit
to participate in the proceedings in good faith, with the intention of resolving
the Dispute if at all possible.

     (j)    Termination of Procedure. The Disputing Parties agree to participate
in the mediation procedure to its conclusion. The mediation shall be terminated
(i) by the execution of a settlement agreement by the Disputing Parties, (ii) by
a declaration of the mediator that the mediation is terminated, or (iii) by a
written declaration of a Disputing Party to the effect that the mediation
process is terminated at the conclusion of one full day's mediation session.

     (k)    Fees of Mediation; Disqualification. The fees and expenses of the
mediator shall be shared equally by the Disputing Parties. The mediator shall be
disqualified as a witness, consultant, expert or counsel for any Disputing Party
with respect to the Dispute and any related matters.

     (l)    Confidentiality. Mediation is a compromise negotiation for purposes
of Federal and State Rules of Evidence and constitutes privileged communication
under Texas law. The entire mediation process is confidential, and no
stenographic, visual or audio record shall be made. All conduct, statements,
promises, offers, views and opinions, whether oral or written, made in the
course of the mediation by any Disputing Party, their agents, employees,
representatives or other invitees and by the mediator, are confidential and
shall, in addition and where appropriate, be deemed privileged. Such conduct,
statements, promises, offers, views and

                                     - 45 -

<PAGE>

opinions shall not be discoverable or admissible for any purpose, including
impeachment, in any litigation or other proceeding involving the parties, and
shall not be disclosed to anyone not an agent, employee, expert, witness or
representative of any of the parties; provided, however, that evidence otherwise
discoverable or admissible is not excluded from discovery or admission as a
result of its use in the mediation.

     13.12. Arbitration. Any Dispute not resolved pursuant to Section 13.11
shall be resolved by binding arbitration in accordance with the following
provisions, provided, however, that (i) before initiating arbitration, each of
the Company Affiliates involved or potentially involved in any Dispute agrees
that he, she or it will participate in mediation as provided in Section 13.11,
and (ii) any of the Company Affiliates may seek in state or federal court in the
county where the arbitration is required to be conducted injunctive relief or
other equitable relief to preserve the status quo pending arbitration.

     Any of the Initiating Parties may submit any Dispute that is subject to
arbitration by giving written notice to the other Responding Parties. Within 30
days after receipt of such notice by such other party, the Initiating and
Responding Parties (collectively the "parties" or individually a party) shall
mutually select an arbitrator. If the parties are unable to agree upon such
selection within such 30 days, then either the Initiating or Responding Party
may, upon at least five days prior written notice to the other party, request
the American Arbitration Association to appoint the arbitrator. The American
Arbitration Association may thereupon appoint the arbitrator. The arbitrator
shall be impartial and unrelated, directly or indirectly, so far as rendering of
services is concerned to any of the parties or any of their respective
Affiliates. The arbitration shall be conducted in Houston, Texas in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
as then in effect, except as otherwise provided in this Section 13.12, and the
arbitrator shall be paid on an hourly basis, except as otherwise mutually
agreed.

     The arbitrator shall investigate the facts and may, in his or her
discretion, hold hearings, at which the parties hereto may present evidence and
arguments, be represented by counsel and conduct cross-examination. The
arbitrator shall render a written decision on the matter presented as soon as
practicable after his or her appointment and in any event not more than 90 days
after such appointment. The decision of the arbitrator, which may include
equitable relief, shall be final and binding on the parties hereto, and judgment
upon the decision may be entered in any court having jurisdiction thereof. If
the arbitrator shall fail to render a decision within such 90 day period, either
party may institute such action or proceeding in such court as shall be
appropriate in the circumstances and upon the institution of such action, the
arbitration proceeding shall be terminated and shall be of no further force and
effect. The prevailing party shall be awarded reasonable attorneys' fees, expert
and non-expert witness costs and expenses incurred in connection with the
arbitration, and the fees and costs of the arbitrator shall be borne by the
nonprevailing party unless, in either case, the arbitrator for good cause
determines otherwise. In resolving any dispute, the arbitrator shall apply the
provisions of these Regulations and applicable law, without varying therefrom in
any respect. The arbitrator shall not have the power to add to, modify or change
any of the provisions of these Regulations.

     IN WITNESS WHEREOF, following adoption of these Regulations by the
Managers, the

                                     - 46 -

<PAGE>

undersigned have executed these Regulations as of the date first set forth
above.

Address for Notice:                     CLASS A MEMBER:
                                        --------------
14315 West Hardy Road                   TieTek Technologies, Inc.,
                                        a Texas corporation

Houston, TX 77060                       By:    Henry W. Sullivan
                                           -------------------------------------
                                              Henry W. Sullivan, President

Address for Notice:                     CLASS B MEMBER:
                                        --------------

5949 Sherry Lane, Suite 1900            Sponsor Investments, LLC, a Texas
                                        limited liability company
Dallas, TX 75225

                                        By:      John H. Washburn
                                           -------------------------------------
                                        Name and Title: John H. Washburn,
                                        Executive Vice President

Manager Notice Addresses:               BOARD OF MANAGERS:
                                        -----------------

5949 Sherry Lane, Suite 1900

Dallas, TX 75225                        John H. Washburn
                                        ----------------------------------------
                                        John H. Washburn

5949 Sherry Lane, Suite 1900

Dallas, TX 75225                        Bruce Leadbetter
                                        ----------------------------------------
                                        Bruce Leadbetter

5949 Sherry Lane, Suite 1900

Dallas, TX 75225                        General Goh
                                        ----------------------------------------
                                        General Goh

14315 West Hardy Road

Houston, TX 77060                       Henry W. Sullivan
                                        ----------------------------------------
                                        Henry W. Sullivan

14315 West Hardy Road

Houston, TX 77060                       Kevin C. Maddox
                                        ----------------------------------------
                                        Kevin C. Maddox

                                     - 47 -

<PAGE>

                                   SCHEDULE A
                                   ----------

CURRENT ASSETS                     AGREED VALUE
-----------------------------------------------
Checking Acct - Wells Fargo      $    16,365.83
Petty Cash                               200.00
Accounts Receivable                   43,235.00
Employee Receivables                     400.00
EMP REC - TX C.S. SDU                    140.95
Advances                               1,372.50
Inventory - Raw Material              17,478.56
Inventory RM-Marshall Plant           14,165.04
Crossties - B & C Grade              165,550.07
Prepaid Insurance                     50,280.76
Prepaid - Other                       30,409.04
TOTAL CURRENT ASSETS                                  339,597.75

FIXED ASSETS
------------
Accumulated Depreciation            (685,022.04)
-----------------------------------------------
Equipment-Molding System             800,394.25
Line II Molding Sys-CIP              694,376.57
Line III Molding Sys-CIP             672,621.54
Equipment-XRay Inspect Sys           117,793.72
Equipment-Upright Lift                 8,500.00
Equipment-MK-160 Molding              95,657.98
Equipment-Banbury/Extruder           671,605.53
Ventilation Sys-Vents                 63,597.50
Ventilation System                     8,248.65
Equip.-Houston Plant Start-Up        654,936.68
LineII Startup                       245,578.89
Line II Banbury - CIP                472,971.00
Forklift-Capital Expenditure           7,756.02
Line III Startup                      59,864.29
Banbury Line III - CIP               114,682.00
Equip.-Raw Materials Handling        177,799.55
Chiller                               84,602.55
Furniture & Fixtures                   8,648.00
Equip-Crosstie Finishing Equip       101,394.21
XRay to Texture Conveyor               6,458.08
Texture to Bank Automation             7,200.00
X-Ray Vitalux/Vista Pluss III         51,116.40
Computers                             27,938.65
Leasehold Improvements                57,814.55
Fixed Asset-Building               1,710,609.01

                                     - 48 -

<PAGE>

TOTAL FIXED ASSETS                                  6,237,143.58

OTHER ASSETS
------------
Patent                                70,303.64
Purchased Technology               2,158,117.44
Purch Tech-Accum Amortization       (646,760.00)
Pat&Purch Tech-Purch Acct Entr     1,378,015.01
Pat&Purch Tech-Acc Amortiz          (459,338.40)
Crosstie Patent                      119,846.16
Crosstie Pat. - Accum Amort           (2,750.27)
Deposit-Seafab, Inc.                  20,000.00
Lease Costs-Legal                        188.44
TOTAL OTHER ASSETS                                  2,637,622.02
TOTAL ASSETS                                      $ 9,214,363.20

CURRENT LIABILITIES
-------------------
Accounts Payable                 $   464,089.54
Accrued Payables                       6,732.65
Property Tax Accrual                  24,000.00
Accrued Int-Sponsor N/P               16,500.00
TOTAL CURRENT LIABILITIES                             511,322.19

LONG TERM LIABILITIES
---------------------
Note payable - Sponsor LLC         1,100,000.00
TOTAL LONG TERM LIABILITIES                         1,100,000.00
TOTAL LIABILITIES                                   1,611,322.19

                                     - 49 -

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