Document:

EXHBIT 10.11

                 _______________________________________________

                     REVOLVING CREDIT AND SECURITY AGREEMENT

                                 By and Between

                                  COMPASS BANK

                                       and

                           UNIVERSAL POWER GROUP, INC.

                                DECEMBER 14, 2004

                 _______________________________________________

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                                TABLE OF CONTENTS

     SECTION 1. Bank's Agreement to Make Advances ..........................   1

 1.1 Borrowing Base ........................................................   1
 1.2 Evidence of Advance Not Causing Excess of Borrowing Base ..............   2
 1.3 Borrower's Loan Account ...............................................   3
 1.4 Exceeding Borrowing Base ..............................................   3
 1.5 Discretionary Advances ................................................   3

     SECTION 2. Borrower's Representations and Warranties; Certain Covenants   4

 2.1 Organization, Licenses, Qualifications, Etc ...........................   4
 2.2 Power and Authority; Enforceability ...................................   4
 2.3 Liens .................................................................   4
 2.4 Payment of Taxes, Charges, Etc ........................................   4
 2.5 Restrictions on Transfer of Collateral ................................   5
 2.6 Reporting Requirements ................................................   5
 2.7 Additional Representations Regarding Accounts .........................  11
 2.8 Additional Representations Regarding Instruments, Chattel Paper, Etc ..  12
 2.9 Location of Collateral ................................................  12
2.10 Location of Records ...................................................  12
2.11 Additional Representations Regarding Financial Statements .............  12
2.12 Possession of and Insurance on Equipment ..............................  13
2.13 Borrower's Names and Offices ..........................................  13
2.14 Additional Representations Regarding Absence of Defaults Under
     Other Agreements ......................................................  13
2.15 Indemnification .......................................................  13
2.16 Taxes, Charges and Expenses Incurred with Respect to Revolving Line ..   14
2.17 Patents, Copyrights, Trademarks and Licenses .........................   14
2.18 Judgments/Actions ....................................................   15
2.19 Margin Stock .........................................................   15
2.20 No Untrue Statements or Omissions ....................................   15
2.21 Bankruptcy ...........................................................   16
2.22 Organizational Identification Number .................................   16

     SECTION 3. Inspection of Records; Further Assurance ..................   16

     SECTION 4. Security Interest of Bank in Collateral ...................   17

 4.1 Collateral ...........................................................   17
 4.2 Security Interest in Collateral Created/Acquired Hereafter ...........   18
 4.3 Further Assurances ...................................................   19
 4.4 Additional Further Assurances ........................................   20
 4.5 Restrictions on Pledging, Mortgaging Collateral ......................   20

     SECTION 5. Collection of Accounts Receivable .........................   21

 5.1 Collection and Application of Proceeds; Notifying Account Debtors ....   21
 5.2 Collection of Accounts ...............................................   22

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     SECTION 6. Additional Affirmative Covenants ..........................   22

 6.1 Financial Statements .................................................   22
 6.2 Insurance ............................................................   24
 6.3 Compliance with Laws .................................................   25
 6.4 Omitted ..............................................................   26
 6.5 Fixed Charge Coverage Ratio ..........................................   26
 6.6 Tangible Net Worth ...................................................   26
 6.7 Fees .................................................................   27
 6.8 Notification of Defaults, Suits, Etc .................................   28
 6.9 Omitted ..............................................................   28
6.10 Deposit Account ......................................................   28

     SECTION 7. Additional Negative Covenants .............................   28

 7.1 Liens ................................................................   29
 7.2 Borrowings; Permitted Indebtedness ...................................   29
 7.3 Dividends ............................................................   29
 7.4 Capital Expenditures .................................................   30
 7.5 Acquiring Assets, Etc. of Other Entities .............................   30
 7.6 Dissolution, Mergers, Change in Nature ...............................   30
 7.7 Subordinated Debt ....................................................   31
 7.8 Omitted ..............................................................   31
 7.9 Total Debt to Tangible Net Worth .....................................   31
7.10 Loans to Related Parties and Affiliates ..............................   31
7.11 Coverage Ratio .......................................................   33

     SECTION 8. Events of Default; Acceleration ...........................   32

     SECTION 9. Power to Sell or Collect Collateral .......................   35

     SECTION 10. Set Off ..................................................   37

     SECTION 11. Waivers ..................................................   38

     SECTION 12. Expenses; Proceeds of Collateral .........................   39

     SECTION 13. Duration; Extension ......................................   40

     SECTION 14. General ..................................................   41

     SECTION 15. Omitted ..................................................   44

     SECTION 16. Miscellaneous ............................................   44

     SECTION 17. Compliance With Laws .....................................   46

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Addendum A - Definitions
Exhibit A - Accounts Receivable and Inventory Reconciliation
Exhibit B - Certificate

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                     REVOLVING CREDIT AND SECURITY AGREEMENT

         This Revolving Credit and Security  Agreement (as may be amended,  this
"Agreement")  is executed and delivered this 14th day of December,  2004, by and
between UNIVERSAL POWER GROUP, INC., a Texas corporation ("Borrower"),  with its
chief executive office and its principal place of business at 1720 Hayden Drive,
Carrollton,  Texas  75006 and  COMPASS  BANK,  an  Alabama  banking  corporation
("Bank"),  with  its  principal  place of  business  at 15  South  20th  Street,
Birmingham,  Alabama 35233. Borrower has applied to Bank for a revolving line of
credit not to exceed an aggregate  principal  amount at any one time outstanding
the  sum of  TWELVE  MILLION  AND  NO/100  DOLLARS  ($12,000,000.00)  (as may be
amended,  the "Revolving Line") to be evidenced by a Master Revolving Promissory
Note (as may be  amended,  the  "Note")  in such  amount  and to be secured by a
security  interest in all of the  Collateral  (as  defined  herein) on the terms
hereinafter set forth.

         Bank is willing  to extend  the  Revolving  Line to  Borrower  up to an
aggregate  principal amount not in excess of the amount set forth above upon the
security  of  the  Collateral  on  the  terms  and  subject  to  the  conditions
hereinafter set forth to refinance some of Borrower's existing  indebtedness and
to provide Borrower with ordinary working capital.

         Accordingly,  Borrower and Bank, in consideration of the premises,  the
credit to be extended hereunder, and other good and valuable consideration,  the
receipt and sufficiency of which are hereby acknowledged, agree as follows:

         Capitalized  terms not otherwise  defined herein shall have the meaning
attributed to the same in Addendum A hereto  incorporated herein by reference as
if fully set forth.

         SECTION 1.  Bank's Agreement to Make Advances.

         1.1      Borrowing  Base.  From the date hereof  until May 5, 2007 (the
"Maturity  Date"),  or  such  future  date to  which  the  Maturity  Date of the
Revolving  Line  may be  extended  (any  such  extension  to be at  Bank's  sole
discretion  and evidenced by a writing  executed by Bank),  subject to the terms
and  conditions  of  this  Agreement  and  Borrower's  and all  guarantor's  (as
applicable)  performance of and compliance with each of the Loan Documents,  and
so long as no event of default (including, without limitation, the breach of any
warranty or  representation)  hereunder or under any of the other Loan Documents
shall have  occurred,  be continuing  or would result,  Bank agrees to extend to
Borrower an open-end credit line (also referred to as the Revolving Line) on the
basis of the following  advance formula (such advance formula being  hereinafter
referred  to as  the  "Borrowing  Base"):  eighty-five  percent  (85.0%)  of the
outstanding value of Borrower's Eligible Accounts Receivable, plus fifty percent
(50.0%) of the value of Borrower's Eligible Inventory,  not to exceed the lesser
of (a) $5,000,000.00 or (b) eighty-five percent (85.0%) of the outstanding value
of  Borrower's  Eligible  Accounts  Receivable  at  any  one  time  outstanding;
provided,  however,  that in no event shall the  aggregate  sum of all principal
advances made by Bank to Borrower at any one time  outstanding  hereunder exceed
the sum of  $12,000,000.00.  Within such limits and subject to the terms of this

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Agreement,  Borrower may borrow,  repay without penalty or premium, and reborrow
hereunder,  from the date of this  Agreement  until  the  Maturity  Date.  It is
expressly  understood  and agreed that Bank shall have no  obligation to make an
advance under the Revolving Line if the amount of such advance together with the
amount  outstanding  under the Revolving Line exceeds or would exceed the lesser
of (i) $12,000,000.00 or (ii) the Borrowing Base.

         The value of all Eligible Inventory shall be determined on the basis of
any and all factors and  criteria  as Bank (in its sole  discretion)  shall deem
appropriate,  including,  without  limitation,  that unless Bank shall determine
that some other basis is more appropriate, such value shall be determined on the
basis of the lower of cost, book or market value,  net of all handling  charges,
taxes, assessments, insurance, warranty, interest, finance and other charges.

         If at any time Borrower is not entitled to any advances by the terms of
this  Agreement,  Bank may, in its sole  discretion,  make  requested  advances;
however, it is expressly acknowledged and agreed that, in such event, Bank shall
have the right, in its sole discretion, to decline to make any requested advance
and to require any payment  required  under the terms of the  Agreement  without
prior  notice  to  Borrower  and the  making of any such  advances  shall not be
construed as a waiver of such right by Bank.

         It is understood  that Borrower may from time to time request and apply
for and Bank may,  in its sole  discretion,  issue  letters  of  credit  for the
benefit of such parties and on such terms and conditions as Borrower may request
and apply for in  written  application(s)  for  letter(s)  of credit in form and
substance  satisfactory  to Bank,  as  delivered  to Bank  along with such other
documentation  as Bank may require.  In no event shall Bank be required to issue
any  requested  letter of  credit,  although  otherwise  acceptable  in form and
substance if (i) Borrower has not executed and delivered one or more  promissory
notes in form and  substance  acceptable to Bank further  evidencing  Borrower's
agreement to reimburse  Bank for any advances or payments made or which could be
made  under  such  letter  of  credit;  (ii)  the sum of the  debit  balance  of
Borrower's Loan Account,  plus (a) the aggregate dollar amount of all issued and
unexpired  L/C's;  plus (b) the dollar amount of the requested  letter of credit
exceeds  the  lesser  of (c) the  Borrowing  Base or (d)  $12,000,000.00;  (iii)
Borrower has not paid to Bank all required fees and executed and delivered  such
associated  documentation as Bank shall request in form and substance acceptable
to Bank; (iv) the requested  letter of credit is not acceptable to Bank and does
not provide for an  expiration  date  acceptable  to Bank; or (v) any default or
event of default shall have occurred, be continuing or would result hereunder or
under any of the other Loan  Documents.  Notwithstanding  anything herein to the
contrary,  in no event shall Bank be required to issue L/C's hereunder in excess
of $750,000.00 in the aggregate for all L/C's requested by Borrower to be issued
by Bank hereunder.

         1.2      Evidence  of Advance Not Causing Excess of Borrowing  Base. If
requested by Bank, prior to any request for an advance hereunder, Borrower shall
submit to Bank such information and documents as Bank shall  reasonably  request
to establish to Bank's  satisfaction  that, if approved,  the requested  advance
will not cause the amount of funds  outstanding  to Borrower  hereunder plus the
aggregate  dollar amount of all issued and unexpired  L/C's to exceed the lesser
of (i) the Borrowing Base or (ii) $12,000,000.00.  Bank shall have no obligation
to make any advance for which  Borrower  is unable to  establish  such to Bank's
satisfaction.

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         1.3      Borrower's  Loan Account.  All  borrowings/advances  under the
Revolving   Line  shall  be  evidenced   by  the  Note  and  by  entering   such
borrowings/advances as debits to Borrower's Loan Account. Bank shall also record
in  Borrower's  Loan  Account all other  charges,  expenses  and items  properly
chargeable  to Borrower  hereunder  (which shall also be evidenced by the Note),
all payments  made by Borrower on account of  indebtedness  under the  Revolving
Line and other appropriate debits  (including,  without  limitation,  debits for
advances made to honor drafts  presented  under L/C's (which  advances  Borrower
hereby expressly  authorize)) and credits.  The debit balance of Borrower's Loan
Account  shall also be  evidenced  by the Note and shall  reflect  the amount of
Borrower's indebtedness to Bank from time to time hereunder.

         1.4      Exceeding  Borrowing  Base.  If at any  time  the  outstanding
balance of  Borrower's  Loan Account  plus the  aggregate  dollar  amount of all
issued and unexpired L/C's exceeds the lesser of (i) the Borrowing Base, or (ii)
$12,000,000.00,  then Borrower shall not be entitled to any additional  advances
under the Revolving Line while such excess exists and shall immediately remit to
Bank  immediately  available  funds  sufficient to eliminate such excess and, if
Bank requests,  deliver to Bank  additional  collateral of a value and character
satisfactory to Bank. If the  Reconciliation  Report (as defined in Section 2.6)
indicates that  Borrower's  Loan Account or advances made to Borrower  hereunder
plus the aggregate  dollar amount of all issued and unexpired  L/C's exceeds the
lesser of (i) the Borrowing Base or (ii) $12,000,000.00, then Borrower shall not
be entitled  to any  additional  advances  under the  Revolving  Line while such
excess  exists  and  shall   immediately   remit  to  Bank  (with  the  relevant
Reconciliation  Report) immediately  available funds in the amount sufficient to
eliminate such excess.

         1.5      Discretionary  Advances. In the event that the availability of
the Revolving Line hereunder  expires by the terms of this Agreement,  or by the
terms of any agreement  extending the Maturity Date of the Revolving  Line, Bank
may, in its sole discretion,  make requested advances;  however, it is expressly
acknowledged  and agreed that, in such event,  Bank shall have the right, in its
sole  discretion,  to  decline to make any  requested  advance  and may  require
payment in full of  Borrower's  Loan Account at any time without prior notice to
Borrower and the making of any such advances  shall not be construed as a waiver
of such right by Bank. With regard to advances to honor drafts under L/C's,  if,
for any reason,  any such advances are made after the  termination or expiration
of the Revolving Line or the occurrence or  continuation of any default or event
of default hereunder,  or when Bank otherwise has no obligation to make advances
hereunder,  Borrower shall  reimburse Bank for such advances in full upon demand
by Bank and  until  the time of such  reimbursement,  such  advance  shall  bear
interest at the rate of interest set forth in the Note (unless  otherwise agreed
by Bank and Borrower in writing) and be secured by the Collateral.

         Bank's right to demand  reimbursement  with interest under this Section
shall be in addition to and  cumulative  of and not in lieu of any and all other
rights and  remedies  available  to Bank under the Loan  Documents  or under any
document  executed  in  connection  with  any  L/C's.  Any  such   reimbursement
obligation  shall be  evidenced  by the  Note,  or,  at  Bank's  option,  by the
Borrower's executing and delivering  additional promissory notes to Bank in form
and substance acceptable to Bank.
Nothing  in this  Section 1 shall be deemed to extend  the  availability  of the
Revolving Line beyond the time noted in Section 13 hereof.

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     SECTION 2. Borrower's Representations and Warranties; Certain Covenants. To
induce Bank to enter into this  Agreement,  Borrower  represents,  warrants  and
covenants  as follows:

         2.1      Organization, Licenses, Qualifications, Etc. Borrower (a) is a
duly organized  corporation,  validly  existing,  and in good standing under the
laws of the State of Texas;  (b) has all necessary  licenses and corporate power
and  authority  to own its assets and conduct its  business as now  conducted or
presently  proposed to be conducted;  (c) has no  subsidiaries;  and (d) is duly
qualified  and in good  standing  (and  will  remain  so  qualified  and in good
standing) in every  jurisdiction in which it is or shall be doing business or in
which the failure to so qualify and remain in good standing  would or could have
an adverse effect on its business or properties, the Collateral or Bank.

         2.2      Power and Authority;  Enforceability.  The execution, delivery
and performance  hereof are within Borrower's  corporate powers,  have been duly
and validly  authorized and are not in  contravention of the law or the terms of
Borrower's charter,  by-laws or other incorporation papers, or of any indenture,
agreement, or undertaking or any law, regulation or order to which Borrower is a
party or by  which  it or any of its  properties  is or may be  bound.  Upon and
delivery  hereof,  this  Agreement  will be a valid and  binding  obligation  of
Borrower enforceable in accordance with its terms. This Agreement,  the Note and
all other Loan  Documents  executed by Borrower  have been validly  executed and
delivered by Borrower and constitute  legal,  valid, and binding  obligations of
Borrower enforceable against Borrower in accordance with their respective terms,
except  as  limited  by  applicable  bankruptcy,   insolvency,   reorganization,
moratorium,  or  similar  laws at the time in  effect  affecting  the  rights of
creditors generally.

         2.3      Liens.  Except  for  the  Permitted  Liens  and  the  security
interests  granted to Bank hereby or by any of the other Loan Documents in favor
of Bank,  Borrower  is and,  as to  Accounts  Receivable,  Inventory  and  other
Collateral  arising or to be acquired  after the date hereof,  shall be the sole
and exclusive owner of the Accounts, the Inventory and each and every other item
of Collateral free from any lien, claim,  charge,  security interest,  mortgage,
secondary financing or encumbrance,  and Borrower shall defend the Accounts, the
Inventory  and each and every  other item of  Collateral  and all  Proceeds  and
products  thereof  against  all  claims and  demands of all  persons at any time
claiming  the same or any  interest  therein  adverse to the  interests of Bank.

         2.4      Payment of Taxes, Charges, Etc. Borrower will promptly pay all
taxes or charges  levied on or with  respect  to, and will at all times keep the
Accounts,  the Inventory and each and every other item of  Collateral,  free and
clear of all liens, claims, charges,  security interests,  mortgages,  secondary
financing and  encumbrances  whatsoever,  other than the Permitted Liens and the
security interests granted to Bank hereby or by any of the other Loan Documents.
Borrower  agrees to take all  actions  that Bank may  request to  establish  and
maintain a valid title and security interest in the Accounts,  the Inventory and
each and every  other  item of  Collateral,  free and clear of all other  liens,
claims,  charges,  security  interests,   mortgages,   secondary  financing  and
encumbrances  whatsoever  (other than the Permitted Liens),  including,  without
limitation, the payment of any amounts, taxes, assessments,  fees and/or charges
necessary  to perfect and note Bank's  interest  in the same.  If such  amounts,
taxes,  assessments,  fees and/or charges remain unpaid after the date fixed for

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the payment of same, or if any lien, claim, charge, security interest, mortgage,
secondary  financing or encumbrance  shall arise, or be claimed or asserted with
respect to the  Accounts,  the Inventory or any other item of  Collateral,  Bank
may, without notice to Borrower, pay such taxes, assessments, charges or claims,
or take any and all other  actions  (including  the  payment  of  money)  deemed
desirable by Bank to remove any such lien,  claim,  charge,  security  interest,
mortgage,  secondary  financing or  encumbrance,  and  Borrower  agrees that the
amounts  thereof,  along with any amounts  necessary  to perfect and note Bank's
interest  in any  Collateral,  shall  be  charged  to  Borrower's  Loan  Account
described  herein  and shall  bear  interest  at the rate of  interest  borne by
Borrower's  obligations  under the Note.

         2.5      Restrictions on Transfer of Collateral. Borrower will not (and
will not allow or suffer  any other  person or entity to) sell  (except  for the
sale of  Inventory in the normal and ordinary  course of  Borrower's  business),
transfer,  lease,  convey or otherwise  dispose of the  Collateral,  any portion
thereof,  or any interest  therein (or any of the Proceeds  thereof,  including,
without limitation,  money, checks, money orders,  drafts,  notes,  instruments,
documents,  chattel paper, Accounts,  returns or repossessions),  without Bank's
prior written consent.

         2.6      Reporting Requirements. Borrower will deliver to Bank, so long
as any of the Liabilities shall remain outstanding,  the following:

(a) monthly,
on or before the tenth (10th) day of each  calendar  month or more often as Bank
shall request, (i) detailed reports in form acceptable to Bank of all Borrower's
Accounts  Receivable  (including  the  aggregate  balance of all  Accounts)  and
accounts payable as of the last day of the immediately  preceding calendar month
(or such shorter  applicable  period),  and the period of time which has elapsed
with respect to such Accounts  Receivable and accounts payable since the invoice
date with respect  thereto  (together with  Borrower's  certification  as to any
counterclaims,  offsets or  contra-accounts  with  respect to any of  Borrower's
Accounts);  (ii) summaries of all of Borrower's  Inventory as of the last day of
the immediately  preceding calendar month (or such shorter  applicable  period),
and the value thereof, and also accompanied by a completed and executed Accounts
Receivable and Inventory  Reconciliation Report substantially in accordance with
Exhibit A hereto (herein referred to as a "Reconciliation Report"); and (iii) if
requested by Bank, a copy of Borrower's  sales  journal or invoice  register for
the immediately preceding calendar month (or such shorter applicable period) and
the dates, amounts and Account Debtors with respect to such billings;

                           (b)      omitted;

                           (c) if  requested  by Bank,  when and as generated by
                  Borrower,  copies of all of  Borrower's  invoices  (or similar
                  documents  relating to the sales and leasing of  Inventory  or
                  the  provision of  services),  which such invoices (or similar
                  documents)  shall be in form  satisfactory  to Bank and  shall
                  specify the  location  at which the goods or services  related
                  thereto are to be delivered, installed and/or performed;

                           (d)  if  requested  by  Bank,  promptly  (within  one
                  business  day) upon any  reduction or  diminution  in the face

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                  value  of  any  Account   Receivable  greater  than  $5000.00,
                  Borrower  shall  advise Bank  thereof  and, if Bank  requests,
                  Borrower shall provide Bank with a signed  writing  explaining
                  the circumstances resulting in such reduction;

                           (e) if  requested  by  Bank,  daily sales and invoice
                  registers  or  journals  reflecting,  on  a  daily  basis, the
                  information described above;

                           (f) if requested by Bank, contemporaneously with each
                  and every  remittance with respect to the Accounts  Receivable
                  and upon  each  deposit  of funds to the  remittances  account
                  maintained  by and in  the  name  of  Bank  (the  "Remittances
                  Account"),  Borrower shall provide to Bank a report reflecting
                  the  amount  of all such  remittances  and the  Accounts  with
                  respect to which such  remittances  were made,  together  with
                  copies of Borrower's  cash receipts  journal  reflecting  such
                  remittances; and

                           (g)  such  other  documents,   instruments,  data  or
                  information  of any type requested by Bank with respect to the
                  Accounts Receivable, Inventory and any other Collateral.

         2.7      Additional Representations Regarding Accounts. At the time any
Account  becomes  subject to a security  interest in favor of Bank, said Account
shall  be a good  and  valid  Account  representing  an  undisputed,  bona  fide
indebtedness  incurred by the Account Debtor named therein, for merchandise held
subject to delivery instructions or theretofore shipped or delivered pursuant to
a contract of sale;  or for services  theretofore  performed by Borrower with or
for said Account Debtor; there shall be no set-offs,  counterclaims, or disputes
against any such Account except as indicated in some written list,  statement or
invoice  furnished to Bank with  reference  thereto;  and Borrower  shall be the
lawful owner of all such  Accounts and shall have good right to subject the same
to a  security  interest  in  favor  of  Bank.  No such  Account  shall be sold,
assigned,  or transferred to any person other than Bank or in any way encumbered
except to Bank, and Borrower shall defend the same against the lawful claims and
demands of all persons  other than Bank. If any Account shall be in violation of
(a) any one or more of the  warranties  expressed  in this section or (b) any of
the requirements to be an Eligible Account Receivable, it shall not be deemed an
Eligible Account Receivable for purposes of this Agreement.

         2.8      Additional   Representations  Regarding  Instruments,  Chattel
Paper,  Etc. At the time Borrower pledges,  sells,  assigns or transfers to Bank
any instrument, document of title, security, chattel paper or other property, or
any interest therein,  Borrower shall be the lawful owner thereof and shall have
good right to pledge,  sell,  assign or transfer the same; none of such property
shall have been pledged,  sold, assigned or transferred to any person other than
Bank or in any way  encumbered  (except for the Permitted  Liens),  and Borrower
shall defend the same against the lawful claims and demands of all persons other
than Bank.

         2.9      Location  of  Collateral.  Except  for  Inventory  sold in the
ordinary  course of business,  all Inventory and other tangible  Collateral have
always been, are and shall continue to be kept at Borrower's  principal place of

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business as reflected in Schedule 2.9 of this Agreement.

         2.10     Location  of Records.  All records of Borrower  pertaining  to
Accounts  Receivable,  general intangibles and contract rights have always been,
are and shall continue to be kept at Borrower's  chief executive office as noted
on the first page of this Agreement.

         2.11     Additional  Representations  Regarding  Financial  Statements.
Subject to any  limitations  stated  therein  or in  connection  therewith,  all
balance sheets,  earnings statements and other financial data which have been or
may hereafter be furnished to Bank to induce it to enter into this Agreement, to
extend credit from time to time hereunder,  or otherwise furnished in connection
herewith,  do or shall fairly represent the financial  condition of Borrower (or
other  persons  or  entities,  as  applicable)  as of the dates and  results  of
operations  for the periods for which the same are furnished in accordance  with
generally accepted accounting  principles  consistently  applied,  and all other
information,  reports  and other  papers  and data  furnished  to Bank  shall be
accurate,  as of the relevant  date,  and correct in all  material  respects and
complete  insofar  as  completeness  may be  necessary  to give  Bank a true and
accurate knowledge of the subject matter.

         2.12     Possession of and Insurance on Equipment.  With respect to any
and all equipment which may now or hereafter  constitute  Collateral  hereunder,
Borrower shall maintain  possession of same,  keep the same in good repair,  and
maintain  casualty  insurance on the same naming Bank as additional  insured and
lender loss payee under a lender loss payee endorsement.

         2.13     Borrower's Names and Offices. Borrower's name, chief executive
office and  principal  place of  business as set forth on the first page of this
Agreement,  except as  otherwise  disclosed  in writing to Bank.  Borrower  will
promptly  advise  Bank in  writing  sixty  (60)  days  prior  to any  change  in
Borrower's name, place of organization,  organizational  identification  number,
chief executive office or principal place of business.

         2.14     Additional Representations Regarding Absence of Defaults Under
Other  Agreements.  Borrower  is not now and will not be in  default  under  any
agreement  evidencing an obligation  for the payment of money,  performance of a
service  or  delivery  of  goods,   demand  for  performance   under  which,  or
acceleration of the maturity of which would render Borrower  insolvent or unable
to meet its other debts as they become due or conduct its business as usual.

         2.15     Indemnification. In the event (a) any of Borrower's warranties
or representations shall prove to be false or misleading; (b) any Account Debtor
in  judicial  proceeding,  shall  assert  against  Bank or any of its  officers,
employees,  directors,  managers or agents a claim or defense arising out of any
transaction  between the Account  Debtor and  Borrower;  or (c)  Borrower or any
other  person  or  entity  shall  assert  against  Bank or any of its  officers,
employees,  directors,  managers or agents a claim or defense  arising out of or
relating to any of the Collateral, the Liabilities or any of the Loan Documents,
Borrower  agrees  to  indemnify  and hold Bank  harmless  from and  against  any
liability,  judgment,  cost, attorneys' fees or other expense whatsoever arising
therefrom.

                                       7

<PAGE>

         2.16     Taxes, Charges and Expenses Incurred with Respect to Revolving
Line.  Borrower will pay any and all taxes (with the exception of taxes measured
by income),  charges and expenses of every kind or description  paid or incurred
by Bank under or with respect to the Revolving  Line,  the Loan  Documents,  any
advances  hereunder  or  any  Collateral   therefor  or  the  collection  of  or
realization upon the same. Borrower hereby authorizes Bank to debit such and all
other taxes,  charges and expenses  provided for in this  Agreement  (including,
without  limitation,  those taxes,  charges and  expenses for which  Borrower is
liable under Section 12) to Borrower's Loan Account.

         2.17     Patents,  Copyrights,  Trademarks and Licenses. With exception
to such items as are specified in Schedule 2.17 attached  hereto and made a part
hereof, none of the Collateral is patented, copyrighted, copyrightable, licensed
or trademarked by Borrower or incorporates  or is subject,  in whole or part, to
any copyright,  license,  patent or trademark in favor of Borrower or any of its
affiliates. Prior to the time any Collateral is copyrighted,  licensed, patented
or  trademarked  or  incorporates  or is subjected,  in whole or in part, to any
copyright,  license,  patent or trademark,  Borrower shall notify Bank and shall
take (or cause to be taken) all actions necessary to preserve the perfection and
priority of Bank's security interest in such Collateral.

         2.18     Judgments/Actions.  There are no  judgments,  actions,  suits,
claims, proceedings or investigations existing, outstanding,  pending, or to the
best of  Borrower's  knowledge  after due  inquiry,  threatened  or in prospect,
before any court,  agency or  tribunal,  or  governmental  authority  against or
involving  Borrower or any  guarantor  which do or could  materially  affect the
business,  properties,  prospects,  financial  condition,  earnings,  results of
operations or earnings  capacity of Borrower or any guarantor or which  question
the validity of the Revolving Line or any of the Loan  Documents,  or any action
or instrument  contemplated by any of them, except as specified in Schedule 2.18
attached hereto and made a part hereof for all purposes.

         2.19     Margin  Stock.  Borrower  is not  engaged in the  business  of
extending credit for the purpose of purchasing or carrying "margin" stock within
the meaning of  Regulation U of the Board of  Governors  of the Federal  Reserve
System (12 C.F.R.  Part 221), as amended from time to time  ("Regulation U"). No
part of the  proceeds  of any  advance  under the  Revolving  Line shall be used
directly or  indirectly  for the  purpose of  purchasing,  acquiring,  carrying,
financing or  refinancing  the purchase of any "margin  stock" as defined in and
contemplated  by Regulation U or for any other  purpose  which would  constitute
"purpose credit" under Regulation U. Borrower is not an "investment  company" or
a company  "controlled"  by an  "investment  company"  within the meaning of the
Investment Company Act of 1940, as amended.

         2.20     No Untrue Statements or Omissions. Neither this Agreement, nor
any document,  certificate,  or statement furnished (or to be furnished) to Bank
by or on behalf of Borrower  pursuant to or in  connection  with this  Agreement
contains (or will contain) any untrue  statement of a material fact or omits (or
will omit) to state a material fact necessary to make the  statements  contained
herein and  therein  not  misleading.  There is no fact known to  Borrower  that
materially and adversely  affects,  or will materially and adversely affect, the
assets,  business,  operations,  or  condition  of  Borrower  that  has not been
specifically  set forth in this Agreement or otherwise  disclosed by Borrower to
Bank in writing.

                                       8

<PAGE>

         2.21     Bankruptcy.  Borrower is and at all times shall remain solvent
as defined under applicable Texas state law and the federal  bankruptcy code and
is not now and has not been in the past three (3) years a debtor under any title
of the United States Bankruptcy Code, 11 U.S.C. ss.ss. 101, et seq.

         2.22     Organizational Identification Number, Etc. The number assigned
by the  State of Texas as  Borrower's  organizational  identification  number is
0024967800;  and Borrower  understands  that the  organizational  identification
number above is not Borrower's  federal or state tax or employer  identification
number.  The Revolving  Line is being obtained and the Collateral is being used,
held or  acquired  for  business  purposes.  Nothing in this  Section 2 shall be
deemed to extend the availability of the Revolving Line beyond the time noted in
Section 13 hereof.

         SECTION 3.  Inspection of Records; Further Assurance.

         Borrower shall at reasonable times and from time to time allow Bank, by
or through  any of its  officers,  managers,  agents,  employees,  attorneys  or
accountants to (i) examine,  inspect and make extracts from Borrower's books and
records;  (ii)  analyze  Borrower's  financial  statements;  (iii)  arrange  for
verification of Borrower's  Accounts  Receivable,  Inventory,  Eligible Accounts
Receivable and Eligible  Inventory under  reasonable  procedures,  directly with
Account  Debtors  or by  other  methods;  and (iv)  inspect,  review  and  audit
Borrower's  Inventory and other  Collateral  at any time during normal  business
hours, without prior notice to Borrower. Borrower shall allow, do, make, execute
and deliver all such  additional and further acts,  things,  deeds,  assurances,
agreements and instruments which Bank may require more completely to vest in and
assure to Bank its rights  hereunder  and in any  Collateral  and to assure that
Borrower's  Loan  Account  balance  does  not  exceed  Borrower's   availability
hereunder.
Nothing  in this  Section 3 shall be deemed to extend  the  availability  of the
Revolving Line beyond the time noted in Section 13 hereof.

         SECTION 4.  Security Interest of Bank in Collateral.

         4.1      Collateral. As security for the payment and performance of all
Liabilities,  Bank shall have and Borrower  hereby assigns to Bank and grants to
Bank a continuing lien on, security interest in and right of set-off against the
following described property and rights:

         All of Borrower's:

                           (a)      Accounts and Accounts Receivable;

                           (b)      Inventory, equipment, machinery, furnishings
                  and   furniture, wheresoever the same may be located;

                           (c) contract  rights,  investment  property,  chattel
                  paper, electronic chattel paper and software,  commercial tort
                  claims,   deposit   accounts,   letter   of   credit   rights,
                  health-care-insurance  receivables,  documents,  documents  of
                  title,  warehouse  receipts,  bills of  lading,  notes,  notes
                  receivable,   instruments,  general  intangibles  and  payment
                  intangibles;

                                       9

<PAGE>

                           (d) licenses,  patents,  tradenames,  trademarks  and
                  copyrights  and any and all  licenses and other rights to use,
                  incorporate,   license,   sell  and/or  assign  any  licenses,
                  patents,   tradenames,   trademarks  and  copyrights  and  any
                  property incorporating any of the foregoing, together with all
                  applications for registration and  registrations  obtained for
                  any of the  foregoing,  and  all  renewals  and/or  extensions
                  thereof,  rights to sue for infringements and all other rights
                  corresponding thereto, and all related licenses and royalties,
                  and all further or other property that pertains,  incorporates
                  or relates to or emanates or derives from any license, patent,
                  tradename,  trademark or copyright and/or the ownership,  use,
                  possession,   transfer,   or  licensing  thereof  (whether  as
                  licensor  or  licensee)  and any  property  which  embodies or
                  incorporates any of the foregoing, and all proceeds, products,
                  rents, issues, royalties,  profits and returns of and from any
                  of  the  foregoing,   and  all  related  rights  and  property
                  (collectively referred to as "Intellectual Property");

                           (e)  goods,  instruments,  notes,  notes  receivable,
                  documents,  documents of title,  warehouse receipts,  bills of
                  lading,  certificates of title,  policies and  certificates of
                  insurance,  securities,  investment  property,  chattel paper,
                  deposits,  cash  and  other  property  which  are  now  or may
                  hereafter be in the  possession of or deposited  with Bank, or
                  which are otherwise  assigned to Bank, or as to which Bank may
                  now or hereafter  control  possession by documents of title or
                  otherwise; and

                           (f)  substitutions,   accessions,  additions,  parts,
                  accessories, attachments,  replacements, Proceeds and products
                  of,  for  and to any  and  all  of the  foregoing,  including,
                  without  limitation,  any and all insurance and tort proceeds,
                  and any and all  such  substitutions,  accessions,  additions,
                  parts, accessories,  attachments,  replacements,  Proceeds and
                  products  in the  form  of any of the  property  described  or
                  referenced in (a) through (e) above,

         whether now or hereafter owned, existing, created, arising or acquired.

         4.2      Security Interest in Collateral Created/Acquired Hereafter. No
submission   by   Borrower  to  Bank  of  any   schedule  or  other   particular
identification  of  Collateral  shall be  necessary  to vest in Bank a  security
interest in each and every item of Collateral now existing or hereafter  created
or acquired,  but rather,  such security interest shall vest in Bank immediately
upon  the  creation  or  acquisition  of any  item of  Collateral,  without  the
necessity  for any  other or  further  action  by  Borrower  or Bank;  provided,
however,  that  Borrower  shall  execute  such other and  additional  documents,
instruments  and  agreements  as  requested  by Bank to  evidence  the  security
interests  contemplated  hereby.  In addition to and without  limiting any other
rights and remedies of Bank arising under this Agreement and/or  applicable law,
Borrower   hereby   grants,   assigns  and   transfers  to  Bank  a  fully-paid,
royalty-free,  perpetual,  non-exclusive,  unrestricted  license  to use,  sell,
assign,  modify,  reproduce,  distribute,  license and sublicense any copyright,

                                       10

<PAGE>

patent,  tradename,   trademark  or  license  and  other  Intellectual  Property
constituting  Collateral and any goods and other property  incorporating  any of
the foregoing  which Bank may exercise at any time upon or after the  occurrence
of a default or event of default  under this  Agreement or any of the other Loan
Documents without further action, consent or approval of Borrower.

         4.3      Further  Assurances.  To the extent allowable under applicable
law, the Uniform  Commercial  Code of Texas shall govern the security  interests
provided for herein. In connection  therewith,  Borrower (at Borrower's expense)
shall take such steps and execute,  deliver and file (as  applicable)  (or cause
the  execution,   delivery  and  filing  (as   applicable)  of)  such  financing
statements,  continuation statements, agreements (including, without limitation,
security   agreements  and  landlord,   creditor  and  mortgagee   subordination
agreements),  documents,  and papers (all in form and  substance  acceptable  to
Bank)  as Bank  may  from  time to time  request  to  perfect  or  preserve  the
perfection and priority of Bank's security interests granted hereby or by any of
the other Loan  Documents.  Borrower  hereby  appoints and empowers Bank, or any
employee  of  Bank  which  Bank  may   designate   for  the   purpose,   as  its
attorney-in-fact,  to execute and/or endorse (and file, as  appropriate)  on its
behalf any documents, agreements, papers, checks, financing statements and other
documents which, in Bank's sole judgment, are necessary to be executed, endorsed
and/or filed in order to (i) perfect or preserve the  perfection and priority of
Bank's security  interests  granted hereby or by any of the other Loan Documents
and (ii) collect or realize upon the Collateral or otherwise exercise its rights
and remedies under any of the Loan Documents or applicable law. Without limiting
any of Bank's  rights and  remedies  under law or any other  provisions  of this
Agreement or any of the other Loan Documents,  Borrower authorizes the filing by
Bank of any and all financing statements in any and all jurisdictions Bank deems
necessary or appropriate to perfect Bank's  security  interest in the Collateral
and/or any other property.

         4.4      Additional  Further  Assurances.  If, by reason of location of
Borrower, the Collateral or otherwise, the creation,  validity, or perfection of
security  interests  provided  for  herein  are  governed  by law other than the
Uniform Commercial Code of Texas, Borrower shall take such steps and execute and
deliver such documents,  agreements, papers and financing statements as Bank may
from time to time  request  to comply  with the  Uniform  Commercial  Code,  the
Uniform  Trust  Receipts  Act,  the Factors  Lien Act, or other laws of Texas or
other states or jurisdictions,  each as applicable. Borrower hereby appoints and
empowers Bank, or any employee of Bank which Bank may designate for the purpose,
as its attorney-in-fact, to execute and/or endorse (and file, as appropriate) on
its behalf any documents,  agreements,  papers, checks, financing statements and
other documents  which,  in Bank's sole judgment,  are necessary to be executed,
endorsed  and/or  filed in order to (i) perfect or preserve the  perfection  and
priority of Bank's security interests granted hereby or by any of the other Loan
Documents and (ii) collect or realize upon the Collateral or otherwise  exercise
its rights and remedies under any of the Loan Documents or applicable law.

         4.5      Restrictions  on Pledging,  Mortgaging Collateral.  Except for
the Permitted Liens, Borrower shall not pledge, mortgage, or create or suffer to
exist a security  interest in any of the  Collateral or any Proceeds or products
thereof, or sell, assign, or create a security interest in any of the Collateral
or any  Proceeds  or  products  thereof in favor of any  person  other than Bank
unless such  security  interest is  expressly  subordinated  to Bank's  security

                                       11

<PAGE>

interest  therein and Bank has approved in writing the  existence  and status of
such security interest.
Nothing  in this  Section 4 shall be deemed to extend  the  availability  of the
Revolving Line beyond the time noted in Section 13 hereof.

         SECTION 5. Collection of Accounts Receivable.

         5.1      Collection  and  Application  of Proceeds;  Notifying  Account
Debtors.  Until Bank  requests  that Account  Debtors on Accounts  Receivable of
Borrower  be  notified  of Bank's  security  interest  therein,  Borrower  shall
continue to collect such Accounts Receivable.  Borrower shall notify Bank of any
collections  received  and  shall  hold  the  same in  trust  for  Bank  without
commingling  the same with other funds of Borrower  and shall turn the same over
to Bank  immediately  upon receipt in the identical form  received.  All Account
payments and other Proceeds transmitted to Bank via any lock-box, by Borrower or
otherwise,  will be handled  and  administered  in and through a  remittance  or
special  account;  the  maintenance  of any such account shall be solely for the
convenience of Bank, and Borrower shall not have any right,  title,  or interest
in or to any such account or in the amounts at any time  appearing to the credit
thereof.  Bank  may  apply  and  credit  Account  payments  and  other  Proceeds
transmitted  to or otherwise  received by Bank via any lock-box,  by Borrower or
otherwise,  against the  outstanding  balance in Borrower's  Loan Account or any
other Liabilities; however, Bank shall not be required to credit Borrower's Loan
Account  or any  other  Liabilities  with  the  amount  of any  check  or  other
instrument  constituting  provisional  payment  until  Bank has  received  final
payment  thereof at its office in cash or solvent  credits  accepted by Bank. In
addition,  Borrower shall notify the Account Debtors of the security interest of
Bank in any  Account  and  shall  instruct  Account  Debtors  to remit  payments
directly to Bank by way of a Compass Bank  lock-box (to be  identified by Bank),
and Bank may itself at any time so notify and instruct Account Debtors.
         5.2......Collection  of  Accounts.  Borrower  (i) shall (a) deliver any
instrument or chattel paper  evidencing or  constituting an Account to Bank, and
(b) use its best  efforts to collect its Accounts in a  commercially  reasonable
manner;  and (ii)  agrees  that no court  action or other  legal  proceeding  or
garnishment, attachment, repossession of property, detinue, sequestration or any
other  attempt to  repossess  any  merchandise  covered  by an Account  shall be
attempted  by  Borrower  except by or under the  direction  of  competent  legal
counsel. Borrower hereby agrees to indemnify and hold Bank harmless for any loss
or  liability  of any kind or  character  which may be asserted  against Bank by
virtue of any suit filed,  process  issued,  or any  repossession  or  attempted
repossession  done or attempted by Borrower or by virtue of any other actions or
endeavors  which Borrower may make to collect any Accounts or repossess any such
merchandise.
Nothing  in this  Section 5 shall be deemed to extend  the  availability  of the
Revolving Line beyond the time noted in Section 13 hereof.

         SECTION 6.  Additional Affirmative Covenants.

         Until all  indebtedness  of  Borrower to Bank has been paid in full and
all Liabilities have been satisfied:

         6.1      Financial  Statements.  Borrower  shall  submit or cause to be
submitted  to  Bank  (i)  Borrower's   internally   prepared  monthly  financial
statements  within thirty (30) days after the close of each month in each fiscal

                                       12

<PAGE>

year  including  a  balance  sheet as of the  close of such  period,  an  income
statement, and such other statements containing financial information which Bank
reasonably  may  require,  prepared and analyzed in  accordance  with  generally
accepted  accounting  principles  and  attested to by an  authorized  officer of
Borrower; (ii) Borrower's audited fiscal year-end financial statements (in form,
preparation and substance  acceptable to Bank) within ninety (90) days after the
close of each of its fiscal years,  including a balance sheet as of the close of
such period, an income statement,  a reconciliation of stockholders' equity, and
a statement of cash flows,  all  certified by an  independent  certified  public
accountant acceptable to Bank and analyzed in accordance with generally accepted
accounting principles; (iii) each guarantor's annual financial statements within
one  hundred  twenty  (120)  days after the close of each of  Borrower's  fiscal
years; (iv) together with each delivery of financial  statements required above,
the certificate of Borrower substantially in the form of Exhibit B hereto signed
by the  president of Borrower  stating,  among other  things,  that no event has
occurred which  constitutes an event of default or would  constitute an event of
default but for the  requirement  that notice be given,  or time elapse or both,
under any loans,  notes,  debentures,  bonds,  leases,  or other  obligations of
Borrower then outstanding,  including,  but not limited to, this Agreement (such
certificate  shall  publish  the  accounting   calculations  used  to  determine
compliance or noncompliance with Borrower's financial  obligations and financial
covenants, including those provided in this Agreement), or, if any such event of
default or defaults exists,  specifying the nature thereof;  (v) if requested by
Bank,  copies of Borrower's and each guarantor's  respective  annual tax returns
(and all  related  schedules,  forms and  attachments)  within  thirty (30) days
following the filing  thereof with the Internal  Revenue  Service;  (vi) monthly
compliance  certificates of Borrower,  in a form to be provided by Bank,  within
thirty (30) days of each month's end hereunder; (vii) annual budget of Borrower,
in a  monthly  format  (in form  and  content  satisfactory  to Bank in its sole
discretion),  consisting  of a balance  sheet and related  statements of income,
retained  earnings,  and cash flow, to be provided within thirty (30) days prior
to the year end for the  upcoming  year;  and (viii)  such other  financial  and
related  information  when and as  requested  by Bank  regarding  Borrower,  the
Collateral  and any endorser,  guarantor or surety of any of the  Liabilities of
Borrower to Bank.

         6.2      Insurance.  Borrower shall (i) maintain  insurance (written by
insurance companies acceptable to Bank) in form, amount and substance acceptable
to Bank, including,  without limitation,  extended multi-peril hazard,  worker's
compensation,   general  liability   insurance  and  insurance  upon  Borrower's
property,  all facets of its businesses and all the Collateral;  (ii) furnish to
Bank, upon request,  a statement of the insurance  coverage;  (iii) use its best
efforts to  protect  and  preserve  the  Collateral  and shall  obtain  other or
additional  insurance  promptly,  upon request of Bank,  to the extent that such
insurance  may be  available;  and (iv) cause Bank to be named as an  additional
insured  and a  lender  loss  payee  as to all  insurance  covering  Collateral,
pursuant to endorsements in form and substance acceptable to Bank. All insurance
proceeds,  payments  and other  amounts  paid to or received by Bank under or in
connection  with any and all such  policies  may be retained by Bank in whole or
part as additional  Collateral for the Liabilities  and/or, at Bank's option, be
applied in whole or part to the payment of such of the Liabilities as shall then
be due and/or,  at Bank's  option,  be held (in a  remittance  or other  special
account in which neither  Borrower nor any guarantor shall have an interest) for
application to Liabilities not yet due and be applied to such Liabilities as and

                                       13

<PAGE>

when the same shall come due,  in such order as Bank may  determine  in its sole
discretion. All insurance policies shall provide for a minimum of ten (10) days'
written  cancellation  notice to Bank and, at Bank's request,  all such policies
shall be delivered  to and held by Bank.  In the event of failure to provide and
maintain insurance required by this Agreement,  Bank may, at its option, provide
such  insurance and charge the costs and expenses  incurred to  Borrower's  Loan
Account.  Bank is hereby  made  attorney-in-fact  for  Borrower  to (i)  obtain,
adjust, and settle, in its sole discretion, such insurance, and (ii) endorse any
drafts or checks issued in connection with such insurance.

         6.3      Compliance  with  Laws.  Borrower  does and shall at all times
while any  Liabilities  remain  unsatisfied  comply  with all  applicable  laws,
ordinances,  rules  and  regulations  of any  governmental  authority  or entity
governing or affecting Borrower, any of its property, the Collateral or any part
thereof,  and shall  immediately  notify Bank of any and all actual,  alleged or
asserted violations of any such laws, ordinances, rules or regulations.  Without
limitation to the generality of the foregoing,  Borrower shall comply, and cause
to be complied, with all laws, governmental standards and regulations applicable
to  Borrower or any  Collateral  in respect of  occupational  health and safety,
toxic and hazardous  waste and substances and  environmental  matters.  Borrower
promptly  shall  notify Bank of receipt of any notice of any actual,  alleged or
asserted  violation of any such law,  standard or  regulation.  Borrower  hereby
agrees to indemnify,  defend and hold Bank harmless from all loss, cost, damage,
claim and  expense  incurred  by Bank on  account  of  Borrower's  breach of any
representation,  warranty or requirement of this Section,  Borrower's failure to
perform the obligations of this Section,  and/or  Borrower's or any Collateral's
violating any applicable  laws,  ordinances,  rules or  regulations,  including,
without limitation,  any environmental or occupational health and safety laws or
regulations.  This  indemnification  shall  survive the closing of the Revolving
Line,  payment of the  Revolving  Line and the  exercise  of any right or remedy
under any of the Loan Documents.  Borrower  represents that there are no pending
claims or  threats  of claims  by  private  or  governmental  or  administrative
authorities  relating to  environmental  impairment,  conditions,  or regulatory
requirements involving Borrower or any Collateral.

         6.4      Omitted.

         6.5      Fixed  Charge  Coverage  Ratio.  Borrower shall have as of the
date  hereof,  and  maintain at all times  thereafter,  a minimum  Fixed  Charge
Coverage  Ratio of 1.50 to 1.00,  which  ratio  shall be  measured  on a rolling
twelve-month  basis.  Borrower's  Fixed  Charge  Coverage  Ratio shall be tested
monthly  and  defined  as the  quotient  of (i) the  sum of (a)  (1)  Borrower's
earnings before interest,  tax, depreciation and amortization expenses (EBITDA),
plus (2)  Borrower's  rent  expenses  paid,  plus (3)  Borrower's  bonus that is
accrued but not paid for 2004 only, plus (4) Borrower's  non-recurring  expenses
of $100,000.00  for calendar year 2004 only,  plus (5)  Management  Fees paid to
Zunicom  less (b) the sum of (1) capital  expenditures  not  financed,  plus (2)
Borrower's  dividends paid, plus (3) Borrower's cash taxes and  distributions to
Zunicom,  Inc. ("Zunicom") or other related parties;  divided by (ii) the sum of
(a)  Borrower's  regularly  scheduled  payments  of  principal  paid,  plus  (b)
Borrower's  interest expenses paid, plus (c) Borrower's rent expenses paid, plus
(d) Borrower's  capital lease obligations paid, plus (e) Management Fees paid to
Zunicom during the applicable measuring period. Borrower shall provide Bank with
full cooperation with respect to all monthly tests hereunder.

                                       14

<PAGE>

         6.6      Tangible Net Worth. Borrower shall maintain a minimum Tangible
Net Worth of not less than  $4,750,000.00  for  Borrower's  fiscal  year  ending
December 31, 2004.  Thereafter,  the December 31, 2005 and the December 31, 2006
Borrower's  Tangible  Net Worth  covenant  shall be set at the actual  amount of
Borrower's   Tangible  Net  Worth  for  the  previous   calendar  year-end  plus
$350,000.00,  with such  $350,000.00  to come from  Borrower's  pre-tax  income.
Borrower's  Tangible Net Worth shall be tested on a monthly  basis by Bank,  and
Borrower  agrees to  provide  full  cooperation  with Bank with  respect to such
monthly tests.

         6.7      Fees.  In consideration of Bank's  commitment to make advances
on the Revolving  Line and Bank's  incurring  certain  administrative  expenses,
Borrower  agrees to and shall pay to Bank (i) a  non-refundable  credit facility
fee in the amount of  $15,000.00  ($5,000.00 of which shall have been paid as of
the date of this  Agreement,  with  the  remaining  $10,000.00  to be paid on or
before  January 5,  2005);  and (ii) a letter of credit fee equal to two percent
(2%) of the amount of any letters of credit  requested  to be issued by Bank for
the benefit of Borrower hereunder, such amount(s) to be paid annually; and (iii)
quarterly (or more often as may be required by the terms below), in arrears,  an
unused line fee  (calculated  as set forth below on the basis of a 360-day year)
beginning to accrue on the date hereof with the first  payment due on January 1,
2005, and payments  thereafter due on the first day of each succeeding  calendar
quarter (and on the Maturity Date (or on any other date when advances  under the
Revolving  Line are terminated  and the amount  outstanding  under the Revolving
Line is paid in full)) equal to the product of (a) 0.375% of the average  Unused
Availability  under the  Revolving  Line for the  calendar  quarter  or  portion
thereof  preceding  such  payment and (b) the number of days  elapsed  since the
latter  of the date  hereof  or the date of the last  such  payment  under  this
Section  (if  any),  divided  by 360.  For  purposes  of this  Section,  "Unused
Availability" shall mean and refer to the amount by which $12,000,000.00 exceeds
the  average  balance of  Borrower's  Loan  Account  for such  period.  Bank and
Borrower  acknowledge and agree that Bank shall, upon the Effective Date hereof,
advance to Borrower the sum of  $30,000.00 to assist with fees due to Borrower's
existing lender, General Electric Capital Corporation. Borrower shall repay this
amount to Bank in  increments of $5,000.00  commencing  on January 5, 2005,  and
continuing thereafter on the fifth (5th) day of each successive month thereafter
for the first six months of calendar year 2005.  Borrower  further agrees to pay
any fee  imposed  by Bank  pursuant  to the Loan  Documents  including,  but not
limited to the fees set forth in Section 11 or Section 12 herein.

         6.8      Notification of Defaults,  Suits, Etc. Promptly after the same
shall have become  known to Borrower,  Borrower  shall notify Bank in writing of
(i) any default or event of default  under any of the Loan  Documents,  (ii) any
material change in Borrower's  financial condition and/or prospects and/or (iii)
any  action,  suit  or  proceeding  at  law or in  equity  or by or  before  any
governmental  instrumentality  or other agency which,  if adversely  determined,
might impair the ability of Borrower to perform its  obligations  under the Loan
Documents, impair the ability of Borrower to carry on its business substantially
as now conducted,  or which might  materially  affect the business,  operations,
properties, assets or condition, financial or otherwise, of Borrower.

         6.9      Omitted.

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<PAGE>

         6.10     Deposit  Account.  So long as any Liabilities are outstanding,
Borrower shall  establish and maintain its primary  deposit  accounts with Bank.
Nothing  in this  Section 6 shall be deemed to extend  the  availability  of the
Revolving Line beyond the time noted in Section 13 hereof.

         SECTION  7.  Additional Negative Covenants.

         Until all  indebtedness  of  Borrower to Bank has been paid in full and
all Liabilities have been satisfied:

         7.1      Liens. Borrower shall not create or permit the creation of any
lien  upon  any  of  the  Collateral except for Permitted Liens and the security
interests granted to Bank under the Loan Documents.

         7.2      Borrowings;  Permitted  Indebtedness.  Except  for  borrowings
under the  Revolving  Line,  Borrower  shall not borrow any money other than (i)
Subordinated  Debt not to exceed  $250,000.00 in the aggregate at any given time
(but only to the extent such  borrowings  and loans shall be fully  subordinated
hereto) or (ii) for trade credit and to finance the purchase of equipment in the
ordinary  course of business,  not to exceed  $50,000.00 in the aggregate at any
given  time (but only to the extent  such  borrowings  and loans  shall be fully
subordinated hereto),  without Bank's prior written consent.  Except in favor of
Bank,  Borrower  shall not  guarantee,  endorse or assume,  either  directly  or
indirectly, any indebtedness of any other corporation, person, or entity.
         7.3      Dividends.  Borrower  shall  not  pay,  make  or  declare  any
dividends,  distributions,  or other similar  payments to Borrower's  directors,
managers, officers, employees, owners, parent, members, affiliates, subsidiaries
or other related  persons or entities.  Notwithstanding  anything  herein to the
contrary,  Bank agrees that Borrower may pay a monthly management fee to Zunicom
of up to $40,000.00 per month and quarterly dividends equal to 50% of Borrower's
net income for any fiscal quarter for cash,  taxes,  or other Zunicom  expenses,
provided that (a) no Default of Event of Default  exists as of the date any such
payment  is to be made or such  payment  would  cause or result in a Default  or
Event of Default,  (b) there is at least  $500,000.00 of borrowing  availability
under the Revolving Line after the making of any such payment,  (c) no more than
one dividend is paid per fiscal  quarter of Borrower,  and (d) any such dividend
is paid no sooner than thirty  (30) days from  Bank's  receipt of the  financial
statements  delivered by Borrower for the end of the month that  coincides  with
the end of such fiscal quarter of Borrower.  Borrower shall not redeem, purchase
or in any manner  acquire any of its  outstanding  shares  without  Bank's prior
written consent.

         7.4      Capital  Expenditures.  Borrower  and its  subsidiaries,  on a
consolidated  basis, shall not make aggregate capital  expenditures or contracts
for capital  expenditures  together aggregating in excess of (a) $150,000.00 for
the calendar  year 2004,  and (b)  $100,000.00  for calendar  year 2005 and each
calendar year thereafter, except expenditures for equipment financed by purchase
money security interest liens.

         7.5      Acquiring  Assets, Etc. of Other Entities.  Borrower shall not
purchase  or  acquire,  directly  or  indirectly,   any  shares  of  stock,  any
substantial   part  of  the   assets  of,   any   interest   in,  evidences   of
indebtedness,  loans  or  other  securities of any person,  corporation or other
entity,  without Bank's prior written consent.

                                       16

<PAGE>

         7.6      Dissolution, Mergers, Change in Nature. Borrower shall not (i)
liquidate, discontinue or materially reduce its normal operations with intention
to  liquidate;  (ii)  cause,  allow  or  suffer  to  occur  (a)  the  merger  or
consolidation   of  or  involving   Borrower  with  or  into  any   corporation,
partnership, or other entity, or (b) the sale, lease, transfer or other disposal
of all or any substantial part of its assets, or any of its Accounts Receivable;
(iii)  acquire any  corporation,  partnership  or other  entity (or any interest
therein),  whether  by stock or asset  purchase  or  acquisition  or  otherwise,
without the prior written consent of Bank; (iv) enter into any lease which could
be characterized as a capitalized lease; or (v) cause, allow, or suffer to occur
any change in the ownership,  nature, control or corporate structure of Borrower
without the prior written consent of Bank.

         7.7      Subordinated  Debt.  Borrower  shall not make any payment upon
any  Subordinated  Debt described in any  subordination  agreement  delivered to
Bank.

         7.8      Omitted.

         7.9      Total  Debt to  Tangible  Net  Worth.  Borrower  shall  have a
maximum Total Debt to Tangible Net Worth ratio,  which ratio shall measured on a
monthly basis,  of (a) 3.75 to 1.00, as of the date hereof and maintained  until
December 30, 2005  inclusive,  (b) 3.50 to 1.00,  from December 31, 2005 through
December  30,  2006  inclusive,  and (c) 3.25 to 1.00,  from  December  31, 2006
through the Maturity Date inclusive.

         7.10     Loans  to Related Parties and Affiliates.  Except as otherwise
specified  herein or otherwise  agreed and consented to by Bank,  Borrower shall
not make,  extend or allow to remain  outstanding  any loans or  advances  to or
investments in Borrower's affiliates,  parent, subsidiaries,  owners, directors,
employees, members, officers, managers or other related persons or entities that
cause or would cause a violation or a further violation of any of the covenants,
terms or conditions of Section 6 or Section 7 of this Agreement.  Further,  Bank
agrees that Borrower, at the closing of the transactions  contemplated under the
Note and  hereunder,  may lend a sum not to exceed  $375,000.00  to AlphaNet (so
called  herein)  which amounts  AlphaNet will in turn utilize to repay  existing
loan balances (the "AlphaNet  Loan"),  provided that such AlphaNet Loan will not
result in a Default or Event of Default  hereunder.  It is understood and agreed
that the  AlphaNet  Loan shall be  considered  an  intangible  for  purposes  of
calculating Borrower's financial covenants hereunder.

         7.11     Interest Coverage Ratio.  Borrower shall  have as of the  date
hereof, and maintain at all times thereafter,  a minimum Interest Coverage Ratio
of 2.00 to 1.00, which ratio shall be measured on a rolling  twelve-month basis.
Borrower's Interest Coverage Ratio shall be tested monthly and defined,  for the
calendar  year  2004  only,  as the  quotient  of (i) the sum of (a)  Borrower's
earnings  before  interest and tax expenses  (EBIT),  plus (b) Borrower's  bonus
accrual not to be paid (2004 only), plus (c) Borrower's  non-recurring  expenses
of $100,000.00 (2004 only);  divided by Borrower's interest expenses paid during
the  applicable  measuring  period.  For the calendar year 2005 and  thereafter,
Borrower's  Interest  Coverage  Ratio shall be tested monthly and defined as the
quotient of (aa) Borrower's EBIT,  divided by (bb) Borrower's  interest expenses
paid during the applicable  measuring  period.  Borrower shall provide Bank with
full cooperation  with respect to all monthly tests  hereunder.  Nothing in this

                                       17

<PAGE>

Section 7 shall be  deemed to extend  the  availability  of the  Revolving  Line
beyond the time noted in Section 13 hereof.

         SECTION  8.  Events  of  Default;  Acceleration.  Any  or  all  of  the
obligations,  indebtedness  and  liabilities  of  Borrower  to Bank,  including,
without  limitation,  the  Liabilities,  shall  be,  at the  option  of Bank and
notwithstanding  any time or credit  allowed by any of the Loan Documents or any
other  document,  agreement or  instrument  evidencing  any of the  Liabilities,
immediately due and payable without notice or demand, and the obligation of Bank
to make advances  hereunder shall immediately cease and terminate upon and after
the occurrence of any of the following events of default:

                           (a) default in the payment or  performance,  when due
                  or  payable,  of any of the  Liabilities  of  Borrower  or any
                  liability or  obligation  (whether now or hereafter  existing,
                  arising  or  incurred,  direct  or  indirect,  conditional  or
                  unconditional) of any endorser,  guarantor,  or surety for any
                  of the Liabilities of Borrower to Bank;

                           (b) failure by Borrower,  any  guarantor or any other
                  person or entity, as applicable, to (i) pay or perform any act
                  or  obligation  imposed  hereby  or by any of the  other  Loan
                  Documents,  or (ii) comply with any of the terms,  conditions,
                  warranties,  covenants or requirements contained or referenced
                  herein or in one or more of the other Loan Documents;

                           (c) failure  of  Borrower  or  any  other  person  or
                  entity,  as  applicable,  to  pay when due (i) any tax or (ii)
                  any  premium on any (a)  insurance  policy  assigned  to Bank,
                  or (b) any insurance covering any Collateral;

                           (d)  if  any  warranty  or  representation  contained
                  herein shall prove false or  misleading  or if Borrower or any
                  endorser,  guarantor or surety for any of the  Liabilities  of
                  Borrower to Bank made or makes any other  misrepresentation to
                  Bank for the purpose of obtaining  credit or any  extension of
                  credit;

                           (e) failure of Borrower or any  endorser,  guarantor,
                  or surety for any of the  Liabilities  of  Borrower to Bank to
                  furnish  financial  information or to permit the inspection of
                  the books or  records  or  Collateral  of  Borrower  or of any
                  endorser,  guarantor or surety for any of the  Liabilities  of
                  Borrower to Bank;

                           (f) issuance of an injunction  or attachment  against
                  property of, the general  assignment by,  judgment  against or
                  filing of a petition in bankruptcy  by or against  Borrower or
                  any endorser,  guarantor or surety for any of the  Liabilities
                  of Borrower to Bank; the filing of an application in any court
                  for a receiver  for  Borrower or any  endorser,  guarantor  or
                  surety for any of the  Liabilities of Borrower to Bank; or the
                  death,  dissolution,  incapacity or liquidation of Borrower or
                  of  any   endorser,   guarantor  or  surety  for  any  of  the

                                       18

<PAGE>

                  Liabilities of Borrower to Bank;

                           (g) calling of a meeting of creditors, appointment of
                  a committee of creditors or liquidation agents, or offering of
                  a composition or extension to creditors by, for or of Borrower
                  or by, for or of any endorser,  guarantor or surety for any of
                  the Liabilities of Borrower to Bank;

                           (h) bankruptcy or  Insolvency  of Borrower or of any
                  of Borrower's  owners, or of any endorser, guarantor or surety
                  for any of the Liabilities of Borrower to Bank;

                           (i) any change in the ownership,  nature,  control or
                  structure  of  Borrower  without the prior written consent of
                  Bank;

                           (j) failure   of   Borrower   or  any other person or
                  entity, as applicable,  to  maintain  any  insurance  required
                  hereunder   and/or   assigned   or   pledged   to   Bank    in
                  connection herewith;

                           (k)  occurrence  or  continuation  of any  default or
                  event of default by or  attributable  to Borrower  under or in
                  connection with any mortgage, lease, security agreement, note,
                  bond,  indenture,  loan  agreement  or similar  instrument  or
                  agreement to which Borrower is now or may hereafter be a party
                  or by  which  Borrower  or  any of  its  property  (including,
                  without limitation, the Collateral) is now or may hereafter be
                  bound or affected;

                           (l)  fraud  or  misrepresentation  by  or  on  behalf
                  of  Borrower  or  any guarantor in its transactions with Bank;

                           (m)  such  a  change  in  the  condition  or  affairs
                  (financial  or  otherwise)  of  Borrower  or of any  endorser,
                  guarantor or surety for any of the  Liabilities of Borrower to
                  Bank or of the  Collateral or any other source of repayment of
                  or security for any of the  Liabilities  which, in the opinion
                  of Bank, impairs Bank's security or increases its risk;

                           (n) any breach or violation of or failure to abide by
                  any warranty,  covenant,  term or provision of this Agreement,
                  the  Note  or any of the  other  Loan  Documents;  Bank's  not
                  obtaining or maintaining a first perfected  security  interest
                  in any of the Collateral; or the termination,  cancellation or
                  revocation of any of the Loan Documents without Bank's consent
                  or the determination by Bank that any of the Loan Documents is
                  void, voidable or unenforceable;

                           (o) a  judgment  against  Borrower  remaining unpaid,
                  unstayed or undismissed or a period of more than five(5) days;

                           (p) Borrower  discontinuing doing  business for  more
                  than  five  (5)  consecutive  calendar  days  during  any year
                  for any reason; or

                                       19

<PAGE>

                           (q) the  cancellation  of the  Brinks  Home  Security
                  contract with Borrower, or if such contract  is not renewed by
                  Brinks Home  Security or Borrower,  or if such contract ceases
                  to exist for any reason whatsoever; or

                           (r)  any  default  or event of  default  under  the
                  Note or any of the other Loan Documents.

         It is expressly  understood  and agreed that neither (a) the provisions
above or any of the other terms of any of the Loan  Documents nor (b) Borrower's
or any other person's compliance or non-compliance with this Agreement or any of
the other Loan  Documents  shall  abrogate  or restrict  Bank's  right to demand
payment in full of the Revolving  Line and all other  Liabilities at any time in
Bank's sole discretion.

         SECTION 9. Power to Sell or Collect Collateral.

         Upon the  occurrence  of any of the above  events of default and at any
time thereafter,  Bank shall have, in addition to all other rights and remedies,
the  remedies  of a secured  party under the  Uniform  Commercial  Code of Texas
(regardless  of whether  the  Uniform  Commercial  Code has been  enacted in the
jurisdiction  where  rights  or  remedies  are  asserted),   including,  without
limitation,  the right to take possession and dispose of the Collateral, and for
that  purpose Bank may, so far as Borrower can give  authority  therefor,  enter
upon any  premises on which the  Collateral  may be situated and remove the same
therefrom or take  possession of same and/or store the same on such premises for
a  reasonable  time  pending  disposition  under the terms of this  Agreement or
applicable law. Bank may require Borrower to assemble the Collateral and make it
available to Bank at a place  designated by Bank which is reasonably  convenient
to both parties. Unless the Collateral is perishable or is of a type customarily
sold on a recognized market, Bank shall give to Borrower at least five (5) days'
prior  written  notice of the time and place of any public sale of Collateral or
of the time after which any private sale or any other intended disposition is to
be made.  Bank may, at any time, in its  discretion,  transfer any securities or
other property constituting  Collateral into its own name or that of its nominee
and  receive  the  income  therefrom  and  hold  the  same as  security  for the
Liabilities  or apply it on  principal,  interest,  charges or  expenses  due on
Liabilities in any manner deemed appropriate by Bank. Bank may demand,  collect,
receipt for,  settle,  compromise,  adjust,  sue for,  foreclose or realize upon
Collateral as Bank may determine,  whether or not  Liabilities or Collateral are
then due, and Bank may receive,  open and dispose of mail  addressed to Borrower
and sign and endorse  notes,  checks,  drafts,  money orders,  certificates  and
documents of title and related forms or other evidences of payment,  shipment or
storage or any form of  Collateral  on behalf of and in the name of  Borrower as
Borrower's  attorney-in-fact for such purpose. Bank may apply Collateral and the
Proceeds  from any  Collateral  against the  Liabilities  secured  hereby in any
manner deemed  appropriate by Bank. The  enumeration of the foregoing  rights is
not intended to be exhaustive,  and the exercise of any right shall not preclude
the exercise of any other rights,  all of which shall be cumulative.  As against
the obligations secured hereby,  Borrower hereby expressly waives all claims and
all  rights to claim any  exemptions,  both as to  personal  and real  property,
allowed or allowable under the  Constitution  or laws of the United States,  the
State of Texas or any  other  jurisdiction.  Any  notice  to  Borrower  of sale,
disposition  or other  intended  action by Bank,  required by law to be given to

                                       20

<PAGE>

Borrower, sent to Borrower at the address of Borrower shown on the first page of
this  Agreement or at such other address of Borrower as may from time to time be
shown on Bank's  records,  at least  five (5) days prior to such  action,  shall
constitute reasonable notice to Borrower.  Bank may resort to any security given
by this  Agreement or to any other  security now existing or hereafter  given to
secure the payment of Borrower's  Liabilities,  in whole or in part, and in such
portions and in such order as may seem best to Bank in its sole discretion,  and
any such  action  shall not in any way be  considered  as a waiver of any of the
rights,  benefits,  or security interests  evidenced by this Agreement or any of
the other Loan  Documents.  Bank may,  at all times,  proceed  directly  against
Borrower to enforce payment of Borrower's  Liabilities and shall not be required
first to enforce its rights in the Collateral or any other  security  granted to
it.  Bank  shall not be  required  to take any  action of any kind to  preserve,
collect,  or protect Bank's or Borrower's  rights in the Collateral or any other
security granted to Bank.

         SECTION 10.  Set Off.

         Bank  and any  participant  and any  holder  of all or any  part of the
Liabilities  are given  hereby as  additional  security  for all  Liabilities  a
continuing lien and security interest in and upon any and all moneys, securities
and other property of Borrower and the Proceeds  thereof,  now or hereafter held
or received by or in transit to Bank (or such participant or holder) from or for
Borrower, whether for safekeeping, custody, pledge, transmission,  collection or
otherwise,  and also upon any and all deposit balances  (general or special) and
credits of Borrower  with,  and any and all claims of Borrower  against Bank (or
such participant or holder) at any time existing,  and upon the occurrence of an
event of default  hereunder,  Bank (or such  participant or holder) may apply or
set off the same against the  Liabilities  secured hereby or by any of the other
Loan Documents in any manner deemed  appropriate by Bank (or such participant or
holder).   Borrower  agrees  that  any  other  person  or  entity  purchasing  a
participation  from Bank may exercise all its rights of payment  (including  the
right of set-off) with respect to such  participation as fully as if such person
or  entity  were  the  direct  creditor  of  Borrower  in  the  amount  of  such
participation.

         SECTION 11.  Waivers.

         Borrower waives demand, presentment, protest, notice of protest, notice
of intent to accelerate,  notice of  acceleration,  notice of acceptance of this
Agreement,  and notice of advances and loans made,  credit extended,  Collateral
received or delivered  or other  action  taken in reliance  hereon and all other
demands and notices of any description. With respect both to the Liabilities and
Collateral,  Borrower  assents to any extension or  postponement  of the time of
payment or any other indulgence, to any substitution, exchange or release of any
or all of the  Collateral,  to the  addition  or  release of any party or person
primarily or secondarily  liable,  to the acceptance of partial payments thereon
and the settlement, compromising or adjusting of any thereof, all in such manner
and at such time or times as Bank may deem advisable. Bank shall have no duty as
to the  collection or  protection of any or all of the  Collateral or any income
therefrom,  nor as to the preservation of any rights against prior parties,  nor
as to the preservation of any rights pertaining  thereto beyond the safe custody
of  Collateral in its  possession.  Bank may exercise its rights with respect to
Collateral  without  resorting  or  regard to other  Collateral  or  sources  of

                                       21

<PAGE>

reimbursement  for the Liabilities.  Bank shall not be deemed to have waived any
of its rights upon or under any of the  Liabilities  or  Collateral  unless such
waiver be in writing  and signed by Bank.  No course of dealing  and no delay or
omission on the part of Bank in  exercising  any right shall operate as a waiver
of such  right or any other  right.  A waiver on any one  occasion  shall not be
construed as a bar to or waiver of any right on any future occasion.  All rights
and  remedies  of Bank  with  respect  to  Liabilities  or  Collateral,  whether
evidenced  hereby, by any of the other Loan Documents or by any other instrument
or paper,  shall be cumulative and may be exercised  singularly or concurrently.
Bank  reserves  the right to assess  and  collect a fee in  connection  with any
agreement by Bank to waive the  violation of any covenant  contained in the Loan
Documents or to waive or forego its rights and remedies  upon the  occurrence of
an event of default.  This  section  shall not in any respect  obligate  Bank to
waive the  violation of any  covenant or to forego its rights and remedies  upon
the occurrence of an event of default,  which Bank may or may not do in its sole
discretion.

         SECTION 12.  Expenses; Proceeds of Collateral.

         Irrespective  of  whether  the  proceeds  of  the  Revolving  Line  are
disbursed,  Borrower  shall  pay  all  fees  and  expenses,  including,  without
limitation,  legal  fees and  expenses,  filing  fees,  insurance  premiums  and
expenses,  appraisal  fees,  recording costs and taxes (except taxes measured by
Bank's income) incurred by Bank or Borrower from time to time in connection with
the preparation and closing, filing, administration,  amendment and modification
of the Revolving Line,  this  Agreement,  the Note, and the other Loan Documents
and those documents and instruments  associated with the perfection and creation
of the security  interests and other rights granted  pursuant hereto or pursuant
to any of the other Loan Documents and Bank's selling, negotiating,  documenting
and/or  enforcing  participations  in the Revolving Line and the Loan Documents.
Borrower shall pay to Bank on demand any and all such fees and expenses incurred
or paid by Bank,  together  with any and all  fees,  expenses  and  costs (a) of
collection or (b) otherwise incurred or paid by Bank in protecting, enforcing or
realizing  its rights upon or with respect to any of the  Liabilities,  the Loan
Documents or the Collateral (including,  without limitation,  reasonable counsel
fees,  including,  without  limitation,  those  incurred in connection  with any
appeal or any  bankruptcy  proceedings).  After  deducting  all of said fees and
expenses,  the residue of any proceeds of collection or sale of  Liabilities  or
Collateral  shall be  applied  to the  Liabilities  and  interest,  charges  and
expenses  constituting or related to the Liabilities in such order of preference
as Bank may determine, proper allowance for Liabilities not then due being made,
and, to the extent  allowed by law,  without  limiting any of  Borrower's or any
guarantor's  obligations  or any of  Bank's  rights  under  the Loan  Documents,
Borrower and guarantors shall remain liable for any deficiency.  In addition and
without limiting the foregoing,  Borrower shall pay and shall indemnify Bank for
all fees,  losses,  costs and expenses  incurred by Bank in connection  with the
L/C's and/or the L/C Documents,  including,  without limitation,  legal fees and
expenses, arising from or related to the L/C's and/or the L/C Documents.

         SECTION 13.  Duration; Extension.

         The Revolving Line shall  terminate on the Maturity Date, at which time
all principal,  interest,  charges and expenses outstanding hereunder, under the
Note or under any of the other Loan  Documents  shall be due and payable in full

                                       22

<PAGE>

unless  due sooner  under the terms of the Note,  this  Agreement  or any of the
other Loan Documents.  It is understood that any extension  hereof may require a
revision of certain  provisions of this Agreement.  No modification or amendment
of this  Agreement or extension of the Maturity  Date shall be effective  unless
placed in writing and duly executed by Bank and Borrower. It is expressly agreed
that this  Agreement  shall survive the maturity or termination of the Revolving
Line in all  respects  necessary  for Bank to exercise  its rights and  remedies
hereunder and with respect to the Collateral. The maturity or termination of the
Revolving  Line shall in no way affect any  transactions  entered into or rights
created or obligations  incurred prior to such maturity or termination;  rather,
such rights and  obligations  shall be fully  operative until the same are fully
disposed of, concluded and/or  liquidated.  Without limitation to the generality
of the foregoing,  such maturity or  termination  shall not release nor diminish
any of (i)  Borrower's  obligations  and  agreements,  or (ii) Bank's rights and
remedies  arising  hereunder  or in  connection  herewith  until  full and final
payment and  performance of all of the  Liabilities.  This Agreement  shall be a
continuing agreement in every respect.

         SECTION 14.  General.

         Any demand upon or notice to Borrower that Bank may elect to give shall
be effective (i) upon delivery if such notice is given personally,  or (ii) upon
the  third  day  following  the date of  dispatch  if  deposited  in the  mails,
addressed to Borrower at the address  noted on the first page of this  Agreement
or,  if  Borrower  has  notified  Bank in  writing  of a change of  address,  to
Borrower's  last  address so notified,  or (iii) upon  receipt if by  facsimile,
telecopy,  or email. Demands or notices addressed to Borrower's address at which
Bank customarily  communicates with Borrower shall also be effective.  If at any
time or times by assignment or otherwise Bank  transfers any of the  Liabilities
(either  separately or together  with the  Collateral  therefor),  such transfer
shall carry with it Bank's powers and rights under this  Agreement and the other
Loan Documents with respect to the Liabilities  and/or  Collateral  transferred,
and the  transferee  shall become vested with said powers and rights  whether or
not they are specifically referred to in the transfer. If and to the extent Bank
retains any of the  Liabilities  or  Collateral,  Bank will continue to have the
rights and powers herein set forth with respect thereto. All notices provided to
Bank by Borrower under or related to any of the Loan Documents,  the Liabilities
or the Collateral, including, without limitation, under any one or more Sections
of the Texas Uniform Commercial Code, shall be sent to the address of Bank noted
on the first page of this Agreement,  Attention: Structured Lending, with a copy
to Compass Bank,  P.O. Box 11830,  Birmingham,  Alabama 35202; no notice sent to
Bank shall be effective until received by Bank. THE NOTE, THIS AGREEMENT AND ALL
OF THE OTHER  LOAN  DOCUMENTS,  AND ALL  RIGHTS AND  OBLIGATIONS  HEREUNDER  AND
THEREUNDER,  INCLUDING MATTERS OF CONSTRUCTION,  VALIDITY AND PERFORMANCE, SHALL
BE GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE INTERNAL LAWS OF THE STATE
OF TEXAS,  EXCEPT THAT ANY CONFLICT OF LAWS RULE OF SUCH JURISDICTION THAT WOULD
REQUIRE REFERENCE TO THE LAWS OF SOME OTHER  JURISDICTION  SHALL BE DISREGARDED.
ANY SUITS,  CLAIMS OR CAUSES OF ACTION ARISING  DIRECTLY OR INDIRECTLY FROM THIS
AGREEMENT,  THE NOTE,  THE OTHER  LOAN  DOCUMENTS  OR ANY  OTHER  AGREEMENTS  OR
INSTRUMENTS  BETWEEN BANK AND BORROWER RELATING TO SUCH DOCUMENTS MAY BE BROUGHT
IN A COURT OF APPROPRIATE JURISDICTION IN DALLAS COUNTY, TEXAS AND OBJECTIONS TO
VENUE AND PERSONAL  JURISDICTION IN SUCH FORUM ARE HEREBY EXPRESSLY WAIVED. THIS
AGREEMENT HAS BEEN  NEGOTIATED  AND IS BEING EXECUTED AND DELIVERED IN THE STATE
OF TEXAS,  OR IF EXECUTED BY BORROWER  ELSEWHERE,  SHALL BECOME  EFFECTIVE  UPON

                                       23

<PAGE>

BANK'S RECEIPT AND ACCEPTANCE OF THE EXECUTED  ORIGINAL OF THIS AGREEMENT IN THE
STATE OF TEXAS;  PROVIDED,  HOWEVER, THAT BANK SHALL HAVE NO OBLIGATION TO GIVE,
NOR SHALL  BORROWER  BE  ENTITLED  TO  RECEIVE  ANY NOTICE OF SUCH  RECEIPT  AND
ACCEPTANCE FOR THIS AGREEMENT TO BECOME A BINDING OBLIGATION OF BORROWER.  IT IS
INTENDED,  AND BORROWER AND BANK SPECIFICALLY  AGREE, THAT THE LAWS OF THE STATE
OF TEXAS  GOVERNING  INTEREST SHALL APPLY TO THIS  TRANSACTION.  BORROWER HEREBY
ACKNOWLEDGES  THAT (I) THE  NEGOTIATION,  EXECUTION,  AND  DELIVERY  OF THE LOAN
DOCUMENTS CONSTITUTE THE TRANSACTION OF BUSINESS WITHIN THE STATE OF TEXAS, (II)
ANY CAUSE OF ACTION  ARISING UNDER ANY OF SAID LOAN DOCUMENTS WILL BE A CAUSE OF
ACTION  ARISING  FROM  SUCH   TRANSACTION   OF  BUSINESS,   AND  (III)  BORROWER
UNDERSTANDS,  ANTICIPATES,  AND  FORESEES  THAT ANY  ACTION FOR  ENFORCEMENT  OF
PAYMENT OF THE REVOLVING LINE OR THE LOAN DOCUMENTS MAY BE BROUGHT AGAINST IT IN
THE STATE OF TEXAS.  TO THE EXTENT  ALLOWED BY LAW,  BORROWER  HEREBY SUBMITS TO
JURISDICTION IN THE STATE OF TEXAS FOR ANY ACTION OR CAUSE OF ACTION ARISING OUT
OF OR IN CONNECTION WITH THE REVOLVING LINE OR THE LOAN DOCUMENTS AND WAIVES ANY
AND ALL  RIGHTS  UNDER  THE  LAWS OF ANY  STATE OR  JURISDICTION  TO  OBJECT  TO
JURISDICTION  OR  VENUE  WITHIN  DALLAS  COUNTY,   TEXAS;   NOTWITHSTANDING  THE
FOREGOING,  NOTHING CONTAINED IN THIS PARAGRAPH SHALL PREVENT BANK FROM BRINGING
ANY ACTION OR  EXERCISING  ANY  RIGHTS  AGAINST  BORROWER,  ANY  GUARANTOR,  ANY
SECURITY  FOR  THE  REVOLVING  LINE,  OR ANY OF  BORROWER'S  OR ANY  GUARANTOR'S
PROPERTIES IN ANY OTHER COUNTY,  STATE, OR JURISDICTION.  INITIATING SUCH ACTION
OR PROCEEDING OR TAKING ANY SUCH ACTION IN ANY OTHER STATE OR JURISDICTION SHALL
IN NO  EVENT  CONSTITUTE  A  WAIVER  BY  BANK OF ANY OF THE  FOREGOING.  Nothing
contained  herein,  or in any of the  documents  contemplated  hereby,  shall be
deemed to render Bank on the one hand, and Borrower on the other hand,  partners
or  venturers  for any purpose.  This  Agreement is intended to take effect as a
sealed instrument.

         SECTION 15.  Omitted .

         SECTION 16.  Miscellaneous.
         In the event of actual  conflict  in the terms and  provisions  of this
Agreement and any of the other Loan Documents or any other document,  instrument
or agreement executed in connection with this Agreement or described or referred
to in this  Agreement,  the terms and  provisions  most  favorable to Bank shall
control. No modification,  consent, amendment or waiver of any provision of this
Agreement or any of the other Loan  Documents,  nor consent to any  departure by
Borrower  therefrom,  shall be effective unless the same shall be in writing and
signed by Bank,  and then shall be effective  only in the specific  instance and
for the  purpose  for which  given.  This  Agreement  and each of the other Loan
Documents are binding upon Borrower,  its  successors and assigns,  and inure to
the benefit of Bank,  its  successors  and  assigns.  Borrower may not assign or
delegate  any of its  rights or  obligations  under  the  Revolving  Line,  this
Agreement or any of the other Loan Documents. All representations and warranties
of Borrower herein,  and all covenants and agreements of Borrower herein, in the
other  Loan  Documents,  or in any  other  document  delivered  hereunder  or in
connection herewith,  shall survive the execution of this Agreement and shall be
deemed continuing representations, warranties, covenants and agreements.
         This Agreement and each of the other Loan Documents  shall be deemed to
be drafted by all parties  hereto and shall not be  construed  against any party
hereto.  In the event any one or more of the terms or  provisions  contained  in
this Agreement, in any of the other Loan Documents or in any other instrument or
agreement  referred to herein or executed in connection  with or as security for
the  Liabilities,  or any  application  thereof to any person or  circumstances,

                                       24

<PAGE>

shall be declared prohibited, illegal, invalid or unenforceable to any extent in
any jurisdiction, as determined by a court of competent jurisdiction,  such term
or provision,  in that jurisdiction,  shall be ineffective only to the extent of
such prohibition,  illegality, invalidity or unenforceability,  or as applied to
such persons or circumstances,  without invalidating or rendering  unenforceable
the remaining terms or provisions hereof or thereof or affecting the validity or
enforceability  of such term or  provision  in any other  jurisdiction  or as to
other persons or circumstances in such jurisdiction,  unless such would effect a
substantial deviation from the general intent and purpose of the parties, make a
significant  change  in the  economic  effect of the  transactions  contemplated
herein on Bank, or impair the validity or perfection of Bank's security interest
in any  Collateral  or the  validity of any  guaranty or other  security for the
Liabilities,  in which  event a  substitute  provision  shall be supplied by the
court in order to provide Bank with the  benefits  intended by such invalid term
or provision.  Borrower hereby  expressly  acknowledges and agrees that Bank may
share with and disclose to any participant and any of Borrower's other creditors
information  regarding Borrower,  the Liabilities and the Collateral as and when
Bank  determines  is necessary or  convenient to establish and confirm to Bank's
and any  participant's  and any  other  creditor's  satisfaction  Bank's  rights
against  Borrower  and  rights  and  priority  in the  Collateral.  The table of
contents hereto and the headings of the sections, paragraphs and subdivisions of
this Agreement are for convenience of reference only, are not to be considered a
part hereof, and shall not limit or otherwise affect any of the terms hereof.

         SECTION 17.  Compliance With Laws.

         It is the  intention  of Bank and  Borrower to conform  strictly to any
applicable  usury laws.  Accordingly,  if the transactions  contemplated  hereby
would be usurious under any applicable law, then, in that event, notwithstanding
anything to the contrary in this  Agreement,  the other Loan  Documents,  or any
other  agreement  entered  into  in  connection  with  or  as  security  for  or
guaranteeing  the Revolving Line, it is agreed as follows:  (i) the aggregate of
all  consideration  which  constitutes  interest  under  applicable  law that is
contracted  for,  taken,  reserved,  charged,  or  received  by Bank under or in
connection  with the  Revolving  Line shall  under no  circumstances  exceed the
Highest  Lawful  Rate (as  defined  below),  and any  excess  shall be  canceled
automatically  and,  if  theretofore  paid,  shall,  at the  option of Bank,  be
credited by Bank on the  principal  amount of any  indebtedness  owed to Bank by
Borrower or refunded by Bank to Borrower, and (ii) in the event that the payment
of the  Revolving  Line  is  accelerated  or in the  event  of any  required  or
permitted  prepayment,  then such consideration that constitutes  interest under
law  applicable to Bank may never include more than the Highest  Lawful Rate and
excess  interest,  if any, to Bank  provided for in this  Agreement or the other
Loan Documents or otherwise with respect to the Revolving Line shall be canceled
automatically  as of the  date  of  such  acceleration  or  prepayment  and,  if
theretofore  paid,  shall,  at the option of Bank,  be  credited  by Bank on the
principal  amount of any  indebtedness  owed to Bank by  Borrower or refunded by
Bank to Borrower.

         "Highest Lawful Rate" means the maximum non-usurious interest rate that
at any  time  or from  time to time  may be  contracted  for,  taken,  reserved,
charged,  or received on amounts due to Bank, under laws applicable to Bank with
regard to the  Revolving  Line that are  presently  in effect  or, to the extent
allowed  by  law,  under  such  applicable  laws  that  allow a  higher  maximum
non-usurious rate than applicable laws now allow.

                                       25

<PAGE>

         IN WITNESS  WHEREOF,  the parties hereto have hereunder set their hands
and seals on this day of December, 2004.

        [Remainder of Page Intentionally Omitted; Signature Pages Follow]

                                        BORROWER:

                                        UNIVERSAL POWER GROUP, INC.,
                                        a Texas corporation

                                        By:      _____________________________

                                        Name:    _____________________________

                                        Title:   _____________________________

                                        BANK:
Witness:                                COMPASS BANK

_________________________________       By:_________________________________
                                        Its:____________________________

                                       26

<PAGE>

                            CORPORATE ACKNOWLEDGMENT

STATE OF ______________

COUNTY OF ____________

         I, the undersigned, Notary Public in and for said County in said State,
hereby certify that _________________________,  whose name as of UNIVERSAL POWER
GROUP, INC., a Texas corporation,  is signed to the foregoing instrument and who
is known to me,  acknowledged  before me on this day that, being informed of the
contents of the instrument,  he, as such and with full  authority,  executed the
same voluntarily for and as the act of said corporation.

         Given under my hand this the           day of December, 2004.
                                      ---------

                                         ---------------------------------
                                         Notary Public
[NOTARIAL SEAL]                          My commission expires:_________________

STATE OF _______________

COUNTY OF _____________

         I, the undersigned, Notary Public in and for said County in said State,
hereby  certify  that  _____________________________,  whose  name as of COMPASS
BANK, an Alabama banking corporation,  is signed to the foregoing instrument and
who is known to me,  acknowledged  before me on this day that, being informed of
the contents of the  instrument,  he, as such  officer and with full  authority,
executed the same voluntarily for and as the act of said corporation.

         Given under my hand this the           day of December, 2004.
                                      ---------

                                         -----------------------------------
                                         Notary Public
[NOTARIAL SEAL]                          My commission expires:_________________

                                       27

<PAGE>

                                   ADDENDUM A

                                   DEFINITIONS

         1        "Account"  and "Account Receivable" shall mean and include all
accounts,  accounts  receivable,  notes, notes receivable,  contracts,  contract
rights,  retail  installment sales contracts,  drafts,  documents,  documents of
title,   warehouse  receipts,   bills  of  lading,   title  retention  and  lien
instruments, security agreements,  acceptances,  instruments,  conditional sales
contracts,  chattel mortgages,  chattel paper,  general  intangibles,  and other
forms of  obligation  and rights to payment and  receivables  whether or not yet
earned by  performance,  including,  without  limitation,  state and federal tax
refunds.

         2        "Account Debtor" shall mean the party who is obligated  on  or
under any Account Receivable.

         3        "Borrower's  Loan   Account"   shall  mean  the account on the
books of Bank in which Bank will record loans and other  advances  made by Bank
to or on behalf of Borrower  pursuant to the  Agreement,  payments  received  on
such   loans   and   advances   and   other  appropriate  debits  and credits as
provided by the Agreement or any of the other Loan Documents.

         4        "Collateral"  shall  mean any and all  property  in which Bank
acquired,  now has, by this  Agreement  or any of the other Loan  Documents  (as
defined herein)  acquires,  or hereafter  acquires a security  interest or other
rights or  interests  as security for the  Liabilities  (as defined  herein) and
without  limiting the  foregoing  expressly  includes the property  described in
Section 4 of the Agreement.

         5        "Current Ratio" - omitted.

         6        An   "Eligible  Account  Receivable"  shall  mean  an  Account
Receivable of Borrower in which Bank holds a first perfected  security  interest
which meets each of the following  requirements  and is otherwise  acceptable to
Bank:
                           (a) it arises from the sale or lease of goods or from
                  services  rendered,  such goods have been shipped or delivered
                  to the Account  Debtor under such Account  Receivable and such
                  services  have been fully  performed and have been accepted by
                  the Account  Debtor,  and Borrower's full right to payment for
                  all sums due from such  Account  Debtor  with  respect to such
                  Account  Receivable shall have been earned and then be due and
                  payable;

                           (b) it is a valid and legally enforceable  obligation
                  of the  Account  Debtor  thereunder  according  to its express
                  terms,  and  is  not  subject  to  any  offset,  counterclaim,
                  crossclaim,  or  other  defense  on the  part of such  Account
                  Debtor denying liability thereunder in whole or in part;

                           (c) it is not subject to any mortgage, lien, security
                  interest,  right  of a  surety  under  a  performance  bond or

                                       28

<PAGE>

                  otherwise or similar  adverse  rights or interests  whatsoever
                  other than the security interests granted to Bank hereunder;

                           (d) it is evidenced by an invoice,  dated the date of
                  shipment  (in the case of goods  sold or leased)  (other  than
                  with  respect  to an  Approved  Bill and  Hold) or the date of
                  performance  (in the case of  services  rendered)  and  having
                  payment  terms  acceptable  to Bank,  rendered to such Account
                  Debtor,  and is not evidenced by an instrument,  note,  draft,
                  title  retention  and  lien  instrument,  security  agreement,
                  acceptance,  conditional  sales contract,  chattel mortgage or
                  chattel  paper and  further,  if  requested by Bank, a copy of
                  such  invoice  shall have been  delivered  to and  received by
                  Bank;

                           (e)  it is  not  owing  by an  Account  Debtor  whose
                  obligations  with  respect  to  which  Bank,   acting  in  its
                  discretion,  shall have  notified  Borrower in writing are not
                  deemed to constitute an Eligible Account Receivable;

                           (f) it is not  due  from  an  affiliated  or  related
                  corporation  or  entity,  subsidiary  corporation  or  entity,
                  parent corporation or entity, or any owner, officer, director,
                  manager or employee  of  Borrower  or of any such  affiliated,
                  related,  subsidiary,  or parent corporation or entity, or any
                  individual  who is a  relative  of  any  one  or  more  of the
                  foregoing by blood or marriage;

                           (g) it does not constitute,  require or  provide  for
                  progress   billings,  retainages  or deferred payments under a
                  contract not fully performed;

                           (h) it does  not  constitute,  in  whole  or in part,
                  interest  or finance  charges  on  outstanding  balances,  any
                  amount  received  as a down  payment  or  prepayment  or other
                  principal  reduction or similar  payment,  any  chargebacks or
                  contra amounts or accounts;

                           (i) it  is  an Account  Receivable  with  respect  to
                  which  no  return, repossession,  rejection,  cancellation, or
                  repudiation shall have occurred or have been  threatened;

                           (j) it is an Account Receivable with respect to which
                  Borrower   continues  to  be  in  full   conformity  with  the
                  representations,  warranties  and  covenants of Borrower  made
                  with respect thereto;

                           (k) it  is  not  subject  to any sales  terms,  trial
                  terms,  sales-or-return terms,  consignment terms,  guaranteed
                  sales  or  performance   terms,  minimum  sales  terms, C.O.D.
                  terms, cash terms, or similar terms or conditions;

                           (l) it is not owed by an Account  Debtor  that is not
                  an  individual  residing  in the United  States or Canada or a

                                       29

<PAGE>

                  corporation  or  partnership  organized  and validly  existing
                  under the laws of a state within the United  States unless the
                  payment of such  Account is supported by a letter of credit in
                  form and substance and issued by an issuer acceptable to Bank;

                           (m) it is not an Account Receivable subject, in whole
                  or in part,  to any  "bill and  hold" or  similar  arrangement
                  pursuant to which the invoice is delivered prior to the actual
                  delivery of the sold or leased goods or the performance of the
                  services;

                           (n) it is not an  Account  Receivable  which  remains
                  unpaid  after the  earlier of (i) the  passage of ninety  (90)
                  days or more  since the  relevant  invoice  date,  or (ii) the
                  passage of sixty (60) days since the relevant due date;

                           (o) it is not owed by any Account Debtor with respect
                  to which ten percent (10%) or more of its total Accounts owing
                  to Borrower remain unpaid after the earlier of (i) ninety (90)
                  days from invoice or earlier due date, or (ii) sixty (60) days
                  since the relevant due date;

                           (p) it is not an Account  owed by an  Account  Debtor
                  whose  aggregate  Account  balance with  Borrower  exceeds ten
                  percent (10%) of the total value of Borrower's  total Accounts
                  (the  portion  over  ten  percent   [10%]  to  be   considered
                  ineligible);  provided,  however, that on a case-by-case basis
                  throughout the term of the Revolving  Line,  exceptions to the
                  ten percent (10%)  threshold  adjustments  set forth herein to
                  those Accounts set above ten percent (10%) shall be considered
                  by Bank, in its sole and absolute discretion,  based on credit
                  worthiness,  historical performance,  and other factors deemed
                  relevant  to  Bank  in  its  sole  discretion.  The  following
                  exceptions  are hereby  noted,  but may be subject to revision
                  and/or removal  subsequent to the date hereof: (i) Brinks Home
                  Security (45%),  and (ii) Radio Shack,  Inc.  (20%);  however,
                  Brinks Home Security  shall be reduced to 25% and Radio Shack,
                  Inc. shall be reduced to 10% automatically  upon the reduction
                  by  Standard  &  Poor's  or  Moody's  ratings  and  investment
                  services  of  the  senior  unstructured  debt  rating  of  the
                  aforementioned  companies to a rating below investment  grade;
                  and

                           (q) it is not an Account  owed by the  United  States
                  Government or any other governmental  body, agency,  entity or
                  authority   unless  such  Account  arises  from  a  government
                  contract that is a United States  Government  contract in form
                  and substance  acceptable to Bank ("Government  Contract") and
                  Borrower  and Bank have  completed  and  executed  a Notice of
                  Assignment  and an  Assignment  form and all  other  forms and
                  documents  necessary  to assign  Borrower's  right,  title and
                  interest in such  Government  Contract  and all  Accounts  and
                  other rights  arising  thereunder  to Bank and Borrower  shall
                  have  provided  to  Bank a copy  of  the  relevant  Government

                                       30

<PAGE>

                  Contract;  and furthermore a Government Contract shall only be
                  an Eligible  Account to the extent  Borrower  has invoiced the
                  United States  Government for payment for amounts then due and
                  owing  thereunder  and Bank has  received  the  United  States
                  Government's   acknowledgment   of  the  relevant   Notice  of
                  Assignment.

         7        "Eligible  Inventory"  shall  mean  Borrower's  finished-goods
Inventory in which Bank holds a first  perfected  security  interest,  and which
meets each of the following requirements and is otherwise acceptable to Bank:

                           (a)  it is  not  private  label  or  styled  type  or
                  otherwise   subject  to  special   marketing   conditions   or
                  marketability   limitations   judged  by  Bank,  in  its  sole
                  discretion, to be unacceptable;

                           (b) it is not parts,  supplies,  raw  materials,  nor
                  work in process, nor does it include any shipping or packaging
                  materials;

                           (c) it is not  materials  or  supplies  used or to be
                  used,  or consumed  or to be consumed in the normal  course of
                  business of Borrower;

                           (d) it is new and unused;

                           (e) it is owned by Borrower and is not subject to any
                  lien or security  interest  whatsoever other than the security
                  interest granted to Bank hereunder;

                           (f) it is held for sale in the  normal  and  ordinary
                  course of Borrower's business;

                           (g) it is  located  at one of  Borrower's  places  of
                  business in (i) Dallas,  Texas, (ii) Oklahoma City,  Oklahoma,
                  or (iii) Overland Park, Kansas;

                           (h) it is not of a type of inventory  that is subject
                  to any recall,  class action litigation,  governmental action,
                  order, inquiry or investigation;

                           (i) it is not located on any leased  premises  unless
                  Bank has a signed  landlord  subordination  agreement from the
                  relevant landlord in form and substance acceptable to Bank;

                           (j) it is not on consignment and no warehouse receipt
                  or  document  of title is or shall have been issued in respect
                  of such Inventory;

                           (k) it is not Inventory  that Bank, in its reasonable
                  discretion, has determined to be unmarketable or unacceptable;
                  and

                           (l) it is not an item,  type,  or class of  inventory
                  which turns less than once each 365 days.

                                       31

<PAGE>

         Notwithstanding the foregoing,  Borrower and Bank acknowledge and agree
that, for purposes of calculating the Borrower's Borrowing Base hereunder, a ten
percent  (10%) slow moving  reserve will be withheld  from the value of Eligible
Inventory (the "SM Reserve").  The SM Reserve will be  re-evaluated  during each
field exam by the Bank.

         8        "Insolvency"  of Borrower or any other  person or entity shall
mean that there  shall have  occurred  with  respect to  Borrower  or such other
person or entity one or more of the following events:  dissolution,  termination
of  existence,  liquidation,  insolvency,  business  failure,  appointment  of a
receiver of any part of the property of, assignment for the benefit of creditors
by or against  Borrower or such other person or entity,  or  institution  of any
action or  proceeding  with  respect to Borrower or such other  person or entity
under or pursuant to any insolvency laws relating to the relief of debtors by or
against  Borrower or such other person or entity,  institution of proceedings in
bankruptcy or with respect to the readjustment of indebtedness,  reorganization,
composition  or extension by or against  Borrower or such other person or entity
(including,   without  limitation,  under  or  pursuant  to  the  United  States
Bankruptcy Code, as amended,  or under any similar law at any time enacted),  or
if any action shall be taken for the purpose of effecting any of the foregoing.

         9        "Inventory"  shall mean all of Borrower's (or other entities',
as applicable)  inventory (as defined in the Uniform  Commercial Code as enacted
in the State of Texas,  or in any other  jurisdiction)  and all finished  goods,
other  goods,  merchandise  and other  personal  property now owned or hereafter
acquired by Borrower which are held for sale,  lease, or rental or are furnished
or to be furnished  under a contract of service and all raw  materials,  work in
process,  component parts, materials or supplies used or to be used, or consumed
or to be consumed,  in Borrower's  business,  and related products and all goods
represented thereby,  wherever located, and all such goods that may be reclaimed
or repossessed  from or returned by Borrower's  customers,  and all shipping and
packaging materials relating to any of the foregoing.

         10       "Liabilities" shall mean any and all obligations, indebtedness
and  liabilities  of Borrower to Bank or any affiliate of Bank of every kind and
description,  whether  direct or  indirect,  absolute  or  contingent,  joint or
several,  due or to become due,  liquidated  or  unliquidated,  now  existing or
hereafter arising, and all extensions, modifications, renewals, and refinancings
thereof,  regardless  of how  such  Liabilities  arise or by what  agreement  or
instrument  (if any) they may be evidenced  and include  obligations  to perform
acts and  refrain  from  taking  actions  as well as  obligations  to pay money.
Without  limiting the  foregoing,  Liabilities  shall  specifically  include all
liabilities  and  obligations of Borrower  hereunder and the obligation to repay
the  indebtedness  evidenced  by  the  Note.  Without  limiting  the  foregoing,
Liabilities  also shall  include all  obligations  heretofore,  now or hereafter
incurred  by  Borrower  under any  agreement  between  Borrower  and Bank or any
affiliate of Bank,  whether now existing or hereafter  entered into,  including,
without limitation, any agreement which provides for an interest rate, currency,
equity, credit or commodity swap, cap, floor or collar, spot or foreign currency
exchange transaction, cross currency rate swap, currency option, any combination
of, or option with respect to, any of the foregoing or similar transactions, for
the purpose of hedging  Borrower's  exposure to  fluctuations in interest rates,
exchange  rates,  currency,  stock,  portfolio or loan  valuations  or commodity
prices.  Without limiting the foregoing,  Liabilities shall specifically include

                                       32

<PAGE>

all liabilities and obligations of Borrower  evidenced by or arising under or in
connection with (a) this Agreement;  (b) the Note; and (c) any letters of credit
heretofore,  now or hereafter issued by Bank at Borrower's request (the "L/C's")
and any related promissory notes, documents, instruments and agreements.

         11       "Loan   Documents"  shall  mean  and  include  the  Note,  the
Agreement,  the L/C Documents and any  subordination  agreements,  intercreditor
agreements  and other  agreements,  documents and  instruments  now or hereafter
evidencing,  securing,  guaranteeing (including,  without limitation,  Unlimited
Continuing  Guaranties  executed in connection  herewith by Zunicom,  Inc. (such
entity being jointly and severally  included within the term  "guarantor" as the
same is used in the  Agreement)) or relating to the Revolving Line or any of the
other Liabilities,  obligations or indebtedness of Borrower to Bank, as the same
may be amended.

         12       "Net  Worth" and "Current  Maturities of Long Term Debt" shall
be defined and  calculated  in accordance  with  generally  accepted  accounting
principles consistently applied as of the date hereof.
         13       "Permitted Liens" shall mean any of the following (but only to
the  extent  the  same  do not or  could  not,  in  Bank's  reasonable  opinion,
jeopardize Bank's rights or priority in or to any Collateral):

                           (a)  liens  of  carriers,  warehousemen,   landlords,
                  mechanics,  laborers and  materialmen  arising by law for sums
                  which are (i) not yet due or (ii) being  diligently  contested
                  in good faith and with respect to which Borrower has set aside
                  sufficient reserves with Bank;

                           (b) liens for taxes which are (i) not yet due or (ii)
                  being  diligently  contested  in  good  faith  by  appropriate
                  proceedings  and with respect to which  Borrower has set aside
                  sufficient reserves with Bank;

                           (c)  security   interests  in  Borrower's   equipment
                  provided that they are limited to those  securing a portion of
                  the purchase price of said equipment.

         14       "Proceeds" shall mean all cash proceeds, non-cash proceeds and
all forms of payment and other  property  received or due from the sale,  lease,
rental,  transfer,  disposition,  licensing,  collection,  use  or  exchange  of
property  constituting  Collateral  hereunder and any and all claims against any
third  party  for loss of or  damage  to any  Collateral,  including  insurance,
contract and tort claims,  and further,  without  limiting the generality of the
foregoing,  Proceeds  shall include all Accounts,  checks,  cash,  money orders,
drafts,  chattel  paper,  general  intangibles,  instruments,  notes  and  other
documents  evidencing payment and payment  obligations to Borrower for the sale,
lease, rental, transfer, disposition,  licensing, collection, use or exchange of
Collateral.

         15       "Subordinated  Debt" shall mean all such debts, obligations or
indebtedness   owing  from  Borrower  to  others  which  have  been  and  remain
subordinated  to all  Liabilities  owing  from  Borrower  to  Bank  pursuant  to
Creditor's Subordination Agreement(s) in form and substance acceptable to Bank.

                                       33

<PAGE>

         16       "Tangible  Net Worth" shall mean Borrower's Net Worth less (i)
any  and  all  loans  and  other  advances  to  and  investments  in  Borrower's
affiliates,   subsidiaries,   owners,  parent,  employees,  officers,  managers,
directors or other related entities;  (ii) notes,  notes  receivable,  accounts,
accounts  receivable,  intercompany  receivables,  and other  amounts owing from
Borrower's  affiliates,   subsidiaries,  owners,  parent,  employees,  officers,
directors,  managers or other related  entities;  and (iii) any and all goodwill
and other intangibles; plus Subordinated Debt.

         17       "Total  Debt" shall mean all of  Borrower's  indebtedness  and
liabilities  owing  to  Bank or any  other  person  or  entity,  whether  now or
hereafter existing,  created or arising,  direct or indirect,  joint or several,
including,  without  limitation,  the Liabilities,  excluding any accrued income
tax.

         18       Any  terms used to describe Bank's security interest under the
Agreement not specifically  defined in the Agreement shall have the meanings and
definitions given those terms under the Uniform  Commercial Code of Texas as may
be amended.

160328v1/2995.620

                                       34

<PAGE>
                                    EXHIBIT A

                ACCOUNTS RECEIVABLE AND INVENTORY RECONCILIATION

                                                            Number:_____________

Borrower:_________________________ Date:_______________

                    ACCOUNTS RECEIVABLE AND INVENTORY REPORT

1.       Accounts Receivable
         a.       Balance Last Report                              $____________
         b.       Add: New Accounts Receivable    $_________
         c.       Less: Sales Returns             $_________
         d.       Other Adjustments               $_________

         e.       Net New Receivables                              $____________

         f.       Less: Customer Remittances (No(s).            )  $____________
                                                     --- --- ---
         g.       Total Value of Accounts Receivable               $____________
         h.       Less: Ineligible Receivables                     $____________

         i.       Net Eligible Accounts Receivable for this Period $____________
                                                                    ============
                           (not to exceed $___________)

2.       Inventory
         a.       Inventory Last Report (Line 2d) $_________
         b.       Add: Purchases                  $_________
         c.       Less: Outgoing Inventory        $_________
         d.       Total Inventory                 $_________
         e.       Less: Ineligible Inventory               $_________

         f.       Total Eligible Inventory for this Period         $____________
                                                                    ============

                                  LOAN REQUEST

3.       Loan Value of Above Collateral
         a.       Receivables  % of Line 1(i) above $__________
                             --
         b.       Inventory  % of Line 2(f) above   $__________
                           --
         c.       Total Collateral Loan Value this Period          $____________
                           (not to exceed $________)

                                       35

<PAGE>

4.       Loan Balance
         a.       Loan Balance Last Report (line 4d)$_________
         b.       Add: Draws                        $_________
         c.       Less: Payments                    $_________
         d.       Loan Balance for this Period                     $____________

5.       Excess (Deficit)                                          $____________
                                                                    ============

                           - BORROWER CERTIFICATION -

The undersigned  hereby  warrants that (i) the foregoing is a correct  statement
regarding  new accounts  receivable,  collection of accounts  receivable  and/or
certification  of inventory  and that the  reconciliation  figures are fully and
correctly  set forth and (ii)  there has been no change in  Borrower's  state of
organization, chief executive office or organizational identification number.

Authorized
Signature                                         Title
          ----------------------------------------      ------------------------

                                       36

<PAGE>

                                    EXHIBIT B

                                   CERTIFICATE

         Reference  is  made to  that  certain  Revolving  Credit  and  Security
Agreement (the  "Agreement")  executed by UNIVERSAL  POWER GROUP,  INC., a Texas
corporation  ("Borrower")  in favor of COMPASS  BANK  ("Bank"),  on or about , .
Capitalized terms used but not defined herein shall have the meaning  attributed
to the same in the Agreement. Borrower hereby represents, warrants and covenants
to and in favor of Bank as follows:

                           (1) no default or event of default (or any event that
                  would  constitute an event of default but for the  requirement
                  that notice be given or time  elapse or both) has  occurred or
                  is  continuing  under the  Agreement  or any of the other Loan
                  Documents or under any other loans, notes, debentures,  bonds,
                  leases  or other  obligations  of  Borrower  now  outstanding,
                  including,  without  limitation,  Borrower's  contract  and/or
                  contractual duties and obligations with respect to Brinks Home
                  Security;

                           (2) all  representations,  warranties  and  covenants
                  contained  in  the Agreement and the other Loan  Documents are
                  expressly  reaffirmed  and restated as of the date hereof;

                           (3) neither  Borrower  nor, to the best of Borrower's
                  knowledge, any other party has any matured or unmatured claim,
                  offset or cause of action against Bank or its officers, agents
                  or affiliates  arising  under or in  connection  with the Loan
                  Documents or the Liabilities; and

                           (4)  all  financial  statements,  reports  and  other
                  documents delivered to Bank on or before the date hereof under
                  or in  connection  with  the  Loan  Documents  are,  as of the
                  relevant date, complete and accurate and may be relied upon by
                  Bank.

                                UNIVERSAL POWER GROUP, INC., a Texas corporation

                                By:      __________________________________
                                Its:     __________________________________

                                Date:    __________________________________

                                       37

<PAGE>

                                 ACKNOWLEDGEMENT

STATE OF______________

COUNTY OF____________

         I, the undersigned, Notary Public in and for said County in said State,
hereby certify that _________________________,  whose name as of UNIVERSAL POWER
GROUP, INC., a Texas corporation,  is signed to the foregoing instrument and who
is known to me,  acknowledged  before me on this day that, being informed of the
contents of the instrument,  he, as such and with full  authority,  executed the
same voluntarily for and as the act of said corporation.

Given under my hand this the                day of __________________, ________.
                             --------------

                                           -----------------------------------
                                           Notary Public
[NOTARIAL SEAL]
                                           My Commission Expires:_______________

                                       38

<PAGE>

                                  Schedule 2.9

                               Places of Business

                                [To be Attached]

<PAGE>

                                  Schedule 2.17

                  Patents, Copyrights, Trademarks, and Licenses

                                [To be Attached]

<PAGE>

                                  Schedule 2.18

                              Judgments and Actions

                                [To be Attached]EXHIBIT 10.18

                                                               Agreement Number:

                                    AGREEMENT

                                     between

                             FISERV SOLUTIONS, INC.
                               20660 Bahama Street
                              Chatsworth, CA. 91311

                                       and

                                Service 1st Bank
                                60 W. 10th Street
                                 Tracy, CA 95376

                            Date: September 27, 2004

                  (C) Copyright 2000 by Fiserv Solutions, Inc.
                               All Rights Reserved

This document contains proprietary and confidential information of Fiserv
Solutions, Inc. and may not be copied, published, disclosed or distributed
without the express written consent of Fiserv Solutions, Inc. The material in
this document, including terms, procedures, fees and other conditions, comprise
an agreement to consider which will remain valid for thirty (30) days from
August 30, 2004.

                                       91
<PAGE>

AGREEMENT dated as of September 27, 2004 ("Agreement") between FISERV SOLUTIONS,
INC., a Wisconsin corporation ("Fiserv"), and SERVICE 1ST BANK, ("Client").

        Fiserv and Client hereby agree as follows:

        1.      Term. The initial term of this Agreement shall end Sixty-two
(62) months following the date Fiserv Services (as defined below) are first used
by Client and, unless written notice of non-renewal is provided by either party
at least 180 days prior to expiration of the initial term or any renewal term,
this Agreement shall automatically renew for additional term(s) of one (1) year.
This Agreement shall be effective on the day services are first provided to
Client by Fiserv ("Effective Date").

        2.      Services. (a) Services Generally. Fiserv, itself and through its
affiliates, agrees to provide Client, and Client agrees to obtain from Fiserv
services ("Services") and products ("Products") (collectively, "Fiserv
Services") described in the attached Exhibits:

        Exhibit A - Account Processing Services
        Exhibit B - Item Processing Services
        Exhibit C - EFT Services
        Exhibit O - Internet and Remote Banking Services

        The Exhibits set forth specific terms and conditions applicable to the
Services and/or Products, and, where applicable, the Fiserv affiliate so
performing. Client may select additional services and products from time to time
by incorporating an appropriate Exhibit to this Agreement.

        (b) Implementation Services. Fiserv will provide services (i) to convert
Client's existing applicable data and/or information to the Fiserv Services;
and/or (ii) to implement the Fiserv Services. These activities are referred to
as "Implementation Services". Client agrees to cooperate with Fiserv in
connection with Fiserv's provision of Implementation Services and to provide all
necessary information and assistance to facilitate the conversion. Client is
responsible for all out-of-pocket expenses associated with Implementation
Services. Fiserv will provide Implementation Services as required in connection
with Fiserv Services.

        (c) Training Services. Fiserv shall provide training, training aids,
user manuals, and other documentation for Client's use as Fiserv finds necessary
to enable Client personnel to become familiar with Fiserv Services. If requested
by Client, classroom training in the use and operation of Fiserv Services will
be provided at a training facility designated by Fiserv. All such training aids
and manuals remain Fiserv's property.

        3.      Fees for Fiserv Services. (a) General. Client agrees to pay
Fiserv:

        (i) Fees for Fiserv Services for the month as specified in the Exhibits;
        (ii) out-of-pocket charges for the month payable by Fiserv for the
        account of Client; and
        (iii) Taxes (as defined below) thereon (collectively, "Fees").

Fiserv shall timely reconcile Fees paid by Client for the Fiserv Services for
the month and the fees and charges actually due Fiserv based on Client's actual
use of Fiserv Services for such month. Fiserv shall either issue a credit to
Client or provide Client with an invoice for any additional fees or other
charges owed. Fiserv may change the amount of Fees billed to reflect appropriate
changes in actual use of Fiserv Services. Fees may be increased from time to
time as set forth in the Exhibits. Upon notification to and acceptance by
Client, Fiserv may increase its fees in excess of amounts listed in the Exhibits
in the event that Fiserv implements major system enhancements to comply with
changes in law, government regulation, or industry practices.

        (b) Additional Charges. Fees for out-of-pocket expenses, such as
telephone, microfiche, courier, and other charges incurred by Fiserv for goods
or services obtained by Fiserv on Client's behalf shall be billed to Client at
cost plus the applicable Fiserv administrative fee as set forth in the Exhibits.
Such out-of-pocket expenses may be changed from time to time upon notification
of a fee change from a vendor/provider.

        (c) Taxes. Fiserv shall add to each invoice any sales, use, excise,
value added, and other taxes and duties however

                                       92
<PAGE>

designated that are levied by any taxing authority relating to the Fiserv
Services ("Taxes"). In no event shall "Taxes" include taxes based upon Fiserv's
net income. The Fees do not include, and Client shall be responsible for,
furnishing transportation or transmission of information between Fiserv's
service center(s), Client's site(s), and any applicable clearing house,
regulatory agency, or Federal Reserve Bank.

        (d) Payment Terms. Estimated Fees are due and payable monthly upon
receipt of invoice. Client shall pay Fiserv through the Automated Clearing
House. In the event any amounts due remain unpaid beyond the 30th day after
payment is due, Client shall pay a late charge of 1.5% per month. Client agrees
that it shall neither make nor assert any right of deduction or set-off from
Fees on invoices submitted by Fiserv for Fiserv Services.

        4.      Access to Fiserv Services. (a) Procedures. Client agrees to
comply with applicable regulatory requirements and procedures for use of
Services established by Fiserv.

        (b) Changes. Fiserv continually reviews and modifies Fiserv systems used
in the delivery of Services (the "Fiserv System") to improve service and comply
with government regulations, if any, applicable to the data and information
utilized in providing Services. Fiserv reserves the right to make changes in
Services, including but not limited to operating procedures, type of equipment
or software resident at, and the location of Fiserv's service center(s). Fiserv
will notify Client 60 days in advance of any material change that affects
Client's normal operating procedures, reporting, or service costs prior to
implementation of such change. Should Client deem that such change significantly
affects its normal operating procedures, reporting or service costs to the
extent that Client cannot accept the change, then Client may invoke its right to
terminate this Agreement for Convenience in accordance with Section 11(e) except
that no termination fee will be payable in connection with such termination,
exclusive of any standard de-conversion fees.

        (c) Communications Lines. Fiserv shall order the installation of
appropriate communication lines and equipment to facilitate Client's access to
Services. Client understands and agrees to pay charges relating to the
installation and use of such lines and equipment as set forth in the Exhibits.

        (d) Terminals and Related Equipment. Client shall obtain necessary and
sufficient terminals and other equipment, approved by Fiserv and compatible with
the Fiserv System, to transmit and receive data and information between Client's
location(s), Fiserv's service center(s), and/or other necessary location(s).
Fiserv and Client may mutually agree to change the type(s) of terminal and
equipment used by Client.

        5.      Client Obligations. (a) Input. Client shall be solely
responsible for the input, transmission, or delivery to and from Fiserv of all
information and data required by Fiserv to perform Services unless Client has
retained Fiserv to handle such responsibilities, as specifically set forth in
the Exhibits. The information and data shall be provided in a format and manner
approved by Fiserv. Client will provide at its own expense or procure from
Fiserv all equipment, computer software, communication lines, and interface
devices required to access the Fiserv System. If Client has elected to provide
such items itself, Fiserv shall provide Client with a list of compatible
equipment and software; Client agrees to pay Fiserv's standard fee for
recertification of the Fiserv System resulting therefrom.

        (b) Client Personnel. Client shall designate appropriate Client
personnel for training in the use of the Fiserv System, shall supply Fiserv with
reasonable access to Client's site during normal business hours for
Implementation Services and shall cooperate with Fiserv personnel in their
performance of Services.

        (c) Use of Fiserv System. Client shall (i) comply with any operating
instructions on the use of the Fiserv System provided by Fiserv; (ii) review all
reports furnished by Fiserv for accuracy; and (iii) work with Fiserv to
reconcile any out of balance conditions. Client shall determine and be
responsible for the authenticity and accuracy of all information and data
submitted to Fiserv.

        (d) Client's Systems. Client shall be responsible for ensuring that its
systems are Year 2000 compliant and otherwise capable of passing and/or
accepting data from and/or to the Fiserv System.

        6.      Ownership and Confidentiality. (a) Definition.

        (i) Client Information. "Client Information" means: (A) confidential
        plans, customer lists, information, or other proprietary material of
        Client that is marked with a restrictive legend, or if not so marked
        with such legend or is disclosed orally, is identified as confidential
        at the time of disclosure (and written confirmation thereof is promptly
        provided to Fiserv); and (B) any information and data concerning the
        business and financial records of Client's customers prepared by or for
        Fiserv, or used in any way by Fiserv in connection with the provision of
        Fiserv Services (whether or not any such information is marked with a
        restrictive legend). Fiserv will be responsible for data and other
        information, including equipment or software on Fiserv premises for the
        benefit of the client, from the time such is received by Fiserv until
        it is, in the case of data, processed and files based thereon are
        transmitted to Client. With a minimum of fifteen (15) days notice,
        Client will have access to any and all records at anytime they are in
        possession of Fiserv.

        (ii) Fiserv Information. "Fiserv Information" means: (A) confidential
        plans, information, research, development, trade secrets, business
        affairs (including that of any Fiserv client, supplier, or affiliate),
        and other proprietary material of

                                       93
<PAGE>

        Fiserv that is marked with a restrictive legend, or if not so marked
        with such legend or is disclosed orally, is identified as confidential
        at the time of disclosure (and written confirmation thereof is promptly
        provided to Client); and (B) Fiserv's proprietary computer programs,
        including custom software modifications, software documentation and
        training aids, and all data, code, techniques, algorithms, methods,
        logic, architecture, and designs embodied or incorporated therein
        (whether or not any such information is marked with a restrictive
        legend).

        (iii) Information. "Information" means Client Information and Fiserv
        Information. No obligation of confidentiality applies to any Information
        that the receiving party ("Recipient") (A) already possesses without
        obligation of confidentiality; (B) develops independently; or (C)
        rightfully receives without obligation of confidentiality from a third
        party. No obligation of confidentiality applies to any Information that
        is, or becomes, publicly available without breach of this Agreement.

        (iv) Information Security) Fiserv shall implement and maintain
        appropriate measures designed to meet the objectives of the guidelines
        establishing standards for safeguarding non-public Client customer
        information as adopted by any federal regulatory agencies having
        jurisdiction over Client's affairs.
        Fiserv shall disclose to Customer any breaches in security, which
        results in unauthorized intrusions to Fiserv's systems, the effect upon
        the Customer, and the corrective action Fiserv has taken to respond to
        the intrusion or breach in security.
        Fiserv performs periodic security assessments, including penetration
        testing, through an independent third party. Fiserv shall provide Client
        with evidence of its most recent security audit certification upon
        Client's request.

        (b) Obligations. Recipient agrees to hold as confidential all
Information it receives from the disclosing party ("Discloser"). All Information
shall remain the property of Discloser or its suppliers and licensors.
Information will be returned to Discloser at the termination or expiration of
this Agreement. Fiserv specifically agrees that it will not use any non-public
personal information about Client's customers for any purpose other than to
provide the services contemplated herein or in any manner prohibited by Title V
of the Gramm-Leach-Bliley Act. Recipient will use the same care and discretion
to avoid disclosure of Information as it uses with its own similar information
that it does not wish disclosed, but in no event less than a reasonable standard
of care. Recipient may use Information for any purpose that does not violate
such obligation of confidentiality. Recipient may disclose Information to (i)
employees and employees of affiliates who have a need to know; and (ii) any
other party with Discloser's written consent. Before disclosure to any of the
above parties, Recipient will have a written agreement with such party
sufficient to require that party to treat Information in accordance with this
Agreement. Recipient may disclose Information to the extent required by law.
However, Recipient agrees to give Discloser prompt notice so that it may seek a
protective order. The provisions of this sub-section survive any termination or
expiration of this Agreement.

        (c) Residuals. Nothing contained in this Agreement shall restrict
Recipient from the use of any ideas, concepts, know-how, or techniques contained
in Information that are related to Recipient's business activities
("Residuals"), provided that in so doing, Recipient does not breach its
obligations under this Section. However, this does not give Recipient the right
to disclose the Residuals except as set forth elsewhere in this Agreement.

        (d) Fiserv System. The Fiserv System contains information and computer
software that are proprietary and confidential information of Fiserv, its
suppliers, and licensors. Client agrees not to attempt to circumvent the devices
employed by Fiserv to prevent unauthorized access to the Fiserv System,
including, but not limited to, alterations, decompiling, disassembling,
modifications, and reverse engineering thereof.

        (e) Confidentiality of this Agreement. Fiserv and Client agree to keep
confidential the prices, terms and conditions of this Agreement, without
disclosure to third parties.

        7.      Regulatory Agencies, Regulations and Legal Requirements. (a)
Client Files. Records maintained and produced for Client ("Client Files") may be
subject to examination by such Federal, State, or other governmental regulatory
agencies as may have jurisdiction over Client's business to the same extent as
such records would be subject if maintained by Client on its own premises.
Client agrees that Fiserv is authorized to give all reports, summaries, or
information contained in or derived from the data or information in Fiserv's
possession relating to Client when formally requested to do so by an authorized
regulatory or government agency.

        (b) Compliance with Regulatory Requirements. Client agrees to comply
with applicable regulatory and legal requirements, including without limitation:

        (i) submitting a copy of this Agreement to the appropriate regulatory
        agencies prior to the date Services commence;
        (ii) providing adequate notice to the appropriate regulatory agencies of
        the termination of this Agreement or any material changes in Services;
        (iii) retaining records of its accounts as required by regulatory
        authorities;
        (iv) obtaining and maintaining, at its own expense, any Fidelity Bond
        required by any regulatory or governmental agency; and
        (v) maintaining, at its own expense, such casualty and business
        interruption insurance coverage for loss of records from fire, disaster,
        or other causes, and taking such precautions regarding the same, as may
        be required by regulatory authorities.

                                       94
<PAGE>

        8.      Warranties. (a) Fiserv Warranties. Fiserv represents and
warrants that:

        (i)(A) Services will conform to the specifications set forth in the
        Exhibits; (B) Fiserv will perform Client's work accurately provided that
        Client supplies accurate data and information, and follows the
        procedures described in all Fiserv documentation, notices, and advices;
        (C) Fiserv personnel will exercise due care in provision of Services;
        (D) the Fiserv System will comply in all material respects with all
        applicable Federal regulations governing Services; and (E) the Fiserv
        System is Year 2000 compliant. In the event of an error or other default
        caused by Fiserv personnel, systems, or equipment, Fiserv shall correct
        the data or information and/or reprocess the affected item or report at
        no additional cost to Client. Client agrees to supply Fiserv with a
        written request for correction of the error within 7 days after Client's
        discovery of the error, but in no event later than 30 days after
        Client's discovery of the work containing the error. Work reprocessed
        due to errors in data supplied by Client, on Client's behalf by a third
        party, or by Client's failure to follow procedures set forth by Fiserv
        shall be billed to Client at Fiserv's then current time and material
        rates; and
        (ii) it owns or has a license to furnish all equipment or software
        comprising the Fiserv System. Fiserv shall indemnify Client and hold it
        harmless against any claim or action that alleges that the Fiserv System
        use infringes a United States patent, copyright, or other proprietary
        right of a third party. Client agrees to notify Fiserv promptly of any
        such claim and grants Fiserv the sole right to control the defense and
        disposition of all such claims. Client shall provide Fiserv with
        reasonable cooperation and assistance in the defense of any such claim.

THE WARRANTIES STATED HEREIN ARE LIMITED WARRANTIES AND ARE THE ONLY WARRANTIES
MADE BY FISERV. FISERV DOES NOT MAKE, AND CLIENT HEREBY EXPRESSLY WAIVES, ALL
OTHER WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. THE STATED EXPRESS WARRANTIES ARE IN LIEU OF ALL LIABILITIES
OR OBLIGATIONS OF FISERV FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE
DELIVERY, USE, OR PERFORMANCE OF FISERV SERVICES.

        (b) Client Warranties. Client represents and warrants that: (A) no
contractual obligations exist that would prevent Client from entering into this
Agreement; (B) it has complied with all applicable regulatory requirements; and
(C) Client has requisite authority to execute, deliver, and perform this
Agreement. Client shall indemnify and hold harmless Fiserv, its officers,
directors, employees, and affiliates against any claims or actions arising out
of (X) the use by Client of the Fiserv System in a manner other than that
provided in this Agreement; and (Y) any and all claims by third parties through
Client arising out of the performance and non-performance of Fiserv Services by
Fiserv, provided that the indemnity listed in clause (Y) hereof shall not
preclude Client's recovery of direct damages pursuant to the terms and subject
to the limitations of this Agreement.

        9.      Limitation of Liability. (a) General. IN NO EVENT SHALL FISERV
BE LIABLE FOR LOSS OF GOODWILL, OR FOR SPECIAL, INDIRECT, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES ARISING FROM CLIENT'S USE OF FISERV SERVICES, OR FISERV'S
SUPPLY OF EQUIPMENT OR SOFTWARE, REGARDLESS OF WHETHER SUCH CLAIM ARISES IN TORT
OR IN CONTRACT. CLIENT MAY NOT ASSERT ANY CLAIM AGAINST FISERV MORE THAN 2 YEARS
AFTER SUCH CLAIM ACCRUED. FISERV'S AGGREGATE LIABILITY FOR ANY AND ALL CAUSES OF
ACTION RELATING TO SERVICES SHALL BE LIMITED TO THE TOTAL FEES PAID BY CLIENT TO
FISERV FOR SERVICES RESULTING IN SUCH LIABILITY IN THE 4 MONTH PERIOD FOR
ACCOUNT PROCESSING SERVICES AND THE 2 MONTH PERIOD FOR ITEM PROCESSING SERVICES,
PRECEDING THE DATE THE CLAIM ACCRUED. FISERV'S AGGREGATE LIABILITY FOR A DEFAULT
RELATING TO EQUIPMENT OR SOFTWARE SHALL BE LIMITED TO THE AMOUNT PAID BY CLIENT
FOR THE EQUIPMENT OR SOFTWARE.

        (b) Lost Records. If Client's records or other data submitted for
processing are lost or damaged as a result of any failure by Fiserv, its
employees, or agents to exercise reasonable care to prevent such loss or damage,
Fiserv's liability on account of such loss or damages shall not exceed the
reasonable cost of reproducing such records or data from exact duplicates
thereof in Client's possession.

        10.     Disaster Recovery. (a) General. Fiserv maintains a disaster
recovery plan ("Disaster Recovery Plan") for each Service. A "Disaster" shall
mean any unplanned interruption of the operations of or inaccessibility to
Fiserv's service center in which Fiserv, using reasonable judgment, requires
relocation of processing to a recovery location. Fiserv shall notify Client as
soon as possible after Fiserv deems a service outage to be a Disaster. Fiserv
shall move the processing of Client's Account Processing Services to a recovery
location as expeditiously as possible, not to exceed 48 hours, and shall
coordinate the cut-over to back-up telecommunication facilities with the
appropriate carriers. Fiserv shall use its best efforts to resume operations.
Client shall maintain adequate records of all transactions during the period of
service interruption and shall have personnel available to assist Fiserv in
implementing the switchover to the recovery location. During a Disaster,
optional or on-request services shall be provided by Fiserv only to the extent
adequate capacity exists at the recovery location and only after stabilizing the
provision of base services.

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        (b) Communications. Fiserv shall work with Client to establish a plan
for alternative communications in the event of a Disaster.

        (c) Disaster Recovery Test. Fiserv shall test the Disaster Recovery Plan
periodically. Client agrees to participate in and assist Fiserv with such test,
if requested by Fiserv. Upon Client request, test results will be made available
to Client's management, regulators, auditors, and insurance underwriters.

        (d) Client Plans. Fiserv agrees to release information necessary to
allow Client's development of a disaster recovery plan that operates in concert
with the Disaster Recovery Plan.

        (e) No Warranty. Client understands and agrees that the Disaster
Recovery Plan is designed to minimize, but not eliminate, risks associated with
a Disaster affecting Fiserv's service center(s). Fiserv does not warrant that
Fiserv Services will be uninterrupted or error free in the event of a Disaster;
no performance standards shall be applicable for the duration of a Disaster.
Client maintains responsibility for adopting a disaster recovery plan relating
to disasters affecting Client's facilities and for securing business
interruption insurance or other insurance necessary for Client's protection.

        11.     Termination. (a) Material Breach. Except as provided elsewhere
in this Section 11, either party may terminate this Agreement in the event of a
material breach by the other party not cured within 90 days following written
notice stating, with particularity and in reasonable detail, the nature of the
claimed breach.
        (a1). Failure by Fiserv to meet a Performance Standard shall be deemed
an "occurrence". When reasonably possible, Customer must report incidents
suspected to be performance Standard Occurrences to Fiserv within seventy- two
(72) hours, or immediately becoming aware of the incident after the seventy-two
(72) hour deadline.
        (a2). Remedy for occurrences: In the event that four (4) occurrences
take place during any six month period with respect to the same Performance
Standard, then for a period of thirty (30) days after receipt by Client of a
report from Fiserv reflecting the fourth occurrence, Client will have the right
to terminate this agreement, through delivery of written notice to Fiserv,
provided the effective date of termination will not be less than ninety (90)
days after receipt by Fiserv of such notice. Upon written notice received by
Fiserv, Fiserv will have a period of ninety (90) days to cure the performance
standard.
        (a3). Fiserv will provide client with a report reflecting the prior
month's actual performance against the performance standard. This report will be
provided by the 20th of the following month.

        (b) Failure to Pay. In the event any invoice remains unpaid by Client 60
days after due, or Client deconverts any data or information from the Fiserv
System without prior written consent of Fiserv, Fiserv, at its sole option, may
terminate this Agreement and/or Client's access to and use of Fiserv Services.
Any invoice submitted by Fiserv shall be deemed correct unless Client provides
written notice to Fiserv within 30 days of receipt of the invoice specifying the
nature of the disagreement.

        (c) Remedies. Remedies contained in this Section 11 are cumulative and
are in addition to the other rights and remedies available to Fiserv under this
Agreement, by law or otherwise.

        (d) Defaults. If Client:

        (i) defaults in the payment of any sum of money due in Section 11(b);
        (ii) breaches this Agreement in any material respect or otherwise
        defaults in any material respect in the performance of any of its
        obligations in Section 11(a); or
        (iii) commits an act of bankruptcy or becomes the subject of any
        proceeding under the Bankruptcy Code or becomes insolvent or if any
        substantial part of Client's property becomes subject to any levy,
        seizure, assignment, application, or sale for or by any creditor or
        governmental agency;

then, in any such event, Fiserv may, upon written notice, terminate this
Agreement and be entitled to recover from Client as liquidated damages an amount
equal to the present value of all payments remaining to be made hereunder for
the remainder of the initial term or any renewal term of this Agreement. For
purposes of the preceding sentence, present value shall be computed using the
"prime" rate (as published in The Wall Street Journal) in effect at the date of
termination and "all payments remaining to be made" shall be calculated based on
the average bills for the 3 months immediately preceding the date of
termination. Client agrees to reimburse Fiserv for any expenses Fiserv may
incur, including reasonable attorneys' fees, in taking any of the foregoing
actions.

        (e) Convenience. (e) Convenience. Client may terminate this Agreement by
paying a termination fee based on the remaining unused term of this Agreement,
the amount to be determined by multiplying Client's largest monthly invoice for
each Fiserv Service received by Client during the term (or if no monthly invoice
has been received, the sum of the estimated monthly billing for each Fiserv
Service to be received hereunder) by the following sliding scale based on the
number of months into the term of the agreement; months 1-14 100%, months 15-26
100%, months 27-38 100%, months 39-50 60%, months 51-62 40%, times the remaining
months of the term, plus any unamortized conversion fees or third party costs
existing on Fiserv's books on the date of termination. Client understands and
agrees that Fiserv losses incurred as a result of early termination of the
Agreement would be difficult or impossible to calculate as of the effective date
of termination since they will vary based on, among other things, the number of
clients using the Fiserv System on the date the Agreement terminates.
Accordingly, the amount set forth in the first sentence of this subsection
represents Client's agreement to

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pay and Fiserv's agreement to accept as liquidated damages (and not as a
penalty) such amount for any such Client termination.

        (f) Merger. In the event of a merger between Client and another
organization in which Client is not the surviving organization and where the
other organization was not previously a user of Fiserv services similar to the
Services, Fiserv will allow an early termination of this Agreement upon the
following terms and conditions:

        (i) written notice must be given 3 months in advance, specifying the
        termination date;
        (ii) Fiserv may specify a deconversion date based on its previous
        commitments and work loads; and
        (iii) Fiserv may charge a termination fee in accordance with subsection
        (e) above.

        (g) Return of Data Files. Upon expiration or termination of this
Agreement, Fiserv shall furnish to Client such copies of Client Files as Client
may request in a Fiserv standard format along with such information and
assistance as is reasonable and customary to enable Client to deconvert from the
Fiserv System, provided, however, that Client consents and agrees and authorizes
Fiserv to retain Client Files until (i) Fiserv is paid in full for (A) all
Services provided through the date such Client Files are returned to Client; and
(B) any and all other amounts that are due or will become due under this
Agreement; (ii) Fiserv is paid its then standard rates for the services
necessary to return such Client Files; (iii) if this Agreement is being
terminated, Fiserv is paid any applicable termination fee pursuant to subsection
(d), (e) or (f) above; and (iv) Client has returned to Fiserv all Fiserv
Information. Unless directed by Client in writing to the contrary, Fiserv shall
be permitted to destroy Client Files any time after 120 days from the final use
of Client Files for processing.

        (h) Miscellaneous. Client understands and agrees that Client is
responsible for the deinstallation and return shipping of any Fiserv-owned
equipment located on Client's premises.

        12.     Dispute Resolution. (a) General. Except with respect to disputes
arising from a misappropriation or misuse of either party's proprietary rights,
any dispute or controversy arising out of this Agreement, or its interpretation,
shall be submitted to and resolved exclusively by arbitration under the rules
then prevailing of the American Arbitration Association, upon written notice of
demand for arbitration by the party seeking arbitration, setting forth the
specifics of the matter in controversy or the claim being made. The arbitration
shall be heard before an arbitrator mutually agreeable to the parties; provided,
that if the parties cannot agree on the choice of arbitrator within 10 days
after the first party seeking arbitration has given written notice, then the
arbitration shall be heard by 3 arbitrators, 1 chosen by each party, and the
third chosen by those 2 arbitrators. The arbitrators will be selected from a
panel of persons having experience with and knowledge of information technology
and at least 1 of the arbitrators selected will be an attorney. Discovery shall
not be permitted. A hearing on the merits of all claims for which arbitration is
sought by either party shall be commenced not later than 60 days from the date
demand for arbitration is made by the first party seeking arbitration. The
arbitrator(s) must render a decision within 10 days after the conclusion of such
hearing. Any award in such arbitration shall be final and binding upon the
parties and the judgment thereon may be entered in any court of competent
jurisdiction.

        (b) Applicable Law. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. 1-16. The arbitrators shall apply the
substantive law of the State of California, without reference to provisions
relating to conflict of laws. The arbitrators shall not have the power to alter,
modify, amend, add to, or subtract from any term or provision of this Agreement,
nor to rule upon or grant any extension, renewal, or continuance of this
Agreement. The arbitrators shall have the authority to grant any legal remedy
available had the parties submitted the dispute to a judicial proceeding.

        (c) Situs. If arbitration is required to resolve any disputes between
the parties, the proceedings to resolve the first such dispute shall be held in
Milwaukee, Wisconsin, the proceedings to resolve the second such dispute shall
be held in Tracy, California, and the proceedings to resolve any subsequent
disputes shall alternate between Milwaukee, Wisconsin and Tracy, California.

        13.     Insurance. Fiserv carries the following types of insurance
policies:

        (i) Comprehensive General Liability in an amount not less than $1
        million per occurrence for claims arising out of bodily injury and
        property damage;
        (ii) Commercial Crime covering employee dishonesty in an amount not less
        than $5 million;
        (iii) All-risk property coverage including Extra Expense and Business
        Income coverage; and
        (iv) Workers Compensation as mandated or allowed by the laws of the
        state in which Services are being performed, including $500,000 coverage
        for Employer's Liability.

        14.     Audit. Fiserv employs an internal auditor responsible for
ensuring the integrity of its processing environments and internal controls. In
addition, Fiserv provides for periodic independent audits of its operations.
Fiserv shall provide Client with a copy of the audit of the Fiserv service
center providing Services within a reasonable time after its completion and
shall charge each client a fee based on the pro rata cost of such audit. Fiserv
shall also provide a copy of such audit to the appropriate regulatory agencies,
if any, having jurisdiction over Fiserv's provision of Services.

        15.     General. (a) Binding Agreement. This Agreement is binding upon
the parties and their respective successors and

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permitted assigns. Neither this Agreement nor any interest may be sold,
assigned, transferred, pledged, or otherwise disposed of by Client, whether
pursuant to change of control or otherwise, without Fiserv's prior written
consent. Client agrees that Fiserv may subcontract any Services to be performed
hereunder. Any such subcontractors shall be required to comply with all
applicable terms and conditions.

        (b) Entire Agreement. This Agreement, including its Exhibits, which are
expressly incorporated herein by reference, constitutes the complete and
exclusive statement of the agreement between the parties as to the subject
matter hereof and supersedes all previous agreements with respect thereto.
Modifications of this Agreement must be in writing and signed by duly authorized
representatives of the parties. Each party hereby acknowledges that it has not
entered into this Agreement in reliance upon any representation made by the
other party not embodied herein. In the event any of the provisions of any
Exhibit are in conflict with any of the provisions of this Agreement, the terms
and provisions of this Agreement shall control unless the Exhibit in question
expressly provides that its terms and provisions shall control.

        (c) Severability. If any provision of this Agreement is held to be
unenforceable or invalid, the other provisions shall continue in full force and
effect.

        (d) Governing Law. This Agreement will be governed by the substantive
laws of the State of California, without reference to provisions relating to
conflict of laws. The United Nations Convention of Contracts for the
International Sale of Goods shall not apply to this Agreement.

        (e) Force Majeure. Neither party shall be responsible for delays or
failures in performance resulting from acts reasonably beyond the control of
that party.

        (f) Notices. Any written notice required or permitted to be given
hereunder shall be given by: (i) Registered or Certified Mail, Return Receipt
Requested, postage prepaid; (ii) confirmed facsimile; or (iii) nationally
recognized courier service to the other party at the addresses listed on the
cover page or to such other address or person as a party may designate in
writing. All such notices shall be effective upon receipt.

        (g) No Waiver. The failure of either party to insist on strict
performance of any of the provisions hereunder shall not be construed as the
waiver of any subsequent default of a similar nature.

        (h) Financial Statements. Fiserv shall provide Client and the
appropriate regulatory agencies so requiring a copy of Fiserv, Inc.'s audited
consolidated financial statements.

        (i) Prevailing Party. The prevailing party in any arbitration, suit, or
action brought against the other party to enforce the terms of this Agreement or
any rights or obligations hereunder, shall be entitled to receive its reasonable
costs, expenses, and attorneys' fees of bringing such arbitration, suit, or
action.

        (j) Survival. All rights and obligations of the parties under this
Agreement that, by their nature, do not terminate with the expiration or
termination of this Agreement shall survive the expiration or termination of
this Agreement.

        (k) Exclusivity. Client agrees that Fiserv shall be the sole and
exclusive provider of the services that are the subject matter of this
Agreement.. If Client is acquired by another entity, the exclusivity provided to
Fiserv hereunder shall apply with respect to the level or volume of these
services provided immediately prior to the signing of the definitive acquisition
agreement relating to such acquisition and shall continue with respect to the
level or volume of these services until any termination or expiration of this
Agreement.

        (l) Recruitment of Employees. Client agrees not to hire Fiserv's
employees during the term of this Agreement and for a period of 6 months after
any termination or expiration thereof, except with Fiserv's prior written
consent.

        (m) Publicity. The parties shall mutually agree on a press release
relating to the execution of this Agreement. Each party shall mutually agree
with the other regarding any media release, public announcement, or similar
disclosure relating to this Agreement or its subject matter and shall give the
other party a reasonable opportunity to review and comment on the content of
such release, announcement, or disclosure prior to its release. Notwithstanding
the foregoing, Fiserv shall have the right to make general references to Client
and the type of services being provided by Fiserv to Client under this Agreement
in Fiserv's oral and visual presentations to Fiserv clients, prospective Fiserv
clients, and financial analysts, provided that such references shall be
consistent with any such mutually agreed press release.

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        IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date indicated
below.

For Client:                                 For Fiserv:

Service 1st Bank                            Fiserv Solutions, Inc.

By: /s/ ROBERT E. BLOCH                     By: /s/ SAM LANGHAM
    -------------------------------             --------------------------------
Name:  Robert E. Bloch                      Name:  Sam Langham
Title: EVP/Chief Financial Officer          Title: President LA Data Center

Date: October 7, 2004                       Date: October 20, 2004

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