LOAN AND SECURITY AGREEMENT

(“Agreement”)

This Agreement dated November 8, 2012 is an agreement between CRESTMARK
COMMERCIAL CAPITAL LENDING LLC, a Michigan limited liability company
(“Crestmark”), and KMHVC, INC., a Texas corporation, and APACHE ENERGY SERVICES,
LLC, a Nevada limited liability company (individually and collectively referred
to herein as “Borrower”).  In this Agreement, Crestmark and Borrower are
collectively the “Parties”.  Any person who guarantees the obligations of
Borrower (each a “Validity Guarantor” subject to the terms and conditions of the
Guaranty of Validity) is required to sign this Agreement.  The Parties have the
addresses shown on the schedule (“Schedule”) which is attached to this
Agreement.  These are the addresses of the Parties for all purposes and may be
changed by one party giving notice to the other party in writing of the new
address.

1.

PURPOSE.  The purpose of this Agreement, including the Schedule, is to set forth
the terms and conditions of the loan from Crestmark to Borrower (“Loan”) and the
obligations of Borrower.  The Schedule is part of this Agreement.  The
promissory note (“Note”) to be signed by Borrower, any guaranty(s), and any
other documents now or hereafter signed by any of the Parties in connection with
this Agreement, the Loan or any document issued by Crestmark or the bank holding
the lockbox (“Lockbox Bank”), including subordination agreements or
intercreditor agreements, are also all part of this Agreement.  All of the
documents together are referred to collectively as the “Loan Documents”.

2.

LOAN; LOAN ADVANCES.

A.

Any disbursement of money or advance of credit by Crestmark, including but not
limited to amounts advanced for the payment of interest, fees, expenses and
amounts necessary to protect, maintain and preserve Crestmark’s Collateral under
the Loan Documents (“Protective Disbursements”), is referred to collectively as
an “Advance”.  Whether Crestmark makes an Advance is in Crestmark’s sole
discretion.  If an Advance is made, it will be made in accordance with the
advance formula set forth in the Schedule (“Advance Formula”); but not at any
time to exceed the maximum amount set forth on the Schedule (“Maximum Amount”).
 Crestmark may choose to make Protective Disbursements in excess of the Maximum
Amount or Advance Formula in its sole discretion.  Each time Crestmark makes an
Advance, including a Protective Disbursement, the Advance will be debited
against an account in Borrower’s name on Crestmark’s books (“Loan Account”), and
each payment will be credited against the Loan Account in the manner described
in this Agreement.

B.

The total amount Borrower owes to Crestmark will be the aggregate of the
Advances made by Crestmark, the expenses and fees set forth in the Schedule and
to the extent not included in Advances, any and all costs incurred by Crestmark
(including reasonable attorney’s fees), and interest at the rate set forth in
the Note on all amounts advanced (together with all other obligations of
Borrower under the Loan Documents, the “Obligations” or “Indebtedness”).

C.

Borrower must repay all Advances with respect to the Loan with interest, which
is due monthly as specified in the Note, along with all other fees and expenses
of Crestmark set forth herein or in the Schedule. Crestmark may in its sole
discretion collect any Obligations due Crestmark by (i) directly applying any
funds in the Lockbox Account, as defined in paragraph 5 below, to the
Obligations (ii) directly applying funds from any reserve to the Obligations,
(iii) collecting the Obligations directly from Borrower; or (d) otherwise
collecting the Obligations.  Borrower understands that all the Obligations are
repayable at any time in full or in part upon demand by Crestmark.  Crestmark
may make demand for partial payments and such demand will not preclude Crestmark
from demanding payment in full at any time.  

D.

Borrower must comply with its representations, promises, covenants and reporting
requirements set forth in this Agreement, in the Schedule and in the other Loan
Documents.  Borrower’s failure to do any of the

1

--------------------------------------------------------------------------------

foregoing is a default (“Default”). The demand nature of the Obligations is not
modified by reference to a Default in this Agreement or the other Loan Documents
and any reference to a Default is for the purpose of permitting Crestmark to
exercise it remedies for Default, including charging interest at the Extra Rate
provided in the Note.

E.

The aggregate amount of all Advances, plus the expenses and fees set forth in
the Schedule, any and all costs incurred by Crestmark (including reasonable
attorney’s fees), and interest at the rate set forth in the Note on all amounts
advanced (the “Loan Amount”), may not, at any time, exceed the Maximum Amount”
or the Advance Formula, and Borrower understands that if at any time it should
owe more to Crestmark than the lesser of the Maximum Amount or the Advance
Formula it must repay that amount immediately, whether or not demand to repay
the whole of the Obligations has been made.  Protective Disbursements must be
immediately repaid whether or not the lesser of the Maximum Amount or the
Advance Formula has been exceeded.  

3.

RESERVES.  If Crestmark believes in its sole discretion that the prospect for
repayment of the Obligations is impaired or that its Collateral margin is
insufficient, Crestmark may establish cash reserves and credit balances to
protect its interests and the repayment of the Obligations and Crestmark will
notify the Borrower of the reserve.  The reserve may be established by reducing
the Advance Formula to achieve the target reserve level, withholding monies due
Borrower from any payments Crestmark receives, from a cash payment from Borrower
or any other method Crestmark chooses. Any money in a reserve account, whether
or not it is a cash reserve, will not earn interest for Borrower, and Crestmark
may apply the funds in the reserve account to reduce the Obligations at any time
Crestmark elects.

4.

FEES AND EXPENSES.  In connection with the Loan there are several types of fees
that may be charged.  Such fees and requirements are set forth in the Schedule.
 In addition, all expenses of every kind incurred by Crestmark in connection
with the Loan, any Advance, collection of the Obligations, inspection, and
examination are to be paid by Borrower.

5.

LOCKBOX.  Borrower must immediately notify all persons who are obligated on
accounts (“Account Debtors”) to direct all Account Debtors and any other person
or party that is liable to Borrower (collectively a “Debtor”) to remit all
payments due Borrower to the lock box address or pursuant to the wire transfer
or ACH instructions set forth in the Schedule (the “Lockbox Account”). The remit
to address on all documents related to the accounts, including invoices,
purchase orders, or contracts (“Documents”) must be the Lockbox Account.  At
Crestmark’s request, all Documents must be marked by Borrower to show assignment
to Crestmark, and Borrower must notify each Account Debtor by mail that the
Account has been assigned to Crestmark and that all payments on the Account,
whether made by mail or electronically or otherwise must be made payable to
Borrower or Crestmark, at Crestmark’s sole discretion, to the Lockbox Account or
other address provided by Crestmark in writing. The language used in such
notices shall be approved by Crestmark in writing. Crestmark may at any time and
from time to time, and at its sole discretion, notify any Debtor or third party
payee to make payments payable directly to Crestmark or to notify Debtor of the
assignment to Crestmark.  All expenses for notification of each Account Debtor
will be paid by Borrower.

If as a result of collections from Account Debtors, a credit balance exists with
respect to the Loan, Crestmark shall transfer such funds into an account
designated by Borrower if requested by Borrower for so long as no Default exists
subject to the terms and conditions of this Agreement.

If notwithstanding the notice to Debtors, Borrower receives any funds from a
Debtor, including any cash, checks, drafts or wire transfers from the
collection, enforcement, sale or other disposition of the Collateral (defined
below), whether derived in the ordinary course of business or not, or if
Borrower receives any proceeds of insurance, tax refunds or any and all other
funds of any kind, Borrower shall hold such funds in trust for Crestmark, shall
not mix such funds received with any other funds, and shall immediately deposit
such funds in the Lockbox Account in the form received.  That means if the funds
are received by mail, the Debtor checks will be sent to the Lockbox Account
uncashed, and if the funds are received electronically, the funds will be
transferred immediately

2

--------------------------------------------------------------------------------

to the Lockbox Account electronically.  Crestmark will have sole possession and
control over the Lockbox Account. The Lockbox Bank will process all deposits and
Borrower has no right to the Lockbox Account, it belongs to Crestmark.
 Crestmark is the owner of all deposits in the Lockbox Account, and has no duty
as to collection or protection of funds as long as it is not grossly negligent
or commits actual fraud.  All expenses plus any applicable administration and
servicing fees of the Lockbox Account will be paid by Borrower.

6.

LOAN ACCOUNT.  All of the Obligations which are owed by Borrower will be shown
in the Loan Account and Borrower will receive a monthly statement either by
mail, electronically or via access to the Crestmark online system at Crestmark’s
sole discretion.  The statement is binding on Borrower unless Borrower provides
a written objection to Crestmark that is actually received by Crestmark within
fifteen (15) business days of the time the statement is provided or made
available to Borrower.

7.

PAYMENTS. Should a check or other credit instrument not be collected after
Borrower has been given credit for such payment, then the credit will be
reversed and a fee charged at Crestmark’s then standard rate. Crestmark, at its
sole discretion, may establish reserves as set forth above or not apply a
payment that it reasonably believes may be returned unpaid for any reason or
disgorged due to a preference claim or garnishment, and in such event the
Monthly Maintenance Fee (as defined in the Schedule) will still be payable.  In
the event that any payment received by Crestmark is sought to be recovered by or
on behalf of the payer (including a trustee in bankruptcy or assignee for the
benefit of creditors), then Borrower agrees to immediately reimburse Crestmark
on demand for any amount so recovered and all of Crestmark’s expenses in
connection with any such proceeding, including reasonable attorneys fees.  This
provision shall survive termination of this Agreement. Any payments received by
Crestmark shall be applied to the Obligations in whatever order Crestmark
determines in its reasonable discretion.  

8.

SECURITY INTEREST.

A.

Borrower grants to Crestmark a security interest in all of its assets, now
existing or hereafter arising, wherever located including all Accounts, Goods,
Inventory, Equipment, Chattel Paper, Instruments, Investment Property,
specifically identified Commercial Tort Claims, Documents, Deposit Accounts,
Letter of Credit Rights, General Intangibles, Contract Rights, customer lists,
furniture and fixtures, books and records and supporting obligations for any of
the foregoing, and all Proceeds of the foregoing (the “Collateral”), to secure
repayment of the Obligations (“Security Interest”).  The Collateral also
includes all monies on deposit with Crestmark, or on deposit in the Lockbox
Account.  All capitalized terms used in this Section 8A which are not otherwise
defined shall have the meanings assigned to them in the Uniform Commercial Code
as adopted in the State of Michigan (the “UCC”). Without limiting the forgoing,
“Accounts” will also mean and include any and all other forms of obligations now
owed or hereafter arising or acquired by the Borrower evidencing any obligation
for payment for goods of any kind, nature, or description sold or leased or
services rendered, and all proceeds of any of the forgoing.

B.

Borrower gives Crestmark all of the rights of a secured party under the UCC.
 Borrower grants Crestmark the authority to file all appropriate documentation
for Crestmark to perfect its security interest in the Collateral, including a
UCC-1 financing statement listing the Collateral as “All assets of the Debtor,
now existing and hereafter arising, wherever located,” or similar terms, as well
as UCC-3 amendments as may be required from time to time.  All expenses of
Crestmark relating to searching, filing or protecting the Security Interest are
part of the Obligations.

C.

The Security Interest gives Crestmark rights with respect to the Collateral and
the Security Interest and this Agreement imposes duties upon Borrower which
relate to the Collateral.  Some of the rights and duties are:  (i) the right of
Crestmark at any time to notify any persons who may hold any part of the
Collateral, such as Account Debtors and other debtors, of Crestmark’s Security
Interest.  Borrower understands that Crestmark may verify Accounts with the
Account Debtors; (ii) Borrower must cooperate with Crestmark in

3

--------------------------------------------------------------------------------

obtaining control of any Collateral in the possession of third persons,
particularly Collateral consisting of deposit accounts, investment property,
letter of credit rights or other Collateral which is evidenced by electronic
entries; (iii) except for the right of Borrower to sell its inventory in the
ordinary course of business, Borrower shall not sell or transfer any of the
Collateral or grant any other security interest in the Collateral, except as
Crestmark may specifically agree to in writing.  Borrower remains liable to
perform all of its obligations with respect to the Collateral such as the
recognition of any warranties in inventory sold and Crestmark is under no
responsibility to perform any of the obligations of Borrower; and (iv) Borrower
must notify Crestmark immediately if it knows that any Account Debtor disputes
an Account whether or not such disputes are deemed valid by Borrower.

9.

POWER OF ATTORNEY.  Borrower irrevocably appoints Crestmark, or any person(s)
designated by Crestmark, as its attorney-in-fact, which appointment is coupled
with an interest and shall remain in full force and effect until all Obligations
of Borrower to Crestmark have been fully satisfied and discharged, with full
power, at Borrower’s sole expense, to exercise at any time in Crestmark’s
reasonable discretion all or any of the following powers:

A.

Receive, take, endorse, assign, deliver, accept and deposit, in the name of
Crestmark or Borrower, any and all cash, checks, commercial paper, drafts,
remittances and other instruments and documents relating to the Collateral or
the proceeds thereof.

B.

Change Borrower’s address on all invoices and statements of Account mailed or to
be mailed to Borrower’s customers and to substitute thereon the address
designated by Crestmark, to place legends on all invoices and statements of
Account mailed or to be mailed to Borrower’s customers, and to receive and open
all mail addressed to Borrower, or to Borrower’s trade name at Crestmark’s
address, or any other designated address.

C.

Upon and after the occurrence of a Default, to change the address for delivery
of Borrower’s mail to Crestmark’s or an address designated by Crestmark.
Borrower specifically authorizes Crestmark to sign any forms on behalf of
Borrower to affect this change with the United States Postal Service or any
third party and requests such change to be accepted.

D.

Upon and after the occurrence of a Default, to take or bring, in the name of
Crestmark or Borrower, all steps, actions, suits or proceedings deemed by
Crestmark necessary or desirable to effect collection of or other realization
upon any Collateral.

E.

Execute on behalf of Borrower any UCC-l and/or UCC-3 Financing Statement(s)
and/or any notices or other documents necessary or desirable to carry out the
purpose and intent of this Agreement, and to do any and all things reasonably
necessary and proper to carry out the purpose and intent of this Agreement.

F.

To transfer any lockboxes belonging to Borrower to Crestmark at Crestmark’s sole
discretion.

G.

Upon and after the occurrence of a Default, to initiate ACH transfers from
Borrower’s depository accounts.

H.

Upon and after the occurrence of a Default, to endorse and take any action with
respect to bills of lading covering any inventory.

I.

Upon and after a Default, or at any time in the event that Borrower fails to do
so within a reasonable time, execute, file and serve, in its own name or in the
name of Borrower, mechanics lien or similar notices, or claims under any payment
or performance bond for the benefit of Borrower.

4

--------------------------------------------------------------------------------

J.

Upon and after a Default, or at any time in the event that Borrower fails to do
so within a reasonable time, pay any sums necessary to discharge any lien or
encumbrance on the Collateral, which sums shall be included as Obligations
hereunder, and which sums shall accrue interest at the Extra Rate until paid in
full.

10.

REPRESENTATIONS.  Borrower makes the following representations and warranties to
Crestmark and such representations and warranties must be true at all times
until the Obligations are paid in full.  If Borrower learns that a
representation and warranty once made is no longer true, it has the duty to
immediately notify Crestmark in writing:

A.

Borrower is in good standing under the laws of the state of its organization,
and is authorized to conduct business in any state that in conducts business
except where the failure to do so could not be reasonably expected to have a
material adverse effect on the Borrower’s business.  Borrower has the power and
authority to enter into this Agreement, and the persons signing this Agreement
and all persons who sign any documents with Crestmark have the appropriate
authority.  Borrower’s organization identification number, state of
organization, and addresses where it conducts business are as shown on the
Schedule.

B.

Borrower’s entry into the Loan Documents do not violate any agreement which
Borrower has or which binds Borrower.

C.

The Loan Documents are fully enforceable against Borrower and the Collateral.

D.

There are no litigation or criminal charges pending or to its knowledge
threatened against Borrower or Validity Guarantor and neither Borrower nor
Validity Guarantor are in default of any order or judgment of any court or any
governmental agency of any kind.  There are no unsatisfied liens or judgments
pending against Borrower in any jurisdiction except as shown on the Schedule.

E.

The financial information furnished by Borrower to Crestmark has been prepared
in accordance with generally accepted accounting principles, consistently
applied throughout the periods involved (and as to unaudited financial
statements, subject to normal year-end adjustments and the absence of footnote
disclosures), all financial statements are true and correct in all material
respects, and any projections of the business operations of Borrower that have
been given or will be given to Crestmark in the future will be prepared in good
faith based upon Borrower’s reasonable assumptions and estimates.

F.

Borrower is the owner of all of the Collateral and there are no other liens or
claims against the Collateral, except the Security Interest of Crestmark or as
shown on the Schedule.

G.

All of the Collateral is personal property and none of the Collateral will be
permanently affixed to real estate.

H.

Borrower has filed and will file all federal, state, local and foreign tax
returns that it is required to file and has paid and will pay all taxes and all
other governmental charges as they become due.  Borrower may defer payment of
any contested taxes until a tax lien is filed, provided that Borrower (a) in
good faith contests its obligations to pay the taxes; and (b) notifies Crestmark
in writing of such contestment.

I.

Borrower is able to pay its debts as they become due and has sufficient capital
to carry on its business. Borrower’s obligations under this Agreement and the
Loan Documents, including the obligation to repay the Loan and the grant of the
Security Interest, do not render Borrower insolvent.

J.

Borrower only uses the fictitious names, d/b/a’s, tradenames and tradestyles set
forth on the Schedule (collectively the “Tradenames”), and Borrower  certifies
that all sales and any and all business done in the name of the Tradenames are
the sales and business of Borrower.  Any and all checks, remittances or other

5

--------------------------------------------------------------------------------

payments received in the name of any of the Tradenames are Borrower’s sole and
exclusive property, and are subject to Crestmark’s security interest hereunder.
 Any and all authority given to Crestmark by Borrower in this Agreement or
elsewhere to endorse Borrower’s name on any checks, negotiable instruments or
other remittances extends with equal and full force and effect to any checks,
negotiable instruments, and other remittances received in the name of any
Tradename.

K.

All Accounts assigned to Crestmark by Borrower are and will at all times be
bonafide accounts arising from the sale of inventory or providing services, and
are not subject to discounts, deductions, allowances, contra items, offset or
counterclaim and are free and clear of all encumbrances of any kind whatsoever,
except as disclosed to Crestmark in writing and approved by Crestmark in
writing.

L.

Borrower’s assignment of any Accounts to Crestmark pursuant to this Agreement
will not at any time violate any federal, state and/or local law, rule or
regulation, court or other governmental order or decree or terms of any contract
relating to such Accounts.

M.

Borrower possesses all necessary trademarks, trade names, copyrights, patents,
patent rights and licenses to conduct its business as now operated, without any
known conflict with any trademarks, trade names, copyrights, patents and license
rights of any other person or entity.

N.

Borrower’s legal name as of the date hereof as it appears in its official filing
with its state of organization is as set forth in the opening paragraph of this
Agreement.  Borrower has not organized another entity or Tradename using
Borrower’s name or Tradename as set forth herein in any other jurisdiction.

O.

As to all of Borrower’s Inventory and Equipment:

i.

The Inventory and Equipment are currently located only at the locations
identified on the Schedule, or such other locations as consented to by Crestmark
in writing;

ii.

All Inventory is now and at all times hereafter shall be of good and
merchantable quality, free from defects (ordinary wear and tear excepted),
except as disclosed to Crestmark in writing;

iii.

The Inventory and Equipment are and shall remain free from all liens, claims,
encumbrances, and security interests (except as held by Crestmark, and except as
identified on the Schedule).

iv.

The Inventory is not now stored with a bailee, warehouseman or similar party
unless such party has entered into a waiver letter in form satisfactory to
Crestmark.

11.

BORROWER’S PROMISES.  Borrower makes the following promises to Crestmark and
these promises are effective until the Obligations are fully paid:

A.

To pay all Obligations when due and perform all terms, conditions and
obligations of the Loan Documents.

B.

To permit Crestmark, or its representatives, access to the Collateral on
Borrower’s premises and to Borrower’s computer systems, books of account and
financial records. Borrower will pay the cost of Field Examinations as specified
in the Schedule.

C.

To notify Crestmark promptly of any litigation, administrative or tax proceeding
or other action threatened or instituted against Borrower or Validity Guarantor
or its property, or of any other material matter which may adversely affect
Borrower’s financial condition.  

6

--------------------------------------------------------------------------------

D.

To pay when due all taxes, assessments and governmental charges, provided that
Borrower has the right to contest the same as long as it has a cash reserve with
Crestmark in an amount as determined by Crestmark in its sole discretion.

E.

To comply with the Financial Covenants described in the Schedule (if
applicable).

F.

To maintain insurance on its business activities in such amount and in such form
as Crestmark may from time to time require, and with respect to such insurance
if so designated, Crestmark shall be named as “Lender Loss Payee” under the
policy and receive evidence of the insurance.  All insurance which protects
Crestmark shall have at least a 30-day notice to Crestmark prior to any
cancellation.  With respect to the insurance, Borrower appoints Crestmark as its
attorney-in-fact to negotiate any and all claims under all insurance policies
and Crestmark also has the power to negotiate any payments on the insurance
policies.

G.

To comply with all laws, ordinances and regulations or other requirements of any
governmental authority or agency applicable to Borrower’s business.

H.

To maintain and preserve all Collateral in good repair, working order and
condition (normal wear and tear excepted), and with respect to accounts, pursue
collections thereof.

I.

To provide Crestmark with evidence of ownership of any Collateral upon the
request of Crestmark.

J.

To maintain a Loan Amount balance which shall not exceed the sum of Eligible
Collateral times the corresponding Advance Rate.

12.

NEGATIVE COVENANTS.  Borrower agrees until the Obligations are paid in full, it
will not:

A.

Change its state of organization or its name, or move its executive office or at
any time adopt any assumed name without giving Crestmark at least 30 days prior
written notice.

B.

Declare or pay any dividend or make any other distribution with regard to its
equity or purchase or retire any of its equity without Crestmark’s prior written
consent, provided if it is taxed as an S Corporation or other “pass through”
entity, Borrower may prior to a Default distribute profits to its equity holders
in an amount necessary to enable such holders to pay personal, state and federal
taxes directly attributable to the profits earned by Borrower for such year.

C.

Make any loan or guaranty or assume any obligation or liability, whether as
borrower, guarantor, surety, indemnitor or otherwise that would result in or
create a Default, without Crestmark’s prior written consent.

D.

Enter into any transaction with its equity holders or any affiliates of Borrower
except on terms at least as favorable as would be usual and customary in similar
transactions if the person with whom the transaction is entered into was not
related to Borrower.

E.

Release, redeem, purchase, or acquire any of its equity interests without the
prior written consent of Crestmark.

F.

Default in the payment of any debt to any other person.

G.

Suffer or permit any judgment, decree or order not fully covered by insurance to
be entered against Borrower or a Validity Guarantor, or permit or suffer any
warrant or attachment to be filed against Borrower, any Validity Guarantor, or
against any property or asset of Borrower or Validity Guarantor.

7

--------------------------------------------------------------------------------

H.

Transfer the ownership of any interest in Borrower without the prior written
consent of Crestmark which shall not be unreasonably withheld.

I.

Sell any of the Collateral outside the normal course of its business without the
prior written consent of Crestmark.

J.

Purchase the stock or assets of any other entity without the prior written
consent of Crestmark.

13.

FINANCIAL REPORTS.  Borrower promises that until the Obligations are fully paid
and this Agreement is terminated, it will keep its books and records in a manner
satisfactory to Crestmark and Crestmark will have the right at any time to
verify any of the Collateral, documentation or books and records of Borrower in
whatever manner and as often as Crestmark deems necessary. Borrower will permit
Crestmark, or its representatives, access to the Collateral and Borrower’s
premises and to Borrower’s computer systems, books of account and financial
records.  Borrower will furnish to Crestmark the financial reports identified on
the Schedule, certified to by the president or chief financial officer of
Borrower and Borrower’s certified public accountant, if applicable.  All
financial reports will be prepared in accordance with generally acceptable
accounting principles and will be true and accurate.

14.

CRESTMARK’S REMEDIES.  Crestmark has all the remedies available at law or in
equity (including those under the UCC) in the event of a Default or if Borrower
fails to pay the Obligations on demand, including but not limited to the
following:  to charge the Extra Rate; to notify Account Debtors to make the
payments directly to Crestmark; to settle or compromise any disputed Account,
sue on any Account and make any agreement to deal with the accounts as if it
were the owner; to offset any of Borrower’s or Validity Guarantor’s funds under
the control of Crestmark against the Obligations; and to require Borrower to
gather up the Collateral and make it available to Crestmark for Crestmark to
conduct public or private UCC foreclosure sales.  Borrower grants to Crestmark a
license or other right to use, without charge, Borrower’s labels, patents,
copyrights, trademarks, rights of use of any name, trade secrets, tradenames and
advertising materials, or any property of a similar nature, as it pertains to
the Collateral, in completing production of, advertising for sale and selling
any Collateral, and Borrower’s rights under all licenses and franchise
agreements shall inure to Crestmark’s benefit.  If Crestmark should proceed
against the Collateral and sell any of the Collateral on credit, Borrower will
be credited on the Obligations only with the amount actually received by
Crestmark and Borrower waives any and all provisions as to notice or a
particular method of sale of any of the Collateral.  Borrower will pay all
expenses in connection with the assembly or sale of the Collateral.  Crestmark
does not have to incur its own expenses in realizing upon the Collateral, but
all the expenses are for the account of Borrower.  Borrower recognizes that at
no time is Crestmark its agent in dealing with the Collateral, but Crestmark
acts only in its own interest.

15.

CUMULATIVE RIGHTS.  Crestmark’s rights and remedies under this Agreement and all
other agreements shall be cumulative.  Crestmark shall have all other rights and
remedies not inconsistent herewith as provided under the UCC, by law, or in
equity.  No exercise by Crestmark of one right or remedy shall be deemed an
election, and no waiver by Crestmark of any Default on Borrower’s part shall be
deemed a continuing waiver.  No delay by Crestmark shall constitute a waiver,
election or acquiescence by it.

16.

LENDER ACTIONS.  To the extent applicable law may impose duties on Crestmark to
exercise remedies in a commercially reasonable manner, Borrower agrees that it
is not commercially unreasonable for Crestmark: to fail to exercise remedies
against any Collateral or any particular Account Debtor; to proceed against
Account Debtors either directly or through collection agencies; to advertise
disposition of Collateral through publications or media of general circulation;
to hire professional auctioneers to dispose of Collateral; to dispose of
Collateral in wholesale or retail markets; to disclaim warranties with respect
to Collateral; or to obtain services of attorneys or other professionals.  The
foregoing is not an exhaustive list and nothing contained in the foregoing shall
be construed to grant any rights to Borrower or to impose any duties on
Crestmark that would not have been

8

--------------------------------------------------------------------------------

granted or imposed by this Agreement or by applicable law in the absence of this
Section 16.  Borrower agrees that under no circumstances is Crestmark the agent
or representative of Borrower.

17.

APPLICATION OF PROCEEDS.  Once collection efforts are commenced by Crestmark,
any proceeds of sale or disposition of Collateral may be applied by Crestmark
first to expenses authorized by this Agreement, including Crestmark’s reasonable
attorneys’ fees, which Borrower must pay, and the balance to payment of the
Obligations in such manner as Crestmark may elect.  Borrower and Validity
Guarantor remain liable for any deficiency.

18.

NOTICES.  Any notice is effective by either party if sent in writing or
facsimile with confirmation of receipt or by certified mail or personal delivery
or expedited mail services to the addresses shown on the Schedule.

19.

MISCELLANEOUS PROVISIONS.

A.

This Agreement is binding upon and is for the benefit of Borrower and Crestmark,
and their respective successors and assigns.  However, under no circumstances
may Borrower assign this Agreement or its rights and duties hereunder.
 Crestmark may assign this Agreement and its rights under the Loan Documents and
Borrower will make payments to any such assignee if so directed.

B.

Crestmark has the right at any time to assign, transfer, negotiate or sell
participations in this Agreement or the Obligations or the rights of Crestmark
hereunder.  In connection with any assignment, Borrower consents to disclosure
of any and all books, records, files, Loan Documents and all other documents in
the possession or under the control of Crestmark.

C.

No delay or failure of Crestmark in exercising any right or remedy will affect
such right or remedy.  No delay or failure of Crestmark to demand strict
adherence to the terms of this Agreement will be deemed to waive Crestmark’s
rights to demand such adherence at any time in the future.

D.

The term “including” means “including, without limitation”, and the term
“includes” means “includes, without limitation”.  The word “will” shall be
construed to have the same meaning and effect as the word “shall.”  The
definitions of terms in this Agreement shall apply equally to the singular and
plural forms of the terms defined.

E.

This Agreement and the other Loan Documents will be interpreted and determined
under the laws of the State of Michigan without any regard to any conflict of
laws provisions.

F.

Borrower, at Crestmark’s request, will make, execute and acknowledge any and all
further instruments or agreements necessary to carry out the intent of this
Agreement and the other Loan Documents.

G.

This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if all signatures were upon the same
instrument.  Delivery of an executed counterpart of the signature page to this
Agreement by facsimile or electronic mail shall be effective as delivery of a
manually executed counterpart of this Agreement, and any party delivering such
an executed counterpart of the signature page to this Agreement by facsimile or
electronic mail to any other party shall thereafter also promptly deliver a
manually executed counterpart of this Agreement to such other party, provided
that the failure to deliver such manually executed counterpart shall not affect
the validity, enforceability, or binding effect of this Agreement.  

H.

Neither Crestmark nor its affiliates directors, officers, agents, attorneys or
employees are liable to Borrower or Validity Guarantor or affiliates for any
action taken or omitted by it or any of them under the Loan Documents except for
such liability as may be imposed by law for gross negligence or actual fraud,
and no claim

9

--------------------------------------------------------------------------------

shall be made by Borrower or Validity Guarantor or any of Borrower’s affiliated,
directors, officers, agents, employees for any special or consequential damages
or punitive damages arising out of, or related to the Loan Documents or the
transactions between the Parties.

I.

This Agreement and the other Loan Documents represent the complete Agreement
between the parties with respect to the subject matter of this Agreement, and
there are no promises, undertakings, representations or warranties by Crestmark
relative to the subject matter of this Agreement not expressly set forth in this
Agreement or the other Loan Documents.  This Agreement and the other Loan
Documents may be amended only in writing.

J.

If any provision of this Agreement is in conflict with any law or statute or is
otherwise unenforceable, then the provision will be deemed null and void only to
the extent of such provision and the provision will be deemed severable and the
remainder of this Agreement shall be in full force and effect.

K.

Any payment made to Crestmark by either Borrower or Validity Guarantor which is
subsequently invalidated, declared fraudulent or preferential or otherwise set
aside under any bankruptcy, state, federal or equitable law, then to the extent
of such invalidity such payment will be deemed not to have been made and the
obligation will continue in full force and effect.  This provision shall survive
termination of this Agreement.

L.

No Lien Termination Without Release.  In recognition of among other things,
Borrower’s indemnification obligations and Crestmark’s right to have its
attorneys’ fees and other expenses incurred in connection with this Agreement
secured by the Collateral, notwithstanding payment in full of all Obligations by
Borrower, Crestmark shall not be required to record any terminations or
satisfactions of any of its liens on the Collateral unless and until Borrower
and all guarantors of its Obligations have executed and delivered to Crestmark a
general release in a form acceptable to Crestmark in its sole discretion. 
Borrower understands that this provision constitutes a waiver of its rights
Borrower may have under §9-513 of the UCC

M.

Small Business Jobs Act Certification – Pursuant to Section 4107(d)(2) (the
“Section”) of the Small Business Jobs Act of 2010, certification is required
from any business receiving a loan using funds received by the institution under
the Small Business Lending Act.  As required by the Section, the Borrower hereby
certifies to Crestmark that the principals of Borrower and its affiliates have
not been convicted of, or pleaded nolo contendere to, a sex offense against a
minor (as such terms are defined in section 111 of the Sex Offender Registration
and Notification Act (42 U.S.C. 16911)).

The term “principals” is defined as follows: if a sole proprietorship, the
proprietor; if a partnership, each managing partner and each partner who is a
natural person and holds a 20% or more ownership interest in the partnership;
and if a corporation, limited liability company, association or a development
company, each director, each of the five most highly compensated executives or
officers of the entity, and each natural person who is a direct or indirect
holder of 20% or more of the ownership stock or stock equivalent of the entity.

N.

USA Patriot Act Notification – The following notification is provided to
Borrower pursuant to Section 3265 of the USA Patriot Act of 2001, 31 U.S.C.
Section 5318:

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.  To help the
government fight the funding of terrorism and money laundering activities,
Federal law requires all financial institutions to obtain, verify, and record
information that identifies each person or entity that opens an account,
including any deposit account, treasury management account, loan or other
extension of credit.  We may ask for the name, address, date of birth, and other
information that will allow us to identify all Borrowers, principals and owners.
 We may also ask to see your driver’s license or other identifying documents.

10

--------------------------------------------------------------------------------

20.

INDEMNIFICATION.  Borrower hereby agrees to indemnify, defend and hold Crestmark
and its executive committees, parent affiliates, subsidiaries, agents,
directors, officers, participants, employees, agents and their successors and
assigns (collectively “Indemnified Parties”) harmless against any and all
liabilities of any kind, nature or description and damages whether they are
direct, indirect or consequential, including attorney’s fees and other
professionals and experts incurred or suffered directly or indirectly by
Indemnified Parties or asserted against Indemnified Parties by anyone whosoever,
including Borrower or Validity Guarantor, which arise out of the Loan Documents
or the relationship and transaction between the Parties, except for any
liabilities caused by an Indemnified Party’s gross negligence or willful
misconduct.  This provision shall survive the termination of this Agreement.

21.

JOINT AND SEVERAL OBLIGATIONS.  If more than one person or entity is named as
Borrower in this Agreement, all Obligations, representations, warranties,
covenants and indemnities of Borrower set forth herein and in the other Loan
Documents shall be the joint and several obligations of such persons and/or
entities.

22.

JURISDICTION.  BORROWER AND VALIDITY GUARANTOR AGREE THAT ANY ACTION TO ENFORCE
BORROWER’S OR VALIDITY GUARANTOR’S OBLIGATIONS TO CRESTMARK SHALL BE PROSECUTED
EITHER IN THE CIRCUIT COURT OF OAKLAND COUNTY MICHIGAN OR THE UNITED STATES
DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN (UNLESS CRESTMARK, IN ITS
SOLE DISCRETION, ELECTS SOME OTHER JURISDICTION), AND BORROWER AND VALIDITY
GUARANTOR SUBMIT TO THE JURISDICTION OF ANY SUCH COURT SELECTED BY CRESTMARK.
 BORROWER AND VALIDITY GUARANTOR WAIVE ANY AND ALL RIGHTS TO CONTEST THE
JURISDICTION AND VENUE OF ANY ACTION BROUGHT IN THIS MATTER AND BORROWER AND
VALIDITY GUARANTOR MAY BRING ANY ACTION AGAINST CRESTMARK ONLY IN THE CIRCUIT
COURT FOR THE COUNTY OF OAKLAND OR THE FEDERAL COURT OR THE UNITED STATES
DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN.

23.

WAIVER.  ALL PARTIES, INCLUDING BORROWER AND VALIDITY GUARANTOR EACH KNOWINGLY
AND VOLUNTARILY WAIVE ANY CONSTITUTIONAL RIGHT TO A TRIAL BY JURY WITH RESPECT
TO ANY CLAIM, DISPUTE OR CONFLICT BETWEEN THE PARTIES OR UNDER THE LOAN
DOCUMENTS AND AGREE THAT ANY LITIGATION SHALL BE HEARD BY A COURT OF COMPETENT
JURISDICTION SITTING WITHOUT A JURY.  BORROWER AND VALIDITY GUARANTOR
ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO REVIEW THE EFFECT OF THIS
PROVISION WITH COUNSEL OF THEIR CHOICE.

24.

RELEASE.  BORROWER AND VALIDITY GUARANTOR RELEASE AND FOREVER DISCHARGE
CRESTMARK, ITS AFFILIATES, OFFICERS, AGENTS, EMPLOYEES AND DIRECTORS FROM ANY
AND ALL CLAIMS OF ANY KIND WHATSOEVER FROM THE BEGINNING OF TIME TO DATE OF THIS
AGREEMENT.

11

--------------------------------------------------------------------------------

The parties have executed this Agreement as of the date and year first written
above.

CRESTMARK:

BORROWER:

CRESTMARK COMMERCIAL

KMHVC, INC.

CAPITAL LENDING LLC

By:  /s/Christy Morgan

By:  /s/Matthew C. Flemming

           Christy Morgan, 1st Vice President, Legal

Matthew C. Flemming, CEO

VALIDITY GUARANTOR:

The undersigned Validity Guarantor by signing

APACHE ENERGY SERVICES, LLC

this Agreement agrees it has been read and

understands the Agreement and Validity Guarantor

By:  /s/Matthew C. Flemming

agrees to all of its terms.

Matthew C. Flemming, CEO

By:  /s/Matthew C. Flemming

 Matthew C. Flemming, Individually

The extent of Validity Guarantor’s obligations

herein will be subject to that which is set forth in

the Guaranty of Validity.

2346668.2

12