Exhibit 10.7

 
LOAN AGREEMENT

Between

STW Oilfield Construction, LLC
 (as “Borrower”)

and

Joshua Brooks
(as “Lender”)

Dated:  As of September 26, 2013

 

 
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LOAN AGREEMENT
 
This Loan Agreement (this “Agreement”) is made and entered into as of this 26th
day of June, 2013, by and between STW Oilfield Construction LLC, a Texas limited
liability company (“Borrower”) and Joshua Brooks, an individual (“Lender”).

1.             Basic Terms and Definitions.

1.1                  Certain Defined Terms. Except as specifically defined in
this Agreement, all capitalized terms used in this Agreement are defined in
Exhibit A attached hereto and have the meanings as set forth therein

1.2                  Borrower.  Borrower is a limited liability company
organized under the laws of the State of Texas of which the Members are the only
members.

1.3                  Property.  All personal property of Borrower including, but
not limited to all equipment as more particularly described on Exhibit B
attached hereto and all equipment and personal property hereafter acquired (the
“Property”).

1.4                  Use of Loan Proceeds.  Borrower has applied to Lender for a
loan of up to Two Hundred and Twenty-Five Thousand No/100 Dollars ($225,000.00)
(the “Loan”), the proceeds of which are to be used to purchase the Property, to
pay costs and expenses incident to purchases of property and to pay costs and
expenses incident to closing the Loan and for other costs and expenses as
desired by Borrower.

1.5                  Loan.  Subject to all of the terms, conditions and
provisions of this Agreement, and of the agreements and instru­ments referred to
herein, Lender agrees to make the Loan to Borrower (the “Commitment”) and
Borrower agrees to accept and repay the Loan.  Unless sooner terminated in
accordance with the terms of this Agreement, the obligation of Lender to make
the Loan Advances hereunder shall commence on the date of this Agreement and
shall terminate on December 31, 2014 (the “Commitment Termination Date”).

2.             LOAN PROVISIONS.

2.1                  Amount of Loan.  Subject to the terms and conditions of
this Agreement and the other Loan Documents, Lender agrees to advance to
Borrower Loan Proceeds in an amount equal to Two Hundred and Twenty-Five
Thousand and No/100 Dollars ($225,000.00) (the “Loan Amount”).

2.2                  Term of Loan; No Extension Right. The Loan shall be for a
term commencing on the date hereof and ending on the Maturity Date. There shall
be no extension right.

2. 3                  Interest.

2. 3.1                    Contract Rate.  The unpaid principal balance of the
Loan from time to time outstanding shall bear interest at the Contract
Rate.  Interest shall be computed hereunder on the actual number of days elapsed
over a year of 365/366 days and paid for on the actual number of days elapsed
for any whole or partial month in which interest is being calculated.

2. 3.2                    Default Rate.  Notwithstanding anything to the
contrary set forth in this Agreement, from and after the occurrence of an Event
of Default and during the continuation thereof (whether or not Lender has
accelerated payment of the Loan) and from and after the Maturity Date, the
outstanding principal balance of all Obligations (including all unpaid
installments of interest under the Note) shall bear interest, at the Default
Rate.
 
 
2. 3.3                    Late Charges.  In the event that any payment of
principal and/or interest herein provided for shall become overdue for more than
ten (10) days, a “late charge” of five percent (5%) of the required payment
shall become immediately due and payable to Lender, as liquidated damages for
failure to make prompt payment, and the same shall be secured by the Security
Documents.

 
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2. 3.4                    Interest Installments.  Monthly payments of accrued,
but unpaid interest only shall be due and payable on the  1st day of each month
during the Term of the Loan, beginning on November 1, 2013 and with a like such
installment being due and payable on the  1st day of each succeeding calendar
month thereafter for the first three (3) months of the Term.  Thereafter,
payments will be due and payable per Section 2.4.1.
 
2. 3.5                    Recapture of Interest.  Notwithstanding the foregoing,
if at any time the amount of interest to be paid by Borrower would exceed the
Maximum Legal Rate, then the interest payable under this Agreement shall be
computed upon the basis of the Maximum Legal Rate, but any subsequent reduction
in the Contract Rate or Default Rate, as applicable, shall not reduce such
interest thereafter payable hereunder below the amount computed on the basis of
the Maximum Legal Rate until the aggregate amount of such interest accrued and
payable under this Agreement equals the total amount of interest which would
have accrued if such interest had been at all times computed solely on the basis
of the Contract Rate or Default Rate, as applicable.

2. 3.6                  Maximum Legal Rate.  All agreements between Borrower,
Guarantors, and Lender are hereby expressly limited so that in no contingency or
event whatsoever, whether by reason of acceleration of maturity of the
Obligations or otherwise, shall the amount paid or agreed to be paid to Lender
for the use or the forbearance of the Indebtedness evidenced by the Note exceed
the Maximum Legal Rate.  As used herein, the Maximum Legal Rate shall mean the
Maximum Legal Rate in effect as of the date hereof; provided, however, in the
event that there is a change in the Maximum Legal Rate which results in a higher
permissible rate of interest, then the Maximum Legal Rate shall be governed by
such new law as of its effective date.  In this regard, it is expressly agreed
that it is the intent of Borrower, Lender and Lender in the execution, delivery
and acceptance of this Agreement and the Notes to contract in strict compliance
with the laws of the State of Texas from time to time in effect.  If, under or
from any circumstances whatsoever, fulfillment of any provision hereof or of any
of the other Loan Documents at the time of performance of such provision shall
be due, shall involve transcending the limit of such validity prescribed by
applicable law, then the obligation to be fulfilled shall automatically be
reduced to the limits of such validity, and if under or from any circumstances
whatsoever Lender should ever receive as interest any amount which would exceed
the Maximum Legal Rate, such amount which would be excessive interest shall be
applied to the reduction of the principal balance of the Obligations and not to
the payment of interest.  This provision shall control every other provision of
all agreements between Borrower, Guarantor and Lender.

The provisions of this Section 2.3.6 shall be deemed to be incorporated into
every document or communication relating to the Obligations which sets forth or
prescribes any account, right or claim or alleged account, right or claim of
Agent and/or Lenders with respect to Borrower (or any other obligor in respect
of Obligations), whether or not any provision of this Section 2.3.6 is referred
to therein.  All such documents and communications and all figures set forth
therein shall, for the sole purpose of computing the extent of the Obligations
and obligations of the Borrower (or other obligor) asserted by Lender
thereunder, be automatically recomputed by Borrower or any other obligor, and by
any court considering the same, to give effect to the adjustments or credits
required by this Section 2. 3.6.
 
2. 4                  Principal and Interest Repayment.

2.4.1                    Loan Payments.  Beginning on the 1st day of November
2013, monthly payments of principal and interest shall be due and payable, with
a like installment being due and payable on the 1st day of each month thereafter
during the Term of the Loan, and the entire outstanding balance of the Loan
shall be due and payable in full at Maturity. The monthly payments of principal
and interest will be amortized over the remainder of the Loan Term (33 months)
at the Contract Rate.

2.4.2                    Prepayment and Certain Payments.  Subject to the terms
of this Section 2.4.2, all or any portion of the unpaid principal balance of the
Loan may be prepaid at any time.  Notwithstanding the foregoing, if Borrower
elects to pre-pay all or part of the Loan during the first six (6) months of the
Term, then Borrower will be required to pay to Lender the Prepayment
Premium.  Following the sixth month anniversary of the Loan, Borrower may prepay
all or any portion of the unpaid principal balance of the Loan, without premium
or penalty, by a payment to Lender of immediately available Dollars by the
Borrower. Any partial prepayment of principal shall first be applied to any
installment of principal then due and owing and shall then be applied to
installments of principal due in the reverse order of maturity, and no such
partial prepayment shall relieve Borrower of the obligation to pay each
subsequent installment of principal when due.

 
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2. 5                  Application of Payments and Collections.  As long as no
Event of Default has occurred and is continuing, all payments shall be applied
first to the payment of all fees, expenses and other amounts due to the Lender
(excluding principal and interest), and then to accrued interest, and the
balance on account of outstanding principal.  After the occurrence of an Event
of Default and during the continuance thereof, Borrower shall have no right, and
it hereby irrevocably waives the right, to direct the application of any and all
payments and collections at any time or times received by Lender from or on
behalf of Borrower, and Borrower does hereby irrevocably agree that Lender
shall, after the occurrence of an Event of Default and during the continuance
thereof, have the continuing exclusive right to apply and reapply any and all
such payments and collections received at any time or times by Lender against
the Obligations, in such manner as Lender may deem advisable, notwithstanding
any entry by Lender upon any of their books and records.

2. 6                  Taxes or Assessments.  If after the date hereof, any
federal or state laws, rules or regulations are changed and the compliance by
Lender with any law, request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency: (a) shall subject
Lender to any tax, duty or other charge with respect to any loans made by
Lender, or shall change the basis of taxation of payments to Lender of the
principal of or interest on the Loan or any other amounts due under this
Agreement; (b) shall impose, modify or deem applicable any assessment or other
charge (including any assessment for insurance of deposits) against assets of,
deposits with or for the account of, or credit extended by Lender; (c) shall
impose on Lender any other condition affecting this Agreement, the Loan or the
Note and the result of any of the foregoing is to increase the cost to Lender of
making or maintaining the Loan hereunder, or to reduce the amount of any sum
received or receivable by Lender under this Agreement or under their Note, then
Lender shall promptly notify the Borrower thereof in writing stating the reasons
therefor and the additional amounts required to fully compensate Lender for such
increased cost or reduced amount as reasonably determined by Lender and, within
ten (10) days after demand by Lender, Borrower shall pay directly to Lender such
additional amount or amounts as will compensate Lender for that portion of such
cost, increased cost or such reduction which relates to the Obligations of
Borrower.  No federal, state, local or foreign taxes based on gross or net
income, or any franchise, net worth or capital tax payable by Lender, shall be
considered in making the determination of increased cost or reduction in amount
receivable to Lender under this Section 2. 6.1.  Lender shall not be entitled to
make a demand for and Borrower shall not be liable for payment of any amount
under the terms of this provision following payment in full of the Obligations.

2. 7                  Term of Agreement.  The provisions of this Agreement shall
be and remain in effect until full and final payment in immediately available
funds of all of the Obligations.

2. 8                  Fees.

2.8.1                    Commitment Fee.  N/A
2.8.2                    Loan Brokerage Fee.  Intentionally Deleted.

2. 9                  Acceleration.  The Loan may be accelerated, at the option
of the Lender, at any time following the occurrence of an Event of
Default.  Upon an acceleration of the Loan, the entire principal balance of the
Loan, together with all unpaid and accrued interest and all costs, expenses and
fees, shall be due and payable together with interest on such amounts at the
Default Rate.  Notwithstanding anything to the contrary contained herein or in
any of the other Loan Documents, from and after the acceleration of the Loan an
Event of Default shall be deemed to be continuing notwithstanding Borrower's
cure of any Event of Default.

2. 10                  The Loan to Constitute One Obligation.  The Loan shall
constitute one general obligation of Borrower to Lender, and shall be secured by
Lender's security interests in and liens upon all of the Collateral, and by all
other security interests and liens heretofore, now or at any time or times
hereafter granted by Borrower to Lender or to Lender.

2. 11                  Time of Payments and Prepayments in Immediately Available
Funds. Notwithstanding any provision to the contrary contained in any of the
Loan Documents, (a) the due dates of all payments under the Loan Documents shall
be adjusted in accordance with the Following Business Day Convention, and (b)
all payments and prepayments of principal, fees, interest and any other amounts
owed from time to time under this Agreement and/or under any Note shall be made
to the Lender at the Lender's address referred to in Section 17.1 in Dollars and
in immediately available funds prior to 12:00 o'clock P.M. on the Business Day
that such payment is due, subject to, if applicable, the Following Business Day
Convention.  Any such payment or prepayment which is received by the Lender in
Dollars and in immediately available funds after 12:00 o'clock P.M. on a
Business Day shall be deemed received for all purposes of this Agreement on the
next succeeding Business Day except that solely for the purpose of determining
whether a Default has occurred, any such payment or prepayment if received by
the Lender prior to the close of the Lender's business on a Business Day shall
be deemed received on such Business Day.

 
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3.                  SECURITY FOR THE LOAN; LOAN AND SECURITY
DOCUMENTS. 3.1 Security.  The Loan, together with all other Obligations of
Borrower to Lender shall be secured, inter alia, by the following “Security”
which Borrower agrees to provide and maintain:

3.1.1                  Security Agreement.  A security agreement (the “Security
Agreement”) on (i) the Property, (ii) all other assets (including, without
limitation, accounts, receivables, contracts (including but not limited to
operating and lease contracts), leases, contract rights, Licenses and Permits,
general intangibles, documents and instruments), including all after-acquired
property, owned, or in which Borrower has or obtains any interest, in connection
with the Property; and (iii) all insurance proceeds and other proceeds
therefrom.

3.1.2                  UCC Financing
Statements.                                                   (a) A first lien
UCC-1 Financing Statement filed on (i) the Property, (ii) all fixtures, goods,
equipment, and other assets (including, without limitation, accounts,
receivables, contracts, leases, contract rights, Licenses and Permits, general
intangibles, documents and instruments), including all after-acquired property,
owned, or in which Borrower has or obtains any interest, in connection with the
Property.

3.1.2                  Guaranty(ies). Intentionally Deleted.

3.1.3                  Other Security Documents.  Any other Security Documents
that may be required by Lender at Closing or from time to time.

3.2                  Loan Documents and Security Documents.  The Loan shall be
made, evidenced, administered, secured and governed by all of the terms,
conditions and provisions of the Loan Documents, each as the same may be
hereafter modified or amended, consisting of: (i) this Agreement; (ii) the Note
executed by the Borrower in favor of the Lender; (iii) the Security Agreement;
(iv) the related UCC Financing Statements; and (vii) any Other Agreements
executed to further evidence or secure the Loan.

3.3                  Termination of Security Interests.  Upon the satisfaction
in full of all of the Obligations, Lender shall release, terminate and satisfy
all of its security interests in and liens upon all remaining Collateral, and
Lender shall deliver to Borrower any and all written instruments requested by
Borrower which are reasonably necessary to evidence such release, termination
and satisfaction. Lender shall not have any obligation to pay any costs or fees
associated with the filing or recordation of any such release, termination or
satisfaction and Borrower agrees to pay all reasonable costs and expenses
(including reasonable attorneys' fees) incurred by Lender in connection with the
preparation, recording and filing of any of such instruments.

4.             CONTINUING AUTHORITY OF AUTHORIZED
REPRESENTATIVES.                                                                                                                              4.1Authorized
Representatives.  Lender is authorized to rely upon the continuing authority of
Lee Maddox, COO of Borrower, and Stanley T. Weiner (“Authorized
Representatives”) to bind Borrower with respect to all matters pertaining to the
Loan and the Loan Documents.  Such authorization may be changed only upon
written notice to Lender accompanied by evidence, reasonably satisfactory to
Lender, of the authority of the person giving such notice and such notice shall
be effective not sooner than five (5) Business Days following receipt thereof by
Lender.

5.             LENDER'S
CONSULTANTS.                                                    5.1           Right
to Employ.  In the event of default, Lender shall have the right to employ, for
the below functions, its own personnel or other specialists, environmental
advisors, accountants and attorneys to act as advisors to Lender in connection
with the Loan (each of which shall be a “Consultant”).

5.2                  Functions.  The functions of a Consultant shall include
without limitation: (a) inspection and physical review of the Property; (b)
review and analysis of any work to be done in connection with the Property (if
any); (c) review and analysis of environmental matters; (d) management of the
Property; and (e) review and analysis of legal matters pertaining to the
Property or issues arising under the Loan Documents or otherwise in connection
with the Property.

5.3                  Payment.  The reasonable costs and fees of Consultants
shall be paid by Borrower.

 
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5.4                  Access.  Borrower shall provide Lender's personnel and all
Consultants with continuing access to the Property and all books and records
related thereto; provided that Lender's personnel and Consultants shall not
unreasonably disturb Borrower's business.

5.5                  No Liability.  Neither Lender nor any Consultant shall have
any liability to Borrower or to any third party on account of:  (a) services
performed by any Consultant or any failure or neglect by any Consultant to
properly perform services, provided however, each Consultant shall be liable for
its respective gross negligence and willful misconduct; or (b) any approval or
disapproval of work, plans or other matters.  Neither Lender nor any Consultant
shall have any obligation regarding proper performance of work related to the
Property.  Borrower shall have no rights under or relating to any agreement,
report or similar document prepared by any Consultant.

6.             LOAN DISBURSEMENT.  6.1           Advance of Loan
Proceeds.  Lender shall, subject to compliance with all of the other terms,
conditions and provisions of this Agreement, make a disbursement of a portion of
the Loan Proceeds (“Initial Loan Advance”) at closing in an amount mutually
agreed upon between Lender and Borrower.

6.2                   Subsequent Advances.  So long as an Event of Default is
not then in existence, Lender shall, subject to compliance with all of the other
terms, conditions and provisions of this Agreement, make subsequent
disbursements of the Loan Proceeds (the “Subsequent Loan Advances” and together
with the Initial Loan Advance are collectively referred to herein as the “Loan
Advance”) to Borrower in accordance with the following:
 
(a)           Each Subsequent Loan Advance shall be made, at Borrower’s request
to Lender on the basis of a written request (the “Notice of Borrowing”) and
Lender shall act upon such requests within three (3) Business Days following the
receipt of a Notice of Borrowing for such Subsequent Loan Advance which action
may include, without limitation, funding the requested Subsequent Loan Advance
or specifying the basis for not funding and, when applicable, requesting
additional information and supporting documentation. The Notice of Borrowing
shall specify (a) the requested borrowing date, and (b) the amount of the
Subsequent Advance along with the relevant wiring instructions (whether to
Borrower or an affiliate of Borrower).
 
(b)           No Subsequent Loan Advances shall be made after the Commitment
Termination Date.

(c)         In no event shall Lender be obligated to advance an aggregate of
more than the Maximum Loan Amount.  However, Lender may, in its absolute
discretion, from time to time make Subsequent Loan Advances which exceed such
total limits, and such Subsequent Loan Advances, if made, shall bear interest at
the same rate as is provided for all Loan Advances under this Agreement.

7.             CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT.

7.1                  Conditions Precedent.  It shall be a condition precedent of
Lender's obligation to close the Loan that each of the following conditions
precedent be satisfied in full (as determined by Lender in its reasonable
discretion which discretion shall be exercised in good faith having due regard
for the advice of Lender's Consultants), unless waived by Lender at or prior to
closing and funding the Loan:

7.1.1                    Satisfactory Loan Documents.  Each of the Loan
Documents shall be satisfactory in form, content and manner of execution and
delivery to Lender and its counsel.

7.1.2                    No Material Change.  No material adverse change shall
have occurred in the financial condition, business, affairs, operations or
control of Borrower or the Guarantors since the date of their respective
financial statements most recently delivered to Lender.

7.1.3                    Warranties and Representations Accurate.  All
warranties and representations made by or on behalf of Borrower or the
Guarantors to Lender shall be true, accurate and complete in all material
respects and shall not omit any material fact necessary to make the same not
misleading.

 
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7.1.4                    Financials.  Lender shall have received and approved
financial statements of the Borrower in all respects satisfactory to Lender and
(b) such other information as Lender may reasonably request.

7.1.5                    Validity and Sufficiency of Security Documents.  The
Security Agreement, UCC-1 Filing Statements and the other Security Documents
shall create valid and perfected liens on the Property and all Collateral and
each of the Security Documents and related UCC filings shall have been duly
recorded and filed to the satisfaction of Lender and its counsel.

7.1.6                    No Other Liens; Taxes and Municipal Charges
Current.  Subject to Section 11.1.4 below, the Property and Collateral shall not
be subject to any liens or encumbrances, whether inferior or superior to the
Loan Documents or the Security Documents, except in respect of: (a) personal
property taxes not yet due and payable; and (b) Permitted Exceptions.  All
personal property taxes and other municipal charges relating to any of the
Collateral shall be current.

7.1.7                    Compliance With Law.  Lender shall have received and
approved evidence that:

 
(a)
Present Compliance.  All tangible personal property constituting or intended to
constitute Collateral for the Loan complies in all material respects with all
applicable Legal Requirements and the provisions of all applicable Licenses and
Permits.

 
(b)
No Prohibitions or Violations.  There are no applicable Legal Requirements which
prohibit or materially, adversely limit the use of the Property for the purposes
the same is intended for, nor is there any outstanding and uncured material
violation of any applicable Legal Requirements.

 
(c)
Licenses and Permits.  Borrower has all necessary and required permits and
licenses to use and operate the Property for its intended purposes and in the
ordinary course of Borrower’s business.

7.1.8                  Evidence of Perfection.  Lender shall have received such
evidence of the perfection of Lender’s liens and security interests as Lender or
its counsel may reasonably require.

7.1.9                  Insurance.  Borrower shall have provided to Lender with
respect to the Property and the Collateral evidence of current valid insurance
policies (liability and all risk) which meet the insurance requirements of
Lender and its Consultants as set forth in Section 9.4; (ii) an endorsement
naming Lender as loss payee or named insured, as the case may be and (iii)
evidence of payment of the premiums for such insurance.

7.1.10                  Organizational Documents and Entity Agreements.  Lender
shall have received and approved the limited liability company, limited
partnership and other organizational documents of Borrower.

7.1.11                  Votes, Consents and Authorizations.  Lender shall have
received and approved certified copies of all limited liability company and
corporate votes, consents and authorizations that may be reasonably required to
evidence authority for:  (a) closing the Loan and the transactions contemplated
hereby; (b) providing continuing authorization to designated persons to deal in
all respects on behalf of Borrower; and (c) the execution of all Loan Documents.

7.1.12                    No Default.  There shall not be any Event of Default
or any monetary Default under any of the Loan Documents.

 
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7.1.13                    Closing Affidavit.  At the closing of the Loan, an
Authorized Representative of Borrower shall execute and deliver to Lender an
affidavit certifying to Lender (a) that all financial information furnished by
or on behalf of Borrower to Lender is accurate and correct in all material
respects as of the reporting date(s) thereof and that there have been no
material adverse changes since the reporting date(s) thereof; (b) that except as
disclosed in writing to Lender and approved by Lender in writing, Borrower is
not in default under any material obligation or agreement to which it is a party
or by which it or the Property and Collateral is bound; and (c) that, except as
disclosed in writing to Lender and approved by Lender in writing, there is no
material litigation pending or, to the best of Borrower's knowledge, threatened,
against Borrower which could have a material adverse effect on Borrower, the
Property or Collateral.

7.1.17                    Other Documents.  Lender shall have received and
approved such other closing documents, instruments and agreements as are
required or necessary to close the Loan, including such other documents,
instruments and agreements as Lender reasonably determines are necessary at any
time to perfect any of Lender's security interests in the Collateral.

7.1.18                    No Proceedings, Etc. No action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before any court, governmental agency or legislative body to enjoin,
restrain or prohibit, or to obtain damages in respect of, or which is related to
or arises out of this Agreement or the consummation of the transactions
contemplated hereby or which, in Lender's judgment, would make it inadvisable to
consummate the transactions contemplated by this Agreement or any of the other
Loan Documents.

7.1.19                    Payment of Lender's Fees and Costs.  Borrower shall
have paid (a) the fees payable to Lender described in Section 2.8, and (b) all
of Lender's costs and expenses as described in Section 9.12.

8.             WARRANTIES AND REPRESENTATIONS.

Borrower warrants and represents to Lender, for the express purpose of inducing
Lender to enter into this Agreement, to make the Loan, and to otherwise complete
all of the transactions contemplated hereby, that as of the date of this
Agreement, as follows:

8.1                  No Property Violations. Borrower has not received written
notice of any uncured violation of any federal, state or local law relating to
the use or operation of the Property, which would materially adversely affect
the Property or use thereof.

8.2                  Pending Actions. Borrower has not received written notice
of any action, suit, arbitration, unsatisfied order or judgment, government
investigation or proceeding pending against Borrower which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.

8.3                  Litigation.  There is no pending litigation and Borrower
has not received written notice of any litigation, which has been filed against
Borrower that arises out of the ownership, management or operation of the
Property and that would materially affect the Property or use thereof, or
Borrower’s ability to perform hereunder.

8.4                  Operating Agreements.  Intentionally Deleted.

8.5                  Lease Agreements.  Intentionally Deleted.

8.6                  Environmental Matters.  Borrower is, and the operations of
Borrower are, in compliance with all applicable Environmental Legal
Requirements.  Borrower has not been notified of any action, suit, proceeding or
investigation (a) relating in any way to compliance by or liability of Borrower
under any Environmental Legal Requirements, (b) which otherwise deals with
Hazardous Substances or any environmental law, or (c) which seeks to suspend,
revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment, or disposal of any Hazardous
Substance.

 
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8.10                  Financial Information.  True, accurate and complete
financial statements of Borrower have been delivered to Lender and the same
fairly present the financial condition of Borrower as of the respective dates
thereof and no material and adverse change has occurred in such financial
condition since the respective dates thereof.  The fiscal year of Borrower end
on December 31 of each year.

8.11                  No Violations.  The consummation of the Loan and the
subsequent payment and performance of the Obligations evidenced and secured by
the Loan Documents shall not constitute a violation of, or conflict with, any
law, order, regulation, contract, agreement or organizational document to which
Borrower is a party or by which Borrower or the Property, may be bound.

8.12                  No Litigation. (a) There is no material litigation now
pending, or, to the best of Borrower's knowledge, threatened, against Borrower
(with respect to the Property or otherwise) which if adversely decided could
materially impair the ability of Borrower to pay and perform its respective
obligations hereunder or under the other Loan Documents.

8.13                  Compliance With Legal Requirements. The Property complies
with all Legal Requirements and any and all covenants, conditions, restrictions
or other matters, which affect the Property, except where such failure to comply
does not have a material adverse effect on the use, value or operations of the
Property.

8.14                  Required Licenses and Permits. Borrower possesses all
licenses, permits and franchises, and all rights thereto, necessary to operate
the Property and conduct its business as now conducted and as presently proposed
to be conducted.

8.15                  Use of Loan Proceeds.  The proceeds of the Loan shall be
used solely and exclusively (a) to purchase Property at Closing and thereafter,
(b) for payment of costs associated with the purchase of Property, and (c) for
payment of costs and expenses incurred in connection with the financing provided
by the Loan.

8.16                  Entity Matters.

8.16.1                    Organization.  Borrower is a duly organized and
validly existing limited liability company in good standing under the laws of
the State of Texas. Borrower is duly qualified in each jurisdiction where the
nature of its business is such that qualification is required. Borrower has all
requisite power and authority to conduct its business and to own its property,
as now conducted or owned, and as contemplated by this Loan Agreement.

8.16.2                    Authorization.  All required corporate, limited
partnership and other entity actions and proceedings have been duly taken so as
to authorize the execution and delivery by Borrower of the Loan Documents and
the payment and performance of Borrower's Obligations thereunder.

8.17                  Valid and Binding.  Each of the Loan Documents constitute
legal, valid and binding obligations of Borrower and is enforceable in
accordance with the respective terms thereof, subject to bankruptcy, insolvency
and similar laws of general application affecting the rights and remedies of
creditors and, with respect to the availability of the remedies of specific
enforcement, subject to the discretion of the court before which any proceeding
therefor may be brought.

8.18                  No Required Consents.  The execution, delivery and
performance of the Loan Documents and the transactions contemplated thereby do
not require any approval or consent of, or filing (other than the recording of
the UCC Financing Statements) or registration with, any governmental or other
agency or authority, or any other party.

8.19                  No Default.  To the best of Borrower's knowledge, no
Default exists under any of the Loan Documents.

8.20                  No Broker or Finder.  Neither Borrower, nor anyone acting
on behalf thereof, has dealt with, made any agreement with or retained the
services of any broker, finder or other person or entity who or which may be
entitled to a broker's or finder's fee, or other compensation, payable by
Borrower or by Lender in connection with the Loan.

 
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8.21                  Solvency.  Borrower is, and after giving effect to the
transactions contemplated under the Loan Documents will be, solvent.  After
giving effect to the transactions contemplated under the Loan Documents,
Borrower:  (a) will be able to pay its respective debts as they become due, and
(b) will have funds and capital sufficient to carry on its businesses and all
businesses in which it are about to engage.

8.22                  Other Agreements. Borrower is not a party to any
indenture, loan, or credit agreement, or to any lease or other agreement or
instrument, or subject to any charter or corporate restriction, which could have
a material adverse effect on the businesses, properties, assets, operations or
conditions, financial or otherwise of Borrower, or the ability of the Borrower
to carry out its respective obligations under the Loan Documents.  To the best
of the Borrower's knowledge, Borrower is bot in default in any material respect
in the performance, observance or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument material to
its business to which it is a party.

8.23                  No Subsidiaries.  Borrower has no subsidiaries.

8.24                 Guarantor's Warranties and Representation.  Intentionally
Deleted.

9.             COVENANTS.

Borrower covenants and agrees that from the date hereof and so long as any
Indebtedness remains unpaid hereunder, or any of the Loan or other Obligations
remains outstanding as follows:

9.1                    Financial Statements and Reports.  Borrower shall furnish
or cause to be furnished to Lender from time to time, the following financial
statements and reports and other information, all in form, manner of
presentation and substance reasonably acceptable to the Lender:

9.1.1                    Annual Statements.  As soon as available, but in any
event within sixty (60) days following the end of each calendar year, the
following certified by the Borrower to be true, accurate and complete in all
material respects: (i) unaudited financial statements of Borrower in form
reasonably acceptable to Lender, such financial statements to include a balance
sheet, income statements and cash flow statements and to be supplemented by such
detail and supporting data and schedules as Lender may from time to time
reasonably require, setting forth in each case in comparative form the figures
for the previous year; (ii) a property tax status report setting forth the
annual personal property taxes payable with respect to the Property, the due
dates of such personal property taxes and the portions of such taxes which have
been paid; and (iii) such other information as the Lender may reasonably
require..  In addition, Borrower will provide Lender a copy of all audited
financial statements as soon as available, but in any event within one hundred
(180) days following the end of each calendar year.

9.1.2                    Quarterly Statements.  As soon as available, but in any
event within forty-five (45) days following the end of each calendar quarter,
the following certified by the Borrower to be true, accurate and complete in all
material respects:  (i) unaudited financial statements of Borrower in form
reasonably acceptable to Lender, such financial statements to include a balance
sheet, income statement and cash flow statement and to be supplemented by such
detail and supporting data and schedules as Lender may from time to time
reasonably require; (ii) a property tax status report setting forth the annual
personal property taxes payable with respect to the Property, the due dates of
such personal property taxes and the portions of such taxes which have been
paid; and (iii) such other information as the Lender may reasonably require.

9.1.3                    Monthly Reports.  As soon as available, but in any
event within thirty (30) days following the end of each calendar month, (a) a
monthly report with respect to the Property and Collateral prepared by Borrower
based upon the books and records of Borrower, such report to include a cash flow
and income statement.

9.1.4                    Data Requested.  Within a reasonable period of time and
from time to time such other financial data and information (in each case
unaudited) as Lender may reasonably request with respect to the Property or
Borrower.

 
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9.1.5                    Tax Returns.  Upon Lender's request, complete copies of
all federal and state tax returns and supporting schedules of Borrower.

9.1.6                    Guarantor's Statements.  Intentionally Deleted.

9.1.7                    Additional Information.  In addition, Borrower shall
furnish to Lender promptly after the commencement thereof, notice of all
actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Borrower, which, if determined adversely to the Borrower, could
have a material adverse effect on the financial condition, properties or
operations of the Borrower.

9.2                  Payment of Taxes and Other Obligations; Tax Escrow Account.

9.2.1                    Payment. Borrower shall duly pay and discharge, or
cause to be paid and discharged, before the same shall become overdue, all
taxes, assessments and other governmental charges payable by it, or with respect
to the Collateral and Property, as well as all claims or obligations for labor,
materials, supplies or services or for borrowed funds in any amount.

9.2.2                    Tax Escrow Account.  Intentionally Deleted.

9.3                  Conduct of Business; Compliance With Law.  Borrower shall
engage solely in the oilfield services business and related activities and in
the business activities in which Borrower is currently engaged. Borrower shall
operate the Property and conduct its affairs in a lawful manner and in
substantial compliance with all Legal Requirements applicable thereto.
 
 
9.4                  Insurance.  Borrower shall at all times maintain in full
force and effect the insurance coverages as set forth in Exhibit C of this Loan
Agreement and shall cause Lender to be designated as loss payee and as
additional insured on all such policies in accordance with the requirements of
Exhibit C.  All insurance premiums shall be paid as and when due, and Lender
shall be provided with evidence of such prepayment of insurance premiums prior
to closing and thereafter at least thirty (30) days prior to each date on which
the coverage may lapse for non-payment or otherwise or replacement of such
coverages.  If Borrower fails to provide and pay for such insurance and deliver
to Lender evidence of such payment within five (5) days of the demand for same
by Lender, Lender may, at Borrower's expense, procure the same, but Lender shall
not be required to do so.

9.5                  Restrictions on Liens, Transfers and Additional Debt

9.5.1                    Prohibited Transactions.  Except for Permitted
Transactions, Borrower shall not: (a) create or incur, or suffer to be created
or incurred, or to exist, any encumbrance, pledge, lien, charge or other
security interest of any kind, or any negative pledge of any kind, upon any of
its assets of any character, whether or not related to the Property, or any
portion thereof, whether now owned or hereafter acquired or upon the proceeds or
products thereof; (b) create or incur any Indebtedness, whether secured or
unsecured, either directly or as a guarantor, except for the Loan and Permitted
Additional Debt; (c) permit any sale, transfer, exchange, assignment or pledge
of or grant of any security interest in any ownership interests in Borrower; (d)
sell, convey, transfer or exchange the Property, or any portion thereof, whether
now owned or hereafter acquired; or (e) permit any Person to create or incur any
Indebtedness, whether secured or unsecured, either directly or as a guarantor,
which is in any way recourse (whether directly, indirectly, absolutely or
contingently) to Borrower or to any assets that are owned by Borrower.

9.5.2                    Permitted Transactions.  The term “Permitted
Transactions” shall mean Permitted Transfers, Permitted Additional Debt and
Permitted Exceptions.

9.5.3                    Permitted Transfers.  The term “Permitted Transfers”
shall mean: (a) the Security Documents and other agreements in favor of Lender
or (b) transactions, whether outright or as security, for which the Lender's
prior written consent has been obtained, which consent may be withheld, granted
or granted conditionally, subject to such protective and other conditions as the
Lender may require in its sole and absolute discretion.

 
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9.5.4                    Permitted Additional Debt.  The term “Permitted
Additional Debt” shall mean: (a) Indebtedness, whether secured or unsecured, for
which the Lender's prior written consent has been obtained, which consent may be
withheld, granted or granted conditionally subject to such protective and other
conditions as the Lender may require in its sole and absolute discretion; (b)
Indebtedness (excluding borrowed funds) incurred in the ordinary course of
business of operating the Property which are payable without interest if paid by
the applicable due date; (c) any tax, assessment, charge, levy or claim
described in Section 10.1.1 provided that Borrower is in compliance with the
terms of Section 10.1.1 and (d) the factoring agreement with Crown Financial,
LLC dated of even date herewith (the “Factoring Agreement”).

9.5.5                      Additional Funds.  All funds required for the
Property in excess of those available from the Loan shall be provided by
Borrower, or its owners, as additional equity contributions or by Permitted
Additional Debt.

9.6                  Limits on Guaranties.  Borrower shall not guaranty the
obligations of any Person.

9.7                  No Dissolution, Merger or Acquisitions.  Borrower shall not
dissolve or liquidate, or merge or consolidate with, or otherwise acquire all or
substantially all of the assets of, any other Person, or enter into any merger
or consolidation agreements.

9.8                  Restrictions on Investments.  Borrower shall not make or
permit to exist any direct or indirect Investment in any tangible personal
property other than that acquired in the normal and ordinary course of
Borrower's present business and in connection with the Property.

9.9                  Indemnification Against Payment of Brokers' Fees.  Borrower
agrees to defend, indemnify and save harmless Lender and Lender from and against
any and all liabilities, damages, penalties, costs, and expenses, relating in
any manner to any brokerage or finder's fees in respect of the Loan, excluding,
however, any claims arising from the intentional actions of Lender.

9.10                    Environmental Indemnity Obligations.   Borrower has
executed and delivered to Lender an Environmental Indemnity Agreement (the
“Environmental Indemnity Agreement”) pursuant to the terms of which Borrower has
agreed to pay and perform its therein specified obligations with respect to
environmental matters and to indemnify and hold Lender and Lender harmless with
respect to such environmental matters (collectively, the “Environmental
Indemnity Obligations”).  Borrower's Environmental Indemnity Obligations shall
survive the foreclosure and/or discharge of the Liens and shall for all purposes
be deemed to be an Obligation and shall be fully secured by all of the other
Security Documents.

9.11                  Intentionally Deleted.

9.12                  Pay Indebtedness and Perform Obligations.  The Borrower
shall: (a) make full and timely payment when due of all amounts owed by the
Borrower to the Lender, whether now existing or hereafter arising; (b) duly
comply in all material respects with all of the terms and covenants contained in
each of the Loan Documents; and (c) duly comply with all applicable provisions
of all other agreements, indentures, leases, contracts and other documents
binding upon the Borrower; all at the times (and in any case prior to the
expiration of any applicable grace periods) and places and in the manner set
forth therein.

9.13                  Place for Records; Inspection.  Borrower shall maintain
all of its business records at the address specified at the beginning of this
Agreement.  Upon two (2) Business Days' prior notice and at reasonable times
during normal business hours Lender shall have the right (through such agents or
Consultants as Lender may designate) to examine Borrower's property and make
copies of and abstracts from Borrower's books of account, correspondence and
other records, it being agreed that Lender shall use reasonable efforts to not
divulge information obtained from such examination to others except in
connection with Legal Requirements and in connection with administering the
Loan, enforcing their rights and remedies under the Loan Documents and in the
conduct, operation and regulation of their banking and lending businesses (which
may include,  without limitation, the transfer of the Loan or of participation
interests therein).  Any transferee of the Loan or any holder of a participation
interest in the Loan shall be entitled to deal with such information in the same
manner and in connection with any subsequent transfer of its interest in the
Loan or of further participation interests therein.

 
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9.14                      Costs and Expenses.  Borrower shall pay all reasonable
costs and expenses incurred by Lender (whether prior or subsequent to the date
hereof and regardless of whether an Event of Default exists) in connection with
(a) the negotiation, preparation, execution, delivery, administration,
modification, amendment or waiver of, or consent under, any provision of this
Agreement, any of the other Loan Documents or any of the other documents to be
delivered hereunder or thereunder, (b) the closing or administration of the
Loan, and (c) any Default or alleged Default hereunder; including in each case,
without limitation, all reasonable fees and expenses associated with travel and
all reasonable fees and expenses of legal counsel (including outside legal
counsel and the allocated costs of in-house legal counsel), accountants,
appraisers, engineers, surveyors and consultants retained by Lender with respect
thereto.  Additionally, if an Event of Default occurs, Borrower shall pay all
costs and expenses incurred by Lender (including, without limitation, the
reasonable fees and expenses of legal counsel, including outside legal counsel
and the allocated costs of in-house legal counsel) in connection with the
restructuring or enforcement (whether through negotiation, collection,
bankruptcy, insolvency or other enforcement proceedings or otherwise) of this
Agreement and the other Loan Documents and the collection of the Loan,
including, without limitation, any costs incurred in connection with any attempt
to inspect, verify, protect, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon any of the Collateral. Additionally,
Borrower shall pay all costs and expenses incurred by Lender (including, without
limitation, the reasonable fees and expenses of legal counsel, including outside
legal counsel and the allocated costs of in-house legal counsel) in connection
with any litigation, contest, dispute, suit, proceeding or action brought
against Lender by any third party relating in any way to the Property or any of
the other Collateral, this Agreement or any of the other Loan Documents or
Borrower's affairs.  Additionally, if any taxes (excluding taxes imposed upon or
measured by the net income of Lender but including, without limitation, any note
or mortgage taxes and all revenue stamps) shall be payable on account of the
execution or delivery of this Agreement, or the execution, delivery, issuance or
recording of any of the other Loan Documents, or the creation of any of the
Obligations hereunder, by reason of any existing or hereafter enacted federal or
state statute, Borrower will pay all such taxes, including, but not limited to,
any interest and penalties thereon, and will indemnify and hold Lender and
Lender harmless from and against liability in connection
therewith.  Additionally, Borrower shall pay all recording, filing and related
costs reasonably incurred by Lender in connection with the Loan.  All amounts
payable by Borrower pursuant to this Section 9.14 shall be due and payable ten
(10) days after written demand to Borrower (which demand shall include invoices
for such amounts). All such amounts shall be additional Obligations under this
Agreement and shall be secured by the Security Documents and the
Collateral.  All such amounts shall bear interest at the Contract Rate (or, if
applicable, the Default Rate).

9.15                  Compliance with Legal Requirements.  Borrower shall comply
in all material respects with all Legal Requirements applicable to the Property,
Borrower, or both.  Borrower shall obtain and keep in force any and all Licenses
and Permits, franchises, or other governmental authorizations necessary to the
ownership of its material assets or to the conduct of a material portion of its
business.  Borrower shall at all times keep and maintain all of its assets in
substantial compliance with, and shall not cause or permit any of the same to be
in material violation of, any applicable Environmental Legal Requirements.

9.16                  General Indemnity.  Borrower shall indemnify, protect, and
hold Lender, Lender and their respective parents, subsidiaries, directors,
officers, employees, representatives, Lender, successors, assigns, and attorneys
(collectively, the “Indemnified Parties”) harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses (including, without limitation, reasonable attorneys'
fees and legal expenses whether or not suit is brought and settlement costs),
and disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Indemnified Parties, in any way relating to
or arising out of the Property, the Loan, the Collateral, the Loan Documents or
any of the transactions contemplated therein (collectively, the “Indemnified
Liabilities”), to the extent that any of the Indemnified Liabilities results,
directly or indirectly, from any claim made or action, suit, or proceedings
commenced by or on behalf of any Person other than the Indemnified Parties or
Borrower.  Notwithstanding the foregoing, an Indemnified Party shall not be
entitled to indemnification in respect of claims arising from acts of its own
gross negligence or willful misconduct to the extent that such gross negligence
or willful misconduct is determined by the final judgment of a court of
competent jurisdiction, not subject to further appeal, in proceedings to which
such Indemnified Party is a proper party.  The provisions of and undertakings
and indemnification set forth in this paragraph shall survive the satisfaction
and payment of the Obligations and termination of this Agreement.

 
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9.17                  Leasing and Operational Matters.  Borrower shall be at
liberty to renew, modify, amend, terminate or take other actions with respect to
existing operating agreements and leases concerning the Property, or enter into
new leases or operating agreements on commercially reasonable terms.

9.18                  Filings.  Borrower shall file all federal, state and local
tax returns and other reports Borrower is required by law to file.

9.19                  Records and Books.  Borrower shall keep adequate records
and books of account with respect to its business activities in which proper
entries are made in accordance with GAAP reflecting all of its financial
transactions.

9.20                  Further Assurances.  Borrower shall, at Lender's request,
promptly execute and deliver or cause to be executed and delivered to Lender any
and all documents, instruments and agreements reasonably deemed necessary by
Lender to perfect or to continue the perfection of Lender's liens or otherwise
to give effect to or carry out the terms or intent of this Agreement or any of
the other Loan Documents.

9.21                  New Places of Business.  Borrower shall not transfer its
principal place of business or chief executive except upon at least thirty (30)
days prior written notice to Lender.

9.22                  New Name or State of Organization; Fictitious
Names.  Borrower shall not change its name or jurisdiction of organization or
use any fictitious name or "d/b/a" except upon thirty (30) days prior written
notice to Lender and after the delivery to Lender of UCC-1 financing statements,
in form and substance satisfactory to Lender to perfect or continue the
perfection of Lender's liens and security interests.

9.23                  Fiscal Year.  Borrower shall not change its fiscal year.

9.24                  Lost Notes, etc.  Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of any Note
(or of any other Loan Document which is not of public record), Borrower will
issue, in lieu thereof, a replacement Note or replacement other Loan Document in
the same principal amount and otherwise of like tenor and identical in all
respects.

10.             SPECIAL PROVISIONS.

10.1                  Right to Contest.

10.1.1                    Taxes and Claims by Third Parties.  Notwithstanding
the provisions of Section 9.2 which obligate Borrower to pay taxes and other
obligations to third parties when due, it is agreed that any tax, assessment,
charge, levy, claim or obligation to a third party (expressly excluding an
obligation created under the Loan Documents) need not be paid while the validity
or amount thereof shall be contested currently, diligently and in good faith by
appropriate proceedings and if Borrower shall have adequate unencumbered (except
in favor of Lender) cash reserves with respect thereto or if Borrower shall have
fully bonded such claim, and provided that Borrower shall pay all taxes,
assessments, charges, levies or obligations:  (a) immediately upon the
commencement of proceedings to enforce any lien which may have attached as
security therefor, unless such proceeding is stayed by proper court order
pending the outcome of such contest; and (b) as to claims for labor, materials
or supplies, prior to the imposition of any lien on the Property unless the lien
is discharged or bonded as set forth in Section 11.1.4.

10.1.2                    Legal Requirements.  Borrower may contest any claim,
demand, levy or assessment under any Legal Requirements by any Person if:  (a)
the contest is based upon a material question of law or fact raised by Borrower
in good faith; (b) Borrower properly commences and thereafter diligently pursues
the contest; (c) Borrower demonstrates to the Lender's reasonable satisfaction
that Borrower has the financial capability to undertake and pay for such contest
and any corrective or remedial action then or thereafter reasonably likely to be
necessary; (d) no Event of Default exists; and (e) in any case in which the
likely cost of complying with the Legal Requirement in the event the contest is
not successfully resolved, as reasonably determined by Lender, is more than
$100,000, there is no reason to believe that the contest will not be resolved
prior to the Maturity Date.

 
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11.             EVENTS OF DEFAULT.

The following provisions deal with Default, Events of Default, notice, grace and
cure periods, and certain rights of Lender following an Event of Default.

11.1                  Default and Events of Default.  The term “Default” as used
herein or in any of the other Loan Documents shall mean an Event of Default, or
any fact or circumstance which constitutes, or upon the lapse of time, or giving
of notice, or both, could constitute, an Event of Default.  Each of the
following events, unless cured within any applicable grace period (if any) set
forth or referred to below in this Section 11.1, or in Section 11.2, shall
constitute an "Event of Default":

11.1.1                    Generally.  A default by Borrower in the performance
of any term, provision or condition of this Agreement to be performed by
Borrower, or a breach, or other failure to satisfy, any other term, provision,
condition, covenant or warranty under this Agreement and such default remains
uncured beyond any applicable specific grace period (if any) provided for in
this Agreement, or as set forth in Section 11.2 below; or

11.1.2                    Notes, Security Agreement and Other Loan Documents.  A
default by Borrower in the performance of any term or provision of any of the
Notes, or the Security, or of any of the other Loan Documents, or a breach, or
other failure to satisfy, any other term, provision, condition or warranty under
any of the Notes, the Security Agreement or any other Loan Document, and the
specific grace period, if any, allowed for the default in question shall have
expired without such default having been cured; or

11.1.3                    Financial Status and Insolvency.  Borrower shall: (i)
admit in writing its inability to pay its debts generally as they become due;
(ii) file a petition in bankruptcy or a petition to take advantage of any
insolvency act; (iii) make an assignment for the benefit of creditors; (iv)
consent to, or acquiesce in, the appointment of a receiver, liquidator or
trustee of itself or of the whole or any substantial part of its properties or
assets; (v) file a petition or answer seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
Federal Bankruptcy laws or any other applicable law; (vi) have a court of
competent jurisdiction enter an order, judgment or decree appointing a receiver,
liquidator or trustee of Borrower, or of the whole or any substantial part of
the property or assets of Borrower, and such order, judgment or decree shall
remain unvacated or not set aside or unstayed for sixty (60) days; (vii) have a
petition filed against it seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the Federal
Bankruptcy laws or any other applicable law and such petition shall remain
undismissed for sixty (60) days; (viii) have, under the provisions of any other
law for the relief or aid of debtors, any court of competent jurisdiction assume
custody or control of Borrower or of the whole or any substantial part of its
property or assets and such custody or control shall remain unterminated or
unstayed for sixty (60) days; (ix) have an attachment or execution levied
against the Property or other material asset(s) of the Borrower which is not
discharged or dissolved by payment or a bond within thirty (30) days; or (x)
have any materially adverse change in its financial condition which Lender
reasonably determines will have a material adverse effect on its ability to
perform its obligations under the Loan Documents to which it is a party on a
timely basis; or

11.1.4                    Liens.  A lien for the performance of work, or the
supply of materials, or a notice of contract, or an attachment, judgment,
execution or levy is filed against the Collateral and remains unsatisfied or is
not stayed, discharged or dissolved by a bond (or by Cash Collateral acceptable
to the Lender) for a period of thirty (30) days after the filing thereof; or

11.1.5                    Breach of Representation or Warranty.  Any material
representation or warranty made by Borrower or Guarantors herein or in any other
instrument or document relating to the Loan or to  the Property shall be
materially false or misleading when made, or any warranty shall be materially
breached.

11.1.6                    Guarantor Default.  Intentionally Deleted.

 
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11.2                  Grace Periods and Notice.  As to each of the foregoing
events the following provisions relating to grace periods and notice shall
apply:

11.2.1                    No Notice or Grace Period.  There shall be no grace
period and no notice provision with respect to the payment of principal at
Maturity and no grace period and no notice provision with respect to defaults
related to the voluntary filing of bankruptcy or reorganization proceedings or
an assignment for the benefit of creditors, or with respect to nonmonetary
defaults which are not reasonably capable of being cured, or with respect to a
breach of material warranty or representation under Section 8.1. (regarding
Financial Information), or with respect to material breaches under Section 9.6
(Restrictions on Liens, Transfers and Additional Debt), and Section 9.7 (Limits
on Guaranties).  In addition, the below provisions of this Section 11.2 shall
not be applicable where a grace or notice period is otherwise specifically
provided for.

11.2.2                    Nonpayment of Interest and Principal.  As to the
nonpayment of interest, and installments of principal prior to Maturity, there
shall be a ten (10) day grace period without any requirement of notice from
Lender.

11.2.3                    Other Monetary Defaults.  All other monetary defaults
shall have a ten (10) day grace period following notice from Lender, or, if
shorter, a grace period without notice until ten (10) Business Days before the
last day on which payment is required to be made in order to avoid:  (i) the
cancellation or lapse of required insurance, or (ii) a tax sale or the
imposition of late charges or penalties in respect of taxes or other municipal
charges.

11.2.4                    Nonmonetary Defaults and Breaches of Warranties and
Representations Capable of Cure.

(a)          As to nonmonetary defaults which are reasonably capable of being
cured or remedied, unless there is a specific shorter or longer grace period
provided for in this Agreement or in another Loan Document, there shall be a
thirty (30) day grace period following notice from Lender or, if such default
would reasonably require more than thirty (30) days to cure or remedy, such
longer period of time (not to exceed a total of one hundred twenty (120) days
from Lender's notice) as may be reasonably required so long as Borrower shall
commence reasonable actions to remedy or cure the default within thirty (30)
days following such notice and shall diligently prosecute such curative action
to completion within such one hundred twenty (120) day period.  However, where
there is an emergency situation in which there is danger to person or property
such curative action shall be commenced as promptly as possible.

(b)          As to breaches of warranties and representations (other than those
related to financial information set forth in Section 8.1) there shall be a
thirty (30) day grace period following notice from Lender.

11.3                  Certain Remedies.  If an Event of Default shall occur,
Lender:

11.3.1                    Accelerate Obligations.  May, at its option, by notice
to Borrower, declare the Obligations immediately due and payable provided that
in the case of a voluntary petition in bankruptcy filed by Borrower or (after
the expiration of the grace period if any set forth in Section 11.1.3 above) an
involuntary petition in bankruptcy filed against Borrower, such acceleration
shall be automatic whereupon each Note, and all accrued fees and interest and
all other Obligations, shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower;

11.3.2                    Pursue Remedies.  May, at its option, pursue any and
all remedies provided for hereunder, and/or under any one or more of the other
Loan Documents and/or under applicable law.

11.4                    Written Waivers.  If a Default or an Event of Default is
waived by the Lender, in its sole discretion, pursuant to a specific written
instrument executed by authorized officers of Lender, the Default or Event of
Default so waived shall be deemed to have never occurred.

 
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12.             ADDITIONAL REMEDIES.

12.1                  Remedies.  Upon the occurrence of an Event of Default,
whether or not the Indebtedness evidenced by the Notes and secured by the Liens
shall be due and payable and whether or not Lender shall have instituted any
foreclosure or other action for the enforcement of the Liens or the Notes,
Lender may, in addition to any other remedies which Lender may have hereunder or
under the other Loan Documents or under applicable law, and not in limitation
thereof, and in the Lender's sole and absolute discretion:

12.1.1                    Exercise Rights.  Exercise the rights of Borrower
under any contract or other agreement in any way relating to the Property and
take over and use all or any part of the labor, materials, supplies and
equipment contracted for by Borrower, whether or not previously incorporated
into the realty; and

12.1.2                    Other Actions.  In connection with any work or action
undertaken by Lender pursuant to the provisions of the Loan Documents:

(i)
 
engage, contractors, engineers, professionals and others for the purpose of
furnishing labor, materials and equipment;

(ii)
 
pay, settle or compromise all bills or claims which may become liens against the
property constituting the Collateral, or which have been or may be incurred in
any manner in connection with the Property or for the discharge of liens,
encumbrances or defects in the title of  the Property or the Collateral;

(iii)
 
take or refrain from taking such action here­under as the Lender may from time
to time determine; and

(iv)
 
engage marketing and leasing agents and brokers to advertise, lease or sell
portions or all of the Property or other Collateral upon such terms and
conditions as the Lender may in good faith determine.

12.2                  Reimbursement.  Borrower shall be liable to Lender for all
reasonable sums paid or incurred after an Event of Default to lease, operate,
market and/or sell the Property, whether the same shall be paid or incurred
pursuant to this section or otherwise, and all payments made or liabilities
incurred by Lender hereunder of any kind whatsoever shall be paid by Borrower
upon demand with interest at the Default Rate as provided in this Agreement or
the Notes from the date of payment by Lender to the date of payment to Lender
and repayment of such sums with such interest shall be secured by the Security
Documents.

12.3                  Power of Attorney.  For the purpose of exercising the
rights of Lender pursuant to this Section 12, as well as any and all other
rights and remedies of Lender, Borrower hereby irrevocably constitutes and
appoints Lender (or any agent designated by Lender) its true and lawful
attorney-in-fact, upon and the occurrence and during the continuance of any
Event of Default, to execute, acknowledge and deliver any instruments and to do
and perform any acts permitted hereunder or by law in the name and on behalf of
Borrower.

12.3                  Appoint Receiver.  Without limiting any other rights,
options and remedies Lender may have under the Loan Documents, the UCC, at law
or in equity, upon the occurrence and during the continuation of an Event of
Default, Lender shall have the right to apply for and have a receiver appointed
by a court of competent jurisdiction in any action taken by lender to enforce
its rights and remedies and in order to manage, protect and preserve the
Property and/or Collateral, to sell or dispose of the Property and/or
Collateral, to continue the operation of the business of Borrower and to collect
all revenues and profits thereof and to apply the same to the payment of all
expenses and other charges of such receivership including the compensation of
the receiver and to the payments as aforesaid until a sale or other disposition
of such Property and/or Collateral shall be finally made and consummated.  To
the extent not prohibited by applicable law, Borrower hereby irrevocably
consents to, and waives any right to object to or otherwise contest, the
appointment of a receiver as provided herein.  Borrower (i) grants such waiver
and consent knowingly after having discussed the implications thereof with
counsel, (ii) acknowledges that (a) the uncontested right to have a receiver
appointed for the foregoing purposes is considered essential by Lender in
connection with the enforcement of its rights and remedies hereunder and under
the Loan Documents and (b) the availability of such appointment as a remedy
under the foregoing circumstances was a material factor in inducing lender to
make the Loan to Borrower and (iii) to the extent not prohibited by applicable
law, agrees to enter into any and all stipulations in any legal actions, or
agreements or other instruments required or reasonably appropriate in connection
with the foregoing, and to cooperate fully with Lender in connection with the
assumption and exercise of control by any receiver over all or any portion of
the Property and/or Collateral.

 
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13.             CASUALTY .

13.1                  Casualty and Obligation To Repair.  In the event of any
damage or destruction to any Collateral by reason of hazard or casualty that
exceeds $50,000 in the aggregate (collectively, a “Casualty”), Borrower shall
give immediate written notice thereof to Lender and Borrower shall proceed with
reasonable diligence, in full compliance with all Legal Requirements and the
other requirements of the Loan Documents, to repair, restore, rebuild or replace
such Collateral (collectively, the “Repair Work”).  Provided, however,
Borrower's obligation to perform such Repair Work is subject to an agreement of
Lender to release the respective insurance proceeds pursuant to Section 13.3
below.

13.2                  Adjustment of Claims.  All insurance claims shall be
adjusted or settled by Borrower, at Borrower's sole cost and expense, but
subject to Lender's prior written approval which approval shall not be
unreasonably withheld; provided that (a) if no Event of Default exists, Borrower
shall have the right to adjust or settle any claim in an amount less than
$100,000 without Lender's prior written approval and (b) if any Event of Default
exists under any of the Loan Documents, the Lender shall have the right (i) to
approve any adjustment or compromise of such claims by Borrower or (ii) to
adjust and compromise such claims without the approval of Borrower.

13.3                  Payment and Application of Insurance Proceeds.  All
proceeds of insurance shall be paid to Lender or, at Lender's option, shall be
applied to Borrower's Obligations or released, in whole or in part, to pay for
the actual cost of repair, restoration, rebuilding or replacement (collectively,
“Cost To Repair”). Notwithstanding the foregoing, if the Cost To Repair does not
exceed $100,000, Lender shall release so much of the insurance proceeds as may
be required to pay for the actual Cost to Repair in accordance with the
provisions of Section 13.4 if: (i) in Lender's good faith judgment such
proceeds, together with any additional funds that may be deposited with and
pledged to Lender for the benefit of Lender, are sufficient to pay for the Cost
To Repair; (ii) in Lender's good faith judgment the Repair Work is likely to be
completed prior to the Maturity Date; (iii) no Event of Default or monetary
Default exists under the Loan Documents; and (iv) as soon as is reasonably
practical, Borrower commences such Repair Work and diligently prosecutes such
Repair Work to completion.

13.4                  Conditions To Release of Insurance Proceeds .  As to any
insurance proceeds to be released by Lender pursuant to Section 13.3 hereof in
excess of $100,000, Lender may impose reasonable conditions on such release,
which may include, but are not limited to, the following:

                                        (i)Prior written approval by the Lender,
which approval shall not be unreasonably withheld or delayed, of specifications,
cost estimates, and contracts for the restoration or repair of the loss or
damage;

                                        (ii)Evidence of costs, payments and
completion as Lender may reasonably require;

                                        (iii)If the Cost To Repair does not
exceed $100,000, the funds to pay therefor shall be released to Borrower.  Funds
shall be released upon final completion of the Repair Work, unless Borrower
requests earlier funding, in which event partial disbursements shall be made
prior to final completion of the repair, restoration or replacement and the
balance of the disbursements shall be made upon full completion and the receipt
by Lender of satisfactory evidence of payment and release of all liens;

                                        (iv)Determination by Lender that the
undisbursed balance of such proceeds on deposit with Lender, together with
additional funds deposited for the purpose, shall be at least sufficient to pay
for the remaining Cost To Repair, free and clear of all liens and claims for
lien;

                                        (v)The absence of any Event of Default
or monetary Default under any Loan Documents.

13.5                  Application of Unreleased Proceeds.  To the extent that
any insurance proceeds are not released to Borrower pursuant to this Section 13,
such proceeds will be applied to the outstanding Obligations.

 
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14.             ASSIGNMENT AND PARTICIPATION PROVISIONS .

14.1.           Lender shall have the unrestricted right at any time and from
time to time, and without the consent of or notice to Borrower or any other
Person, to grant to one or more banks, other financial institutions, funds
(private or public), investment companies or other parties (each, a
“Participant”) participating interests in Lender’s obligation to lend hereunder
and/or any or all of the loans held by Lender relating to this Agreement.  In
the event of any such grant by Lender of a participating interest to a
Participant, whether or not upon notice to Borrower, Borrower shall continue to
deal solely and directly with Lender in connection with Lender's rights and
obligations hereunder.

14.2.         Lender shall have the unrestricted right at any time and from time
to time, and without Borrower's or any other Person's consent, to assign all or
any portion of Lender's rights and obligations hereunder and under any other
Loan Documents, to one or more banks, other financial institutions, funds
(private or public), investment companies or other parties (each, an
“Assignee”), and Borrower agrees that it shall execute, or cause to be executed,
at no cost to Borrower, such documents, including without limitation, amendments
to any documents, instruments and agreements executed in connection herewith, as
Lender shall deem necessary to effect any such assignment.  In addition, at the
request of Lender and any such Assignee, Borrower shall, at no cost to Borrower,
issue one or more new promissory notes, as applicable, to any such Assignee and,
if Lender has retained any of its rights and obligations hereunder following
such assignment, to Lender, which new promissory notes shall be issued in
replacement of, but not in discharge of, the liability evidenced by the
promissory note held by Lender prior to such assignment and shall reflect the
amount of the respective loans held by such Assignee and Lender after giving
effect to such assignment.  Upon the execution and delivery of appropriate
assignment documentation, amendments and any other documentation required by
Lender in connection with any such assignment, and the payment by Assignee of
the purchase price agreed to by Lender and such Assignee, such Assignee shall
have all of the rights and obligations of Lender hereunder (and under any and
all other guaranties, documents, instruments and agreements executed in
connection herewith) to the extent that such rights and obligations have been
assigned by Lender pursuant to the assignment documentation between Lender and
such Assignee, and Lender shall be released from its obligations hereunder and
thereunder thereafter arising to a corresponding extent.

14.3.         Lender may furnish any information concerning Borrower in its
possession from time to time to prospective Assignees and Participants, provided
that Lender shall require any such prospective Assignee or Participant to agree
in writing to maintain the confidentiality of such information.
 
 
14. 4                   Lender may at any time pledge or assign all or any
portion of its interest and rights under the Loan Documents (including all or
any portion of its Notes) to any bank, financial institutions, funds (private or
public), investment companies or other parties.  No such pledge or assignment or
the enforcement thereof shall release Lender from its obligations hereunder or
under any of the other Loan Documents.

15.             GENERAL
PROVISIONS.                                                    15.1           Notices.  Any
notice or other communication in connection with this Loan Agreement, the Notes,
the Security Agreement, or any of the other Loan Documents, shall be in writing,
and (i) deposited in the United States Mail, postage prepaid, by registered or
certified mail, or (ii) hand delivered by any commercially recognized courier
service or overnight delivery service such as Federal Express, (iii) sent by
facsimile transmission, if a FAX Number is designated below, provided a copy is
also sent by first-class mail, (iv) sent by e-mail, of e-mail address is
designated below, provided a copy is also sent by first-class mail addressed:

If to Borrower:                  STW Oilfield Construction, LLC
Midland or Dallas address?
Attn:
Fax:
E-mail:

with copies to:                  D. Grant Seabolt, Jr.
In-House Counsel & Corporate Secretary
STW Resources Holding Corp.
5307 E. Mockingbird Lane
5th Floor, Mockingbird Station
Dallas, TX 75206
Fax: 214-580-5571
E-Mail: gseabolt@stwresources.com
 
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If to Lender:                       Joshua Brooks
________________________
________________, Texas
Attention:                 Joshua Brooks
Fax:
E-mail:

with copies to:
Kendrick A. James
Attorney at Law
8827 West Sam Houston Pkwy. N., Suite 200
Houston, Texas 77040
Fax: 713-438-9529
E-mail: kjamestx@gmail.com

Any such addressee may change its address, e-mail and/or fax number for such
notices to such other address, e-mail or fax number in the United States as such
addressee shall have specified by written notice given as set forth above.  All
periods of notice shall be measured from the deemed date of delivery.

A notice shall be deemed to have been given, delivered and received for the
purposes of all Loan Documents upon the earliest of:  (i) if sent by such
certified or registered mail, on the earlier of the third Business Day following
the date of postmark or on the date of actual receipt as evidenced by the return
receipt, or (ii) if hand delivered at the specified address by such courier or
overnight delivery service, when so delivered or tendered for delivery during
customary business hours on a Business Day, or (iii) if facsimile or e-mail
transmission is a permitted means of giving notice, upon receipt during
customary business hours on a Business Day as evidenced by confirmation.  Any
notice delivered outside of the customary business hours on a Business Day shall
be deemed received on the next Business Day.

15.2                 No Assignment by Borrower.  Borrower shall not assign or
transfer any of its rights or obligations under any of the Loan Documents or any
monies due hereunder or any interest therein without the prior written consent
of each of the Lender.

15.3                  Parties Bound; No Third Party Beneficiaries. The
provisions of this Agreement and of each of the other Loan Documents shall be
binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns, except as otherwise prohibited by this
Agreement or any of the other Loan Documents. This Agreement is a contract by
and between Borrower and Lender for their mutual benefit, and no third person
shall have any right, claim or interest against Lender by virtue of any
provision hereof.

15.4                  Waivers, Extensions and Releases.

(a)           Subject to Section 15.15 the Lender may at any time and from time
to time waive any one or more of the conditions contained herein or in any of
the other Loan Documents, or extend the time of payment of the Loan, or release
portions of the Collateral from the provisions of this Agreement and from the
Security Agreement or any other Security Document, but any such waiver,
extension or release shall be deemed to be made in pursuance and not in
modification hereof, and any such waiver in any instance, or under any
particular circumstance, shall not be considered a waiver of such condition in
any other instance or any other circumstance.

(b)           Lender's failure, at any time or times hereafter, to require
strict performance by Borrower of any provision of the Loan Documents shall not
waive, affect or diminish any right of Lender thereafter to demand strict
compliance and performance therewith.  Any suspension or waiver by Lender of an
Event of Default under any Loan Document shall not suspend, waive or affect any
other Event of Default under any Loan Document, whether the same is prior or
subsequent thereto and whether of the same or of a different type.  None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in any Loan Document and no Event of Default under any Loan Documents
shall be deemed to have been suspended or waived by Lender, unless such
suspension or waiver is by an instrument in writing specifying such suspension
or waiver and is signed by a duly authorized representative of Lender and
directed to Borrower.

 
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15.5                  Governing
Law.                                             15.5.1           Substantial
Relationship.  It is understood and agreed that all of the Loan Documents shall
be deemed to have been delivered in the State of Texas, which state the parties
agree has a substantial relationship to the parties and to the underlying
transactions embodied, by the Loan Documents.

15.5.2                    Place of Delivery.  Borrower agrees to furnish to
Lender at the Lender's office in Houston, Texas all further instruments,
certifications and documents to be furnished hereunder.

15.5.3                    Governing Law.  This Agreement and, except as
otherwise provided in Section 15.5.4, each of the other Loan Documents shall in
all respects be governed, construed, interpreted, applied and enforced in
accordance with the internal laws of the State of Texas without regard to
principles of conflicts of law.

15.5.4                    Exceptions.  Notwithstanding the foregoing choice of
law:

 
(a)
matters relating to (i) the creation, transfer, perfection, priority and
enforcement of the liens on and security interests in the Property or other
assets situated in states other than Texas, including by way of illustration,
but not in limitation, actions for foreclosure, for injunctive relief, or for
the appointment of a receiver, and (ii) the nature of the interest in the
Property created, transferred or perfected; the method for foreclosure of the
liens on the Property; the nature of the interest in real property that results
from foreclosure and the manner and effect of recording or failing to record
evidence of a transaction that transfers or creates an interest in real
property, shall be governed by the laws of the state where the Property is
situated;

 
(b)
Lender shall comply with applicable law in the state where the Property is
situated to the extent required by the law of such jurisdiction in connection
with the foreclosure of the security interests and liens created under the
Security Agreement and the other Loan Documents with respect to the Property or
other assets situated in states other than Texas; and

 
(c)
provisions of Federal law and the law of the state where the Property is
situated shall apply in defining the terms Hazardous Materials, Environmental
Legal Requirements and Legal Requirements applicable to the Property as such
terms are used in this Loan Agreement and the other Loan Documents.

 
Nothing contained herein or any other provisions of the Loan Documents shall be
construed to provide that the substantive laws of the state where the Property
is situated shall apply to any parties' rights and obligations under any of the
Loan Documents, which, except as expressly provided in clauses (a), (b) and (c)
of this Section 15.6.4., are and shall continue to be governed by the
substantive law of the State of  Texas except as set forth in clauses (a), (b)
and (c) of this Section 15.6.4.  In addition, the fact that portions of the Loan
Documents may include provisions drafted to conform to the law of the state
where the Property is situated is not intended, nor shall it be deemed, in any
way, to derogate the parties' choice of law as set forth or referred to in this
Loan Agreement or in the other Loan Documents.  The parties further agree that
the Lender   may enforce their rights under the Loan Documents including, but
not limited to, their rights to sue the Borrower or to collect any outstanding
indebtedness in accordance with applicable law.

 
 
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15.6                  Consent to Jurisdiction and Service of Process.  AS PART
OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR
FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR LENDER, BORROWER
HEREBY CONSENTS AND AGREES THAT (EXCEPT AS OTHERWISE MANDATORILY REQUIRED BY
APPLICABLE LAW IN ORDER TO ENFORCE LENDER'S RIGHTS UNDER THIS AGREEMENT OR UNDER
ANY OF THE OTHER LOAN DOCUMENTS AND EXCEPT AS OTHERWISE PROVIDED IN ANY OF THE
OTHER LOAN DOCUMENTS) THE COURT OF HARRIS COUNTY, TEXAS OR, AT LENDER'S OR
BORROWER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
TEXAS, SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THE LOAN DOCUMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATED THERETO.  BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. BORROWER FURTHER CONSENTS AND AGREES THAT
SERVICE OF PROCESS IN ANY SUIT BROUGHT FOR ENFORCEMENT OF THIS AGREEMENT  MAY BE
MADE BY MAIL IN THE MANNER SET FORTH IN SECTION 16.1 ABOVE.  NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE
LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY
LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

15.7                  JURY TRIAL WAIVER.  BORROWER AND LENDER MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON THIS LOAN AGREEMENT, ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS LOAN AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF LENDER RELATING TO THE
ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT
NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH
A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  BORROWER CERTIFIES THAT NO
REPRESENTATIVE, LENDER OR ATTORNEY OF LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER.  THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR
BORROWER AND LENDER TO ENTER INTO THE TRANSACTIONS CONTEMPLATED HEREBY.

15.8                  Survival.  All representations, warranties, covenants and
agreements of Borrower herein or in any other Loan Document, or in any notice,
certificate, or other paper delivered by or on behalf of Borrower pursuant
hereto are significant and shall be deemed to have been relied upon by Lender
notwithstanding any investigation made by Lender or on its behalf and shall
survive the delivery of the Loan Documents and the making of the Loan and each
advance pursuant thereto.  No review or approval by Lender or by Lender's
Consultants or representatives, of any plans and specifications, opinion
letters, certificates by professionals or other item of any nature shall relieve
Borrower or anyone else of any of the obligations, warranties or representations
made by or on behalf of Borrower under any one or more of the Loan Documents.

 
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15.9                  Cumulative Rights; No Waiver.  All of the rights of Lender
hereunder and under each of the other Loan Documents and any other agreement now
or hereafter executed in connection herewith or therewith, shall be cumulative
and may be exercised singly, together, or in such combination as Lender may
determine in its sole good faith judgment.  All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule given to Lender or contained in any other agreement between
Borrower and Lender heretofore, concurrently, or hereafter entered into, shall
be deemed cumulative to and not in derogation or substitution of any of the
terms, covenants, conditions, or agreements of Borrower herein contained.  The
failure or delay of Lender to exercise or enforce any rights, liens, powers or
remedies hereunder or under any of the aforesaid agreements or other documents
or security or Collateral shall not operate as a waiver of such liens, rights,
powers and remedies, but all such liens, rights, powers, and remedies shall
continue in full force and effect until the Loan and all other Obligations shall
have been fully satisfied.  All liens, rights, powers, and remedies herein
provided for are cumulative and none are exclusive.

15.10                  Limitations on Claims Against Lender.

15.10.1                    Borrower Must Notify.  Lender shall not be in default
under this Agreement, or under any other Loan Document, unless a written notice
specifically setting forth the claim of Borrower shall have been given to Lender
within sixty (60) days after Borrower first had actual knowledge or actual
notice of the occurrence of the event which Borrower alleges gave rise to such
claim and Lender does not remedy or cure the default, if any there be, with
reasonable promptness thereafter.  Such actual knowledge or actual notice shall
refer to what was actually known by, or expressed in a written notification
furnished to, any of the Authorized Representatives.

15.10.2                    Remedies.  If it is determined by the final order of
a court of competent jurisdiction, which is not subject to further appeal, that
Lender breached any of its obligations under the Loan Documents and has not
remedied or cured the same with reasonable promptness following notice thereof,
Lender's responsibilities shall be limited to the payment of any actual, direct,
compensatory damages sustained by Borrower as a result thereof plus Borrower's
reasonable costs and expenses, including, without limitation, reasonable
attorneys' fees and disbursements in connection with such court proceedings.

15.10.3                    Limitations.  Except as prohibited by law, Borrower
hereby waives any right it may have to claim or recover against Lender in any
litigation any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages.  Borrower certifies that
no representative, agent or attorney of Lender has represented, expressly or
otherwise, that Lender would not, in the event of litigation, seek to enforce
the foregoing waiver.  In no event shall Lender be liable to Borrower or anyone
else unless a written notice specifically setting forth the claim of Borrower
shall have been given to Lender within the time period specified above.

15.11                  Obligations Absolute.  Except to the extent prohibited by
applicable law which cannot be waived, the Obligations of Borrower under the
Loan Documents shall be absolute, unconditional and irrevocable and shall be
paid strictly in accordance with the terms of the Loan Documents under all
circumstances whatsoever, including, without limitation, the existence of any
claim, set off, defense or other right which Borrower may have at any time
against the Lender whether in connection with the Loan or any unrelated
transaction.

15.12                  Table of Contents, Title and Headings.  Any Table of
Contents, the titles and the headings of sections are not parts of this
Agreement or any other Loan Document and shall not be deemed to affect the
meaning or construction of any of their provisions.

15.13                  Counterparts.  This Agreement may be executed in several
counterparts, each of which when executed and delivered is an original, but all
of which together shall constitute one instrument.  In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counter­part, which is executed by the party against whom enforcement of
this Agreement is sought.

15.14                  Time of the Essence.  Time is of the essence of each
provision of this Agreement and each other Loan Document.

 
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15.15                  Amendments; No Oral Changes, etc.   Any amendment or
modification of this Agreement must be signed by both Borrower and Lender. In no
event shall any oral agreements, promises,  actions, inactions, knowledge,
course of conduct, course of dealings or the like be effective to amend,
terminate, extend or otherwise modify this Loan Agreement or any of the other
Loan Documents.  THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES, AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

15.16                  Severability.  Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

15.17                  Cumulative Effect; Conflict of Terms.  The provisions of
the Other Agreements and the Security Documents are hereby made cumulative with
the provisions of this Agreement.  Except as otherwise provided in any of the
Other Agreements or the Security Documents by specific reference to the
applicable provision of this Agreement, if any provision contained in this
Agreement is in direct conflict with, or inconsistent with, any provision in any
of the Other Agreements or the Security Documents, the provision contained in
this Agreement shall govern and control.

15.18                  Lender's Consent.  Whenever Lender's consent is required
to be obtained under any Loan Documents as a condition to any action, inaction,
condition or event, Lender shall be authorized to give or withhold such consent
in its sole and absolute discretion without regard to reasonableness (unless
otherwise expressly provided herein or therein) and to condition their consent
upon the giving of additional collateral security for the Obligations, the
payment of money or any other matter.

15.19                  Interpretation; Integration.  No provision in any of the
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured, drafted or
dictated such provision.  This Agreement and the other Loan Documents are
intended by the parties as the final, complete and exclusive statement of the
transactions evidenced by this Agreement and the other Loan Documents.  All
prior or contemporaneous promises, agreements and understandings, whether oral
or written, are deemed to be superseded by this Agreement and the other Loan
Documents, and no party is relying on any promise, agreement or understanding
not set forth in this Agreement or the other Loan Documents.

15.20                  No Preservation or Marshaling.  Borrower agrees that
Lender shall not have any obligation to preserve rights to the Collateral
against prior parties or to marshal any Collateral for the benefit of any
Person.

15.21                  Waivers by Borrower.  EXCEPT AS IS OTHERWISE EXPRESSLY
PROVIDED FOR HEREIN, BORROWER WAIVES (A) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, INTENT TO ACCELERATE,
ACCELERATION, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF
ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS,
CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN
ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN
THIS REGARD; (B) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL
OR OBTAINING ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING LENDER TO EXERCISE ANY OF ITS REMEDIES; (C) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (D) NOTICE OF ACCEPTANCE
HEREOF.  BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL
INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING
UPON THE FOREGOING WAIVERS IN FUTURE DEALINGS WITH BORROWER.  BORROWER WARRANTS
AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL
AND HAS KNOWINGLY AND VOLUNTARILY WAIVED SUCH RIGHTS FOLLOWING CONSULTATION WITH
LEGAL COUNSEL.

 
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15.22                  Monthly Statements.  While Lender may issue invoices or
other statements on a monthly or periodic basis (a “Statement”), it is expressly
acknowledged and agreed that:  (i) the failure of Lender to issue any Statement
on one or more occasions shall not affect Borrower's obligations to make
payments under the Loan Documents as and when due; (ii) the inaccuracy of any
Statement shall not be binding upon Lender and so Borrower shall always remain
obligated to pay the full amount(s) required under the Loan Documents as and
when due notwithstanding any provision to the contrary contained in any
Statement; (iii) all Statements are issued for information purposes only and
shall never constitute any type of offer, acceptance, modification, or waiver of
the Loan Documents or any of Lender's rights or remedies thereunder; and (iv) in
no event shall any Statement serve as the basis for, or a component of, any
course of dealing, course of conduct, or trade practice which would modify,
alter, or otherwise affect the express written terms of the Loan Documents.

15.23                  Recourse Provisions.

15.23.1                    Borrower Fully Liable.  Borrower shall be fully
liable for the Loan and the payment and performance of all Obligations of
Borrower to Lender.

15.23.2                    Guarantor Liability.  Guarantor shall be liable with
respect to the Loan and the payment and performance of the Obligations only to
the extent set forth in the Guaranty.

15.23.3                    No Member Liability.  No Member of Borrower shall
have any personal liability for the payment and performance of the Obligations

15.24                  USA Patriot Act Notice. Lender hereby notifies Borrower
and Guarantor that pursuant to the requirements of the USA Patriot Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)) (as amended, the
“Patriot Act”), it is required to obtain, verify and record information that
identifies Borrower and Guarantor, which information includes the name and
address of Borrower and Guarantor and other information that will allow Lender
to identify Borrower and Guarantor in accordance with the Patriot Act.

 
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IN WITNESS WHEREOF this Agreement has been duly executed and delivered as a
sealed instrument as of the date first above written.

Borrower:

STW Energy Services, LLC,
a Texas limited liability company

 
By:                                                                
Lee Maddox, President

Lender:

 
Joshua  Brooks,

 
An Individual

By:                                                                
Joshua Brooks
 
 
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Exhibit A
Definitions

1.         When used herein, the following terms shall have the following
meanings (terms defined in the singular shall have the same meaning when used in
the plural and vice versa):

Affiliate - of any Person shall mean any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
first-mentioned Person, or any individual, in the case of a Person who is an
individual, who has a relationship by blood, marriage or adoption to such
first-mentioned Person not more remote than first cousin, and, without limiting
the generality of the foregoing, shall include (a) any Person beneficially
owning or holding 51% or more of any class of voting stock or partnership
interests or limited liability company membership interests of such
first-mentioned Person or (b) any Person of which such first-mentioned Person
owns or holds 51% or more of any class of voting stock or partnership interests
or limited liability company membership interests.  For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting stock or partnership interests or
limited liability company membership interests or by contract or otherwise.

A.M. - a time from and including 12 o'clock midnight to and excluding 12 o'clock
noon on any day using Central Time.

Approved Appraised Value – Intentionally Deleted.

Bankruptcy Remote - as to the Borrower, such term shall mean that Borrower (i)
is a single purpose entity which owns no assets other than the Property and
related assets and (ii) has no Indebtedness and in the future will not incur any
Indebtedness other than the Loan and Permitted Additional Debt.

Business Day - every day other than Saturday, Sunday and any other day which is
a legal holiday under the laws of the state of Lender's office for notice
purposes hereunder or is a day on which banking institutions in such state are
required or authorized to close.

Cash Collateral – all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Lender or any
Affiliate of Lender or in transit to any of them; which term includes, without
limitation, the Tax Escrow Account, all sums deposited in such account and any
cash collateral pledged to Lender pursuant to any provision of this Agreement or
any of the other Loan Documents.

CERCLA - the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. §9601, et seq.), as amended from time to time, which for purposes
of this definition shall include, without limitation, the Superfund Amendments
and Reauthorization Act.

Collateral – the Property, Cash Collateral and all other property described in
the Security Agreement, UCC-1 Filing Statements and the other Security
Documents.

Contract Rate – shall mean fifteen percent (15%) per annum.

Default Rate - the Maximum Legal Rate.

Dollars and $ - lawful money of the United States.

Eligible Assignee - shall mean (a) any Affiliate or subsidiary of Lender, and
(b) any other Person consented to as such by the Lender.

Environmental Legal Requirements - all federal, state or local laws, statutes,
ordinances, or regulations pertaining to industrial hygiene, environmental
conditions or the existence, release, generation, storage or disposal of any
Hazardous Materials, including but not limited to, CERCLA and RCRA.

 
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Exhibit - means, when followed by a letter, the exhibit attached to this
Agreement bearing that letter and by such reference is fully incorporated in
this Agreement.

Following Business Day Convention - shall mean the convention for adjusting any
relevant date if it would otherwise fall on a day that is not a Business
Day.  When used in connection with a date the term, "Following Business Day
Convention" shall mean that an adjustment will be made if that date would
otherwise fall on a day that is not a Business Day so that the date will be the
first following day that is a Business Day.

GAAP - generally accepted accounting principles in the United States of America
in effect from time to time.

Guarantors – None.

Hazardous Materials - one or more of the following substances:

(a)                  those substances included within the definitions of
"hazardous substances," "hazardous materials" or "toxic substances," in CERCLA,
RCRA, Toxic Substances Control Act, Federal Insecticide, Fungicide and
Rodenticide Act and the Hazardous Materials Transportation Act (49 U.S.C.
§ 1801, et seq.);

(b)                  such other substances, materials and wastes which at the
time in question are regulated as hazardous or toxic under applicable local,
state or federal law, or which are classified as hazardous or toxic under
federal, state, or local laws or regulations; and

(c)                  any material, waste or substance which is (i) asbestos,
(ii) polychlorinated biphenyls, (iii) designated as a "hazardous substance"
pursuant to Section 311 of the Clean Water Act, 33 U.S.C. §1251, et seq. or
listed pursuant to Section 307 of the Clean Water Act (33 U.S.C. §1317), (iv)
explosives, (v) radioactive materials, (vi) petroleum, petroleum products or any
fraction thereof or (vii) mold, mildew or fungi.

Indebtedness - as applied to a Person means, without duplication (a) all items
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of such Person on the date as
of which Indebtedness is to be determined (b) all obligations of other Persons
which such Person has guaranteed and (c) in the case of Borrower (without
duplication), the Obligations.

Investment - the acquisition of any real or tangible personal property or of any
stock or other security, any loan, advance, bank deposit, money market fund,
contribution to capital, extension of credit (except for accounts receivable
arising in the ordinary course of business and payable in accordance with
customary terms), or purchase or commitment or option to purchase or otherwise
acquire real estate or tangible personal property or stock or other securities
of any party or any part of the business or assets comprising such business, or
any part thereof.

Legal Requirements - all applicable federal, state, county and local laws,
by-laws, rules, regulations, codes and ordinances, and the requirements of any
governmental agency or authority having or claiming jurisdiction with respect
thereto, including, but not limited to, those applicable to health, fire,
safety, sanitation, labor and environmental matters and shall also include all
orders and directives of any court, governmental agency or authority having or
claiming jurisdiction with respect thereto.

Lease Agreements – all lease agreements now existing or entered into by Borrower
or any Affiliate of Borrower with respect to the Property including.

Lender - means Crown Financial, LLC and any other Person which hereafter becomes
a party hereto as a “Lender” pursuant to the terms of Section 15, each in their
individual capacity, and Lenders means, Crown Financial LLC and each such other
Person.

Licenses and Permits - all licenses, permits, authorizations and agreements
issued by or agreed to by any governmental authority, and including, but not
limited to, operational permits, health and safety permits, and such other
permits and licenses that may be required to operate the Property and/or
Collateral.

 
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Loan Amount - the amount of Loan Proceeds actually advanced or to be advanced by
Lender, as defined in Section 2.1.

Loan Documents - this Agreement, the Note, the Security Agreement, the UCC-1
Financing Statements, the Security Documents, the Guaranties, the Environmental
Indemnity Agreement and the Other Agreements, all as amended, renewed, modified,
replaced, extended or restated from time to time.

Loan Proceeds - all outstanding proceeds of the Loan advanced by Lender.

Maturity - the Maturity Date, or in any instance, upon acceleration of the Loan,
if the Loan has been accelerated as a result of the occurrence of an Event of
Default.

Maturity Date – Thirty-six (36) months being the date on which the Note is due
and payable in full.

Maximum Legal Rate - on any day, the highest non-usurious rate of interest
permitted by applicable law on such day, computed on the basis of the actual
number of days elapsed over a year of 365/355 days, as the case may be.

Note - any individual promissory note of Borrower payable to the order of Lender
and evidencing all or a portion of the Loan, and Notes means all of the Notes,
collectively; together with any renewals, extensions or modifications thereof
and substitutions therefor.  To the extent that at any time there is only one
Note in effect, all references in this Agreement to the "Notes" shall be deemed
to refer to such single Note.

Obligations - all liabilities and obligations of Borrower to Lender under and
with respect to the Loan, the Note, this Agreement, and the other Loan
Documents, and all renewals, increases, extensions, modifications,
rearrangements or restatements thereof.  The term includes, without limitation,
all principal, interest, charges, expenses, fees, attorneys' fees and any other
sums chargeable to Borrower under any of the Loan Documents.

Operating Agreements – all operating agreements now existing or entered into by
Borrower or any Affiliate of Borrower with respect to the Property.

Other Agreements - any and all agreements, instruments and documents (other than
this Agreement, the Notes and the Security Documents), heretofore, now or
hereafter executed by Borrower and delivered to Lender with respect to the
transactions contemplated by this Agreement, together with related
documentation, all as amended, renewed, modified, extended or restated from time
to time.

Person - an individual, partnership, limited liability company, corporation,
joint stock company, joint venture, estate, trust or unincorporated
organization, or a governmental agency or political subdivision thereof.

Prepayment Premium – The Prepayment Premium will be equal to the amount of
interest that would have been received by Lender over the first six (6) months
of the Loan, if the Loan had not been repaid, less any interest payments made as
part of the principal and interest payments made by borrower pursuant to Section
2.4.1 during the first six (6) months of the Loan.  (By way of example, if the
Loan is repaid at the end of month four (4) and Borrower has paid all
installments through month four (4), then the Prepayment Penalty would be equal
to the interest that would accrue be due and payable throughout the entire first
six (6) month period less the four (4) months of interest previously paid, which
would be equal to two (2) months of interest).

P.M. - a time from and including twelve o'clock noon to and excluding twelve
o'clock midnight on any day using Central Time.

RCRA - the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §6901, et
seq.), as amended from time to time.

Security Documents - the Security Agreement, and associated UCC-1 Financing
Statements and all other documents executed by Borrower granting lender security
in the Property and Collateral; together with any modifications thereof,
additions thereto and substitutions therefor.

 
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Term - the period commencing on the date of the closing of the Loan and ending
on the Maturity Date.

UCC - means the Uniform Commercial Code in effect in the State of Texas and the
jurisdiction where the Property or any other Collateral is located.
 
2.         Accounting and Other Terms.  All accounting terms not specifically
defined herein shall be construed in accordance with GAAP applied on a
consistent basis by the accounting entity to which they refer, and all financial
data pursuant to this Agreement shall be prepared in accordance with such
principles.  All other terms contained in this Agreement shall have, when the
context so indicates, the meanings provided for by the UCC to the extent the
same are used or defined therein.  However, if a term is defined in Article 9 of
the UCC differently than in another Article of the UCC, the term has the meaning
specified in Article 9 of the UCC.

3.         Certain Matters of Construction.  The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision.  Any pronoun used
shall be deemed to cover all genders.  The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of this Agreement.  All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any instruments or agreements, including, without
limitation, references to any of the Loan Documents, shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.  A reference to any agreement, budget, document or schedule shall
include such agreement, budget, document or schedule as revised, amended,
modified, restated or supplemented from time to time in accordance with its
terms and the terms of this Agreement.  The singular includes the plural and the
plural includes the singular.  A reference to any Person includes its permitted
successors and permitted assigns.  The words "include", "includes" and
"including" are not limiting.  The words "approval" and "approved", as the
context so determines, means an approval in writing given to the party seeking
approval after full and fair disclosure to the party giving approval of all
material facts necessary in order to determine whether approval should be
granted.  Reference to a particular "Section" refers to that Section of this
Agreement unless otherwise indicated.

 
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Exhibit B
Property Description

List of equipment
 

 
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EXHIBIT C
Insurance Requirements

I.                  GENERAL REQUIREMENTS.

The General Requirements set forth herein shall be applicable to the insurance
requirements outlined below.

(A)         RELATING TO INSURER.

All insurance coverages required by the Loan Documents must be provided by
insurance companies acceptable to the Lender that are rated at least an “A-IX”
or better by Best’s Insurance Guide.

Each insurance policy must (i) permit the Lender to pay premiums at the Lender’s
discretion and (ii) as respects any third party liability claim brought against
the Lender, obligate the insurer to defend Lender as an additional insured
thereunder.

(B)         RELATING TO DOCUMENTATION OF COVERAGE.

The Borrower shall submit to Lender an Accord certificate, effective with the
closing of the Loan, evidencing all required insurance coverage and that must be
furnished annually thereafter, prior to the expiration date of the preceding
policy(ies).  The Lender reserves the right to require a complete copy of the
policy.

(C)         CANCELLATION AND MODIFICATION CLAUSE.

The insurer hereby agrees that its policy will not lapse, terminate, or be
canceled, or be amended or modified to reduce limits or coverage terms unless
and until Lender has received not less than thirty (30) days’ prior written
notice thereof.  Notwithstanding the foregoing, in the event of cancellation due
to non-payment of premium, the insurer shall provide not less than ten (10)
days’ Notice of Cancellation to Lender.

(D)         ADDITIONAL INSURED/LOSS PAYEE CLAUSE.

All policies shall name Lender as an additional insured and/or loss payee, as
the case may be.

II.                  TYPES OF INSURANCE – DURING THE CONSTRUCTION PERIOD.

The Borrower will at all times keep the Property insured against loss or damage
from such causes as are customarily insured against by prudent owners of similar
Property.  Without limiting the generality of the foregoing, the Borrower will
obtain, and maintain in effect, the following amounts and types of insurance:

A.         LIABILITY INSURANCE.

B.              “ALL RISKS” OR “SPECIAL” FORM PROPERTY INSURANCE.

All Risks insurance against loss or damage to the Property, including perils
typically provided under an Extended Coverage Endorsement and other forms of
broadened risk perils, and insured  on a “replacement cost” value basis to the
extent of the full replacement value of the Property.

C.              WORKERS COMPENSATION INSURANCE.

Workers Compensation insurance covering all employees of the Borrower, or any
contractor employed to run, operate or maintain the Property to the extent
required by Statutory law, including Other States Coverage.  Policy shall also
provide Employer’s Liability coverage for

 
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Bodily Injury by Accident - $500,000 Each Accident

Bodily Injury by Disease - $500,000 Policy Limit

Bodily Injury by Disease - $500,000 Each Employee

D. LIABILITY INSURANCE

COMMERCIAL GENERAL LIABILITY: A Commercial General Liability insurance policy,
including contractual liability, with limits of liability for bodily injury and
property damage of at least $1,000,000 per occurrence and $2,000,000 annual
aggregate, with the Borrower and Lender as additional insureds.

AUTOMOBILE LIABILITY:  An Automobile Liability insurance policy with limits of
liability for bodily injury and property damage of at least $1,000,000 per
accident.

UMBRELLA LIABILITY:  Umbrella Liability insurance in the minimum amount of
$5,000,000 for each occurrence and aggregate combined single limit for all
liability, with a $10,000 self-insured retention for exposure not covered in
underlying primary policies.  The Umbrella Liability policy shall name in its
underlying schedule the policies of Commercial General Liability, Automobile
Liability and Employer’s Liability.