CREDIT AGREEMENT

This Credit Agreement ("Agreement") is made as of December 10, 2010, by and
between NATURAL GAS SERVICES GROUP, INC., a Colorado corporation ("Borrower"),
and JPMORGAN CHASE BANK, N.A., a national banking association ("Lender").
Borrower has requested that Lender make loans to Borrower in the following
manner and subject to the following terms and conditions:

ARTICLE I
Definitions

Section 1.01    Certain
Definitions.                                                                Unless
a particular word or phrase is otherwise defined or the context otherwise
requires, capitalized words and phrases used in this Agreement shall have the
following meanings (all definitions that are defined in this Agreement in the
singular to have the same meanings when used in the plural and vice versa):
 
Account shall have the meaning set forth in Article 9 of the UCC.

Acquisition means any transaction, or any series of related transactions,
consummated on or after the date hereof, by which the Borrower or any of its
Domestic Subsidiaries (a) acquires any going business or all or substantially
all of the assets of any Person, whether through purchase of assets, merger or
otherwise or (b) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the Equity Interests of a Person which has ordinary voting
power for the election of directors or other similar management personnel of a
Person (other than Equity Interests having such power only by reason of the
happening of a contingency) or a majority of the outstanding Equity Interests of
a Person.

Adjusted LIBOR Rate means, with respect to any LIBOR Borrowing for any Interest
Period or for any CBFR Borrowing, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBOR Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate

Adjusted One Month LIBOR Rate means, for any day, an interest rate per annum
equal to the sum of (i) 2.50% per annum plus (ii) the Adjusted LIBOR Rate for a
one month Interest Period on such day (or if such day is not a Business Day, the
immediately preceding Business Day); provided that, for the avoidance of doubt,
the Adjusted LIBOR Rate for any day shall be based on the rate appearing on the
Reuters Screen LIBOR01 Page (or on any successor or substitute page) at
approximately 11:00 a.m. London time on such day (without any rounding).

Affiliate means any Person controlling, controlled by or under common control
with any other Person.  For purposes of this definition, "control" (including
"controlled by" and "under common control with") means 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 any indicia of
equity rights (whether issued and outstanding capital stock, partnership
interests or otherwise) or by any other means.

Agreement means this Credit Agreement, as it may from time to time be amended,
modified, restated or supplemented.

Annual Audited Financial Statements means, with respect to each fiscal year of
the Borrower, (a) the Borrower’s 10-K Report filed with the Securities Exchange
Commission for such fiscal year, prepared in conformity with GAAP and
accompanied by a report and opinion of independent certified public accountants
with an accounting firm of standing and reputation acceptable to the Lender,
which shall state that such financial statements, in the opinion of such
accountants, present fairly, in all material respects, the financial position of
the Borrower and its Subsidiaries, on a consolidated basis, as of the date
thereof and the results of its operations and cash flows for the period covered
thereby in conformity with GAAP, and (b) the annual consolidating financial
statements of the Borrower and its Subsidiaries, containing a balance sheet as
of the end of such fiscal year and an income statement, retained earnings
statements and a statement of cash flows for such fiscal year, all prepared in
reasonable detail and certified as true and correct by an authorized officer of
Borrower acceptable to Lender on behalf of Borrower, with the parties
recognizing that such consolidating statements will be prepared in accordance
with GAAP only to the extent normal and customary and shall not be required
until the end of the first full fiscal quarter of Borrower occurring after the
creation or acquisition by Borrower of its first Subsidiary, if any.

Applicable Margin means, for any day, the applicable rate per annum set forth
below based upon the Borrower’s Leverage Ratio as of the most recent
determination date, provided that until the delivery to the Lender, pursuant to
Section 5.02(b) below, of the Borrower's Quarterly Financial Statements for the
Borrower's fiscal quarter ending December 31, 2010, the "Applicable Margin"
shall be the applicable rate per annum set forth below in Category 3:
 
 
 

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Leverage Ratio
 
 
Applicable Margin for
CBFR Borrowings
 
 
Applicable Margin for
LIBOR Borrowings
 
 
       Category 1
       > 2.00x
 
 
-0.50%
 
 
+2.25%
 

 
Category 2
       > 1.00x
 
 
-0.75%
 
+2.00%
 
Category 3
       > 1.00x
 
 
-1.00%
 
 
+1.75%

 

For purposes of the foregoing, (a) the Applicable Margin shall be determined as
of the end of each fiscal quarter of the Borrower (commencing with the fiscal
quarter ending December 31, 2010) based upon the Borrower’s Annual Financial
Statements or Quarterly Financial Statements, as applicable, together with the
related Compliance Certificates, delivered pursuant to Sections 5.02(a), 5.02(b)
and 5.02(c) hereof, and (b) each change in the Applicable Margin resulting from
a change in the Leverage Ratio shall be effective during the period commencing
ten (10) days after the date of delivery to the Lender of such financial
statements indicating such change and ending on the date immediately preceding
the effective date of the next such change, provided that the Leverage Ratio
shall be deemed to be in Category 1 at the option of the Lender if the Borrower
fails to deliver the Annual Audited Financial Statements or Quarterly Financial
Statements, as applicable, together with the related Compliance Certificates,
required to be delivered pursuant to Sections 5.02(a), 5.02(b) and 5.02(c)
hereof during the period from the expiration of the time for delivery thereof
until such financial statements are delivered.

Applicable Lending Office shall mean Lender's Domestic Lending Office in the
case of a CBFR Borrowing and Lender's LIBOR Lending Office in the case of a
LIBOR Borrowing.

Applications means all applications and agreements for Letters of Credit, or
similar instruments or agreements, in Proper Form, now or hereafter executed by
Borrower in favor of Lender in connection with any Letter of Credit now or
hereafter issued or to be issued under the terms of Section 2.08 at the request
of Borrower.

Availability means, as at any date, an amount equal to (a) the lesser of (i) the
Commitment or (ii) the Borrowing Base, minus (b) the aggregate amount of the
Loans then outstanding, minus (c) the aggregate amount of the Letter of Credit
Liabilities then outstanding, minus (c) all Rent Reserves, all at said date.

Bankruptcy Code means the United States Bankruptcy Code, as amended, and any
successor statute.

Board means the Board of Governors of the Federal Reserve System of the United
States of America and any successor entity performing similar functions.

Book Value means the depreciated book value of the applicable Equipment
Inventory or General Inventory, as the case may be, as shown on the Borrower’s
financial records, so long as the applicable depreciation schedule utilized (i)
is in accordance with GAAP for depreciating the applicable type of Inventory and
(ii) is consistently applied at all times during the term of this Agreement.
 
 
 

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             Borrowing Authorization means (i) with respect to a corporation, a
certificate, in Proper Form, of the Secretary or an Assistant Secretary of a
corporation as to the resolutions of the Board of Directors of such corporation
authorizing the execution, delivery and performance of the Credit Documents to
be executed by such corporation; the incumbency and signature of the officer of
such corporation executing such documents on behalf of such corporation, and the
Organizational Documents of such corporation, and (ii) with respect to a
partnership, limited liability company, joint venture or other non-individual
Person, such written instruments as shall be required by Lender, each in Proper
Form, authorizing the execution, delivery and performance of the Credit
Documents to be executed by such Person; the incumbency and signature of the
representative of such Person executing such documents on behalf of such Person,
and the Organizational Documents of such Person.
 
Borrowing Base means, as at any date, the amount of the Borrowing Base shown on
the Borrowing Base Certificate then most recently delivered pursuant to
Paragraph 5.02(c) hereof, determined by calculating the amount equal to the sum
of the following:

(a)  
80% of the Eligible Receivables of Borrower and its Domestic Subsidiaries at
said date; plus

 
(b)
50% of the Book Value of the Eligible General Inventory of Borrower at said
date; provided, however, that the amount of the Borrowing Base attributable to
the Eligible General Inventory component described in this subparagraph on any
date shall never exceed 50% of the aggregate amount of the Commitment as of such
date; plus

 
(c)
75% of the Book Value of the Eligible Equipment Inventory of Borrower at said
date.

 
 
In the absence of a current Borrowing Base Certificate, Lender may determine the
Borrowing Base from time to time in its reasonable discretion, taking into
account all information reasonably available to it, and the Borrowing Base from
time to time so determined shall be the Borrowing Base for all purposes of this
Agreement until a current Borrowing Base Certificate, in Proper Form, is
furnished to and accepted by Lender.  Notwithstanding any provision to the
contrary in this Agreement or in any other Credit Document, if any collateral
audit or field exam of Borrower’s and its Subsidiaries’ operations and
Collateral by Lender after the date hereof (i) discloses any material deviations
for the applicable Borrowing Base components reported under the most recently
delivered Borrowing Base Certificate, then the applicable Borrowing Base
components for which such deviations are discovered may be adjusted accordingly
at Lender’s reasonable discretion, or (ii) results in material negative
adjustments when compared to the results from the collateral audit or field exam
of Borrower’s operations and Collateral conducted by Lender prior to the date of
this Agreement, then the Borrowing Base components and features (i.e.,
eligibility criteria and/or Borrowing Base advance rates) may be adjusted
accordingly at Lender’s reasonable discretion.

            Borrowing Base Certificate means a certificate, duly executed by an
appropriate officer or other responsible party acceptable to Lender on behalf of
Borrower, appropriately completed and in substantially the form of Exhibit C
hereto.  Each Borrowing Base Certificate shall be effective only as accepted by
Lender (and with such revisions, if any, as Lender may reasonably require as a
condition to such acceptance).

             Business Day means a day (other than a Saturday or Sunday) on which
banks generally are open in Austin, Chicago and Dallas for the conduct of
substantially all of their commercial lending activities and interbank wire
transfers can be made on the Fedwire system; provided, however, that with
respect to LIBOR Borrowings and the Adjusted One Month LIBOR Rate, Business Day
shall also mean a day on which transactions in dollar deposits between lenders
may be carried on in the London eurodollar interbank market.

Capital Expenditures means, as to any Person, without duplication, any
expenditure or commitment to expend money for any purchase or other acquisition
of any asset which would be classified as a fixed or capital asset on a balance
sheet of such Person prepared in accordance with GAAP.

             Capital Lease Obligations means, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal Property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP (including Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board, as amended) and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).

CBFR Borrowing shall mean, as of any date, that portion of the principal balance
of the Loans bearing interest at the CB Floating Rate as of such date.

             CB Floating Rate means, on any day, the Prime Rate for such day;
provided that the CB Floating Rate shall never be less than the Adjusted One
Month LIBOR Rate for a one month Interest Period on such day (or if such day is
not a Business Day, the immediately preceding Business Day).  Any change in the
CB Floating Rate due to a change in the Prime Rate or the Adjusted One Month
LIBOR Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Adjusted One Month LIBOR Rate, respectively.

Ceiling Rate means, on any day, the maximum nonusuri­ous rate of interest
permitted for that day by whichever of applicable federal or Texas laws permits
the higher interest rate, stated as a rate per annum.  On each day, if any, that
the Texas Finance Code establish­es the Ceiling Rate, the Ceiling Rate shall be
the "weekly ceiling" (as defined in the Texas Finance Code) for that
day.  Lender may from time to time, as to current and future balances, implement
any other ceiling under the Texas Finance Code by notice to Borrower, if and to
the extent permit­ted by the Texas Finance Code.  Without notice to Borrower or
any other person or entity, the Ceiling Rate shall automatically fluctuate
upward and downward as and in the amount by which such maximum nonusurious rate
of interest permitted by applicable law fluctu­ates.

           Change in Law means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by Lender (or, for purposes
of Section 2.06(a), by any lending office of Lender or by Lender’s holding
company) with any binding request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement.  Notwithstanding anything herein to the contrary, the Dodd Frank
Wall Street Reform and Consumer Protection Act, and all requests, rules,
guidelines and directives promulgated thereunder shall be deemed to be “Changes
in law”, regardless of the date enacted or adopted.
 
 
 

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Chattel Paper shall have the meaning set forth in Article 9 of the UCC.

             Code means the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regula­tions, rulings and interpretations
thereof or thereunder by the Internal Revenue Service.

             Collateral means (a) all Accounts now or hereafter owned by
Borrower and/or any of its Domestic Subsidiaries, (b) all leases and other
Chattel Paper covering all or any portion of any rental compressor Inventory of
Borrower and/or any of its Domestic Subsidiaries (including any Equipment
Inventory), including without limitation, all rights to payments now or
hereafter due and owing thereunder, (c) all General Inventory now or hereafter
owned by Borrower and/or any of its Domestic Subsidiaries, (d) all Equipment
Inventory now or hereafter designated by Borrower in accordance with the other
terms of this Agreement, together with all leases of any Equipment Inventory and
other Chattel Paper covering or otherwise related to any Equipment Inventory,
now or hereafter owned by Borrower and/or any of its Domestic Subsidiaries, (e)
100% of all Equity Interests hereafter owned by Borrower and/or any of its
Domestic Subsidiaries (i) in all Domestic Subsidiaries of the Borrower hereafter
created or acquired and (ii) in any other non-Subsidiary entity in which
Borrower and/or any of its Domestic Subsidiaries hereafter acquires any Equity
Interest, (f) 65% of all Equity Interests in all non-Domestic Subsidiaries of
the Borrower hereafter existing, and (g) all products and proceeds of any of the
foregoing.
 
            Collateral Access Agreement means any landlord waiver, subordination
or other agreement, in form and substance satisfactory to Lender, between Lender
and any third party (including any licensor, bailee, consignee, customs broker,
or other similar Person) in possession of any Collateral or any landlord of
Borrower or any of its Domestic Subsidiaries for any leased real property where
any Collateral is located, as such landlord waiver, subordination or other
agreement may be amended, restated, or otherwise modified from time to time.

Commitment means the obligation of Lender to make Loans to the Borrower in an
aggregate principal amount at any one time outstanding up to (but not exceeding)
$20,000,000.00, as the same may hereafter be reduced by Borrower in accordance
with the terms of Section 2.01(b) hereof or increased in accordance with the
terms of Section 2.01(c) hereof.

Commitment Coverage Ratio means, on any day, the ratio of (a) the amount of the
Borrowing Base as of such date to (b) the amount of the Commitment as of such
date.

            Compliance Certificate shall have the meaning given to it in Section
5.02(c) hereof.

            Consequential Loss shall mean, any amounts payable under Section
2.05(d).

Controlled Group means all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under common control which,
together with the applicable Person, are treated as a single employer under
Section 414 of the Code.

            Cover means, on any day, an amount equal to 105% of the aggregate
Letter of Credit Liabilities then outstanding on such day, such amount to be
paid in immediately available funds and collaterally assigned by Borrower to
Lender and held by Lender as security for the Obligations using documentation
satisfactory to Lender.  Such amount shall be retained by Lender in a collateral
account until such time as the applicable Letters of Credit for which such Cover
has been paid shall have expired and the Letter of Credit Liabilities, if any,
with respect thereto shall have been fully satisfied; provided, however, that at
such time if a Default or Event of Default has occurred and is continuing,
Lender shall not be required to release such amount in such collateral account.

Credit Documents means any and all papers now or hereafter governing,
evidencing, guaranteeing or securing or otherwise relating to all or any part of
the Obligations, including the Note, this Agreement, Borrowing Authorizations
with respect to all such Persons as Lender may require, the Security Documents,
the Letter of Credit Documents, all instruments, certificates and agreements now
or hereafter executed or delivered to Lender pursuant to any of the foregoing or
in connection with the Loans or any commitment regarding the Loans, including
without limitation, any International Swaps and Derivatives Association, Inc.
(ISDA) Master Agreement or any similar or other agreement with respect to any
Rate Management Transaction, and all amendments, modifications, renewals,
extensions, increases and rearrangements of, and substitutions for, any of the
foregoing.

Default means an Event of Default or an event which with notice or lapse of time
or both would, unless cured or waived, become an Event of Default.

Default Rate means, on any day, a rate per annum equal to the lesser of (a) the
Ceiling Rate for that day, or (b) a rate per annum equal to five percent (5.00%)
in excess of (i) the CB Floating Rate minus (ii) the Applicable Margin for CBFR
Borrowings.

Distributions means all dividends and other distributions made by a Person to
holders of Equity Interests in such Person or to the officers or directors of
such Person, as the case may be, other than salary, bonuses, stock grants,
restricted stock awards, option grants and other compensation for services
expended or rendered.

Dollars or $ refers to lawful money of the United States of America.

Domestic Lending Office shall mean the office of Lender specified in the address
portion on the signature pages hereof, or such other office of Lender as Lender
may from time to time specify to the Borrower as its "Domestic Lending Office."

Domestic Subsidiary shall mean any Subsidiary that is organized and domiciled in
the Unites States of America.

 
 

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           EBITDA means for any Person for any period, (a) Net Income, plus (b)
the sum of (i) income tax expense, (ii) Interest Expense, (iii) depreciation,
depletion, obsolescence and amortization expense, (iv) non-cash stock
compensation expense, (v) unrealized losses on derivatives and investments in
Equity Interests, (vi) extraordinary expenses (including, but not limited to,
impairment of goodwill and other intangibles), (vii) non-recurring, non-cash
expenses, and (viii) losses attributable to minority ownership interests in
Equity Interests, minus (c) the sum of (i) unrealized gains on derivatives and
investments in Equity Interests, (ii) extraordinary income, (iii) non-recurring,
non-cash income, (iv) gains attributable to minority ownership interests in
Equity Interests, in each case of such Person for such period, with each
component of EBITDA to be computed and calculated, all without duplication, on a
consolidated basis and in accordance with GAAP.
 
Eligible Receivables means, as at any date of determination thereof, each
Receivable which at such date is payable and owing to Borrower or any of its
Domestic Subsidiaries and which complies with all of the following requirements:

 
 
 
(a)
all payments due on the Receivable have been billed and invoiced in a timely
fashion and in the normal course of business;

 
(b)
no payment on the Receivable is more than 90 days past the date of invoice or 60
days past due;

 
(c)
the Receivable has been created by Borrower or its applicable Domestic
Subsidiary in the ordinary course of business from a completed, outright and
lawful sale of goods, to which such goods have been shipped and title has passed
to the applicable account debtor on an absolute sales basis, or from the
rendering of services by or on behalf of Borrower or such Domestic Subsidiary
and is deemed “earned” under the applicable service contract or other agreement
between the applicable account debtor and Borrower or such Domestic Subsidiary;
provided, however, that notwithstanding the foregoing and except as expressly
excluded in the immediately following proviso, Receivables arising under leases
of rental Inventory owned by Borrower or its applicable Domestic Subsidiary may
be billed for up to thirty (30) days in advance in accordance with the terms of
the applicable rental Inventory lease; provided further, however, that one-half
(1/2) of the difference between (i) the aggregate amount of all Receivables
shown on the most recent listing and aging of Receivables furnished to Lender
and (ii) the actual amount of such Receivables permitted to be included as an
asset on the consolidated balance sheet of the Borrower in accordance with GAAP
(as determined by Lender based upon Lender’s review of (A) the most recent
Annual Audited Financial Statements or Quarterly Financial Statements of
Borrower, as applicable, furnished by Borrower to Lender, or (B) if applicable,
the supporting schedules accompanying the most recent Borrowing Base Certificate
furnished by Borrower to Lender with respect to any calendar month-end not
coinciding with the end of any fiscal quarter of Borrower) shall be expressly
excluded from Eligible Receivables;

 
(d)
the Receivable is Collateral hereunder and is subject to a first priority
perfected Lien in favor of Lender which is free and clear of all other Liens of
any nature whatsoever (except for Liens permitted under Section 6.02);

 
(e)
less than twenty percent (20%) of all billed Receivables owing by the applicable
account debtor to Borrower and its Domestic Subsidiaries are more than 60 days
past due;

 
(f)
the Receivable, together with all other Receivables owing from the applicable
debtor and its Affiliates to Borrower and its Domestic Subsidiaries, is not in
excess of twenty percent (20%) of the aggregate amount of all Receivables then
owing to Borrower and its Domestic Subsidiaries by all account debtors (it being
agreed that for purposes of this subparagraph, only the aggregate amount of such
Receivables owing from the applicable debtor and its Affiliates in excess of
such 20% concentration threshold shall be excluded from Eligible Receivables);

 
(g)
the Receivable does not arise out of a bill-and-hold, guaranteed sale,
sale-and-return, consignment, sale-on-approval, progress billing, promotional
(including samples), C.O.D. or cash in advance arrangement;

 
(h)
the Receivable is not subject to any setoff, contra, offset, deduction, dispute,
charge back, credit, counterclaim or other defense arising out of the
transactions represented by the Receivable or independently thereof (but in each
case regarding an undisputed liquidated sum, only to the extent of such
undisputed sum, and in each case regarding a disputed sum or claim, only to the
extent of the sum or amount claimed by the party adverse to Borrower or its
applicable Domestic Subsidiary);

 
(i)
the applicable account debtor has finally accepted the goods or services from
the sale out of which the Receivable arose and has not (1) objected to such
account debtor's liability thereon, (2) rejected any of such services or goods,
or (3) returned or repossessed any of such goods, except for goods returned in
the ordinary course of business for which, in the case of goods returned, goods
of equal or greater value have been shipped in return;

 
(j)
the applicable account debtor is not any Governmental Authority;

 
(k)
the applicable account debtor is not a director, officer, employee or any
Affiliate of Borrower or any of its Subsidiaries;

 
(l)
the applicable account debtor must not be a natural Person, must be organized
under the laws of any state, and must have its principal place of business
located within the United States;

 
(m)
the Receivable is not evidenced by a promissory note or other instrument (other
than by Chattel Paper constituting any lease of any rental compressor Inventory
of Debtor);

 
 

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(n)
the Receivable complies with all material Legal Requirements (including without
limitation, all usury laws, fair credit reporting and billing laws, fair debt
collection practices and rules, and regulations relating to truth in lending and
other similar matters);

 
(o)
the Receivable is in full force and effect and constitutes a legal, valid and
binding obligation of the applicable account debtor enforceable in accordance
with the terms thereof;

 
(p)
the Receivable is denominated in and provides for payment by the applicable
account debtor in U.S. dollars;

 
(s)
the Receivable has not been and is not required to be charged or written off as
uncollectible in accordance with GAAP; and

 
(q)
the credit standing of the applicable account debtor in relation to the amount
of credit extended has not become unsatisfactory to Lender in its reasonable
discretion.

 
 
 
Additionally, in calculating Eligible Receivables, each of the following shall
be excluded (to the extent the same are otherwise included in Eligible
Receivables): (i) unpaid sales, excise or similar taxes owed by Borrower and/or
any of its Domestic Subsidiaries; and (ii) returns, discounts, claims, credits
and allowances of any nature asserted or taken by account debtors of Borrower
and/or any of its Domestic Subsidiaries.  In the event of any dispute under the
foregoing criteria about whether a Receivable is or has ceased to be an Eligible
Receivable, the decision of Lender shall be conclusive and binding, absent
manifest error.  Nothing in this definition of "Eligible Receivables" shall be
construed to limit or release any right of Lender to any Collateral.

Eligible Equipment Inventory means, as at any date of determination thereof, any
Equipment Inventory of Borrower or any of its Domestic Subsidiaries which
complies with the following requirements:

 
(a)
good title to such Equipment Inventory is owned by and recorded on the books and
records of Borrower or its applicable Domestic Subsidiary in the ordinary course
of business;

(b)  
such Equipment Inventory shall not include or be permanently attached to
vehicles, trailers or other transportation equipment covered by any certificate
of title;

(c)  
the Book Value of such Equipment Inventory is determined in accordance with GAAP
on an average cost basis;

(d)  
such Equipment Inventory is Collateral hereunder and is subject to a first
priority perfected Lien in favor of the Lender and is free and clear of all
other Liens of any nature whatsoever (except for Liens permitted under Section
6.02);

(e)  
to the extent such Equipment Inventory is not in the possession of the
third-party lessee pursuant to the terms of any lease covering the same, such
Equipment Inventory must not be in transit and must be housed or stored in the
United States at a real Property location either owned or leased by Borrower or
any of its Domestic Subsidiaries, so long as (i) such leased facility is covered
by a Collateral Access Agreement delivered to the Lender by the lessor thereof
or (ii) a Rent Reserve for such leased facility has been established and is then
applicable, provided, that notwithstanding the foregoing, no such Rent Reserve
will be required during the first 60 days after the date of this Agreement with
respect to any leased facility not covered by a Collateral Access Agreement;

(f)  
such Equipment Inventory meets all applicable laws and standards imposed by any
Governmental Authority having regulatory authority over it;

(g)  
such Equipment Inventory must be adequately insured to the reasonable
satisfaction of the Lender pursuant to insurance coverage required by this
Agreement and the Security Documents;

(h)  
such Equipment Inventory is not obsolete, slow moving, unmerchantable,
defective, unfit for lease, not leasing at reasonable prices in the ordinary
course of business or unacceptable due to age, type, category and/or quantity;

(i)  
which contains or bears any intellectual property rights licensed to Borrower or
its applicable Domestic Subsidiary unless the Lender is satisfied that it may
sell, lease or otherwise dispose of such Equipment Inventory without (i)
infringing the rights of such licensor, (ii) violating any contract with such
licensor, or (iii) incurring any liability with respect to payment of any
royalties to such licensor; and

(j)  
the Lender has not deemed such Equipment Inventory ineligible because the Lender
considers such Equipment Inventory in its reasonable discretion to be
unmarketable or the value thereof to be impaired or its ability to realize such
value to be insecure in any material respect.

In the event of any dispute under the foregoing criteria about whether any
Equipment Inventory is or has ceased to be an Eligible Equipment Inventory, the
decision of Lender shall be conclusive and binding, absent manifest
error.  Nothing in this definition of "Eligible Equipment Inventory" shall be
construed to limit or release any right of Lender to any Collateral.

 
 

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Eligible General Inventory means, as at any date of determination thereof, any
General Inventory of Borrower or any of its Domestic Subsidiaries (excluding
compressors and any and all accessions thereto) which complies with the
following requirements:

 
(a)
good title to such General Inventory is owned by and recorded on the books and
records of Borrower or its applicable Domestic Subsidiary in the ordinary course
of business;

 
(b)
such General Inventory is only raw materials or finished goods and is not
work-in-progress Inventory, is not scrap or remnants Inventory and is not
display items or manufacturing, replacement, packaging or shipping supplies or
materials;

 
(c)
the Book Value of such General Inventory is valued in accordance with GAAP on a
average cost basis;

 
(d)
such General Inventory is Collateral hereunder and is subject to a first
priority perfected Lien in favor of the Lender and is free and clear of all
other Liens of any nature whatsoever (except for Liens permitted under Section
6.02);

 
(e)
such General Inventory meets all applicable laws and standards imposed by any
Governmental Authority having regulatory authority over it;

 
(f)
such General Inventory must not be in transit and must be housed or stored in
the United States at a real Property location either owned or leased by Borrower
or any of its Domestic Subsidiaries, so long as (i) such leased facility is
covered by a Collateral Access Agreement delivered to the Lender by the lessor
thereof or (ii) a Rent Reserve for such leased facility has been established and
is then applicable, provided, that notwithstanding the foregoing, no such Rent
Reserve will be required during the first 60 days after the date of this
Agreement with respect to any leased facility not covered by a Collateral Access
Agreement;

 
(g)
such General Inventory must be adequately insured to the reasonable satisfaction
of the Lender pursuant to insurance coverage required by this Agreement and the
Security Documents;

 
(h)
such General Inventory has not been sold and must not be on consignment;

 
(i)
such General Inventory is not obsolete or slow moving (with the amount of such
obsolete or slow moving General Inventory as of any date to never be less than
the Obsolescence Reserve on such date), unmerchantable, defective, unfit for
sale, not salable at prices approximating at least the cost of such General
Inventory in the ordinary course of business or unacceptable due to age, type,
category and/or quantity;

 
(j)
which contains or bears any intellectual property rights licensed to Borrower or
its applicable Domestic Subsidiary unless the Lender is satisfied that it may
sell or otherwise dispose of such General Inventory without (i) infringing the
rights of such licensor, (ii) violating any contract with such licensor, or
(iii) incurring any liability with respect to payment of any royalties to such
licensor; and

 
(k)
the Lender has not deemed such Inventory ineligible because the Lender considers
such General Inventory in its reasonable discretion to be unmarketable or the
value thereof to be impaired or its ability to realize such value to be insecure
in any material respect.

In the event of any dispute under the foregoing criteria about whether any
Inventory is or has ceased to be a Eligible General Inventory, the decision of
Lender shall be conclusive and binding, absent manifest error. Nothing in this
definition of "Eligible General Inventory" shall be construed to limit or
release any right of Lender to any Collateral.

Environmental Claim means any third party (including Governmental Authorities
and employees) action, lawsuit, claim or proceeding (including claims or
pro­ceedings at common law or under the Occupational Safety and Health Act or
similar laws relating to safety of employees) which seeks to impose liability
for (i) noise; (ii) pollu­tion or contamination of the air, surface water,
ground water or land or the clean-up of such pollution or contamin­a­tion; (iii)
solid, gaseous or liquid waste generation, handling, treatment, storage,
disposal or transportation; (iv) exposure to Hazardous Substances; (v) the
safety or health of employees or (vi) the manufacture, processing, distribu­tion
in commerce or use of Hazardous Substances.  An "Environmental Claim" includes a
common law action, as well as a proceeding to issue, modify or terminate an
Environmental Permit, or to adopt or amend a regulation to the extent that such
a proceeding attempts to redress violations of an applicable permit, license, or
regulation as alleged by any Governmental Authority.

Environmental Liabilities includes all liabilities arising from any
Environmental Claim, Environmental Permit or Requirement of Environmental Law
under any theory of recovery, at law or in equity, and whether based on
negli­gence, strict liability or otherwise, including remedial, removal,
response, abatement, restoration (including natural resources), investigative,
monitoring, personal injury and damage to Property or natural resources or
injuries to persons, and any other related costs, expenses, losses, damages,
penalties, fines, liabil­ities and obligations, and all costs and expenses
necessary to cause the issuance, reissuance or renewal of any Environmental
Permit, including reasonable attorneys' fees and court costs.

Environmental Matters means matters relating to pollution or protection of the
environment, including emissions, dischar­ges, releases or threatened releases
of Hazardous Substances into the environment (including ambient air, surface
water or ground water, or land surface or sub­surface), or otherwise relating to
the manufacture, process­ing, distribution, use, treatment, storage, disposal,
tran­sport or handling of Hazardous Substances.

Environmental Permit means any permit, license, approval or other authorization
under any applicable Legal Requirement relat­ing to pollution or protection of
health or the environ­ment, including laws, regulations or other requirements
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants or hazardous substances or toxic materials or wastes
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contami­nants or Hazardous Substances.

 
 

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Equipment shall have the meaning set forth in Article 9 of the UCC.

Equipment Inventory means the specific rental compressor Inventory, together
with any and all accessions thereto, now or hereafter owned by Borrower or any
of its Domestic Subsidiaries, if any, for purposes of rental or leasing of the
same to customers to the extent, but only to the extent, such compressors have
been properly identified and designated by the Borrower as “Equipment Inventory”
for purposes hereof in accordance with the requirements of Section  5.11.

Equity Interests means shares of the capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, or any warrants, options
or other rights to acquire such interests.

ERISA means the Employee Retirement Income Security Act of 1974, as amended from
time to time, and all rules, regula­tions, rulings and interpretations adopted
by the Internal Revenue Service or the U.S. Department of Labor thereunder.

           Event of Default shall have the meaning assigned to it in Section
7.01 hereof.

           Financing Statements means all such Uniform Commercial Code financing
statements as Lender shall require, in Proper Form, naming Lender, as secured
party, and naming Borrower or its applicable Domestic Subsidiary, as applicable,
as debtor, in order to give notice of and to perfect or continue perfection of
Lender's Liens in all Collateral.

Funded Indebtedness means, as to a particular Person at any particular time,
without duplication, the sum of all Indebtedness (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person  for or in respect of (a) borrowed money, (b) amounts
raised under or liabilities in respect of any note purchase or acceptance credit
facility, (iii) reimbursement obligations (contingent or otherwise) under any
letter of credit agreement or facility, (iv) obligations under any Rate
Management Transaction or any other currency swap agreement, interest rate swap,
cap, collar or floor agreement or other interest rate management devices, (v)
any other transaction (including forward sale or purchase agreements, Capital
Lease Obligations (other than the interest component of such obligations) or
conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such Person to finance its operations or capital
requirements (but not including trade payables and accrued expenses incurred in
the ordinary course of business which are not represented by a promissory note
or other evidence of Indebtedness and which are not more than thirty (30) days
past due), (vi) all guarantees and other surety obligations by such Person of
Indebtedness of others for borrowed money, and (vii) all Indebtedness for
borrowed money Indebtedness of others secured by any Lien existing on any
interest of the Person with respect to which Funded Indebtedness is being
determined in Property owned subject to such Lien whether or not the
Indebtedness secured thereby shall have been assumed by or such Person is
otherwise liable therefor; provided, that such term shall not mean or include
any Indebtedness in respect of which monies sufficient to pay and discharge the
same in full (either on the expressed date of maturity thereof or on such
earlier date as such Indebtedness may be duly called for redemption and payment)
shall be deposited with a depository, agency or trustee acceptable to Lender in
trust for the payment thereof

GAAP means, as to a particular Person, such accounting practice as, in the
opinion of the independent certified public accountants of recognized national
standing regu­larly retained by such Person and acceptable to Lender, conforms
at the time to generally accepted accounting principles, consistently
applied.  GAAP means those principles and practices (a) which are recognized as
such by the Financial Accounting Standards Board, (b) which are applied for all
periods after the date hereof in a manner con­sistent with the manner in which
such principles and practices were applied to the most recent audited financial
statements of the relevant Person furnished to Lender, and (c) which are
consistently applied for all periods after the date hereof so as to reflect
properly the financial condition, and results of operations and changes in
financial position, of such Person.  If any change in any accounting principle
or practice is required by the Financial Accounting Standards Board in order for
such prin­ciple or practice to continue as a GAAP or practice, all reports and
financial statements required hereunder may be prepared in accordance with such
change only after written notice of such change is given to Lender.

General Intangibles shall have the meaning set forth in Article 9 of the UCC.

General Inventory means any Inventory of Borrower or any of its Domestic
Subsidiaries (excluding compressors held for lease to third parties and any and
all accessions thereto), now or hereafter owned by Borrower or any of its
Domestic Subsidiaries.

Governmental Authority means any foreign governmental authority, the United
States of America, any State of the United States and any political subdivision
of any of the fore­going, and any central bank, agency, department, commission,
board, bureau, court or other tribunal having jurisdiction over Lender,
Borrower, any other Obligor or their respec­tive Property.

Guarantor means each Domestic Subsidiary of the Borrower, if any, hereafter
becoming a guarantor of the Obligations in accordance with the other terms of
this Agreement.

Guaranty means each and every guaranty of the Obligations, if any, from time to
time executed and delivered to Lender after the date hereof by any Guarantor, as
each of the same may be amended, supplemented, modified and/or restated from
time to time.

Hazardous Substance means petroleum products and any hazardous or toxic waste or
substance defined or regulated as a hazardous substance from time to time by any
law, rule, regu­lation or order described in the definition of "Requirements of
Environmental Law".

Indebtedness means, as to a particular Person at any particular time, without
duplication, the sum of (a) all Funded Indebtedness of such Person and (b) all
Off-Balance Sheet Liabilities of such Person.

Interest Expense means, for any Person during any applicable period, the total
interest expense accruing on Indebtedness of such Person and/or its
Subsidiaries, on a consolidated basis, during such period (including interest
expense attributable to Capitalized Lease Obligations and amounts, both positive
and negative, attributable to interest expense incurred under any Rate
Management Transaction), computed and calculated, without duplication, in
accordance with GAAP.

 
 

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Interest Option shall have the meaning specified in Section 2.04(a) hereof.

Interest Payment Date means (a) with respect to any CBFR Borrowing, the first
day of each calendar month and the Maturity Date, and (b) with respect to any
LIBOR Borrowing, the last day of the Interest Period applicable to such
Borrowing and the Maturity Date.

Interest Period means the period commencing on the date of the applicable LIBOR
Borrowing and ending on the numerically corresponding day in the calendar month
that is one, two or three months thereafter, as the Borrower may elect;
provided, that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period,
(iii) no Interest Period shall end later than the Maturity Date, and (iv)
interest shall accrue from and including the first day of an Interest Period to,
but excluding, the last day of such Interest Period.

Inventory shall have the meaning set forth in Article 9 of the UCC.

           Investment means the purchase or other acquisition of any securities
or Indebtedness of, or the making of any loan, advance, extension of credit or
capital contribution to, or the incurring of any liability, contingently or
otherwise, in respect of the Indebtedness of, any Person.

Joinder Agreement shall mean any agreement, in Proper Form, executed by a
Domestic Subsidiary of Borrower from time to time after the date hereof in
accordance with Section 6.08 hereof, pursuant to which such Subsidiary joins in
the execution and delivery of a Guaranty and the applicable Security Documents.

Legal Requirement means any law, statute, ordinance, decree, requirement, order,
judgment, rule, or regulation (or inter­pretation of any of the foregoing) of,
and the terms of any license or permit issued by, any Governmental Authority,
whether presently existing or arising in the future.  The term "Legal
Requirement" includes Requirements of Environmental Law.

Letter of Credit Advances means all sums which may from time to time be paid by
Lender pursuant to any and all of the Letters of Credit, together with all other
sums, fees, reimbursements or other obligations which may be due to Lender
pursuant to or in connection with any of the Letters of Credit.

Letter of Credit Documents means the Letters of Credit and the Applications.

Letter of Credit Liabilities means at any time the sum of (i) the aggregate
undrawn amount of all Letters of Credit outstanding at such time plus (ii) the
aggregate amount of all Letter of Credit Advances for which Lender has not been
reimbursed and which remain unpaid at such time (it being agreed that any Letter
of Credit Advances satisfied by proceeds of a Loan hereunder shall be deemed to
have been reimbursed and paid for purposes of this definition).

Letters of Credit means all standby letters of credit issued by Lender for the
account or liability of Borrower pursuant to the terms of Section 2.08
hereof.  Letter of Credit means any one of the Letters of Credit.

Leverage Ratio means the ratio, determined as of the end of each fiscal quarter
of Borrower  for the most-recently ended four (4) fiscal quarters, of (a) all
Funded Indebtedness to (b) EBITDA, all computed and calculated, without
duplication, for Borrower, on a consolidated basis, and in accordance with GAAP.

LIBOR Borrowing shall mean, as of any date, that portion of the principal
balance of the Loans bearing interest at the Adjusted LIBOR Rate as of such
date.

LIBOR Lending Office shall mean the office of Lender specified in the address
portion on the signature pages hereof, or such other office of Lender as Lender
may from time to time specify in writing to the Borrower as its LIBOR Lending
Office.

LIBOR Rate means, with respect to any LIBOR Borrowing for any Interest Period,
the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Lender from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
in the London interbank market) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, as the rate for
dollar deposits with a maturity comparable to such Interest Period.  In the
event that such rate is not available at such time for any reason, then the
LIBOR Rate with respect to such LIBOR Borrowing for such Interest Period shall
be the rate at which dollar deposits of $5,000,000 and for a maturity comparable
to such Interest Period are offered by the principal London office of the Lender
in immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.

Lien means any mortgage, pledge, charge, encumbrance, security interest,
collateral assignment or other lien or restriction of any kind, whether based on
common law, constitutional provision, statute or contract, and shall include
reservations, exceptions, encroach­ments, easements, rights of way, covenants,
conditions, restrictions, leases and other title exceptions.

Loan means a loan described in and provided for by Section 2.01, and Loans means
all of such Loans.

 
 

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Material Adverse Effect means a material adverse effect on (a) the business,
assets, property, or condition (financial or otherwise) of Borrower and its
Subsidiaries, if any, taken as a whole, which in Lender's judgment, impairs or
could reasonably be expected to impair Lender's ability in any material respect
to collect the Obligations when due, or (b) the validity or enforceability of
Lender’s Lien on any material portion of the Collateral or the priority of such
Lien.

Maturity Date means the earlier to occur of (a) December 31, 2011, (b) any date
that the Commitment is terminated in full by Borrower pursuant to Section
2.01(b) hereof, and (c) any date the Maturity Date is accelerated or the
Commitment is terminated by Lender pursuant to Section 7.02 hereof.

Net Income means gross revenues and other proper income credits, less all proper
income charges (including taxes on income), all determined in accordance with
GAAP; provided, that there shall not be included in such revenues (a) any gains
resulting from the write-up of assets, (b) any proceeds of any life insurance
policy, or (c) any gain which is classified as "extraordinary" in accord­ance
with GAAP; and provided further, that capital gains may be included in revenues
only to the extent of capital losses.  Net Income shall be determined on a
consolidated basis.

Note means the promissory note dated concurrently herewith executed by Borrower
payable to the order of Lender in the face amount of $20,000,000.00, and any and
all renewals, extensions, modifications, increases, rearrangements and/or
replacements thereof.

Obligations means the Indebtedness evidenced by the Note and other sums now or
hereafter payable to Lender by Borrower or any other Obligor under any of the
Credit Documents, including all payment obligations, contingent or otherwise,
whether now or hereafter arising under any Rate Management Transaction, together
with performance of all other payment obligations, liabilities and Indebtedness
of Borrower to Lender under any one or more of the Credit Documents, including
all fees, costs, expenses and indemnity obligations under this Agreement and all
other Credit Documents.

Obligors means Borrower and each Guarantor now or hereafter primarily or
secondarily obligated to pay to Lender all of the Obligations.

Obsolescence Reserve means, on any day, an amount equal to the obsolescence
reserve established and maintained by the Borrower on its balance sheet as of
such date.

Off-Balance Sheet Liability of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by
such Person, (b) any indebtedness, liability or obligation under any so-called
“synthetic lease” transaction entered into by such Person, or (c) any
indebtedness, liability or obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheets of
such Person (other than operating leases).

Organizational Documents means, with respect to a corporation, the certificate
of incorporation, articles of incorporation and bylaws of such corporation; with
respect to a partnership, the partnership agreement establishing such
partnership; with respect to a limited liability company, the articles of
organization or formation and regulations or operating agreement of such limited
liability company; with respect to a joint venture, the joint venture agreement
establishing such joint venture, and with respect to a trust, the instrument
establishing such trust; in each case including any and all modifications
thereof as of the date of the Credit Document referring to such Organizational
Document and any and all future modifications thereof which are consented to by
Lender.

Parties means all Persons other than Lender executing any Credit Document.

PBGC means the Pension Benefit Guaranty Corporation or any entity succeeding to
any or all of its functions under ERISA.

Permitted Acquisition means any Acquisition by the Borrower or any of its
Domestic Subsidiaries in a transaction that satisfies each of the following
requirements:

(a) such Acquisition is not a hostile or contested acquisition;
 
(b) the business acquired in connection with such Acquisition is not engaged,
directly or indirectly, in any line of business other than the businesses in
which the Borrower is engaged on the date of this Agreement, any Permitted Other
Business Lines and any business activities that are substantially similar,
related, or incidental to any of the foregoing;
 
(c) as soon as available, but not less than thirty (30) days prior to such
Acquisition, the Borrower has provided the Lender with written notice of such
Acquisition;
 
(d) the purchase price paid by the Borrower or its applicable Subsidiary (i) in
connection with any single Acquisition shall not exceed $15,000,000.00, and (ii)
for all Acquisitions made during any twelve (12) consecutive calendar months
shall not exceed $15,000,000.00 in the aggregate (provided, however, that for
Acquisitions for permitted pipeline business activities of the type described in
the definition of Permitted Other Business Lines, such aggregate Acquisition
price threshold shall not exceed $5,000,000.00); provided, however, that for
Acquisitions of pipeline business activities of the type described in the
definition of  Permitted Other Business Lines, the foregoing single Acquisition
price threshold and aggregate Acquisition purchase price threshold shall each
not exceed $5,000,000.00; provided further, however, that to the extent any
purchase price paid for any single Acquisition (whether for pipeline or for
other permitted business line activities) equals or exceeds $5,000,000.00, then
the written notice of such Acquisition required to be furnished by the Borrower
to the Lender pursuant to subparagraph (c) above shall be accompanied by a
written certificate in favor of the Lender and executed on behalf of the
Borrower by an authorized officer of Borrower, together with a pro forma
calculation in form and substance reasonably satisfactory to the Lender,
confirming that after giving effect to the completion of such Acquisition, the
consolidated Leverage Ratio of the Borrower will be less than or equal to 2.25
to 1.0 on a pro forma basis which includes all consideration given in connection
with such Acquisition, other than Equity Interests of the Borrower delivered to
the seller(s) in such Acquisition, as having been paid in cash at the time of
making such Acquisition;
 
 
 

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(e) if such Acquisition is an acquisition of the Equity Interests of a Person,
the Acquisition is structured so that the acquired Person shall become (i) a
Domestic Subsidiary of the Borrower of which greater than fifty percent (50%) of
the issued and outstanding Equity Interests thereof are owned and held by
Borrower and/or one or more Subsidiaries of Borrower and (ii) a Guarantor
pursuant to the terms of this Agreement;
 
(f) in connection with an Acquisition of the Equity Interests of any Person, all
Liens on property of such Person shall be terminated unless the Lender in its
sole discretion consents otherwise, and in connection with an Acquisition of the
assets of any Person, all Liens on such assets shall be terminated; and
 
(g) both before and after giving effect to such Acquisition and the Loans (if
any) requested to be made in connection therewith, (i) each of the
representations and warranties in this Agreement and the other Credit Documents
is true and correct (except (1) any such representation or warranty which
relates to a specified prior date and (2) to the extent the Lender have been
notified in writing by the Borrower that any representation or warranty is not
correct and the Lender has explicitly waived in writing compliance with such
representation or warranty), and (ii) no Default or Event of Default exists,
will exist, or would result therefrom.
 
Permitted Encumbrances means:

(a)           Liens for taxes, assessments or other governmental charges or
levies which are not delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP;

(b)           Liens in connection with workers’ compensation, unemployment
insurance or other social security, old age pension or public liability
obligations which are not overdue by more than 30 days or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP;

(c)           statutory landlord’s liens, operators’, vendors’, carriers’,
warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’, materialmen’s,
construction or other like Liens arising by operation of law in the ordinary
course of business or incident to the exploration, development, operation and
maintenance of oil and gas properties each of which is in respect of obligations
that are not overdue by more than 30 days or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP;

(d)           easements, restrictions, servitudes, permits, conditions,
covenants, exceptions or reservations in any property of Borrower that do not
secure any monetary obligations and which in the aggregate do not materially
impair the use of such property for the purposes of which such property is held
by Borrower or materially impair the value of such property subject thereto; and

(e)           judgment and attachment Liens not giving rise to an Event of
Default, if any appropriate legal proceedings which may have been duly initiated
for the review of such judgment shall not have been finally terminated or the
period within which such proceeding may be initiated shall not have expired and
no action to enforce such Lien has been commenced; and

(f)           to the extent not otherwise described above, Liens not securing
borrowed money Indebtedness and arising in the ordinary course of business.

Permitted Investments means:

(a)           readily marketable securities issued or fully guaranteed by the
United States of America with maturities of not more than one year;

(b)           commercial paper rated "Prime 1" by Moody's Investors Service,
Inc. or "A-1" by Standard and Poor's Corporation with maturities of not more
than 180 days;

(c)           certificates of deposit or repur­chase obligations issued by any
U.S. domestic bank having capital surplus of at least $100,000,000 or by any
other financial institution acceptable to Lender, all of the foregoing not
having a maturity of more than one year from the date of issuance thereof;

(d)           fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above;
and

(e)           money market funds that (i) comply with the criteria set forth in
SEC Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated A2 by
Standard & Poor’s Ratings Group or P2 by Moody’s Investors Service, Inc., and
(iii) have portfolio assets of at least $250,000,000.

Permitted Other Business Lines means any and all of the following:  (a) sales,
rental and/or servicing of gas treating and/or processing equipment and/or the
providing of gas treating and/or processing services; (b) sales, rental and/or
servicing of oil and gas measurement and/or treating equipment and/or the
providing of oil and gas measurement and/or treating services; (c) sales, rental
and/or servicing of natural gas emissions equipment and/or the providing of
natural gas emissions measurement services; and (d) operation of pipelines for
in-state transportation of oil and/or gas from a wellhead to a treatment or
processing facility.

 
 

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Person means any individual, corporation, partnership, joint venture, joint
stock association, business or other trust, unin­corporated organization,
Governmental Authority or any other form of entity.

Plan means an employee pension benefit plan which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
and is either (a) maintained by Borrower, any of its Subsidiaries or any member
of a Controlled Group for employees of Borrower or any of its Subsidiaries or
(b) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
Borrower, any of its Subsidiaries or any member of a Controlled Group for
employees of Borrower or any of its Subsidiaries is then making or accruing an
obligation to make contributions or has within the preceding five plan years
made contributions.

Prime Rate means the rate of interest per annum publicly announced from time to
time by the Lender as its prime rate and each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective. THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE LENDER’S LOWEST
RATE.

Proper Form means in form and substance reasonably satisfactory to Lender.

Property means any interest in any kind of property or asset, whether real,
personal or mixed, tangible or intangible.

Quarterly Financial Statements means, with respect to each fiscal quarter of the
Borrower (except for the last fiscal quarter), (a) the Borrower’s 10-Q Report
filed with the Securities Exchange Commission for such fiscal quarter, prepared
in accordance with GAAP and certified as true and correct by an authorized
officer of Borrower acceptable to Lender on behalf of Borrower, and (b) the
quarterly consolidating financial statements of the Borrower and its
Subsidiaries, containing a balance sheet as of the end of such fiscal quarter
and an income statement, retained earnings statements and a statement of cash
flows for such fiscal quarter, and for the fiscal year to date, subject to
normal year-end adjustments, all prepared in reasonable detail and setting forth
in comparative form the corresponding figures for the corresponding period of
the preceding year, certified as true and correct by an authorized officer of
Borrower acceptable to Lender on behalf of Borrower, with the parties
recognizing that such consolidating statements will be prepared in accordance
with GAAP only to the extent normal and customary and shall not be required
until the end of the first full fiscal quarter of Borrower occurring after the
creation or acquisition by Borrower of its first Subsidiary, if any.

Rate Management Transaction means (a) any transaction (including an agreement
with respect thereto) now existing or hereafter entered into between Borrower
and Lender and/or its Affiliates which is a rate swap, swap option, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap, floor, collar, currency swap, cross-currency
rate swap, currency option, credit protection transaction, credit swap, credit
default swap, credit default option, total return swap, credit spread,
repurchase transaction, reverse repurchase transaction, buy/sell-back
transaction, securities lending transaction, weather index transaction or
forward purchase or sale of a security, commodity or other financial instrument
or interest (including any option with respect to any of these transactions), or
(b) any type of transaction that is similar to any transaction referred to in
clause (a) above that is currently, or in the future becomes, recurrently
entered into in the financial markets and which is a forward, swap, future,
option or other derivative on one or more rates, currencies, commodities, equity
securities or other equity instruments, debt securities or other debt
instruments, economic indices or measures of economic risk or value, or other
benchmarks against which payments or deliveries are to be made, or any
combination of the foregoing transactions.

Rate Selection Date shall mean that Business Day which is (a) in the case of
CBFR Borrowings, the date of such borrowing, or (b) in the case of LIBOR
Borrowings, the date three (3) Business Days preceding the first day of any
proposed Interest Period.

Rate Selection Notice shall have the meaning specified in Section 2.04(b)(1)
hereof.

Receivables shall mean each of the following items now or hereafter payable and
owing to Borrower and/or any of its Domestic Subsidiaries:  (a) all Accounts;
and (b) all rights to payments under leases or other Chattel Paper covering all
or any portion of any rental compressor Inventory of Debtor (including any
Equipment Inventory).

Regulation D means Regulation D of the Board of Governors of the Federal Reserve
System from time to time in effect and shall include any successor or other
regulation relating to reserve requirements applicable to member lenders of the
Federal Reserve System.

Regulatory Change means, with respect to Lender, any change on or after the date
of this Agreement in any Legal Requirement (including Regulation D) or the
adoption or making on or after such date of any interpretation, directive or
request applying to a class of lenders including Lender under any Legal
Requirement (whether or not having the force of law) by any Governmental
Authority charged with the interpretation or administration thereof.

Rent Reserves means, (a) with respect to any real property location leased by
Borrower as of the date of this Agreement and for which a Collateral Access
Agreement has not yet been delivered to Lender as of the applicable
determination date, an amount equal to all rent, charges and other amounts
payable (or to become payable) by Borrower under the lease covering such
location for (i) a three (3)-month period if the applicable determination date
for Rent Reserves is within 180 days after of the date of this Agreement,
provided, that notwithstanding the foregoing, no such 3-month Rent Reserve will
be required during the first 60 days after the date of this Agreement, or (ii) a
six (6)-month period if the applicable determination date for Rent Reserves is
later than 180 days after of the date of this Agreement, and (b) with respect to
any real property location leased by Borrower after the date of this Agreement
and for which a Collateral Access Agreement has not yet been delivered to Lender
as of the applicable determination date, an amount equal to all rent, charges
and other amounts payable (or to become payable) by Borrower under the lease
covering such location for a six (6)-month period.

Request for Loan means a request for a Loan duly executed by an appropriate
officer or other responsible party acceptable to Lender on behalf of Borrower,
appropriately completed and substantially in the form of Exhibit A attached
hereto, or any other request for a Loan by Borrower submitted under the terms of
other documentation or any auto-advance feature acceptable to Lender.

 
 

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Requirements of Environmental Law means all require­ments imposed by any law
(including The Resource Conservation and Recovery Act and The Comprehensive
Environmental Response, Compensation, and Liability Act), rule, regulation or
order of any Governmental Authority in effect at the applicable time which
relate to (i) noise; (ii) pollution, protection or clean-up of the air, surface
water, ground water or land; (iii) solid, gaseous or liquid waste gener­ation,
recycling, reclamation, treatment, storage, disposal or transportation;
(iv) exposure to Hazardous Substances; (v) the safety or health of employees or
(vi) regulation of the manufacture, processing, distribution in commerce, use,
discharge, release, threatened release, emission or storage of Hazardous
Substances.

Reserve Requirement means the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves) which is imposed under
Regulation D.

Security Agreements means, collectively, (a) any and all security agreements,
pledge agreements, collateral assignments or other similar documents now or
hereafter executed by Borrower or any of its Domestic Subsidiaries, if any, in
favor of Lender, as security for the payment or performance of any and/or all of
the Obligations, and (b) any amendment, modification, restatement or supplement
of all or any of the above-described agreements and assignments.

Security Documents means, collectively, this Agreement, the Security Agreements,
the Financing Statements and any and all other agreements, deeds of trust,
mortgages, chattel mortgages, security agreements, pledges, guaranties,
assignments, subordination agreements, undertakings and other instruments and
Financing Statements now or hereafter executed and delivered in connection with,
or as security for the payment or performance of, any Credit Document, as any of
them may from time to time be amended, modified, restated or supplemented.

Statutory Reserve Rate means a fraction (expressed as a decimal), the numerator
of which is the number one and the denominator of which is the number one minus
the aggregate of the maximum reserve percentages (including any marginal,
special, emergency or supplemental reserves) expressed as a decimal established
by the Board to which the Lender is subject with respect to the Adjusted LIBOR
Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board).  Such reserve percentages shall
include those imposed pursuant to such Regulation D.  LIBOR Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such Regulation D or
any comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

Subordinated Indebtedness means all Indebtedness, if any, of Borrower or any of
its Subsidiaries which has been subordinated on terms and conditions
satisfactory to Lender, in its sole discretion, to all Obligations to
Lender.  Indebtedness shall not be considered as "Subordinated Indebtedness"
unless and until Lender shall have received copies of the documentation
evidencing or relating to such Indebtedness together with a subordination
agreement, in Proper Form, duly executed by the holder or holders of such
Indebtedness and evidencing the terms and conditions of subordination required
by Lender in its discretion.

Subsidiary means, as to a particular parent Person, any other Person of which
50% or more of the indicia of equity rights (whether outstanding capital stock,
partnership interests or otherwise) is at the time directly or indirectly owned
or held by such parent Person, or by one or more of its Affiliates.

UCC means the Uniform Commercial Code, as in effect from time to time, of the
State of Texas or of any other state the laws of which are required as a result
thereof to be applied in connection with the attachment, perfection or priority
of, or remedies with respect to, Lender's Lien on any Collateral.

           Unfunded Liabilities means, with respect to any Plan, at any time,
the amount (if any) by which (a) the present value of all benefits under such
Plan exceeds (b) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent actuarial valuation report
for such Plan, but only to the extent that such excess represents a potential
liability of any member of the applicable Controlled Group to the PBGC or a Plan
under Title IV of ERISA.  With respect to multiemployer Plans, the term
"Unfunded Liabilities" shall also include contingent liability for withdrawal
liability under Section 4201 of ERISA to all multiemployer Plans to which
Borrower, any other Obligor or any member of a Controlled Group for employees of
Borrower or any other Obligor contribute in the event of complete withdrawal
from such Plans.

Section 1.02                        Terms Generally.  The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may require, any pronoun shall include the
corresponding mascu­line, feminine and neuter forms.  The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”.  The word “will” shall be construed to have the same meaning and
effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (c) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights

 
 

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ARTICLE II
Loans; Credit Facility Administration

Section 2.01                      Loans; Commitment.  Lender agrees, subject to
all of the terms and conditions of this Agreement, to make Loans to Borrower as
follows:
 
(a)           Prior to the Maturity Date, Lender will make Loans to Borrower, if
after giving effect to the applicable requested Loan, Availability will be equal
to or greater than zero.  Within the foregoing limits and subject to the terms
and conditions set forth herein, Borrower may borrow, prepay and reborrow Loans
prior to the Maturity Date.  Borrower and Lender agree pursuant to Chapter 346
("Chapter 346") of the Texas Finance Code that Chapter 346 (which relates to
open-end line of credit revolving loan accounts) shall not apply to this
Agreement, the Note or any Loan obligation hereunder and that none of this
Agreement, the Note nor any Loan obligation hereunder shall be governed by
Chapter 346 or subject to its provisions in any manner whatsoever. Loans shall
be evidenced by the Note, and Lender shall in no event be obligated to fund more
than one (1) Loan per day.  Loan proceeds shall be made available to Borrower by
depositing them in an account designated by Borrower and maintained with Lender.
 
(b)           Upon at least five (5) Business Days' prior irrevocable written
notice to Lender, Borrower may at any time in whole permanently terminate, or
from time to time in part permanently reduce, the Commitment; provided, however,
that the Commitment shall not be reduced at any time to an amount less than the
sum of the aggregate principal amount of all Loans outstanding at such time and
the aggregate Letter of Credit Liabilities outstanding at such time.  Each
partial reduction of the Commitment shall be in a minimum of $500,000.00, or an
integral multiple of $100,000.00 in excess thereof.
 
(c)           Borrower shall have the right to request from the Lender one or
more increases of up to up to $20,000,000.00 in the aggregate in the Commitment,
provided that (i) any such request for an increase shall be in a minimum amount
of $5,000,000.00 and Borrower may only make a maximum of four such requests,
(ii) the aggregate amount of the Commitment after such increase shall not exceed
$40,000,000.00, and (iii) the Lender shall have thirty (30) days after receipt
from Borrower of the applicable Commitment increase request to review and either
approve or reject such requested Commitment increase, in the sole discretion of
Lender.  Borrower acknowledges and agrees that Lender shall have no obligation
to approve any such requested increase in the Commitment, but in the event of
approval by Lender of any such Commitment increase request, Borrower will
thereafter promptly execute and deliver to Lender an amendment of this Agreement
in the form reasonably required by Lender to evidence the approved increase in
the amount of the Commitment.
 
Section 2.02                      Repayment of Principal and Interest of Loans.
 
(a)           Borrower hereby unconditionally promises to pay to Lender in full
the unpaid principal balance of the Note on the Maturity Date.
 
(b)           Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date, as well as upon the Maturity Date. After the Maturity
Date, accrued and unpaid interest on the Loans shall be payable on demand.
 
Section 2.03                      Prepayments of Loans.
 
(a)           Borrower shall have the right at any time and from time to time to
prepay any Loan in whole or in part, without premium or penalty, except as
otherwise provided in this Section 2.03 and subsections (a), (b) or (c) of
Section 2.05 hereof, but subject to the requirements of this
Section.  Prepayments under this subparagraph (a) of any Loan shall be subject
to the following additional conditions:
 
(1)           In giving notice of prepayment as hereinafter provided, Borrower
shall specify, for the purpose of paragraphs (2) and (3) immediately following,
the manner of application of such prepayment as between CBFR Borrowings and
LIBOR Borrowings.
 
(2)           Prepayments applied to any LIBOR Borrowing may be made on any
Business Day, provided, that (i) Borrower shall have given Lender at least three
(3) Business Days' prior irrevocable written or telecopied notice of such
prepayment, specifying the principal amount of the LIBOR Borrowing to be
prepaid, the particular LIBOR Borrowing to which such prepayment is to be
applied and the prepayment date; and (ii) if such prepayment is made on any day
other than the last day of the Interest Period corresponding to the LIBOR
Borrowing to be prepaid, Borrower shall pay directly to Lender, on the last day
of such Interest Period, any Consequential Loss as a result of such prepayment.
 
(3)           Prepayments applied to any CBFR Borrowing may be made prior to
1:00 p.m., Austin, Texas time, on any Business Day.
 
(b)           Borrower shall from time to time on demand by Lender and subject
to the requirements of this Section, prepay the Loans in such amounts as shall
be necessary so that Availability at all times shall be equal to or greater than
zero.
 
Section 2.04                      Interest Rates for Loans; Interest Options.
 
(a)           Subject to Section 8.01 hereof, the outstanding principal balance
of the Loans shall bear interest on and after the date of this Agreement at the
CB Floating Rate minus the Applicable Margin; provided, that (i) all principal
outstanding after the occurrence of an Event of Default which has not been cured
or waived in writing by Lender shall bear interest at the Default Rate, (ii)
past due principal and interest shall bear interest at the Default Rate, which
shall be payable on demand, and (iii) subject to the provisions hereof, Borrower
shall have the option of having all or any portion of the principal balances
from time to time outstanding under the Loans bear interest until their
respective maturities at a rate per annum equal to the Adjusted LIBOR Rate plus
the Applicable Margin (together with the CB Floating Rate, individually herein
called an "Interest Option" and collectively called "Interest Options").  The
records of Lender, with respect to Interest Options, Interest Periods and the
amounts of the Loans to which they are applicable shall be binding and
conclusive, absent manifest error.  Interest on the Loans shall be calculated at
the CB Floating Rate minus the Applicable Margin, except where it is expressly
provided pursuant to this Agreement that the Adjusted LIBOR Rate plus the
Applicable Margin is to apply.
 
 
 

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(b)           In accordance with the provisions hereof, and provided no Default
or Event of Default has occurred and is continuing, Borrower may elect to have
the Adjusted LIBOR Rate plus the Applicable Margin apply or continue to apply to
all or any portion of the principal balances of the Loans.  Each change in
Interest Options shall be a conversion of the rate of interest applicable to the
specified portion of the Loans, but such conversion alone shall not change the
outstanding principal balance of the Loans and the Note. The Interest Options
shall be designated or converted in the manner provided below:
 
(1)           Borrower shall give Lender by telephone, promptly confirmed by
written notice (the "Rate Selection Notice") substantially in the form of
Exhibit B hereto.  Each such telephone and written notice shall specify the
amount and type of borrowings which are the subject of the designation, if any;
the amount and type of borrowings into which such borrowings are to be converted
or for which an Interest Option is designated; the proposed date for the
designation or conversion (which, in the case of conversion of LIBOR Borrowings,
shall be the last day of the Interest Period applicable thereto) and the
Interest Period or Periods, if any, selected by the Borrower.  Such notice by
telephone shall be irrevocable and shall be given to Lender no later than the
applicable Rate Selection Date.  If a new Loan is to be a LIBOR Borrowing, then
the Rate Selection Notice shall be included in the Request for Loan applicable
to the new Loan, which shall be given to Lender no later than the applicable
Rate Selection Date;
 
(2)           No more than three (3) LIBOR Borrowings and corresponding Interest
Periods shall be outstanding at any one time with respect to the Loans.  Each
LIBOR Borrowing shall be in a minimum aggregate principal amount of at least
$500,000, with any increases over such minimum amount being in integral
aggregate multiples of $100,000;
 
(3)           Principal included in any borrowing shall not be included in any
other borrowing which exists at the same time;
 
(4)           Each designation or conversion shall occur on a Business Day; and
 
(5)           Except as provided in Section 2.05 hereof, no LIBOR Borrowing
shall be converted on any day other than the last day of the applicable Interest
Period.
 
(c)           All interest will be computed on the basis of a year of 360 days
and actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable, unless the effect of so computing
shall be to cause the rate of interest to exceed the Ceiling Rate.
 
Section 2.05                      Special Provisions Applicable to LIBOR
Borrowings.
 
(a)           If, after the date of this Agreement, any Change in Law or
compliance by Lender with any request or directive (whether or not having the
force of law) of any Governmental Authority shall at any time make it unlawful
or impracticable for Lender to permit the establishment of or to maintain any
LIBOR Borrowing, the commitment of Lender to establish or maintain the LIBOR
Borrowings affected by such adoption or change shall forthwith be canceled and
the Borrower shall forthwith, upon demand by Lender to Borrower, (1) convert
such LIBOR Borrowings to CBFR Borrowings; (2) pay all accrued and unpaid
interest to date on the amount so converted; and (3) pay any amounts required
under paragraph (d) below.  All present and subsequent requests for LIBOR
Borrowings by Borrower shall be deemed to be requests for CBFR Borrowings with
respect to Lender for all LIBOR Borrowings affected by such adoption or change
until such adoption or change no longer affects the LIBOR Borrowings for Lender.
 
(b)           If any Change in Law or compliance by Lender with any request or
directive (whether or not having the force of law) from any Governmental
Authority shall at any time as a result of any portion of the principal balance
of the Loans being maintained on the basis of the Adjusted LIBOR Rate impose,
modify, increase or deem applicable any reserve requirement, special deposit
requirement or similar requirement (including state law requirements and
Regulation D, but excluding Statutory Reserve Rates) against assets held by
Lender, or against deposits or accounts in or for the account of Lender, or
against loans made by Lender, or against any other funds, obligations or other
Property owned or held by Lender and the result of any of the foregoing is to
increase the cost to Lender of agreeing to make or of making, renewing or
maintaining such borrowing on the basis of the Adjusted LIBOR Rate, or reduce
the amount of principal or interest received by Lender, then Borrower shall pay
to Lender from time to time additional amounts sufficient to compensate such
Lender for such increased cost or reduced amount.
 
(c)           If for any reason with respect to any Interest Period, Lender
shall have determined (which determination shall be conclusive and binding upon
Borrower) that: (1) Lender is unable through its customary general practices to
determine a rate at which Lender is offered deposits in United States dollars by
prime banks in the London interbank market, in the appropriate amount for the
appropriate period, or by reason of circumstances affecting the London interbank
market, generally, Lender is not being offered deposits for the applicable
Interest Period and in an amount equal to the amount any LIBOR Borrowing
requested by Borrower, or (2) the Adjusted LIBOR Rate will not adequately and
fairly reflect the cost to Lender of making and maintaining any LIBOR Borrowing
hereunder for any proposed Interest Period, then Lender shall give Borrower
notice thereof and thereupon, (A) any Rate Selection Notice previously given by
Borrower designating an Adjusted LIBOR Rate which has not commenced as of the
date of such notice from Lender shall be deemed for all purposes hereof to be of
no force and effect, as if never given, and (B) until Lender shall notify
Borrower that the circumstances giving rise to such notice from Lender no longer
exist, each Rate Selection Notice requesting an Adjusted LIBOR Rate shall be
deemed a request for a CBFR Borrowing, and each outstanding LIBOR Borrowing then
in effect shall be converted, without any notice to or from the Borrower, upon
the termination of the Interest Period then in effect to a CBFR Borrowing.
 
 
 

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(d)           Borrower hereby agrees to indemnify Lender against and hold Lender
harmless from any actual loss or expense that Lender may sustain or incur as a
consequence of (i) failure by Borrower to timely convert or borrow any LIBOR
Borrowing after Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (ii) failure by Borrower to make any
prepayment after Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (iii) the making of a payment or prepayment of
any LIBOR Borrowing, or the conversion of any LIBOR Borrowing, on a day that is
not the last day of an Interest Period with respect thereto, including without
limitation, in each case, any such loss or expense arising from the liquidation
or reemployment of funds obtained by Lender or from fees payable to terminate
the deposits from which such funds were obtained.
 
(e)           If Borrower requests quotes of the Adjusted LIBOR Rate for
different Interest Periods being considered for election by Borrower, Lender
will use reasonable efforts to provide such quotes to Borrower
promptly.  However, all such quotes provided shall be representative only and
shall not be binding on Lender, nor shall they be determinative, directly or
indirectly, of any Adjusted LIBOR Rate or any component of any such rate, nor
will Borrower's failure to receive or Lender's failure to provide any requested
quote or quotes either (1) excuse or extend the time for performance of any
obligation of Borrower or for the exercise of any right, option or election of
Borrower or (2) impose any duty or liability on Lender.  If Borrower requests a
list of the Business Days in any calendar month, Lender will use reasonable
efforts to provide such list promptly.  However, any such list provided shall be
understood to identify only those days which Lender believes in good faith at
the time such list is prepared will be the Business Days for such month.  Lender
shall not have any liability for any failure to provide, delay in providing,
error or mistake in or omission from, any such quote or list.
 
 
 
(f)           With respect to Lender having a LIBOR Lending Office which differs
from its Domestic Lending Office, all Loans that are part of LIBOR Borrowings
advanced by Lender's LIBOR Lending Office shall be deemed to have been made by
Lender and the obligation of Borrower to repay such Loans shall nevertheless be
to Lender and shall be deemed held by Lender for the account of Lender's LIBOR
Lending Office.
 
Section 2.06                      Increased Costs.

(a)
If Lender reasonably determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on
Lender’s capital or on the capital of Lender’s holding company, if any, as a
consequence of this Agreement or any of the Loans to a level below that which
Lender or Lender’s holding company could have achieved but for such Change in
Law (taking into consideration Lender’s policies and the policies of Lender’s
holding company with respect to capital adequacy), then from time to time
Borrower will pay to Lender such additional amount or amounts as will compensate
Lender or Lender’s holding company for any such reduction suffered; provided,
however, that notwithstanding the foregoing, if Borrower (i) fully pays all
outstanding Obligations, (ii) pays to Lender, in immediately available funds, an
amount equal to 105% of the then aggregate amount available for drawings under
all outstanding Letters of Credit, if any (which funds shall be held by Lender
as Cover for said Letters of Credit), and (iii) irrevocably terminates the
Commitment in writing delivered to Lender, all within twenty (20) days after
Borrower’s receipt of any notice from Lender that amounts are or will be owing
by Borrower to Lender pursuant to the terms of this Section 2.06, then in such
event, Borrower shall not be obligated to pay to Lender any such amounts to the
extent, but only to the extent, such amounts are attributable to any period
prior to the date of Borrower’s receipt of such notice from Lender.

(b)
A certificate of Lender setting forth the amount or amounts necessary to
compensate Lender or its holding company, as the case may be, as specified in
Section 2.06(a) shall be delivered to Borrower, demonstrating in reasonable
detail the calculation of the amounts.  Borrower shall pay amounts due under
this Section 2.06 within ten (10) days after receipt of the corresponding
certificate.

(c)
Failure or delay on the part of Lender to demand compensation pursuant to this
Section shall not constitute a waiver of Lender’s right to demand such
compensation; but Borrower shall not be required to compensate Lender pursuant
to this Section for any increased costs or reductions incurred more than 180
days before the date that Lender notifies Borrower of the Change in Law giving
rise to such increased costs or reductions and of Lender’s intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive and if Lender notifies
Borrower of such Change of Law within 180 days after the adoption, enactment or
similar act with respect to such Change of Law, then the 180-day period referred
to above shall be extended to include the period from the effective date of such
Change of Law to the date of such notice.

Section 2.07                      Payments Generally.

(a)           All payments of the Obligations hereunder shall be made to Lender
at Lender’s address specified pursuant to Section 8.08, or at any other office
of Lender specified in writing by Lender to Borrower, by 1 p.m. (local time) on
the date when due.
 
(b)           Borrower shall make each payment required to be made by it
hereunder or under any other Credit Document (whether of principal, interest or
fees, or other amounts payable under Article II or otherwise) on or before the
time expressly required hereunder or under such other Credit Document for such
payment (or, if no such time is expressly required, before 2:00 p.m., Austin,
Texas time), on the date when due, in immediately available funds, without
set-off, deduction or counterclaim.  Any amounts received after such time on any
date may, in the discretion of Lender, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon.  If
any payment under any Credit Document shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension.  Unless otherwise
specified therein, all payments under each Credit Document shall be made in
Dollars.
 
(c)           If at any time insufficient funds are received by and available to
Lender to pay fully all amounts of principal, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, and (ii) second, towards payment of principal, if
any, then due hereunder.
 
 

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(d)           If after receipt of any payment which is applied to the payment of
all or any part of the Obligations, Lender is for any reason compelled to
surrender such payment or proceeds to any Person because such payment or
application of proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, impermissible setoff, or a
diversion of trust funds, or for any other reason, then the Obligations or part
thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by Lender and Borrower shall be liable to pay to Lender.  The
provisions of this Section 2.07(d) shall be and remain effective notwithstanding
any contrary action which may have been taken by Lender in reliance upon such
payment or application of proceeds.  The provisions of this Section 2.07(d)
shall survive the termination of this Agreement.
 
Section 2.08                      Letter of Credit Facility.

(a)           Subject to the terms and conditions contained herein, Borrower
shall have the right from time to time prior to the Maturity Date to obtain from
Lender one or more Letters of Credit for the account of Borrower in such amounts
and in favor of such beneficiaries as Borrower from time to time shall request;
provided, that in no event shall Lender have any obligation to issue any Letter
of Credit if (i) the face amount of such Letter of Credit, plus the other Letter
of Credit Liabilities at such time, would exceed $2,000,000.00, (ii) such Letter
of Credit would have an expiry date beyond the earlier to occur of (1) the
scheduled Maturity Date, and (2) one year after the issuance date of such Letter
of Credit, (iii) such Letter of Credit is not in a form and does not contain
terms satisfactory to Lender in its discretion, (iv) Borrower has not executed
and delivered such Applications and other instruments and agreements relating to
such Letter of Credit as Lender shall have reasonably requested, (v) any Default
or Event of Default has occurred and is continuing, or (vi) such Letter of
Credit is not being issued or has not been issued to a landlord of a real
property location leased by Borrower in connection with Borrower obtaining a
Collateral Access Agreement in favor of Lender from such landlord.
 
 
(b)           Each Letter of Credit will be issued for the account of Borrower,
and Borrower shall have full liability for each Letter of Credit.  Borrower
promises to pay to the order of Lender the amount of all Letter of Credit
Advances.  Each Letter of Credit Advance shall be considered for all purposes as
a demand obligation owing by Borrower to Lender, and each Letter of Credit
Advance shall bear interest from the date thereof at the Default Rate, without
notice of presentment, demand, protest or other formalities of any kind (said
past due interest on such Letter of Credit Advance being payable on demand).  To
effect repayment of any such Letter of Credit Advance, Lender, at its sole
option, shall be entitled to satisfy such Letter of Credit Advance
simultaneously with or at any time thereafter that such Letter of Credit Advance
remains unpaid by Borrower (subject to the terms and conditions herein) by
making a Loan if (A) Availability will be equal to or greater than zero after
giving effect to such Loan and the resulting repayment of such Letter of Credit
Advance to be contemporaneously paid with the proceeds of such Loan, and (B) no
Default or Event of Default shall have occurred which is then
continuing.  Lender’s unwillingness to make such a Loan or the unavailability of
a Loan to effect repayment of any such Letter of Credit Advance in accordance
with the preceding sentence shall not in any way whatsoever affect Borrower's
obligation to pay each Letter of Credit Advance on demand and to pay interest at
the Default Rate on the amount of such unreimbursed Letter of Credit Advance.
 
(c)           In consideration of the issuance of each Letter of Credit,
Borrower agrees to pay to Lender a per annum letter of credit fee (computed on
the basis of the actual number of days elapsed in a year composed of 360 days)
in an amount equal to the product of (A) the Applicable Margin for LIBOR
Borrowings for the applicable period of time from the date of issuance until the
expiry date of the applicable Letter of Credit times (B) the original face
amount of such Letter of Credit, such letter of credit fee to be payable
quarterly in arrears for such Letter of Credit, commencing on the date three (3)
months after the issuance date of such Letter of Credit.
 
(d)           In addition to the fees payable under the immediately preceding
paragraph, Borrower hereby agrees to pay to Lender customary and reasonable
fronting fees and any and all other issuance, administrative, amendment,
negotiation, payment and other normal, customary and reasonable fees which are
charged by Lender in connection with the issuance or negotiation of any of
Letter of Credit and the presentation or payment of any draw under any such
Letter of Credit, with all of such amounts being due and payable to Lender upon
demand.
 

 
 
ARTICLE III
Conditions Precedent

Section 3.01                      All Loans and Letters of Credit.  The
obligation of Lender to make any Loan or issue any Letter of Credit is subject
to the accuracy in all material respects of all representations and warranties
of Borrower or any other Obligor in this Agreement or any other Credit Document
on the date thereof (except where such representation or warranty specifically
relates to an earlier date or has been waived in writing by Lender) and if
requested by Lender, receipt by Lender of evidence of such accuracy, to the
performance by Borrower and the other Obligors of their respective obligations
under the Credit Documents (and Lender's receipt of evidence of such
performance) and to the satisfaction of the following conditions:

 
 

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(a)           (i) with respect to any Loan, Lender shall have received by no
later than 11:00 a.m. on the date of such requested Loan, telephonic notice from
Borrower of the proposed date and amount of such Loan, and by no later than 1:00
p.m. on such date, a Request for Loan and, only to the extent required under
Section 5.02(d), a Borrowing Base Certificate dated as of the date of such
requested Loan, each signed by an officer of Borrower, and (ii) with respect to
any Letter of Credit, Lender shall have received by no later than 11:00 a.m.
five (5) Business Days prior to the date of issuance of such requested Letter of
Credit, a fully completed and executed Application and all other applicable
Letter of Credit Documents required by Lender from Borrower;

(b)           since the date of the most recently delivered financial statements
pursuant to this Agreement, there shall have occurred, in the reasonable opinion
of Lender, no Material Adverse Effect;

(c)           no Default or Event of Default shall have occurred and be
continuing or will occur as a result of the requested Loan or Letter of Credit;
 
(d)           the making of the Loan or issuance of the Letter of Credit shall
not be prohibited by any applicable Legal Requirement;
 
(e)           all of the Credit Documents have been executed and delivered, and
shall be valid, enforceable and in full force and effect;
 
(f)           all fees and expenses owed to Lender under any of the Credit
Documents as of the date thereof shall have been paid in full;
 
(g)           Lender shall have received evidence reasonably satisfactory to
Lender as to the perfection and requisite priority of the Liens created by the
Security Documents;
 
(h)           no action, suit or proceeding shall have been commenced and then
be continuing against or affecting Borrower or involving the validity or
enforce­ability of any material provision of any Credit Document, at law or in
equity, or before any Governmen­tal Authority, which is not adequately covered
by insurance coverage and in Lender's reasonable judgment, impairs or could
reasonably be expected to impair Lender's ability in any material respect to
collect the Obligations when due; and
 
(i)           Lender shall have received such other documents as it may
reasonably require.
 
 
Delivery of any Request for Loan or Application to Lender shall constitute a
representation by Borrower that the representations and warranties made by
Borrower under this Agreement and the other Credit Documents are true and
correct in all material respects as of the date of delivery of such Request for
Loan or Application except where such representation or warranty specifically
relates to an earlier date or has been waived in writing by Lender.
 
Section 3.02                      Initial Loans and Letters of Credit.  In
addition to the conditions described in Section 3.01 hereof, the obligation of
Lender to make the initial Loans and issue the initial Letter of Credit
hereunder is subject to the receipt by Lender of each of the following, in
Proper Form:
 
(a)           the Note, all Security Documents and the other Credit Documents;

(b)           the Organizational Documents of Borrower, together with (i) a duly
executed Borrowing Authorization with respect to Borrower and (ii) other
reasonably satisfactory evidence confirming that the ownership, organizational
structure and capitalization of Borrower is consistent in all material respects
to the written descriptions thereof previously furnished to Lender;

(c)           current certificates of fact and account status from the Colorado
Secretary of State, the Texas Secretary of State, the Texas Comptroller’s Office
or the equivalent Governmental Authority in the Stat of Colorado, as applicable,
as to the continued existence and good standing of Borrower in the State of
Texas and the continued registration, qualification and good standing of
Borrower in the State of Texas;

(d)           certificates of insurance satisfactory to Lender in all respects
evidencing the existence of all insurance required to be maintained by Borrower
or any other Obligor pursuant to the terms of this Agreement and the Security
Documents;

 
 

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(e)           a Borrowing Base Certificate dated as of the date of the initial
Loan hereunder, together with (i) a listing and aging of the Accounts of
Borrower as of the end of the most recent calendar month ending prior to the
date of the initial Loan hereunder, prepared in reasonable detail and containing
such information as Lender may request, and (ii) a summary or listing of the
General Inventory and the Equipment Inventory of the Borrower as of the end of
the most recent calendar month ending prior to the date of the initial Loan
hereunder;

(f)           evidence that (i) all existing Indebtedness not otherwise
permitted by this Agreement, including without limitation, all indebtedness of
Borrower to Western National Bank has been or concurrently with the date of this
Agreement will be terminated and all outstanding amounts thereunder have or
concurrently with the date of this Agreement will be paid in full, and (ii) that
the holders of all Liens securing such Indebtedness have agreed to promptly
file, or have adequately approved the filing of, releases of such Liens in the
appropriate public records;

(g)           Lender shall have received the results of a recent lien search in
each of the jurisdictions where assets of Borrower or any other Collateral are
located, and each such search shall reveal no Liens on any of the assets to be
pledged as Collateral except for liens permitted by Section 6.02 or discharged
on or prior to the date hereof pursuant to a pay-off letter or other
documentation satisfactory to Lender; and

(h)           Lender shall have received all fees required to be paid by
Borrower, and all expenses to be paid or reimbursed by Borrower to the extent
invoices have been presented for such expenses (including the reasonable fees
and expenses of legal counsel).

ARTICLE IV
 
Representations and Warranties
 
Borrower represents and warrants to Lender that:
 
Section 4.01                      Organization; Authorization.  Borrower is duly
organized, validly existing and in good standing under the laws of the State of
Colorado and has full legal right, power and authority to carry on its business
as presently conducted and to execute, deliver and perform its obligations under
the Credit Documents, and Borrower is duly qualified to do business and in good
standing in the state of Texas and each other jurisdiction in which the nature
of its business makes such qualification necessary or desirable, except for
those jurisdictions in which the failure to qualify and/or be in good standing
would not reasonably be expected to result in a Material Adverse Effect.
Borrower's execution, delivery and per­formance of the Credit Documents to which
it is a party have been duly authorized by all necessary action under the
Organiza­tional Documents of Borrower and otherwise.
 
Section 4.02                      No Consents Necessary.  The execution,
delivery and performance of the Credit Documents by Borrower or any other
Obligor do not and will not require (i) any consent of any other Person or (ii)
any consent, li­cense, permit, authorization or other approval of any court,
arbitrator, administrative agency or other Governmental Authority, or any notice
to, exemption by, any registration, declaration or filing with or the taking of
any other action in respect of, any such court, arbitrator, administra­tive
agency or other Governmental Authority.
 
Section 4.03                      No Conflicts.  Neither execution or delivery
of any Credit Document, nor the fulfillment of or compliance with its terms and
provisions will (i) violate any Legal Requirement or the Organizational
Documents of Borrower or any other Obligor, or (ii) conflict with or result in a
breach of the terms, conditions or provisions of, or cause a default under, any
material agreement, instrument, fran­chise, license or concession to which
Borrower or any other Obligor is a party or bound.
 
 
Section 4.04                      Enforceability.  Each Credit Document has been
duly and validly exe­cuted, issued and delivered by Borrower or any other
applicable Obligor, as the case may be.  They are in proper legal form for
prompt enforcement and they are the respective valid and legally binding
obligations of Borrower (or the other applicable Obligors, when and if
applicable), enforceable in accordance with their terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.  The
obligations of Borrower (or the other applicable Obligors, when and if
applicable) under them rank and will rank at least equal in priority of payment
with all of Borrower’s (and the other applicable Obligors, when and if
applicable) other Indebtedness (except only for Indebtedness preferred by
operation of law or Indebtedness disclosed in writing to Lender before execution
and delivery of this Agreement).
 
Section 4.05                      Financial Condition; Title to Property.  All
information supplied to Lender, and all statements made to Lender by or on
behalf of Borrower or any other Obligor before, concurrently with or after
execution of this Agreement are and will be true, correct, complete, valid and
genuine in all material respects.  Borrower's and each other Obligor’s financial
statements fur­nished to Lender fairly present in all material respects the
consolidated financial condition of Borrower (or such other applicable Obligor)
as of its date and for the period then ended.  No material adverse change has
occurred in the financial conditions reflected in any such statements since
their dates, and all assets listed on such statements are subject to the
Borrower’s or the other applicable Obligor’s management, control and
disposition.  Borrower has good and marketable title to, or a valid leasehold
interest in, all of the material Property and assets shown on the most recent
consolidated balance sheet for Borrower provided under the terms of Section 5.2,
and all assets and Property acquired since the date of such respective balance
sheets, except for such Property as is no longer used or useful in the conduct
of Borrower’s or its applicable Subsidiary’s business or as have been disposed
of in the ordinary course of business or otherwise in accordance with this
Agreement, and except for minor defects in title that do not interfere with the
ability of Borrower and its Subsidiaries to conduct their respective businesses.
 
 
 

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Section 4.06                      Taxes.  Borrower has filed all tax returns
required to be filed and paid all taxes due, including interest and penalties,
except for taxes which are being dili­gently con­tested in good faith and for
payment of which adequate reserves have been set aside.
 
Section 4.07                      Litigation.   As of the date of this
Agreement, there is no condemnation or other action, suit or proceeding
pending—or, to the best of Borrower's knowledge, threatened--against Borrower,
any other Obligor or the Collateral, at law or in equity, or before or by any
Governmental Authority, which involves a claim or dispute in excess of
$100,000.00, except as described and set forth in Schedule 4.07 attached hereto.
 
Section 4.08                      No Defaults.  Neither Borrower nor any other
Obligor is in default with respect to any order, writ, injunction, decree or
demand of any court or other Governmental Authority, in the payment of any
Indebtedness for borrowed money or under any agreement or other papers
evidencing or securing any such Indebtedness to the extent the default in such
payment would constitute a Default or an Event of Default under Section 7.01(j).
 
Section 4.09                      No Adverse Contracts.  Except for loan
documents evidencing permitted Indebtedness or Liens, neither Borrower nor any
other Obligor is a party to any contract or agreement which materially and
adversely affects any of its businesses, Properties or financial conditions.
 
Section 4.10                      Solvency.  Borrower and each other Obligor is
now solvent, and no bankruptcy or insolvency proceedings are pending or
contemplated by or--to Borrower's knowledge threatened--against Borrower or any
other Obligor.  Borrower’s liabilities and obligations under the Credit
Documents do not and will not render Borrower insol­vent, and the liabilities
and obligations of each other Obligor under the Credit Documents do not and will
not render any other Obligor insol­vent.
 
Section 4.11                      Prior Representations. No representation or
warranty contained in any Credit Document and no statement contained in any
certificate, schedule, list, financial statement or other papers furnished to
Lender by or on behalf of Borrower or any other Obligor contains any untrue
statement of material fact, or omits a material fact necessary to make the
statements contained therein, taken as a whole, not misleading in light of the
circumstances under which such statements were provided.
 
Section 4.11                      Margin Stock.   None of the proceeds of the
Note will be used for the purpose of purchasing or carrying, directly or
indirectly, any margin stock or for any other purpose which would make such
credit a "purpose credit" within the meaning of Regula­tion U of the Board of
Governors of the Federal Reserve System.
 
Section 4.12                      Permits.  Borrower and its Subsidiaries
possess all permits, licenses, patents, trademarks, tradenames and copyrights
required and material to conduct their respective businesses.
 
Section 4.13                      Legal Requirements.  Borrower, each other
Obligor and the Collateral are in compliance in all material respects with all
applicable Legal Requirements and Borrower manages and operates (and will
continue to manage and operate) its business in accordance with good industry
practices as determined by Borrower in its reasonable discretion.
 
Section 4.14                      ERISA.  With respect to each Plan, Borrower,
each of its Subsidiaries and each member of a Controlled Group for the employees
of Borrower or any of its Subsidiaries have fulfilled their obligations,
including obligations under the minimum funding standards of ERISA and the Code
and are in compliance in all material respects with the provisions of ERISA and
the Code.  No event has occurred which could result in a liability of Borrower
or any member of a Controlled Group for the employees of Borrower or any of its
Subsidiaries to the PBGC or a Plan (other than to make contributions in the
ordinary course).  Since the effective date of Title IV of ERISA, there have not
been any nor are there now existing as of the date of this Agreement, any events
or conditions that would reasonably be expected to cause the Lien provided under
Section 4068 of ERISA to attach to any Property of Borrower, or any of its
Subsidiaries or any member of a Controlled Group for the employees of Borrower
or any of its Subsidiaries.  As of the date of this Agreement, there are no
Unfunded Liabilities with respect to any Plan, and no "prohibited transaction"
has occurred with respect to any Plan as of the date hereof.
 
Section 4.15                      Investment and Holding Company Status.
 
(a)           Neither Borrower nor or any of its Subsidiaries is an investment
company within the meaning of the Investment Company Act of 1940, as amended,
or, directly or indirectly, controlled by or acting on behalf of any Person
which is an investment company, within the meaning of said Act.
 
(b)           Neither Borrower nor or any of its Subsidiaries is an "affiliate"
or a "subsidiary company" of a "public utility company," or a "holding company,"
or an "affiliate" or a "subsidiary company" of a "holding company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended
("PUHC Act").  Further, none of the transactions contemplated under this
Agreement shall cause or constitute a violation of any of the provisions, rules,
regulations or orders of or under the PUHC Act and the PUHC Act does not in any
manner impair the legality, validity or enforceability of the Note, the
liabilities of Borrower or any of its Subsidiaries under any of the Credit
Documents or any Liens created under the Security Documents.
 
 
 

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Section 4.16                      Environmental Matters.  Except as disclosed in
writing to Lender before execution and delivery of this Agreement, (a) Borrower
and each of its Subsidiaries has obtained and maintained in effect all
Environmental Permits, the failure to obtain which could reasonably be expected
to have a Material Adverse Effect, (b) Borrower and each of its Subsidiaries
(and its Properties, business and operations) has been and is in compliance in
all material respects with all applicable Requirements of Environ­mental Law and
Environmen­tal Permits, the failure to obtain which could reasonably be expected
to have a Material Adverse Effect, (c) neither Borrower nor any of its
Subsidiaries (or any of their Properties, business and operations) is subject to
any (i) Environmental Claims or (ii) Environmental Liabilities, in either case
direct or contingent, and whether known or unknown, arising from or based upon
any act, omission, event, condition or circumstance occurring or existing on or
prior to the date hereof which could reasonably be expected to have a Material
Adverse Effect, and (d) neither Borrower nor any of its Subsidiaries has
received any notice of any violation or alleged viola­tion of any Requirements
of Environmental Law or Environmen­tal Permit or any Environmental Claim in
connection with its Properties, business or operations which could reasonably be
expected to have a Material Adverse Effect.  The liability (including any
Environmental Liability and any other damage to persons or Property), if any, of
Borrower and each of its Subsidiaries with respect to their Properties, business
and operations which is reasonably expected to arise in connection with
Require­ments of Environmental Laws currently in effect and other environmental
matters presently known by Borrower could not reasonably be expected to have a
Material Adverse Effect.  Neither Borrower nor any of its Subsidiaries knows of
any event or condition with respect to Environmental Matters with respect to any
of its Properties which could reasonably be expected to have a Material Adverse
Effect.  The provisions of this Section are cumulative of the provisions
relating to this subject matter in the other Credit Documents.
 
Section 4.17                      Executive Offices; Fiscal Year.  As of the
date of this Agreement, Borrower's principal place of business and chief
executive office is 508 W. Wall Street, Suite 550, Midland, Texas 79701, and
Borrower's fiscal year is January 1st to December 31st of each calendar year.

Section 4.18                      Subsidiaries.   As of the date hereof,
Borrower has no Subsidiaries.
 
Section 4.19                      Subordinated Indebtedness.  As of the date
hereof, Borrower has no Subordinated Indebtedness.

ARTICLE V
 
Affirmative Covenants
 
Borrower covenants and agrees with Lender that prior to the payment in full of
the Obligations (other than indemnification liabilities and other similar
contingent obligations) and the termination of the Commitment:
 
Section 5.01                      Existence; Conduct of Business.  Borrower
shall (and shall cause each of its Subsidiaries to) at all times (a) pay when
due all material taxes and governmental charges of every kind upon it or against
its income, profits or Property, unless and only to the extent that the same
shall be contested diligently in good faith and adequate reserves have been
established therefor; (b) to the extent applicable, do all things reasonably
necessary to preserve its existence, qualifications, rights and franchises in
all states where such qualification is necessary; (c) comply in all material
respects with all applicable Legal Requirements (including Requirements of
Environmental Law) in respect of the conduct of its business and the ownership
of its Property; (d) cause its material Property to be protected, maintained and
kept in good repair (ordinary wear and tear and casualty expected) and make all
replacements and additions to its Property as may be reasonably necessary to
conduct its business, and (e) pay punctually and discharge when due, or renew or
extend, any Indebtedness in excess of $250,000.00 incurred by it and discharge,
perform and observe the covenants, provisions and conditions to be performed,
discharged and observed on its part in connection therewith, or in connection
with any agreement or other instru­ment relating thereto or in connection with
any mortgage, pledge or lien existing at any time upon any of its Property;
provided, however, that nothing contained in this subparagraph (e) shall require
payment, discharge, renewal or extension of any such Indebtedness or discharge,
performance or observance of any such cove­nants, provisions and conditions so
long as any claims which may be asserted against with respect to any such
Indebted­ness or any such covenants, provisions and conditions shall be
contested diligently and in good faith and reserves with respect thereto deemed
adequate by Lender shall be established.
 
 
 
Section 5.02                      Financial Statements; Designation of Equipment
Inventory and Other Information.  Borrower shall furnish or cause to be
furnished to Lender a copy of each of the following:
 
(a)           as soon as available and in any event within 120 days after the
end of each fiscal year of Borrower, the Annual Audited Financial Statements of
Borrower;
 
(b)           as soon as available and in any event within 45 days after the end
of each fiscal quarter (excluding the last fiscal quarter of each fiscal year)
of Borrower, the Quarterly Financial Statements of Borrower;
 
(c)           concurrently with the financial statements provided for in
subsections (a) and (b) of this Section 5.02 which are delivered as of the end
of any fiscal quarter or fiscal year of Borrower, a compliance certificate
("Compliance Certificate") in the form of Exhibit D hereto accompanied by such
schedules, computations and other information, in reasonable detail, as may be
required by Lender to demonstrate compliance with the covenants set forth herein
or reflecting any non-compliance therewith as of the applicable date, all
certified and signed by an appropriate officer or other responsible party
acceptable to Lender on behalf of Borrower;
 
 
 

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(d)           within 25 days after the end of each calendar month when any Loans
and/or Letter of Credit Liabilities are outstanding as of the end of such
calendar month, within 25 days after the end of each fiscal quarter of Borrower
(regardless of whether any Loans and/or Letter of Credit Liabilities are
outstanding as of the end of such fiscal quarter), and contemporaneously with a
Request for Loan to the extent the following information has not been previously
provided to the Lender within 30 days prior to the date such Request for Loan is
submitted to the Lender, (i) a Borrowing Base Certificate as of the last day of
such calendar month or fiscal quarter, as applicable, together with such
supporting information as Lender may reasonably request, certified and signed by
an appropriate officer or other responsible party acceptable to Lender on behalf
of Borrower, (ii) a listing and aging of the Receivables of Borrower and each of
its Domestic Subsidiaries as of the end of such calendar month or fiscal
quarter, as applicable, prepared in reasonable detail and containing such
information as Lender may request (including Borrower’s reasonable calculation
of the difference between (A) the aggregate amount of all Receivables shown on
such listing and aging of Receivables and (B) the actual amount of such
Receivables permitted to be included as an asset on the consolidated balance
sheet of the Borrower in accordance with GAAP), (iii) a listing and aging of the
accounts payable of Borrower and each of its Domestic Subsidiaries as of the end
of such calendar month or fiscal quarter, as applicable, prepared in reasonable
detail and containing such information as Lender may request, and (iv) a listing
of the Equipment Inventory and a summary of the General Inventory of Borrower
and each of its Domestic Subsidiaries as of the end of such calendar month or
fiscal quarter, as applicable, prepared in reasonable detail and containing such
information as Lender may request, including without limitation, updated Book
Value amounts for the applicable Equipment Inventory and General Inventory;
 
(e)           within 25 days after the end of each June and December (commencing
with December 31, 2010), and promptly on a more frequent basis upon the
reasonable request of Lender, a listing covering all Equipment Inventory which
is then leased by Borrower or its applicable Subsidiaries which adequately sets
forth the following information for each such lease of any Equipment Inventory:
(i) a summary of the applicable lease, including the remaining term thereof and
the monthly amounts payable thereunder; (ii) the identity of specific Equipment
Inventory covered by the applicable lease; (iii) the name and mailing address of
the third-party lessee under the applicable lease; and (iv) the physical address
that the specific Equipment Inventory is to be maintained by the applicable
third-party lessee, if different than such lessee’s mailing address;
 
(f)           from time to time, at any time upon the request of Lender, but at
the cost of Borrower (subject to the limitation set forth below), a report of a
collateral field examiner or auditor (which may or may not be affiliated with
Lender) with respect to the Accounts and General Inventory included in the
Borrowing Base (provided, however, that Borrower shall not be required to pay or
reimburse to Lender the cost and expense of such a report more than twice per
calendar year to the extent of reports prepared when no Default or Event of
Default exists); and
 
(g)           such other information relating to the financial condition,
operations, prospects or business of any Borrower and/or any of its Subsidiaries
as from time to time may be reasonably requested by Lender.
 
Section 5.03                      Financial Covenants.  Borrower shall have and
maintain, on a consolidated basis, a Leverage Ratio less than or equal to 2.50
to 1.00 as of the last day of each fiscal quarter (commencing with the fiscal
quarter ending December 31, 2010).
 
Section 5.04                      Books and Records; Inspection
Rights.   Borrower shall (and shall cause each of its Subsidiaries to) maintain
books and records in accordance with GAAP.  Borrower shall permit Lender and any
consultant of Lender to inspect its Property, to examine its files, books and
records and make and take away copies thereof, and to discuss its affairs with
its officers and accountants, during normal business hours and upon reasonable
notice from Lender.  In connection therewith, Lender and any consultant of
Lender shall each have the right to examine, as often as Lender may reasonably
request, the existence and condition of any of the Collateral and to review
Borrower's and each other Obligor’s compliance with the terms and conditions of
this Agreement and the other Credit Documents, subject to governmental
confidentiality requirements.  Borrower shall not be obligated to pay the
expenses of Lender with respect to more than two (2) such visits and inspections
per year so long as no Default or Event of Default exists.
 
Section 5.05                      Further Assurances.  Borrower shall promptly
execute and deliver (or cause to be executed and delivered by any other
applicable Obligor), at Borrower's expense, any and all other and further
instruments which may be reasonably requested by Lender necessary to cure any
defect in the execution and delivery of any Credit Document or more fully to
describe particular aspects of the agreements and undertakings set forth in the
Credit Documents.
 
 
Section 5.06                      Insurance.  Borrower shall maintain insurance
with such insurers, on such of its and its Subsidiaries’ Property, in such
amounts and against such risks as is customarily insured by companies similarly
situated as Borrower, including without limitation, fire and extended coverage,
general liability insurance and worker's compensation coverage, and furnish
Lender satisfactory evidence thereof promptly upon request. [Notwithstanding the
foregoing property insurance requirement or any other property insurance
requirement set forth in any other Loan Document, so long as Borrower continues
to maintain in all material respects the existing self-insurance program
currently maintained by Borrower for property insurance coverage in lieu of
third-party property insurance coverage, Borrower shall be deemed to have
complied with all applicable property insurance requirements set forth in this
Agreement or in any other Loan Document.]  These insurance provisions are
cumulative of the insurance provisions of the Security Documents.  With respect
to all such property, casualty and general liability insurance, Lender shall be
named as an "additional loss payee" or "additional insured," as applicable, in
its capacity as a lender and mortgagee, and shall be provided with copies of all
such policies of insurance and one or more certificates of the applicable
insurers that such insurance may not be canceled, reduced or materially and
adversely affected in any manner without thirty (30) days' prior written notice
to Lender.  Wherever permitted and available under applicable law, such property
insurance shall name Lender as loss payee and/or mortgagee insured.  If Lender
receives any proceeds of any such insurance, such proceeds shall be applied as
prepayments against the Loans.
 
 
 
 

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Section 5.07                      Notice of Material Events.  Borrower shall
notify Lender promptly upon acquiring knowledge of the occurrence of, or if
Borrower or any of its Subsidiaries causes or intends to cause, as the case may
be:  (a) the institution of any lawsuit or administrative proceeding affecting
Borrower or any other Obligor in any material respect; (b) any Default or any
Event of Default, together with a detailed statement by an appropriate officer
or other responsible party acceptable to Lender on behalf of Borrower of the
steps being taken to cure the effect of such Default or Event of Default; (c)
the receipt of any notice from, or the taking of any other action by, the holder
of any Indebtedness of Borrower or any of its Subsidiaries in excess of $50,000
with respect to a claimed default, together with a detailed statement by an
appropriate officer or other responsible party acceptable to Lender on behalf of
Borrower specifying the notice given or other action taken by such holder and
the nature of the claimed default and what action Borrower or its applicable
Subsidiaries, as the case may be, is taking or proposed to take with respect
thereto; and (d) any adverse change in any material respect in the accuracy of
the representations and warranties of Borrower or any other Obligor in this
Agreement or any other Credit Document.  Borrower will notify Lender in writing
at least 10 days prior to the date that any Obligor changes its name or its
address or the place where it keeps its books and records.
 
Section 5.08                      ERISA Matters.  Borrower shall promptly
furnish to Lender (1) promptly after receipt, a copy of any notice of complete
or partial withdrawal liability regarding a Plan under Title IV of ERISA and any
notice from the PBGC under Title IV of ERISA of an intent to terminate or
appoint a trustee to administer any Plan, (2) if requested by Lender, promptly
after the filing thereof with the United States Secretary of Labor or the PBGC
or the Internal Revenue Service, copies of each annual and other report with
respect to each Plan or any trust created thereunder, (3) immediately upon
becoming aware of the occurrence of any "reportable event," as such term is
defined in Section 4043 of ERISA, for which the disclosure requirements of
Regulation Section 2615.3 promulgated by the PBGC have not been waived, or of
any "prohibited transaction," as such term is defined in Section 4975 of the
Code, in connection with any Plan or any trust created thereunder, a written
notice signed by an appropriate officer or other responsible party acceptable to
Lender on behalf of Borrower, its applicable Subsidiaries  or the applicable
member of a Controlled Group for the employees of Borrower or its applicable
Subsidiaries specifying the nature thereof, what action Borrower, its applicable
Subsidiaries or the applicable member of such Controlled Group is taking or
proposes to take with respect thereto, and, when known, any action taken by the
PBGC, the Internal Revenue Service or the Department of Labor with respect
thereto, (4) promptly after the filing or receiving thereof by Borrower, any of
its Subsidiaries or any member of a Controlled Group for the employees of any
such Person of any notice of the institution of any proceedings or other actions
which may result in the termination of any Plan, and (5) each request for waiver
of the funding standards or extension of the amortization periods required by
Sections 303 and 304 of ERISA or Section 412 of the Code regarding a Plan
promptly after the request is submitted by Borrower, any of its Subsidiaries or
any member of a Controlled Group for the employees of any such Person to the
Secretary of the Treasury, the Department of Labor or the Internal Revenue
Service, as the case may be.  To the extent required under applicable statutory
funding requirements, Borrower will fund, and will cause each of its applicable
Subsidiaries to fund, all current service pension liabilities as they are
incurred under the provisions of all Plans from time to time in effect, and
comply with all applicable provisions of ERISA.  Borrower covenants that it
shall and shall cause each of its applicable Subsidiaries and each member of a
Controlled Group for the employees of Borrower or any of its Subsidiaries  to
(a) make contributions to each Plan in a timely manner and in an amount
sufficient to comply with the contribution obligations under such Plan and the
minimum funding standards requirements of ERISA; (b) prepare and file in a
timely manner all notices and reports required under the terms of ERISA
including annual reports regarding such Plans; and (c) pay in a timely manner
all required PBGC premiums regarding such Plans.
 
Section 5.09                      Loan Proceeds.  The proceeds of the Loans will
be used to provide funds for working capital, acquisition needs, capital
expenditures and general corporate purposes for Borrower.
 
Section 5.10                      Deposits, Treasury Management and Traditional
Banking Services.  Borrower shall maintain with Lender a substantial portion of
its depository and disbursement accounts, related treasury management services
and other traditional banking services.
 
Section 5.11                      Designation of Equipment Inventory as
Collateral; Requisite Commitment Coverage Ratio.
 
 
(a)           The specific rental compressor Inventory initially designated by
Borrower as “Equipment Inventory” for purposes of this Agreement is described in
Exhibit E attached hereto.   Borrower and Lender agree that the Book Value of
such initially designated Equipment Inventory as of the date of this Agreement
is sufficient to cause the Commitment Coverage Ratio to be equal to or greater
than 2.00 to 1.0 as of the date of this Agreement.   If the Borrowing Base
Certificate and related information delivered by Borrower to Lender as of the
end of any fiscal quarter or fiscal year of the Borrower pursuant to the terms
of Section 5.02(d) show that the Commitment Coverage Ratio is less than 2.00 to
1.0 as of the end of the applicable fiscal quarter of fiscal year of Borrower,
or if it is subsequently discovered that any Equipment Inventory previously
included within Eligible Equipment Inventory is actually not Eligible Equipment
Inventory as a result of such Equipment Inventory being permanently attached to
vehicles, trailers or other transportation equipment covered by any certificate
of title or for any other valid reason, then within 15 days after the Lender’s
written demand to Borrower for the designation and pledge of additional
Equipment Inventory as Collateral, the Borrower shall (i) furnish the Lender
with the Borrower’s written designation of additional specific rental
compressors of the Borrower and/or any of its Domestic Subsidiaries not already
included in Equipment Inventory and having an aggregate Book Value at such time
in the amount necessary to cause the Commitment Coverage Ratio to then be equal
to or greater than 2.00 to 1.0 after the addition to and inclusion of such
additional rental compressors as Equipment Inventory for purposes of hereof and
(ii) execute and deliver to the Lender any and all Security Documents reasonably
required by the Lender to evidence and perfect a first priority Lien in favor of
the Lender in and to such additional Equipment Inventory as additional
Collateral.   Borrower acknowledges and agrees that during the period after any
above-described written demand by Lender to Borrower for the designation and
pledge of additional Equipment Inventory as Collateral, Lender shall have the
option to withhold funding any additional Loans and/or issuing any additional
Letters of Credit requested by Borrower unless and until Borrower has designated
and pledged the requisite additional Equipment Inventory as Collateral in
accordance with the foregoing requirements.
 
(b)           The Borrower acknowledges that the initial Equipment Inventory
described in Exhibit E hereto is the newest and most recently acquired rental
compressor Inventory owned and held by the Borrower as of the date of this
Agreement, and the Borrower hereby agrees that (i) each subsequent designation
of additional Equipment Inventory after the date hereof shall sufficiently
identify such additional Equipment Inventory in a manner (including furnishing
of serial numbers and other specific equipment descriptions) to permit the
Lender to thereafter file a valid UCC-Financing Statement with a legally
sufficient description against all additionally designated Equipment Inventory
in the manner required to properly and validly perfect the Lender’s requisite
first priority Lien against such Equipment Inventory as Collateral hereunder,
and (ii) that the specific rental equipment to be designated by the Borrower as
“Equipment Inventory” in each such subsequent Equipment Inventory designation is
required to be the newest and most recently acquired rental compressor Inventory
then owned and held by the Borrower and/or its applicable Domestic Subsidiaries
and which is not yet Equipment Inventory for purposes hereof at the time of such
designation.
 
 
 

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(c)           Lender shall be entitled, upon its reasonable request, to require
a current appraisal of the Equipment Inventory and all other rental compressors
then owned by Borrower to be prepared by an appraiser acceptable to Lender and
at Borrower’s cost and expense in order to substantiate and confirm compliance
with the above-described Commitment Coverage Ratio requirement in connection
with (i) any increase in the Commitment requested by Borrower pursuant to
Section 2.01(c) or (ii) confirming the value of any Equipment Inventory
designated by Borrower in accordance with the above provisions that is older
than five (5) years. Borrower agrees to promptly remit to Lender the amount of
each such appraisal upon demand by Lender accompanied by a copy of the invoice
for the applicable appraisal.
 
 
 

ARTICLE VI
 
Negative Covenants
 
Borrower covenants and agrees with Lender that prior to the payment in full of
the Obligations (other than indemnification liabilities and other similar
contingent obligations) and the termination of the Commitment:
 
Section 6.01                      Indebtedness.  Neither Borrower nor any of its
Subsidiaries will create, incur, suffer or permit to exist, or assume or
guarantee, directly or indirectly, or become or remain liable with respect to
any Indebtedness, whether direct, indirect, absolute, contingent or otherwise,
except the following:
 
 
(a)           Indebtedness to Lender or any Affiliate of Lender;
 
(b)           Indebtedness secured by Liens permitted by Section 6.02 hereof;
 
(c)           other liabilities existing on the date of this Agreement and
disclosed in the financial statements delivered on or prior to the date hereof;
 
(d)           current accounts payable and unsecured current liabilities, not
the result of borrowing, to vendors, suppliers and persons providing services,
for expenditures for goods and services normally required by it in the ordinary
course of business and on ordinary trade terms;
 
(e)           any Subordinated Indebtedness;
 
(f)           intercompany Indebtedness among Obligors, so long as any such
Obligor other than Borrower is a wholly-owned Domestic Subsidiary of Borrower;
 
(g)           intercompany Indebtedness owing by a non-Domestic Subsidiary to
any Obligor, so long as (1) Borrower is in compliance with the financial
covenant in Section 5.03 hereof after giving effect to all such intercompany
Indebtedness extended to non-Domestic Subsidiaries and all Investments permitted
by Section 6.07(j), and (2) all such intercompany Indebtedness extended to any
non-Domestic Subsidiary is evidenced by a valid and enforceable promissory note
executed and payable by the applicable non-Domestic Subsidiary to the order of
the applicable Obligor and the Lender has received a perfected first priority
Lien (subject only to Permitted Encumbrances) against such promissory note;
 
(h)           Capital Lease Obligations, purchase money Indebtedness incurred to
finance the acquisition of any Equipment or any other Indebtedness for borrowed
money incurred after the date of this Agreement, so long as the aggregate
principal amount of all such Indebtedness shall not exceed $300,000.00 in the
aggregate at any time outstanding;
 
(i)           Indebtedness which represents an extension, refinancing, or
renewal of any of the Indebtedness described in clauses (b), (c) and (h) hereof;
provided that, (1) the principal amount or interest rate of such Indebtedness is
not increased, (2) any Liens securing such Indebtedness are not extended to any
additional Property of any Obligor, (3) no Obligor that is not originally
obligated with respect to repayment of such Indebtedness is required to become
obligated with respect thereto, (4) such extension, refinancing or renewal does
not result in a shortening of the maturity of the Indebtedness so extended,
refinanced or renewed, (5) the terms of any such extension, refinancing, or
renewal are not less favorable to the obligor thereunder than the original terms
of such Indebtedness and (6) if the Indebtedness that is refinanced, renewed, or
extended was Subordinated Indebtedness, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must include subordination terms
and conditions that are at least as favorable to the Lender as those that were
applicable to the refinanced, renewed, or extended Indebtedness;
 
 
 

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(j)           Indebtedness owed by Borrower to any Person providing workers'
compensation, health, disability or other employee benefits or property,
casualty or liability insurance, pursuant to reimbursement or indemnification
obligations to Borrower, in each case incurred in the ordinary course of
business; and
 
(k)           Indebtedness of any Borrower in respect of performance bonds, bid
bonds, appeal bonds, surety bonds and similar obligations, in each case provided
in the ordinary course of business.
 
Section 6.02                      Liens.  Neither Borrower nor any of its
Subsidiaries will create or suffer to exist any Lien upon any of its Property
now owned or hereafter acquired, permit to exist any Lien on any Collateral
owned by any other Obligor, or acquire any Property upon any conditional sale or
other title retention device or arrangement or any purchase money security
agreement; provided, however, that Borrower may create or suffer to exist:
 
 
(a)           Liens in effect on the date hereof and disclosed in Schedule 6.02
attached hereto, provided that neither the Indebtedness secured thereby nor the
Property covered thereby shall increase;
 
(b)           Liens in favor of Lender;
 
(c)           Liens created pursuant to Capital Lease Obligations or purchase
money Indebtedness for Equipment permitted pursuant to this Agreement, if such
Liens are only in respect of the Equipment subject to, and secure only, the
respective Capital Lease Obligations or purchase money Indebtedness and do not
cover any other Property of Borrower or any of its Subsidiaries; and
 
(d)           Permitted Encumbrances.

Section 6.03                      Fundamental Changes.    Neither Borrower nor
any of its Subsidiaries, in any single transaction or series of transactions,
directly or indirectly, (a) consolidate, terminate, liquidate or dissolve, (b)
be a party to any consolidation, termination, merger or consolidation, (c) sell,
convey or lease all or substantially all of its assets (other than to Borrower
or another Obligor that is a wholly-owned Subsidiary of Borrower), or (d) except
for Permitted Acquisitions, acquire all or substantially all of the assets of
any Person, or acquire any Equity Interests of any other Person after the date
hereof, without the prior consent of Lender; provided, however, that any
wholly-owned Subsidiary of an Obligor may (i) consolidate or merge with Borrower
or another Obligor that is a wholly-owned Subsidiary of Borrower or (ii)
otherwise terminate, liquidate or dissolve, so long as all of the assets of such
Obligor that is terminating, liquidating or dissolving are conveyed to Borrower
or another Obligor that is a wholly-owned Subsidiary of Borrower.

Section 6.04                      Asset Sales.   Neither Borrower nor any of its
Subsidiaries will, in any single transaction or series of transactions, directly
or indirectly, sell, transfer, lease or otherwise dispose of any of its assets,
except for (i) sales or other dispositions of Inventory or other assets in the
ordinary course of business and for fair value, including, without limitation,
sales or other dispositions of damaged, used, surplus or obsolete assets, (ii)
sales or other dispositions to any other Obligor and (iii) sales or other
dispositions of assets not to exceed $1,000,000.00 in the aggregate in any
fiscal year.
 
Section 6.05                      Nature of Business; Management.  Neither
Borrower nor any of its Subsidiaries will (a) change the nature of its business
in any material respect or enter into any business which is substantially
different from the business in which it is presently engaged, other than any
Permitted Other Business Lines, or (b) permit a change in the Chief Executive
Officer and/or President of the Borrower.
 
Section 6.06                      Affiliate Transactions.  Neither Borrower nor
any of its Subsidiaries will enter into any transaction or agreement with any
Affiliate or any officer, director, partner, trustee or owner or holder of any
Equity Interests of Borrower or any of its Subsidiaries, except (a) transactions
in the ordinary course of business that are at prices and on terms and
conditions not less favorable to it than could be obtained on an arm’s-length
basis from unrelated third parties, (b) any Distribution with respect to any
Equity Interests in Borrower permitted hereunder or other transaction or
agreement otherwise permitted hereunder, and (c) compensation, employment,
severance and benefit arrangements in the ordinary course of business, including
payment of directors’ fees.
 
Section 6.07                      Investments; Loans; Advances. Neither Borrower
nor any of its Subsidiaries will make any Investment in, any Person, or make any
commitment to make any Investment, except the following:
 
(a)           Permitted Investments;
 
(b)           Accounts, Inventory and other working capital accounts, if created
in the ordinary course of business and payable or dischargeable in accordance
with customary trade terms;
 
 
 

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(c)           loans or advances to employees, officers or directors in the
ordinary course of business of Borrower or any of its Subsidiaries, in each case
only as permitted by applicable law, including Section 402 of the Sarbanes Oxley
Act of 2002, but in any event not to exceed $100,000.00 in the aggregate at any
time outstanding;
 
(d)           Investments received in satisfaction or partial satisfaction from
financially troubled account debtors as a result of the applicable Obligor’s
exercise of its reasonable business judgment;
 
(e)           Equity Interests issued by Subsidiaries permitted hereunder;
 
(f)           Investments in another Obligor;
 
(g)           Investments existing on the date hereof to the extent the same are
reflected in the most recent financial statements of Borrower furnished to
Lender prior to the date of this Agreement; and
 
(h)           Permitted Acquisitions.
 
 
 
Section 6.08                      New Subsidiaries. Neither Borrower nor any of
its Subsidiaries will form, create or acquire any Subsidiary without the prior
written consent of Lender, unless (a) Lender is provided not less than thirty
(30) days prior written notice by Borrower of the intention to create or acquire
such new Subsidiary, (b) if such new Subsidiary is to be acquired, such
Acquisition is a Permitted Acquisition, and (c) contemporaneously with the
actual creation or acquisition of such new Subsidiary, as applicable, Borrower
causes (i) each such Subsidiary that is a Domestic Subsidiary to become an
Obligor, by execution and delivery to Lender, of a Guaranty or a Joinder
Agreement (if a Joinder Agreement is requested by Lender in lieu of a Guaranty),
(ii) each such Subsidiary that is a Domestic Subsidiary to grant to Lender a
first priority perfected Lien (subject only to Liens permitted under Section
6.02) against all Collateral now or hereafter owned by such Domestic Subsidiary
(subject to the limitations of Section 5.11), (iii) sixty-five percent (65%) of
the issued and outstanding Equity Interests of each Subsidiary that is a
non-Domestic Subsidiary (or such greater percentage that, due to a change in
applicable law after the date hereof, (1) could not reasonably be expected to
cause the undistributed earnings of such foreign Subsidiary as determined for
U.S. federal income tax purposes to be treated as a deemed dividend to such
foreign Subsidiary’s U.S. parent and (2) could not reasonably be expected to
cause any material adverse tax consequences) entitled to vote (within the
meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and
outstanding Equity Interests not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2) in each foreign Subsidiary directly owned by the
Borrower or any Domestic Subsidiary to be subject at all times to a first
priority, perfected Lien in favor of the Lender pursuant to the terms and
conditions of the Credit Documents or other security documents as the Lender
shall reasonably request., and (iv)  each such Subsidiary to deliver to Lender
such related certificates, legal opinions and documents (including
Organizational Documents) as Lender may reasonably require.
 
Section 6.09                      ERISA; Unfunded Liabilities.  Neither Borrower
nor any of its Subsidiaries will incur any material Unfunded Liabilities or
allow any material Unfunded Liabilities to arise or exist under any Plan.
 
Section 6.10                      Sale and Leaseback Transactions.   Neither
Borrower nor any of its Subsidiaries will enter into any arrangement, directly
or indirectly, whereby it shall sell or transfer any Property, real or personal,
used or useful in its business, whether now owned or hereinafter acquired, and
thereafter rent or lease such Property or other Property that it intends to use
for substantially the same purpose or purposes as the Property sold or
transferred.

Section 6.11                      Control of Voting Rights of Borrower’s and its
Subsidiaries’ Equity Interests.   Borrower will not permit (i) any change in the
control of the voting rights for any Equity Interests in Borrower which results
in any Person and its Affiliates controlling, directly or indirectly, more than
one-third (1/3) of the voting rights under all issued and outstanding classes of
Equity Interests in Borrower at any time, or (ii) any change in the ownership of
any Equity Interests in any Subsidiary now or hereafter owned and held by
Borrower.

Section 6.12                      Dividends and Other Distributions.  Borrower
will not:  (a) redeem, retire or otherwise acquire, directly or indirectly, any
of its Equity Interests; or (b) pay or make any Distribution of any Property or
cash to holders of Equity Interests in Borrower as such, except (i) non-cash
dividends of additional Equity Interests, (ii) dividends required to be paid
under the current terms of any preferred stock issued and outstanding as of the
date of this Agreement, and (iii) redemptions of Equity Interests from officers,
directors, employees and consultants upon termination of employment or service
of such Person.
 
Section 6.13                      Other Negative Pledge Agreements. Neither
Borrower nor any of its Subsidiaries will enter into any contract or other
agreement for any purpose with any Person (other than the applicable negative
covenants of this Agreement and the other Credit Documents) that directly or
indirectly prohibits the Borrower or any of its Subsidiaries from granting any
Lien against any Property now or hereafter owned by Borrower or any of its
Subsidiaries.
 
 
 

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ARTICLE VII
 
Defaults
 
Section 7.01                      Default.  The occurrence of any of the
following events shall consti­tute an Event of Default (herein so called) under
this Agreement:
 
(a)           any part of the Obligations is not paid when due, whether by lapse
of time or acceleration or otherwise;
 
(b)           Borrower or any other Obligor fails to perform, observe or comply
with--or defaults under--any of the terms, covenants, conditions or provisions
of any Credit Document (other than any such failure or default described in one
of the other subparagraphs of this Section), unless Lender declares the failure
or default fully cured to Lender's satisfaction within fifteen (15) calendar
days after Lender has given Borrower written notice thereof (such curative
period to run concurrently with, and not in addition to, any other curative
periods, if any, provided for in any of the other Credit Documents with respect
to the same default);
 
(c)           Borrower or any of its Subsidiaries fails to perform, observe or
comply with--or defaults under--Sections 5.02, 5.03 or 5.07 hereof or any
negative covenant under Article VI of this Agreement;
 
(d)           any representation or warranty by Borrower or any other Obligor
made in any Credit Document or in any other report or other paper now or
hereafter provided to Lender pursuant or incident to any Credit Document or the
Obligations proves to have been untrue or misleading in any material respect as
of the date made or deemed made;
 
(e)           Borrower or any of its Subsidiaries:  (i) voluntarily suspends
transaction of business (except as permitted hereunder); (ii) becomes insolvent
or unable to pay its Indebtedness as it matures; (iii) commences a voluntary
case in bankruptcy or a voluntary petition seeking reorganiza­tion or to effect
a plan or other arrangement with creditors; (iv) makes an assignment for the
benefit of creditors; (v) applies for or consents to the appoint­ment of a
receiver or trustee for any such person or entity or for any substantial portion
of its Property; or (vi) makes an assign­ment to an agent authorized to
liquidate any substantial part of its assets;
 
 
(f)           in respect of Borrower or any of its Subsidiaries:  (i) an
involuntary case shall be commenced with any court or other authority seeking
liquidation, reorgani­zation or a creditor's arrangement of any such person or
entity; (ii) an order of any court or other authority shall be entered
appointing any receiver or trustee for any such person or entity or for any
substantial portion of its Property; or (iii) a writ or warrant of attachment or
any similar process shall be issued by any court or other authority against any
substan­tial portion of the Property of any such person or entity, and in each
case, such petition seeking liquidation, reorganiza­tion or a creditor's
arrangement or such order appointing a receiver or trustee is not vacated or
stayed, or such writ, warrant of attachment or similar process is not vacated,
released or bonded off within sixty (60) days after its entry or levy;
 
(g)           the dissolution, li­quidation or termination of the existence of
Borrower or any of its Subsidiaries except as otherwise permitted under this
Agreement;
 
(h)           any one or more final judgments for the payment of money in excess
of $150,000.00 in the aggregate shall be rendered against any Obligor and the
same shall remain unstayed or undischarged for a period of 30 days (it being
agreed that a judgment shall be deemed stayed for purposes hereof during the
prosecution by the applicable Obligor of any legally valid appeal process if a
proper supersedeas bond has been timely filed in connection therewith);
 
(i)           the occurrence of any Material Adverse Effect;
 
(j)           Borrower or any of its Subsidiaries shall default in the payment
of any amount when due under any other Funded Indebtedness obligation in excess
of $50,000.00 in principal amount or the holder of such other obligation
declares--or has the right to declare--such obligation due before its stated
maturity because of default;
 
(k)           Borrower or any other applicable Obligor shall claim--or any court
shall find or rule--that Lender does not have a valid Lien on any material
portion of the Collateral;
 
(l)           Borrower or any of its Subsidiaries shall have concealed, removed,
or permitted to be concealed or removed, any part of its Property, with intent
to hinder, delay or defraud any of its creditors, or made or suffered a transfer
of any of its Property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law, or shall have made any transfer of its Property to or
for the benefit of a creditor at a time when other creditors similarly situated
have not been paid, or, while insolvent, shall have suffered or permitted any
creditor to obtain a lien upon any of its Property through legal proceedings or
distraint which is not vacated within 30 days from its date;
 
 
 

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(m)           Borrower or any of its Subsidiaries fails to pay when due any
amount which he or it is liable to pay to the PBGC or its successor regarding a
Plan or to a Plan, or notice of intent to terminate any Plan is filed under
ERISA, or PBGC commences proceedings under ERISA to terminate any Plan or to
cause a trustee to be appointed to administer any Plan, or a proceeding is
commenced by any fiduciary of any Plan to enforce Section 515 or Section
4219(c)(5) of ERISA, or PBGC becomes entitled to obtain a decree adjudicating
that any Plan must be terminated; or
 
(n)           The occurrence of any default or event of default under any
International Swaps and Derivatives Association, Inc. (ISDA) Master Agreement or
other agreement evidencing any Rate Management Transaction that remains uncured
after any applicable grace or cure period, if any, provided for therein.
 
Section 7.02                      Remedies.  Upon the occurrence of any Event of
Default that is then continuing, Lender shall have the right, at its option, (a)
to declare the Commitment terminated (whereupon the Commitment shall be
terminated) and to declare the unpaid balance of the Indebtedness evidenced by
the Note and all other Credit Documents to be immediately due and payable
without further notice (including notice of intent to accelerate and notice of
acceleration), protest or demand or presentment for payment, all of which are
hereby expressly waived by Borrower, (b) to require Borrower to pay to Lender,
in immediately available funds, an amount equal to 105% of the then aggregate
amount available for drawings under all Letters of Credit (which funds shall be
held by Lender as Cover), and/or (c) to enforce or avail itself of any and all
powers, rights and remedies available at law or provided in this Agreement, the
Note, the other Credit Documents or any other document executed pursuant hereto
or in connection herewith.   All powers, rights and remedies of Lender set forth
in this Section shall be cumulative and not exclusive of any other power, right
or remedy available to Lender under the law or under this Agreement, the Note,
the other Credit Documents or any other docu­ment executed pursuant hereto or in
connection herewith to enforce the performance or observance of the covenants
and agree­ments contained in this Agreement, and no delay or omission of Lender
to exercise any power, right or remedy accruing to Lender shall impair any such
power, right or remedy, or shall be con­strued to be a waiver of the right to
exercise any such power, right or remedy.  Every power, right or remedy of
Lender set forth in this Agreement, the Note, the other Credit Documents or any
other document executed pursuant hereto or in connection here­with, or afforded
by law may be exercised from time to time, and as often as may be deemed
expedient by Lender.

Section 7.03                      Lender's Right to Cure.  If Borrower or any
other Obligor should fail to comply with any of its agreements, covenants or
obligations under any Credit Document, then after reasonable notice thereof to
Borrower, Lender (in the name of Borrower or such other applicable Obligor or in
Lender's own name) may perform them or cause them to be performed for Borrower's
account and at Borrower's expense, but shall have no obligation to perform any
of them or cause them to be performed.  Any and all expenses thus incurred or
paid by Lender shall be Borrower's obligations to Lender due and payable on
demand, and each shall bear interest from the date Lender pays it until the date
Borrower repays it to Lender at the Default Rate.  Upon making any such payment
or incurring any such expense, Lender shall be fully and automatically
subrogated to all of the rights of the person, corporation or body politic
receiving such payment.  Any amounts owing by Borrower to Lender pursuant to
this or any other provision of this Agreement shall be secured by all Security
Dcouments.  The amount and nature of any such expense and the time when it was
paid shall be fully established by the affidavit of Lender or any of Lender's
officers or agents.  The exercise of the privileges granted to Lender in this
Section shall in no event be considered or constitute a cure of the default or a
waiver of Lender's right at any time after an Event of Default that is then
continuing to declare the Note to be at once due and payable, but is cumulative
of such right and of all other rights given by this Agreement, the Note and the
Credit Documents and of all rights given Lender by law.
 
 
ARTICLE VIII
 
Miscellaneous
 
Section 8.01                      Usury Not Intended; Savings
Provisions.   Notwith­standing any provision to the contrary contained in any
Credit Document, it is expressly provided that in no case or event shall the
aggregate of any amounts accrued or paid pursuant to this Agreement which under
applicable laws are or may be deemed to constitute interest ever exceed the
maximum nonusurious interest rate permitted by applicable Texas or federal laws,
whichever permit the higher rate.  In this connection, Borrower and Lender
stipulate and agree that it is their common and overriding intent to contract in
strict compliance with applicable usury laws.  In furtherance thereof, none of
the terms of this Agreement shall ever be construed to create a contract to pay,
as consideration for the use, forbearance or detention of money, interest at a
rate in excess of the maximum rate permitted by applicable laws. Neither
Borrower nor any other Obligor shall ever be liable for interest in excess of
the maximum rate permitted by applicable laws.  If, for any reason whatever,
such interest paid or received during the full term of the applicable
Indebtedness produces a rate which exceeds the maximum rate permitted by
applicable laws, Lender shall credit against the principal of such Indebtedness
(or, if such Indebtedness shall have been paid in full, shall refund to the
payor of such interest) such portion of said interest as shall be necessary to
cause the interest paid to produce a rate equal to the maximum rate permitted by
applicable laws.  All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of money shall, to the extent required to avoid or
minimize usury and to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the applicable
Indebtedness so that the interest rate does not exceed the Ceiling Rate.  The
provisions of this Section shall control all agreements, whether now or
hereafter existing and whether written or oral, between Borrower and Lender.
 
Section 8.02                      Documentation Requirements.  Each written
instrument required by this Agreement, the Note or the other Credit Documents to
be furnished to Lender shall be duly executed by the person or persons specified
(or where no particular person is specified, by such person as Lender shall
require), duly acknowledged where reasonably required by Lender and, in the case
of affidavits and similar sworn instruments, duly sworn to and subscribed before
a notary public duly authorized to act by governmental authority; shall be
furnished to Lender in one or more copies as required by Lender; and shall in
all respects be in form and substance satisfactory to Lender and to its legal
counsel.
 
Section 8.03                      Credit Documents Cumulative.  The benefits,
rights and remedies of Lender and the security contained herein or provided for
in the Note, the other Credit Documents or any other document executed pursuant
hereto or in connection herewith are cumulative; provided, how­ever, that to the
extent of any conflict between any provision of this Agreement and any provision
contained in the Note, the other Credit Documents or any other document executed
pursuant hereto or in connection herewith, the provisions of this Agree­ment
shall control.
 
 
 

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Section 8.04                      Satisfaction of Conditions.  Where evidence of
the existence or nonexistence of any circumstance or condition is required by
this Agreement, the Note, the other Credit Documents or any other document
executed pursuant hereto or in connection herewith to be furnished to Lender,
such evidence shall in all respects be in form and sub­stance reasonably
satisfactory to Lender.
 
Section 8.05                      Survival.  All covenants, agreements,
representations and warranties made by Borrower in this Agreement, the Note and
the other Credit Documents shall survive the execution and delivery of this
Agreement, the Note and the other Credit Documents, and shall continue in full
force and effect until full payment of the Indebtedness evidenced by the Note
and/or secured by the Credit Documents, complete performance of all of the
obligations of Borrower and all other Obligors under the Credit Documents and
final termination of Lender's obligations--if any--to make any further advances
under the Note or to provide any other financial accommodation to Borrower
(provided, however, that all reimbursement obligations, indemnification and hold
harmless obligations and other similar obligations of Borrower under any of the
Credit Documents shall survive such payment, performance and termination).  No
Person other than Borrower shall have any right or action hereon or any rights
to Loans at any time, the Loans shall not constitute a trust fund for the
benefit of any third parties and no third party shall under any circumstances
have or be entitled to any Lien or any trust impressed on any undisbursed Loans.
 
Section 8.06                      Borrower Agrees to Pay or Reimburse Lender's
Expenses.  To the extent not prohibited by applicable law and except as
otherwise expressly limited herein, Borrower will pay all of the following costs
and expenses and reimburse Lender for any and all of the following expenditures
incurred or expended from time to time, regardless of whether a Default or an
Event of Default shall have occurred, in connection with:
 
(a)           all reasonable out-of-pocket costs and expenses for (i) the
preparation, negotiation, documentation, closing, renewal, revision,
modification, increase, review or restructuring of any loan or credit facility
secured by the Credit Documents, including legal, accounting, auditing,
architectural, engineering and inspection services and disbursements, and (ii)
Lender’s creating and perfecting its Liens against the Collateral; and
 
(b)           all costs and expenses of realizing upon Lender's Liens on the
Collateral, and all costs and expenses relating to Lender's exercising any of
its rights and remedies under any Credit Document or at law and/or protecting
the Collateral, including all such appraisal fees, consulting fees, filing fees,
taxes, brokerage fees and commissions, title review and abstract fees,
litigation report fees, UCC search fees, other fees and expenses incident to
title searches, reports and security interests, escrow fees, attorneys' fees,
legal expenses, court costs, other fees and expenses incurred in connection with
any complete or partial liquidation of the Collateral, and all such fees and
expenses for any professional services relating to the Collateral or any
operations conducted in connection therewith.  Provided, that no right or option
granted by Borrower to Lender or otherwise arising pursuant to any provision of
any Credit Document shall be deemed to impose or admit a duty on Lender to
supervise, monitor or control any aspect of the character or condition of the
Collateral or any operations conducted in connection therewith for the benefit
of Borrower or any person or entity other than Lender.  Borrower agrees to
indemnify, defend and hold Lender, its shareholders, directors, officers,
agents, attor­neys, advisors and employees (collective­ly "Indemnified Parties")
harmless from and against any and all Environmental Liabilities and any and all
other loss, liability, obligation, damage, penalty, judgment, claim, deficiency,
expense, action, suit, cost and disbursement of any kind or nature whatsoever
(including interest, penalties, attorneys' fees and amounts paid in settlement)
REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF ANY OF THE
INDEMNIFIED PARTIES, imposed on, incurred by or asserted against the Indemnified
Parties growing out of or resulting from any Credit Document or any transaction
or event contem­plated therein (except that such indemnity shall not be paid to
any Indemnified Party to the extent that such loss, etc. directly results from
the gross negligence or willful misconduct of that Indemnified Party).   Any
amount to be paid under this Section by Borrower to Lender shall be a demand
obligation owing by Borrower to Lender and shall bear interest from the date of
expenditure until paid at the Default Rate.
 
 
Section 8.07                      Amendments in Writing.  This Agreement shall
not be changed orally but shall be changed only by agreement in writing signed
by Borrower and Lender.  Any waiver or consent with respect to this Agreement
shall be effective only in the specific instance and for the specific purpose
for which given.  No course of dealing between the parties, no usage of trade
and no parol or extrinsic evidence of any nature shall be used to supplement or
modify any of the terms or provisions of this Agreement.
 
Section 8.08                      Notices.  Any notice, request or other
communi­cation required or permitted to be given hereunder shall be given in
writing by delivering it against receipt for it, by depositing it with an
overnight delivery service or by depositing it in a receptacle maintained by the
United States Postal Service, postage prepaid, registered or certified mail,
return receipt requested, addressed to the respective par­ties at the addresses
shown herein (and if so given, shall be deemed given when mailed) or by
facsimile or electronic transmission (with confirmation of receipt).  Borrower's
or Lender’s address for notice may be changed at any time and from time to time,
but only after ten (10) days' advance written notice to the other party and
shall be the most recent such address furnished in writ­ing by the applicable
party to the other party hereto.  Actual notice, however and from whomever given
or received, shall always be effective when received.  Whenever (and if) notice
by telecopy by Borrower is permitted hereunder, it is intended for the
convenience of Borrower, and Lender may rely on, and shall not be liable for
acting (or refraining from acting) upon, any notice, instruction or request
purporting to have been signed or presented by the proper party unless such
action (or refraining from action) constitutes gross negligence or willful
misconduct.
 
Section 8.09                      Gender; "Including" is Not Limiting; Section
Headings.  The masculine and neuter genders used in this Agreement each includes
the masculine, feminine and neuter gen­ders, and whenever the singular number is
used, the same shall include the plural where appropriate, and vice
versa.  Wherever the term "including" or a similar term is used in this
Agreement, it shall be read as if it were written "including by way of example
only and without in any way limiting the generality of the clause or concept
referred to."  The headings used is this Agreement are included for reference
only and shall not be considered in interpreting, applying or enforcing this
Agreement.
 
Section 8.10                      Lender's Offset Rights.  Lender is hereby
autho­rized at any time and from time to time, to the fullest extent permitted
by law, to set-off and apply any and all monies and securities owed to Borrower
against any and all of Borrower's Obligations to Lender now or hereafter
existing under this Agreement, irrespec­tive of whether Lender shall have made
any demand under this Agreement.  Lender agrees to use reasonable efforts to
promptly notify Borrower after any such set-off and application, provided that
failure to give--or delay in giving--any such notice shall not affect the
validity of such set-off and applica­tion or impose any liability on
Lender.  Lender's rights under this Section are in addition to other rights and
remedies (including other rights of set-off) which Lender may have.
 
 
 

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Section 8.11                      Governing Law; Venue.  This Agreement and the
other Credit Documents are performable in Travis County, Texas.  Any legal
proceeding in respect of this Agreement or the other Credit Documents shall be
brought exclusively in the district courts of Travis County, Texas or the United
States District Court for the Western District of Texas, Austin Division
(collectively, the "Specified Courts"), to the exclusion of all other venues.
Borrower and Lender hereby irrevocably submit to the exclusive jurisdiction of
such state and federal courts of the State of Texas.  Each of Borrower and
Lender hereby irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to any Credit Document brought
in any Specified Court, and hereby further irrevoca­bly waives any claims that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum.  Each of Borrower and Lender further irrevocably
consents to the service of process out of any of the Specified Courts in any
such suit, action or proceeding by the delivery of copies thereof by certified
mail, return receipt requested, postage prepaid.   Each of Borrower and Lender
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE
UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT.
 
Section 8.12                      Rights Cumulative; Delay Not Waiver.  Lender's
exercise of any right, bene­fit or privilege under any of the Credit Documents
or any other papers or at law or in equity shall not preclude the concurrent or
subsequent exercise of Lender's other pre­sent or future rights, benefits or
privileges.  The remedies provided in this Agreement are cumulative and not
exclusive of any remedies provided by law, the Credit Documents or any other
papers.  No failure by Lender to exercise, and no delay in exercising, any right
under any Credit Document or any other papers shall operate as a waiver thereof.
 
Section 8.13                      Severability.  If any provision of this
Agreement is held to be illegal, invalid or unenforceable under present or
future laws, the legality, valid­ity and enforce­ability of the remaining
provisions of this Agreement shall not be affected thereby, and this Agreement
shall be liberally construed so as to carry out the intent of the parties to
it.  Each waiver in this Agreement is subject to the overriding and controlling
rule that it shall be effective only if and to the extent that (a) it is not
prohibited by applicable law and (b) applicable law neither provides for nor
allows any material sanctions to be imposed against Lender.
 
Section 8.14                      Entire Agreement.  This Agreement, the Note
and the other Credit Documents together embody the entire agreement and
under­standing between Borrower and Lender with respect to the subject matter
hereof and supersede all prior conflicting or inconsistent agree­ments, consents
and understandings relating to such subject matter.  Borrower acknowledges and
agrees that there is no oral agreement between Borrower and Lender which has not
been incorporated in this Agreement, the Note and the other Credit Documents.
 
Section 8.15                      Counterparts.  This Agreement may be executed
in several identical counterparts, and by the parties hereto on separate
counterparts, and each counterpart, when so executed and delivered, shall
constitute an original instrument, and all such separate counterparts shall
constitute but one and the same instrument.
 
 
Section 8.16                      Sale and Assignment.  All obligations of the
Borrower shall be binding upon any successors and assigns of Borrower, but any
attempted assignment of any rights of Borrower hereunder without the prior
written consent of Lender shall be null and void.  Lender reserves the right, in
its sole discretion, without notice to Borrower or any other Person, to sell
participations or assign its interest, or both, in all or any part of this
Agreement, the Note, any of the other Credit Documents, any Loan and the
Commitment and to disseminate to Lender’s Affiliates, potential purchasers,
derivative counterparties and rating agencies any information it has pertaining
to the Loans, including without limitation, complete and current credit
information on Borrower and any of its Subsidiaries.  In the event of any such
assignment, Borrower will agree (and will cause each of its Subsidiaries to
agree) to such modifications to this Agreement and the other Credit Documents,
and will cause to be delivered to Lender any legal opinion and other Credit
Documents, as required to facilitate such assignment, so long as the same do not
modify, alter or increase in any material respect the obligations and
liabilities of Borrower under the Credit Documents.  Without limiting the
foregoing, and notwithstanding anything contained in any Credit Document to the
contrary, Lender may at any time assign all or any portion of its rights under
this Agreement, the Note and the other Credit Documents as collateral to a
Federal Reserve Bank
 
 
Section 8.17                      JURY TRIAL WAIVER.  EACH OF BORROWER AND
LENDER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT
BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE.  BORROWER AND LENDER ARE EACH HEREBY AUTHORIZED TO
FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER BY BORROWER AND LENDER.
 
Section 8.18                      USA Patriot Act.  Lender is subject to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Act") and hereby notifies Borrower that pursuant to
the requirements of the Act, it is required to obtain, verify and record
information that identifies Borrower, which information includes the name and
address of Borrower and other information that will allow Lender to identify
Borrower in accordance with the Act.

 
 

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Section 8.19                      Confidentiality. Lender agrees to keep
confidential all Information (as defined below); provided that nothing herein
shall prevent Lender from disclosing any such Information (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Credit Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or participant in, or any
prospective assignee of or participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any Rate Management Transaction relating to Borrower and its
Obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to Lender on a non-confidential basis
from a source other than Borrower.  For the purposes of this Section,
"Information" means all information received from Borrower relating to Borrower
or its business, other than any such information that is available to Lender on
a non-confidential basis prior to disclosure by Borrower; provided that, in the
case of information received from Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential.  Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

 

 
 
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE §26.02

     THIS AGREEMENT, THE NOTE AND THE OTHER CREDIT DOCUMENTS AND ALL OTHER
CREDIT DOCUMENTS EXECUTED BY ANY OF THE PARTIES SUBSTANTIALLY CONCURRENTLY
HEREWITH CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

EXECUTED effective as of the date first set forth above.
 
 
 
NATURAL GAS SERVICES GROUP, INC.,
a Colorado corporation

By:/s/ Stephen Taylor
Stephen C. Taylor, Chief Executive Officer

Borrower's Address:

508 W. Wall Street, Suite 550
Midland, Texas 79701
Attention: Mr. Steve Taylor, CEO

JPMORGAN CHASE BANK, N.A.

By: /s/ Brenda Pollard
Name:Brenda Pollard
Title: Vice President

Lender's Address:

Mail Code TX3-8211
221 West 6th Street, 2nd Floor
Austin, Texas  78701
Attention:  Manager/Commercial Lending Group
 
 
 

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