Exhibit 4.1










                            STOCK PURCHASE AGREEMENT

                                  BY AND AMONG

                        NATURAL GAS SERVICES GROUP, INC.

                                   ("BUYER"),

               THE SHAREHOLDERS OF SCREW COMPRESSION SYSTEMS, INC.

                                  ("SELLERS"),

                                       AND

                         SCREW COMPRESSION SYSTEMS, INC.


                                   ("COMPANY")



<PAGE>

                                TABLE OF CONTENTS

ARTICLE 1 - DEFINITIONS

1.1      Definitions...........................................................1

ARTICLE 2 - PURCHASE AND SALE

2.1     Purchase and Sale......................................................3
2.2     Payments on Closing; Post-Closing Adjustment...........................3
2.3     The Closing............................................................4
2.4     Deliveries.............................................................4

ARTICLE 3

[Intentionally Omitted]

ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY

4.1     Organizations, Standing and Power......................................5
4.2     No Subsidiaries........................................................6
4.3     Capital Structure......................................................6
4.4     Title to Company Shares................................................7
4.5     Authorization; Enforceability..........................................7
4.6     Absence of Conflicting Agreement.......................................8
4.7     Title to Properties....................................................9
4.8     Condition of Properties................................................9
4.9     Contracts.............................................................10
4.10    No Default............................................................12
4.11    Intellectual Property.................................................12
4.12    Leases................................................................12
4.13    Financial Statements..................................................13
4.14    Absence of Certain Changes and Events.................................13
4.15    No Undisclosed Liabilities............................................15
4.16    No Litigation or Labor Disputes.......................................15
4.17    Taxes.................................................................15
4.18    Governmental Authorizations...........................................16
4.19    Insurance.............................................................16
4.20    Brokers...............................................................17
4.21    Bank Accounts.........................................................17
4.22    Employees.............................................................17
4.23    Employee Benefit Plans................................................17
4.24    Environmental Compliance..............................................19
4.25    Related Party Transactions............................................20


                                      (i)

<PAGE>

4.26    Real Properties.......................................................21
4.27    Labor Matters.........................................................22
4.28    Compliance with Laws; Permits.........................................23
4.29    Prospects; Outstanding Commitments; Customers and Suppliers...........24
4.30    Minute Books..........................................................24
4.31    Subchapter S Matters..................................................24
4.32    Absence of Certain Business Practices.................................24
4.33    Completeness of Disclosure............................................25

ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE BUYER

5.1     Organization; Standing and Power......................................25
5.2     Capital Structure.....................................................25
5.3     Authority; Non-contravention..........................................26
5.4     SEC Documents.........................................................27
5.5     Absence of Material Adverse Change....................................28
5.6     No Default............................................................28
5.7     No Undisclosed Material Liabilities...................................28
5.8     Compliance with Laws; Permits.........................................28
5.9     Brokers...............................................................29
5.10    Litigation............................................................29
5.11    Financing.............................................................29
5.12    Tax Matters...........................................................29
5.13    Completeness of Disclosure............................................29

ARTICLE 6 - COVENANTS RELATING TO CONDUCT OF BUSINESS AND
ADDITIONAL AGREEMENTS

6.1     Conduct of Business of the Company....................................30
6.2     Access to Information.................................................32
6.3     Reasonable Efforts; Notification......................................34
6.4     Fees and Expenses.....................................................35
6.5     Public Announcements..................................................35
6.6     Agreement to Defend...................................................35
6.7     Nasdaq National Market................................................35
6.8     Payment of Indebtedness...............................................35

ARTICLE 7 - CONDITIONS PRECEDENT

7.1     Conditions to Each Party's Obligation to Effect the Purchase..........36
7.2     Conditions to Obligations of Buyer....................................36
7.3     Conditions to Obligations of the Company and the Sellers..............37


                                      (ii)

<PAGE>

ARTICLE 8 - TERMINATION, AMENDMENT AND WAIVER

8.1     Termination...........................................................38
8.2     Procedure for Termination, Amendment, Extension or Waiver.............39
8.3     Effect of Termination.................................................39
8.4     Amendment.............................................................39
8.5     Extension; Waiver.....................................................39

ARTICLE 9 - SPECIAL PROVISIONS AS TO CERTAIN MATTERS

9.1     No Negotiation........................................................40
9.2     Audited Financial Statements..........................................40

ARTICLE 10 - INDEMNIFICATION

10.1    Indemnification of Buyer..............................................40
10.2    Indemnification of Sellers............................................42
10.3    Remedies; Specific Performance........................................43
10.4    Survival..............................................................44

ARTICLE 11 - TAX MATTERS

11.1    Tax Periods Ending on or Before the Closing Date......................44
11.2    Tax Periods Beginning Before and Ending After the Closing Date........44
11.3    Cooperation on Tax Matters............................................44
11.4    Tax Sharing Agreements................................................45
11.5    Certain Taxes.........................................................45
11.6    Section 338(h)(10) Election...........................................45

ARTICLE 12 - GENERAL PROVISIONS

12.1    Survival of Representations and Warranties............................46
12.2    Survival of Covenants and Agreements..................................47
12.3    Interpretation........................................................47
12.4    Counterparts..........................................................47
12.5    Entire Agreement; No Third-Party Beneficiaries........................47
12.6    Governing Law.........................................................47
12.7    Assignment............................................................47
12.8    Enforcement of the Agreement..........................................47
12.9    Performance by Sub....................................................48
12.10   Severability..........................................................48
12.11   Joint Participation in Drafting.......................................48
12.12   Notices...............................................................48


                                     (iii)


<PAGE>

                                    EXHIBITS

Exhibit A            -     Certain Officers of the Company
Exhibit B            -     Certain Officers of the Buyer
Exhibit C            -     Promissory Note
Exhibit D            -     Release
Exhibit E            -     Employment Agreement
Exhibit F            -     Stockholders' Agreement
Exhibit G            -     Opinion of Company's Counsel
Exhibit H            -     Opinion of Buyer's Counsel


                                    SCHEDULES

Schedule 4.2         -     Subsidiaries
Schedule 4.3         -     Company Shares
Schedule 4.4         -     Title to Company Shares
Schedule 4.6         -     Conflicting Agreements
Schedule 4.7         -     Title Defects
Schedule 4.8         -     Condition of Properties
Schedule 4.9         -     Material Contracts
Schedule 4.12        -     Leases
Schedule 4.14        -     Certain Changes and Events
Schedule 4.15        -     Liabilities and Obligations
Schedule 4.16        -     Litigation
Schedule 4.17        -     Taxes
Schedule 4.19        -     Insurance
Schedule 4.21        -     Bank Accounts
Schedule 4.22        -     Employees
Schedule 4.23        -     Company Benefit Plans
Schedule 4.24        -     Hazardous Materials
Schedule 4.25        -     Related Party Transactions
Schedule 4.26        -     Real Property
Schedule 4.27        -     Labor Matters
Schedule 4.29        -     Customers and Suppliers









                                      (iv)

<PAGE>

                             INDEX TO DEFINED TERMS

                                                                      Section
                                                                    ------------

Affiliate........................................................         1.1
Affiliated Group.................................................         1.1
Agreement........................................................         1.1
Buyer............................................................   Introduction
Buyer Balance Sheet..............................................         5.4
Buyer Balance Sheet Date.........................................         5.4
Buyer Charter Documents..........................................         5.3
Buyer Common Stock...............................................         5.2(a)
Buyer Indemnitee or Buyer Indemnitees ...........................       10.1
Buyer Permits....................................................         5.7
Buyer Stock Plans................................................         5.2(a)
Closing..........................................................         1.1
Closing Date.....................................................         1.1
Code.............................................................           1.1
Company..........................................................   Introduction
Company Balance Sheet............................................       4.13
Company Balance Sheet Date.......................................       4.13
Company Benefit Plan.............................................       4.23
Company Charter Documents........................................         4.5(a)
Company Permits..................................................       4.28
Company Shares...................................................         4.3(b)
Company Stock Plans..............................................         4.3(a)
Employer.........................................................       4.23
Employment Agreements............................................    2.4(a)(iii)
Environmental Laws...............................................         1.1
ERISA............................................................       4.23
Exchange Act.....................................................         5.3
Financial Statements.............................................       4.13
Governmental Entity..............................................         4.5(a)
Hazardous Materials..............................................         1.1
hereof, herein and hereunder.....................................       12.3
include, includes or including...................................       12.3
IRS..............................................................     4.23(i)(B)
Knowledge........................................................         1.1
Lien.............................................................         1.1
Material Adverse Effect or Material Adverse Change...............         1.1
Material Contracts...............................................         4.9(a)
Person ..........................................................         1.1
Promissory Notes.................................................         2.2(c)
Purchase.........................................................         2.1
Purchase Consideration...........................................         1.1


                                      (v)

<PAGE>

Real Property....................................................        4.26(a)
SEC..............................................................         5.3
SEC Documents....................................................         5.4
Securities Act...................................................         5.2
Seller Indemnitee or Seller Indemnitees..........................       10.2
Seller or Sellers................................................   Introduction
Sellers' Releases................................................     2.4(a)(ii)
Stockholders' Agreement..........................................     2.4(a)(iv)
subsidiary.......................................................         1.1
Tax or Taxes.....................................................       4.17(a)
Tax Return.......................................................       4.17(a)
338 Adjustment...................................................        11.6
































                                      (vi)


<PAGE>

                            STOCK PURCHASE AGREEMENT


         THIS STOCK  PURCHASE  AGREEMENT,  dated as of October 18, 2004, is made
and  entered  by and  among  Paul D.  Hensley,  Jim  Hazlett  and Tony  Vohjesus
(hereinafter  referred  to  collectively  as  "Sellers"  and  individually  as a
"Seller"), Screw Compression Systems, Inc., a Texas corporation (the "Company"),
and Natural Gas Services Group, Inc., a Colorado corporation ("Buyer").

                                   WITNESSETH:


         WHEREAS,  Sellers own all of the issued and  outstanding  shares of the
capital stock of the Company; and

         WHEREAS,  Sellers are willing to sell to Buyer, and Buyer is willing to
purchase from Sellers,  all of the issued and  outstanding  capital stock of the
Company, on the terms and subject to the conditions set forth herein;

         NOW,  THEREFORE,  in  consideration  of the above  premises  and of the
mutual covenants,  conditions and agreements set forth herein and for other good
and  valuable  consideration,  the receipt and  sufficiency  of which are hereby
acknowledged,  the  parties,  intending  to be legally  bound,  hereby  agree as
follows:


                                    ARTICLE I
                                   DEFINITIONS

         1.1  Definitions.  In addition to the terms  defined  elsewhere in this
Agreement, for purposes of this Agreement:


                  "Affiliate"  means,  with  respect  to any  Person,  any other
Person  that  directly  or  indirectly,  through  one  or  more  intermediaries,
controls, is controlled by, or is under common control with, such first Person.

                  "Affiliated  Group"  means any  affiliated  group  within  the
meaning  of Code  ss.1504(a)  or any  similar  group  defined  under  a  similar
provision of state, local or foreign law.

                  "Agreement" means this Stock Purchase Agreement, together with
the  Schedules  and the Exhibits  attached  hereto,  as the same may be amended,
supplemented or otherwise modified from time to time.

                  "Closing"  means  the  actual  transfer  and  delivery  of the
documents  transferring the Company Shares to Buyer, the payment of the Purchase
Consideration  and  the  exchange  and  delivery  by the  parties  of the  other
documents and instruments contemplated by this Agreement.



                                       1
<PAGE>


                  "Closing  Date" means,  subject to the  provisions  of Section
8.1, December 6, 2004;

                  "Code"  shall  mean the  Internal  Revenue  Code of  1986,  as
amended.

                  "Confidentiality Agreement" means that certain Confidentiality
Agreement, dated April 12, 2004, by and between the Company and Buyer.

                  "Environmental  Laws" means all applicable  foreign,  federal,
state and local statutes,  rules, regulations,  ordinances,  orders, decrees and
common law relating in any manner to pollution, protection of the environment or
the use, storage, treatment or disposal of Hazardous Materials.

                  "Hazardous Materials" means all hazardous or toxic substances,
wastes,  materials or chemicals,  petroleum (including crude oil or any fraction
thereof) and petroleum  products,  asbestos and  asbestos-containing  materials,
pollutants,  contaminants  and all other  materials  and  substances,  including
radioactive materials, regulated pursuant to any Environmental Laws.

                  "Knowledge"  with respect to (i) Sellers and the Company means
the knowledge of each Seller and the knowledge of the Company's  officers listed
in Exhibit A, after  reasonable  inquiry,  and (ii) Buyer means the knowledge of
the officers of Buyer listed in Exhibit B, after reasonable inquiry.

                  "Lien"   means   any   mortgage,   deed  of   trust,   pledge,
hypothecation,  security  interest,  encumbrance,  easement,  claim, lien, lease
(including any  capitalized  lease) or charge of any kind,  whether  voluntarily
incurred or arising by operation of law or  otherwise,  affecting  any assets or
property,  including  any agreement to give or grant any of the  foregoing,  any
conditional  sale or  other  title  retention  agreement  and the  filing  of or
agreement to give any financing statement with respect to any assets or property
under the Uniform Commercial Code of the State of Texas or comparable law of any
jurisdiction.

                  "Material  Adverse Effect" or "Material Adverse Change" means,
when  used  in  connection  with  any  Person,  any  change  or  effect  (or any
development that, insofar as can reasonably be foreseen,  is likely to result in
any change or effect) that is materially  adverse to the  business,  properties,
assets,  condition  (financial  or  otherwise)  or results of operations of that
Person  and its  subsidiaries,  taken as a whole,  except  for such  changes  or
effects in general economic, capital market, regulatory or political conditions,
changes  resulting  from war or terrorism and changes that affect  generally the
natural  gas  compressor  industry  and do not  disproportionately  affect  such
Person.

                  "Person"  means  an  individual,   corporation,   partnership,
limited liability company,  association,  trust,  unincorporated organization or
other entity.

                  "Purchase  Consideration" means the aggregate price to be paid
by Buyer for the Company Shares held by Sellers, as provided for in Section 2.1.



                                       2
<PAGE>

                  a   "subsidiary"   of  any  Person   means  any   corporation,
partnership,  association,  joint venture,  limited  liability  company or other
entity in which  such  Person  owns  more than 50% of the stock or other  equity
interests,  the holders of which are generally entitled to vote for the election
of directors or other governing body of such other legal entity.


                                    ARTICLE 2
                                PURCHASE AND SALE

         2.1 Purchase and Sale. At the Closing on the Closing Date, and upon all
of the terms and subject to all of the conditions of this Agreement, each Seller
shall sell,  assign,  convey,  transfer  and  deliver to Buyer,  and Buyer shall
purchase,  all of Sellers' Company Shares,  such sale and purchase  transactions
being  collectively   referred  to  herein  as  the  "Purchase".   The  Purchase
Consideration to be paid to Sellers as a group shall be $15,000,000.00,  subject
to adjustment as provided for in Section 2.2(d).

         2.2 Payments on Closing; Post-Closing Adjustment. At the Closing on the
Closing Date, Buyer shall, in consideration for good and marketable title to the
Company  Shares,  free  and  clear  of  all  Liens,  charges,  encumbrances  and
restrictions of any kind, pay the Purchase Consideration to Sellers as follows:

         (a) Cash  Consideration  - Buyer  shall  deliver to each Seller by wire
transfer in  immediately  available  federal funds the amount set forth opposite
such Seller's name below:

                Paul D. Hensley             $ 5,600,000
                Jim Hazlett                 $   800,000
                Tony Vohjesus               $ 1,600,000
                                            -----------
                        Total               $ 8,000,000

         (b)  Stock  Consideration  -  Buyer  shall  deliver  to each  Seller  a
certificate  evidencing  the  number of shares of Buyer  Common  Stock set forth
opposite such Seller's name below:

               Paul D. Hensley                  426,829
               Jim Hazlett                       60,976
               Tony Vohjesus                    121,951
                                            -----------
                       Total                    609,756

         (c)  Note  Consideration  -  Buyer  shall  deliver  to  each  Seller  a
promissory  note  in the  form  of  Exhibit  C (the  "Promissory  Notes"),  with
appropriate insertions, in the principal amount set forth opposite such Seller's
name below:

               Paul D. Hensley              $ 2,100,000
               Jim Hazlett                  $   300,000
               Tony Vohjesus                $   600,000
                                            -----------
                       Total                $ 3,000,000



                                       3
<PAGE>

         (d)  Post-Closing  Adjustment  - If  Buyer  elects  to  make a  Section
338(h)(10) election under the Code pursuant to Section 11.6, Buyer shall, to the
extent required by Section 11.6(b), make a 338 Adjustment payment promptly after
the determination of such amount, in immediately available funds, to the Sellers
in  proportion  to  their  ownership  of the  Company  Shares  and the  Purchase
Consideration shall be deemed to have increased accordingly.

         2.3 The Closing.  The Closing of the transactions  contemplated by this
Agreement shall take place at 11:00 a.m., local time on the Closing Date, at the
offices of John L. Shafer III, 5918 E. 31st Street, Tulsa, Oklahoma 74135, or at
such other  time and place as the  parties  might  hereafter  mutually  agree in
writing.

         2.4 Deliveries. At the Closing on the Closing Date:

         (a)      Sellers will deliver to Buyer:

                  (i)  certificates   representing  the  Company  Shares,   duly
         endorsed (or accompanied by duly executed stock powers);

                  (ii)  releases  in the form of Exhibit D  executed  by Sellers
         (collectively, the "Sellers' Releases");

                  (iii)  employment  agreements  in  substantially  the  form of
         Exhibit E, with appropriate  insertions  mutually agreeable to Sellers,
         Robert   Scott  and  Buyer,   executed  by  Sellers  and  Robert  Scott
         (collectively, the "Employment Agreements");

                  (iv) a  stockholders'  agreement  in the  form of  Exhibit  F,
         executed by Sellers (the "Stockholders' Agreement");

                  (v) a  certificate  executed by each Seller  representing  and
         warranting  to  Buyer  that,   except  as  otherwise   stated  in  such
         certificate,  each of Sellers'  representations  and warranties in this
         Agreement was accurate in all respects as of the date of this Agreement
         and is accurate in all  material  respects as of the Closing Date as if
         made on the Closing Date,  except that  representations  and warranties
         that are by their express provisions made as of a specific date need be
         true and correct only as of such specific date; and

                  (vi) if so  requested by Buyer  before the Closing  Date,  the
         written  resignations  of all  officers  and  members  of the  Board of
         Directors of the Company.

         (b)      Buyer will deliver or cause to be delivered to Sellers:

                  (i) the payments set forth in Section 2.2(a);

                  (ii) the Promissory Notes;

                  (iii) the share certificates described in Section 2.2(b);



                                       4
<PAGE>

                  (iv) a  certificate  executed  by  Buyer to the  effect  that,
         except  as  otherwise  stated  in such  certificate,  each  of  Buyer's
         representations  and  warranties  in this  Agreement is accurate in all
         material  respects  as of the  Closing  Date as if made on the  Closing
         Date;

                  (v) the Employment Agreements, executed by Buyer;

                  (vi) the Stockholders' Agreement, executed by Buyer; and

                  (vii) as security for the Buyer's  payment and  performance of
         the Promissory Notes,  irrevocable  standby letters of credit issued by
         Western  National  Bank,  Midland,   Texas,  for  Buyer's  account  and
         otherwise being in a form mutually agreeable to Sellers and Buyer. Each
         letter of credit shall designate one Seller as beneficiary  thereof and
         shall be in the face  amount  set forth  opposite  such  Seller's  name
         below:

                    Paul D. Hensley           $ 1,400,000
                    Jim Hazlett                   200,000
                    Tony Vohjesus                 400,000
                                              -----------
                            Total             $ 2,000,000


                                    ARTICLE 3

                             [Intentionally omitted]



                                    ARTICLE 4
                        REPRESENTATIONS AND WARRANTIES OF
                             SELLERS AND THE COMPANY

         Sellers and the Company,  jointly and severally,  represent and warrant
to Buyer that the statements  contained in this Article 4 are true,  correct and
complete as of the date of this Agreement.

         4.1 Organization, Standing and Power. The Company is a corporation duly
organized,  validly existing and in good standing under the laws of the State of
Texas and is duly  qualified  to do  business  and is in good  standing  in each
jurisdiction  in which the nature of its business or the ownership or leasing of
its  properties  makes  such  qualification   necessary,   other  than  in  such
jurisdictions  where the  failure to be so  qualified  to do business or in good
standing  (individually  or in the  aggregate)  would  not  have,  or would  not
reasonably  be likely to have, a Material  Adverse  Effect on the  Company.  The
Company  has all  requisite  corporate  power and  authority  to own,  lease and
operate  its  properties  and assets and to carry on its  business  as now being
conducted.  Complete  and  correct  copies of the  certificate  and  articles of
incorporation,  as  amended,  and the bylaws,  as amended,  of the Company as in
effect on the date of this Agreement have been  previously  delivered by Sellers
to Buyer.


                                       5
<PAGE>

         4.2 No  Subsidiaries.  Except as set  forth in  Schedule  4.2,  (a) the
Company  has no  subsidiaries,  and does not own,  directly or  indirectly,  any
capital  stock or other  ownership,  participation  or  equity  interest  in any
corporation,  partnership, limited liability company, association, joint venture
or other entity , and (b) there are no  outstanding  contractual  obligations or
commitments  of the Company to acquire or make any  investment  in any shares of
capital  stock or other  ownership,  participation  or  equity  interest  in any
corporation,  partnership, limited liability company, association, joint venture
or other entity.

         4.3 Capital Structure.

                  (a) As of the date hereof, the authorized capital stock of the
Company  consists of 200,000 shares of common stock,  no par value. At the close
of business on October 15, 2004,  100,000 shares of common stock were issued and
outstanding. No shares of common stock were held by the Company in its treasury.
The Company has no outstanding stock options, stock appreciation rights, phantom
units,  profit  participation or similar rights with respect to the Company.  No
shares of capital stock or other equity or voting  securities of the Company are
reserved  for  issuance or are  outstanding.  All of the issued and  outstanding
shares of capital  stock of the Company  are duly  authorized,  validly  issued,
fully  paid and  nonassessable  and have not been  issued  in  violation  of any
preemptive rights or in violation of state or federal securities laws, and there
are no preemptive rights with respect thereto.  No capital stock has been issued
by the Company since the Company Balance Sheet Date.  Except as set forth above,
as of the  date  hereof  there  are no  outstanding  or  authorized  securities,
options,  warrants, calls, rights,  commitments,  preemptive rights, agreements,
arrangements  or undertakings of any kind to which the Company is a party, or by
which it is bound, obligating the Company to issue, deliver or sell, or cause to
be issued,  delivered  or sold,  any shares of capital  stock or other equity or
voting securities of, or other ownership interests in, the Company or obligating
the Company to issue,  grant,  extend or enter into any such  security,  option,
warrant, call, right, commitment,  agreement, arrangement or undertaking. Except
as set forth in Schedule 4.3, there are not as of the date of this Agreement and
there will not be at the Closing Date any shareholder agreements,  voting trusts
or other  agreements  or  understandings  to which the  Company is a party or by
which it is bound  relating to the voting of any shares of the capital  stock of
the Company.

                  (b) The shares of capital stock of the Company held by Sellers
(the "Company  Shares") in the amounts set forth in Schedule 4.3  constitute all
of the  issued  and  outstanding  shares  of  capital  stock or other  ownership
interests of the Company. Except for the purchase and sale of the Company Shares
pursuant to this Agreement,  there are no outstanding  claims,  options or other
rights of any Person to purchase from Sellers,  and no contracts or  commitments
providing  for the  granting  of rights to acquire,  any of the Company  Shares.
Except as  disclosed  on Schedule  4.3,  there are no claims  pending or, to the
Knowledge  of Sellers and the  Company,  threatened,  against the Company or any
Seller  that  concern or affect  title to the  Company  Shares,  or that seek to
compel the issuance of capital stock or other securities of the Company.

                  (c) There are no outstanding  obligations  in connection  with
the  redemption by the Company of any of the previously  issued and  outstanding
shares of capital stock of the Company.



                                       6
<PAGE>

         4.4 Title to Company  Shares.  Each  Seller has legal,  beneficial  and
record title to the Company  Shares set forth  opposite  such  Seller's  name on
Schedule 4.4, free and clear of any and all Liens, restrictions, options, voting
trusts or  agreements,  proxies,  encumbrances,  claims or  charges  of any kind
whatsoever  (except as set forth in Section 4.3) and are validly  issued,  fully
paid  and  nonassessable.  Sellers  have or will  have at the  Closing  physical
custody of the  certificates  evidencing all of the Company Shares.  At Closing,
Buyer will acquire good and  defensible  title to the Company  Shares,  free and
clear of any and all Liens, restrictions,  options, voting trusts or agreements,
proxies, encumbrances, claims or charges of any kind.

         4.5 Authorization; Enforceability.

                  (a)  The  Company  has  the  requisite   corporate  power  and
authority  to enter  into this  Agreement  and to  consummate  the  transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been  duly  authorized  by all  necessary  corporate  action  on the part of the
Company.  This Agreement has been duly and validly executed and delivered by the
Company  and  constitutes  a  valid  and  binding  obligation  of  the  Company,
enforceable  against the Company in accordance  with its terms,  except that (i)
such  enforcement  may be subject  to  bankruptcy,  insolvency,  reorganization,
moratorium  or other  similar  laws or judicial  decisions  now or  hereafter in
effect relating to creditors'  rights  generally and (ii) the remedy of specific
performance  and injunctive  relief may be subject to equitable  defenses and to
the discretion of the court before which any proceeding therefor may be brought.
The  execution  and  delivery of this  Agreement  by the Company do not, and the
consummation  of the  transactions  contemplated  hereby and compliance with the
provisions  hereof will not,  conflict  with,  or result in any violation of, or
default (with or without notice or lapse of time, or both ) under,  or give rise
to a right of  termination,  cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material  benefit under,  or result in
the  creation  of any Lien on any of the  properties  or assets  of the  Company
under,  any  provision  of (i) the  articles of  incorporation  or bylaws of the
Company,  each  as  amended  through  the  date  hereof  (the  "Company  Charter
Documents"), (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease, or other agreement,  instrument, permit, concession, franchise or license
applicable  to the  Company  or its  properties  or assets or (iii)  subject  to
governmental  filings and other matters  referred to in the following  sentence,
any judgment,  order,  decree,  statute,  law, ordinance,  rule or regulation or
arbitration  award applicable to the Company or its properties or assets,  other
than in the case of clauses  (ii) and  (iii),  any such  conflicts,  violations,
defaults,  rights or Liens that individually or in the aggregate would not have,
or would not  reasonably  be likely to have,  a Material  Adverse  Effect on the
Company and would not, or would not reasonably be likely to,  materially  impair
the ability of the Company to perform its  obligations  hereunder or prevent the
consummation  of  any of  the  transactions  contemplated  hereby.  No  consent,
approval,  order or  authorization  of, or  registration,  declaration or filing
with,  any court,  administrative  agency or  commission  or other  governmental
authority  or agency,  domestic  or  foreign,  including  local  authorities  (a
"Governmental  Entity"),  is  required  by or with  respect  to the  Company  in
connection  with the execution and delivery of this  Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby.



                                       7
<PAGE>

                  (b) The execution,  delivery and performance of this Agreement
and  all of the  agreements,  documents  and  instruments  required  under  this
Agreement  by  Sellers  and the  consummation  by  Sellers  of the  transactions
contemplated  hereby and thereby (including the sale,  transfer,  assignment and
delivery of the  Company  Shares),  are within the power,  legal  rights,  legal
capacity and authority of Sellers.  This Agreement is, and the other agreements,
documents and instruments  required by this Agreement will be, when executed and
delivered by Sellers, the valid and binding obligations of Sellers,  enforceable
against Sellers in accordance with their terms,  except as (i) such  enforcement
may be subject to bankruptcy,  insolvency,  reorganization,  moratorium or other
similar  laws or  judicial  decisions  now or  hereafter  in effect  relating to
creditors'  rights  generally  and (ii) the remedy of specific  performance  and
injunctive relief may be subject to equitable  defenses and to the discretion of
the court before which any proceeding therefor may be brought.

         4.6 Absence of Conflicting Agreements.  Except as set forth in Schedule
4.6, neither the execution, delivery or performance of this Agreement by Sellers
or the Company,  nor the  consummation of the transactions  contemplated  hereby
does or will,  after the  giving  of  notice,  or the lapse of time or both,  or
otherwise:

                  (a) subject to receipt of any necessary  third party consents,
conflict with,  result in a breach of,  constitute a default,  or give rise to a
right of termination  under the  certificate  and articles of  incorporation  or
bylaws of the Company, any federal, state or local law, statute, ordinance, rule
or  regulation   applicable  to  the  Company  or  Sellers,   or  any  court  or
administrative  order  or  process,  or any  contract,  agreement,  arrangement,
commitment  or plan to  which  Sellers  or the  Company  is a party  or by which
Sellers or the Company is bound;

                  (b) result in the creation of any Lien upon any of the Company
Shares, or the assets, business and properties of the Company;

                  (c) subject to receipt of any necessary  third party consents,
terminate,  amend or modify,  or give any party the right to  terminate,  amend,
modify,  abandon  or refuse to perform  any  contract,  agreement,  arrangement,
commitment or plan to which the Company is a party or by which it is bound;

                  (d)  accelerate  or  modify,  or give any  party  the right to
accelerate  or modify,  the time within  which,  or the terms under  which,  any
duties or obligations  are to be performed,  or any rights or benefits are to be
received,  under any  contract,  agreement,  arrangement,  commitment or plan to
which the Company is a party or by which it is bound; or

                  (e) to the  Knowledge of Sellers and the Company,  require the
consent,  waiver, approval,  permit, license,  clearance or authorization of, or
any  declaration or filing with, any court or public agency or other  authority,
including  the U.S.  Environmental  Protection  Agency or other federal or state
environmental protection agency.



                                       8
<PAGE>

         4.7 Title to Properties.  The Company has good and defensible title to,
or valid leasehold  interests in, all of its material properties and assets (and
a fee simple estate in all owned real  property),  including all  properties and
assets (tangible and intangible)  reflected in the Company Balance Sheet, except
for (i) such  properties  and  assets  as are no  longer  used or  useful in the
conduct of its businesses or as have been disposed of in the ordinary  course of
business,  (ii)  defects  in  title  set  forth  on  Schedule  4.7,  (iii)  such
imperfections  of  title,  easements,  rights  of way and  similar  matters  and
failures  of  title as  would  not,  individually  or in the  aggregate,  have a
Material  Adverse  Effect  on the  Company  or  materially  interfere  with  the
Company's use of such assets or properties, (iv) Liens for current Taxes not yet
due and  payable  or which  are being  contested  in good  faith by  appropriate
proceedings (and which have been sufficiently accrued or reserved against in the
Company  Balance  Sheet),  (v)  Liens  of  carriers,  warehousemen,   mechanics,
laborers,  materialmen,  landlords,  vendors,  workmen and operators  arising by
operation  of law in the ordinary  course of business or by a written  agreement
existing as of the date hereof for sums not yet due or being  contested  in good
faith  by  appropriate  proceedings,   (vi)  Liens,  easements,   rights-of-way,
restrictions,    servitudes,   permits,   conditions,   covenants,   exceptions,
reservations and other similar  encumbrances  incurred in the ordinary course of
business  or  existing on property  not  materially  impairing  the value of the
assets of the Company or interfering  with the ordinary  conduct of the business
of the Company or rights to any of its assets,  and (vii) Liens  incurred in the
ordinary   course  of  business  in  connection   with  workers'   compensation,
unemployment  insurance and other social security legislation (other than ERISA)
for sums not yet due, which would not, individually or in the aggregate,  result
in a Material  Adverse  Effect on the Company.  All such assets and  properties,
other than assets and  properties in which the Company has leasehold  interests,
are free and clear of all Liens,  other than those (i) set forth in Schedule 4.7
and (ii) Liens, that, in the aggregate, do not and will not materially interfere
with the ability of the Company to conduct business as currently conducted or as
reasonably  expected to be conducted.  Except as set forth in Schedule 4.7, none
of the Company's properties,  assets or business are subject to any restrictions
with respect to the transferability thereof.

         4.8  Condition  of  Properties.  To the  Knowledge  of Sellers  and the
Company, except as set forth in Schedule 4.8, all properties and assets owned or
utilized by the Company are in good  operating  condition and repair,  free from
any defects  (except such minor defects as do not interfere with the use thereof
in the conduct of the normal operations of the Company),  ordinary wear and tear
excepted, and have been maintained consistent with prudent industry practice. No
other  assets or  properties  are needed to permit  the  Company to carry on its
business  as  conducted  during the  preceding  12 months and as  proposed to be
conducted.  To the Knowledge of Sellers and the Company,  except as set forth in
Schedule  4.8, all  buildings,  plants and other  structures  owned or otherwise
utilized by the Company are in good condition and repair, ordinary wear and tear
excepted,  and have no  structural  defects or defects  affecting  the plumbing,
electrical,  sewerage,  or  heating,  ventilating  or air  conditioning  systems
(except  such  minor  defects  as do not  significantly  interfere  with the use
thereof in the conduct of the normal operations of the Company) and are suitable
and adequate for the purposes for which they are presently being used.




                                       9
<PAGE>

         4.9      Contracts.

                  (a) Schedule 4.9 is a true,  correct and complete  list of all
contracts of the categories described below (whether written or oral), including
all amendments  thereto,  existing as of the date of this Agreement to which the
Company is a party or by which any of the properties,  business or assets of the
Company is bound or is materially affected ("Material Contracts"):

                  (i)  any  note,  agreement,   mortgage,   indenture,  security
                  agreement,  and other instrument  relating to the borrowing of
                  money or evidence of credit for the deferred purchase price of
                  property,  or the direct or indirect  guarantee by the Company
                  of any such  indebtedness or deferred purchase price in excess
                  of $50,000.00;

                  (ii) any lease of real property or material  personal property
                  providing  for annual  payments by the Company  under any such
                  lease or group of related leases in excess of $50,000.00;

                  (iii) any agreement that has a term of one year or more and/or
                  provides for future  payments in excess of $50,000.00  that is
                  not terminable  (without  penalty) on no more than one month's
                  notice;

                  (iv) any  management,  employment and consulting  agreement or
                  other contract for personal services that is not terminable on
                  no more than one month's notice without penalty;

                  (v) any  agreement  providing for  severance  pay,  collective
                  bargaining agreements, and labor contracts;

                  (vi) any surety, performance and maintenance bond in excess of
                  $50,000.00;

                  (vii) any plan, contract or arrangement providing for bonuses,
                  pensions,  deferred  compensation,  retirement  plan payments,
                  profit  sharing,  incentive  pay,  or for any  other  employee
                  benefit plan;

                  (viii) any  brokerage  or finder's  agreement  obligating  the
                  Company to make a payment thereunder;

                  (ix) any agreement  that restricts the right of the Company to
                  engage in any place in any line of business;

                  (x) any contract, commitment, agreement or arrangement between
                  the Company and any Affiliate thereof;




                                       10
<PAGE>



                  (xi) any contract or agreement  relating to the sale, lease or
                  other disposition of any of the properties, business or assets
                  of  the  Company  having  a  value,  individually  or  in  the
                  aggregate, in excess of $50,000.00;

                  (xii) any  contract,  commitment,  or agreement  that involves
                  commodity  or interest  rate  swaps,  floors,  caps,  collars,
                  futures, options or other similar transactions; and

                  (xiii) any obligation currently  outstanding  affecting any of
                  the  properties,  business  or  assets  of the  Company  which
                  requires a single or series of related future  expenditures in
                  the aggregate in excess of $50,000.00.

                  (b) Sellers and the Company have provided Buyer with access to
true,  correct and complete  copies of all written  Material  Contracts  and all
amendments,  modifications and supplements thereto, and have provided Buyer with
accurate  descriptions  of all oral  Material  Contracts,  including the parties
thereto,  the value of the goods and services to be provided  thereunder and the
financial obligations of the parties thereunder.


                  (c) To the  Knowledge  of Sellers and the  Company,  as of the
date of this Agreement,  the Company's  relationships are generally satisfactory
with its suppliers who are material to the conduct of the Company's business.

                  (d) As of the date of this  Agreement,  the  Company  does not
have outstanding any powers of attorney with any Person, except that the Company
has granted its power of attorney  to Jim  Burwell,  a true and correct  copy of
which has been provided to Buyer.

                  (e) Each of the  Material  Contracts to which the Company is a
signatory  has been duly executed by the Company and to the Knowledge of Sellers
and the Company, as of the date of this Agreement,  the Company is not in breach
of any Material Contract.

                  (f) The Company has  performed in all material  respects  each
material term, covenant and condition of each of the Material Contracts to which
it is a party or by which it is bound,  and, to the Knowledge of Sellers and the
Company,  no material  event of default on the part of any other  party  thereto
exists  under any of the  Material  Contracts.  The  Company  is  current on all
payment  obligations  under all Material  Contracts to which it is a party or by
which it is bound.

                  (g) To the Knowledge of Sellers and the Company,  no event has
occurred under any of the Material  Contracts  that would  constitute a material
default thereunder on the part of any other party thereto.

                  (h)  Each  of  the  Material  Contracts  is  valid,   binding,
enforceable and in full force and effect, unimpaired by any acts or omissions of
the Company or its officers, directors and agents, and constitutes the legal and
binding obligation of the Company in accordance with its terms,  except that (i)
such  enforcement  may be subject  to  bankruptcy,  insolvency,  reorganization,
moratorium  or other  similar  laws or judicial  decisions  now or  hereafter in



                                       11
<PAGE>

effect relating to creditors' rights generally,  and (ii) the remedy of specific
performance  and injunctive  relief may be subject to equitable  defenses and to
the discretion of the court before which any proceeding therefor may be brought.

         4.10 No Default.  The Company is not in  default,  breach or  violation
(and, to the Knowledge of Sellers and the Company,  no event has occurred which,
with  notice  or the  lapse of time or  both,  would  constitute  a  default  or
violation)  of any term,  condition  or  provision  of (i) the  Company  Charter
Documents; (ii) any note, bond, mortgage, indenture, license, agreement or other
instrument  or  obligation  to which the  Company is now a party or by which the
Company  or any of its  properties,  business  or assets is bound;  or (iii) any
order, writ, injunction,  decree,  statute, rule or regulation applicable to the
Company, except in the case of clauses (ii) and (iii) for defaults or violations
which in the aggregate would not have a Material Adverse Effect on the Company.

         4.11  Intellectual  Property.  The  Company  owns,  or is  licensed  or
otherwise  has the  right  to  use,  all  patents,  patent  rights,  trademarks,
trademark rights,  trade names, trade name rights,  service marks,  service mark
rights,  copyrights,  technology,  know-how,  processes  and  other  proprietary
intellectual  property  rights and  computer  programs  ("Intellectual  Property
Rights") which are material to the condition (financial or otherwise) or conduct
of the business and  operations of the Company.  To the Knowledge of Sellers and
the Company,  (i) the use of Intellectual  Property Rights by the Company in its
current operations does not infringe on the Intellectual  Property Rights of any
Person,  subject to such claims and  infringements  as do not, in the aggregate,
give  rise to any  liability  on the  part of the  Company  which  could  have a
Material  Adverse  Effect on the  Company,  and (ii) no Person is, in any manner
that could have a Material  Adverse  Effect on the  Company,  infringing  on any
Intellectual  Property  Right of the  Company.  No claims are pending or, to the
Knowledge of Sellers and the Company,  threatened that the Company is infringing
or  otherwise  adversely  affecting  the rights of any Person with regard to any
Intellectual Property Right.

         4.12 Leases.

                  (a) The leases  described on Schedule 4.12  constitute  all of
the lease  agreements  between  the  Company  and third  Persons  affecting  the
Company's real property, material personal property or relating to the operation
of the business of the Company.  The Company and Sellers have furnished true and
complete  copies  of  each  of the  leases  to  Buyer,  including  any  and  all
amendments, supplements or modifications thereto.

                  (b) The Company has  performed in all material  respects  each
material  term,  covenant  and  condition of each of the leases to which it is a
party or which is required to be  performed  by it at or before the date hereof,
and no  material  event  of  default  on the  part of the  Company  and,  to the
Knowledge  of Sellers and the Company,  on the part of any other party  thereto,
exists under any lease.

                  (c) Each of the leases is legal, valid,  binding,  enforceable
and in full force and effect, unimpaired by any acts or omissions of the Company
and  constitutes  the legal and binding  obligation of the Company in accordance
with its terms,  except  (i) such  enforcement  may be  subject  to  bankruptcy,



                                       12
<PAGE>



insolvency,  reorganization,  moratorium  or  other  similar  laws  or  judicial
decisions now or hereafter in effect relating to creditors' rights generally and
(ii) the remedy of specific  performance and injunctive relief may be subject to
equitable  defenses  and to  the  discretion  of  the  court  before  which  any
proceeding therefor may be brought.

                  (d) To the  Knowledge of Sellers and the Company,  there is no
law,   ordinance,   regulation  or  requirement  in  existence,   including  any
Environmental  Law or the Americans with  Disabilities  Act of 1990, as amended,
which would require any  expenditure  to remediate,  remedy,  remove,  modify or
improve  any of the real  property  that is the subject of any lease in order to
bring it into compliance therewith.

                  (e) There are no leasing  commissions or similar payments due,
arising out of,  resulting  from or with  respect to any lease which are owed by
the Company, except to the extent accrued on the Company Balance Sheet.

                  (f) The  Company  has  not  assigned,  transferred,  conveyed,
mortgaged, or deeded in trust any interest in the leases.

                  (g) The Company has not subordinated its interest under any of
the leases to any third party, mortgagee or otherwise.

                  (h) The Company  enjoys  peaceful and  undisturbed  possession
under all leases.

         4.13  Financial  Statements.  The Company and Sellers have  provided to
Buyer  true and  complete  copies  of (i) the  unaudited  balance  sheets of the
Company as of  December  31,  2001,  2002 and 2003,  and the  related  unaudited
statements  of  operations  and  changes in  stockholders'  equity for the three
fiscal years then ended and (ii) the unaudited  balance sheet of the Company and
the related unaudited  statements of operations for the seven-month period ended
July  31,  2004  (collectively,   the  "Financial  Statements").  The  Financial
Statements  (i)  have  been  prepared  in  accordance  with  generally  accepted
accounting  principles  (except for certain balance sheet  classifications,  and
certain  required  reports and all footnote  disclosures have been omitted) on a
basis consistent throughout the periods covered thereby; (ii) present fairly, in
all material  respects,  the financial  condition of the Company as of the dates
thereof and the results of its operations for the periods then ended (subject to
normal year-end audit adjustments);  and (iii) are consistent with the books and
records of the Company,  which books and records are true,  correct and complete
in all material  respects.  For  purposes of this  Agreement,  "Company  Balance
Sheet" means the balance sheet as of July 31, 2004,  and "Company  Balance Sheet
Date" means July 31, 2004.

         4.14  Absence of Certain  Changes or  Events.  Except as  disclosed  in
Schedule 4.14,  since the Company  Balance Sheet Date, the Company has conducted
its business  only in the ordinary  course  consistent  with past  practices and
there has not been:

                  (a) any event,  occurrence,  circumstance or development  that
has had, or has been reasonably  likely to have, a Material  Adverse Effect with
respect to the Company;


                                       13
<PAGE>



                  (b)  any  default  on  the  part  of  the  Company  under  any
indebtedness  of the  Company,  or any event which with the lapse of time or the
giving of notice, or both, would constitute such a default;

                  (c) any issuance,  sale or other disposal of any capital stock
or other equity  security of the Company,  or any grant of options,  warrants or
other rights to obtain any of its capital stock;

                  (d) (A) any contract or agreement  entered into by the Company
on or  prior  to the  date  hereof  relating  to  any  material  acquisition  or
disposition  of any  assets or  business,  or (B) any  modification,  amendment,
assignment,  termination  or  relinquishment  by the  Company  of any  contract,
license  or  other  right  (including  any  insurance  policy  naming  it  as  a
beneficiary  or loss payable  payee) that  reasonably  would be likely to have a
Material  Adverse Effect on the Company,  in each case other than  transactions,
commitments,  contracts  or  agreements  in  the  ordinary  course  of  business
consistent with past practices and those contemplated by this Agreement;

                  (e) any amendment  made or  authorized to the Company  Charter
Documents;

                  (f) any increase in  compensation  paid,  payable or to become
payable by the Company to any of its officers,  directors or  employees,  or any
material  change in  personnel  policies or  benefits,  outside of the  ordinary
course of business consistent with past practices;

                  (g) any creation or  assumption by the Company of any security
interest or other Lien imposed upon any material assets of the Company;

                  (h) any damage, destruction or loss, whether or not covered by
insurance,  that has or reasonably  could be expected to have a Material Adverse
Effect on the Company;

                  (i) any  commitment to or liability to any labor  organization
which represents, or proposes to represent, employees of the Company;

                  (j)  any  sale,   assignment,   lease  or  other  transfer  or
disposition  of any of the assets or  properties  of the Company,  except in the
ordinary  course of business or in connection  with the  acquisition  of similar
property or assets or retirements  of assets in the ordinary  course of business
consistent with past practices;

                  (k)  any  write  down  of  the  value  of,  or  write  off  as
uncollectible, any asset or accounts receivable of the Company;

                  (1) any  declaration,  setting  aside or payment,  directly or
indirectly,  of any  cash  or  non-cash  dividend  or  other  cash  or  non-cash
distribution  in respect of any of the securities of the Company,  or any direct
or indirect  redemption,  purchase or other acquisition of any securities of the
Company or agreement to do so;

                  (m) any material change in the Company's  accounting  methods,
principles or practices;


                                       14
<PAGE>

                  (n) any amendment of any term of any  outstanding  security of
the Company that would materially  increase the obligations of the Company under
such security;

                  (o) any making of any loan, advance or capital contribution to
or material investment in any Person by the Company other than loans,  advances,
capital contributions or investments, in each case not exceeding $10,000.00; or

                  (p) (A) any  incurrence  or  assumption  by the Company of any
indebtedness for borrowed money other than under existing credit  facilities (or
any renewals, replacements or extensions thereof that do not materially increase
the  commitments  thereunder) or otherwise by the Company in the ordinary course
of business consistent with past practices, or (B) any guaranty,  endorsement or
other incurrence or assumption of liability,  whether directly,  contingently or
otherwise, by the Company for the obligations of any other Person, other than in
the ordinary course of business consistent with past practice.

         4.15 No Undisclosed Liabilities.  The Company has no debt, liability or
obligation  of  any  kind,  whether  accrued,  absolute,  contingent,  inchoate,
determined, determinable or otherwise, except for (i) liabilities or obligations
which, individually or in the aggregate would not have a Material Adverse Effect
on the Company, (ii) liabilities or obligations under this Agreement or incurred
in connection with the transactions  contemplated  hereby,  (iii) liabilities or
obligations   disclosed  in  Schedule  4.15;  (iv)  liabilities  or  obligations
disclosed  in the  Financial  Statements;  and (v)  liabilities  or  obligations
arising in the  ordinary  course of business  after the  Balance  Sheet Date and
which do not have a Material Adverse Effect on the Company.

         4.16 No Litigation.  Except as disclosed on Schedule 4.16,  there is no
suit, action, proceeding or investigation presently pending or, to the Knowledge
of Sellers or the Company,  threatened against or affecting the Company that has
had or could  reasonably  be expected to have a Material  Adverse  Effect on the
Company or  prevent,  hinder or  materially  delay the ability of the Company to
consummate the  transactions  contemplated by this  Agreement,  nor is there any
judgment,  decree,  injunction,  rule or order  of any  Governmental  Entity  or
arbitrator  outstanding against the Company which has had, or which,  insofar as
reasonably can be foreseen, in the future could have, any such effect.

         4.17 Taxes.

         (a) Except as set forth in Schedule  4.17, the Company has timely filed
(taking into account any extensions) all Tax Returns  required to be filed by it
on or before the date of this  Agreement  and has timely paid or  deposited  all
Taxes and  estimated  Taxes  which are  required to be paid or  deposited  on or
before such date.  Each of the Tax Returns  filed by the Company is accurate and
complete  in all  material  respects  and has  been  completed  in all  material
respects in accordance with applicable laws,  regulations and rules. The Company
Balance Sheet  reflects an adequate  reserve for all Taxes for which the Company
may be liable for all taxable  periods  and  portions  thereof  through the date
thereof.  The Company has not waived any  statute of  limitations  in respect of
Taxes of the Company. No material deficiencies for any Taxes have been proposed,
asserted or assessed against the Company, no requests for waivers of the time to
assess  any such Taxes have been  granted or are  pending,  and there are no Tax




                                       15
<PAGE>



Liens upon any assets of the Company  (except for liens for ad valorem Taxes not
yet  delinquent  and other Taxes not yet due and payable).  There are no current
examinations   of  any  Tax  Return  of  the  Company  being  conducted  by  any
Governmental Entity and there are no settlements of any prior examinations which
could  reasonably be expected to adversely  affect any taxable  period for which
the  statute of  limitations  has not run.  The  Company is not a party to a Tax
allocation  agreement,  Tax sharing  agreement,  Tax  indemnity  agreement,  Tax
partnership  agreement  or similar  agreement  or  arrangement.  The Company has
complied  in  all  material   respects  with  all  applicable  laws,  rules  and
regulations  relating  to the payment  and  withholding  of Taxes and has in all
respects  timely  withheld from  employee  wages and paid over such taxes to the
appropriate Governmental Entity. As used herein, "Tax" or "Taxes" shall mean all
taxes of any kind,  including those on or measured by or referred to as federal,
state,  local or foreign  income,  gross  receipts,  property,  sales,  use,  ad
valorem, franchise, profits, license, withholding, payroll, alternative or added
minimum, employment,  estimated, excise, transfer, severance, stamp, occupation,
premium,  value added,  or windfall  profits taxes,  customs,  duties or similar
fees, assessments or charges of any kind whatsoever,  together with any interest
and  any  penalties,  additions  to tax or  additional  amounts  imposed  by any
Governmental Entity. As used herein, "Tax Return" shall mean any return, report,
statement or information  required to be filed with any Governmental Entity with
respect to Taxes.

         (b) No amount  that could be paid  (whether  in cash or property or the
vesting of property) as a result of any of the transactions contemplated by this
Agreement  to  any  Person  who is  properly  characterized  as a  "disqualified
individual" (as such term is defined by the IRS in proposed Treasury  Regulation
section  1.280G-1)  under any  employment,  severance or termination  agreement,
other compensation arrangement or other Company Benefit Plan currently in effect
would be characterized as an "excess parachute payment" (as such term is defined
in section 280G(b)(1) of the Code).

         (c) The Company has not filed a consent under Code ss.341(f) concerning
collapsible corporations.  The Company is not and has never been a United States
real property holding  corporation  within the meaning of Code Section 897(c)(2)
during the applicable  period  specified in Code Section  897(c)(1)(A)(ii).  The
Company has  disclosed  on its federal  income Tax returns all  positions  taken
therein that could give rise to a substantial  understatement  of federal income
Tax within the meaning of Code Section 6662.  The Company (i) is not a member of
an Affiliated Group filing a consolidated  federal income Tax Return (other than
a group the common  parent of which is the Company) or (ii) has no liability for
the Taxes of any Person  (other  than the  Company)  under  Treasury  Regulation
Section 1.1502-6 (or any similar provision of state,  local, or foreign law), as
a transferee or successor, by contract, or otherwise.

         4.18 Governmental Authorizations. The Company holds, and on the Closing
Date will hold, all the necessary, regular and valid licenses and authorizations
from any  Governmental  Entity  required  to own its  properties  and assets and
operate its business,  and each such authorization is validly issued and in full
force and effect.

         4.19 Insurance.  The Company has in full force and effect the liability
and casualty insurance,  errors and omissions insurance,  workers  compensation,
life  insurance  and  employee  fidelity   insurance  insuring  the  properties,



                                       16
<PAGE>

business,  assets,  employees  and officers  and/or  directors of the Company as
described  in  Schedule  4.19.  The  Company is not in  default in any  material
respect with respect to such insurance policies,  and the Company has not failed
to give any notice or present  any claim  under any  policies  in due and timely
fashion.

         4.20  Brokers.  Neither  Sellers nor the Company has any  obligation or
liability to pay any fees or commission to any broker,  finder, agent or similar
Person, with respect to the transactions contemplated by this Agreement.

         4.21 Bank Accounts. All bank or other financial institution accounts of
the Company are  described in Schedule  4.21,  and such  Schedule also lists all
Persons with check writing authority on behalf of the Company.

         4.22  Employees.  Schedule  4.22  is a true  and  complete  list of all
employees of the Company  showing each of their names and their  current  annual
base salary rates.  Except as set forth in Schedule  4.22, the employment of all
employees  of the  Company is  terminable  at will by the  Company  without  any
penalty or severance  obligations  incurred by the Company.  Schedule  4.22 also
includes all  employees  of the Company who are on annual leave  pursuant to the
Family and Medical Leave Act of 1993.

         4.23 Employee  Benefit  Plans.  As used in this Section 4.23,  the term
"Employer"  shall mean the Company as defined in the preamble of this  Agreement
and any member of a controlled group or affiliated  service group, as defined in
sections  414(b),  (c), (m) and (o) of the Code, or section 4001 of the Employee
Retirement  Income  Security  Act of 1974,  as  amended  ("ERISA")  of which the
Company is a member.  As used in this  Agreement,  "Company  Benefit Plan" shall
mean (1) any employee  welfare benefit plan or employee  pension benefit plan as
defined  in  sections  3(1) and 3(2) of ERISA,  including  a plan that  provides
retirement  income or results in deferrals  of income by  employees  for periods
extending  to their  terminations  of  employment  or  beyond,  and a plan  that
provides medical, surgical or hospital care benefits or benefits in the event of
sickness,  accident,  disability,  death  or  unemployment,  and (2)  any  other
employee benefit  agreement or arrangement that is not an ERISA plan,  including
any deferred compensation plan, incentive plan, bonus plan or arrangement, stock
option plan, stock purchase plan, stock award plan, golden parachute  agreement,
severance pay plan,  dependent care plan, flexible benefit plan, cafeteria plan,
employee assistance program, scholarship program, employment contract, retention
incentive   agreement,    noncompetition   agreement,    consulting   agreement,
confidentiality  agreement,  vacation policy, or other similar plan or agreement
or arrangement  that has been maintained by,  participated in, or contributed to
by the Employer at any time during the  three-year  period ending on the date of
this Agreement, or with respect to which the Employer may have any liability.

         (i) Schedule  4.23  contains a complete and correct list of all Company
         Benefit  Plans.  With respect to each Company  Benefit Plan,  except as
         disclosed in Schedule 4.23, to the extent  applicable:  (A) the plan is
         in  compliance  with the Code and ERISA,  including  all  reporting and
         disclosure  requirements  of Part 1 of  Subtitle B of Title I of ERISA;
         (B) the  appropriate  Form 5500 has been timely  filed for each year of
         its  existence  or a  "top-hat"  statement  was  timely  filed with the
         Department of Labor pursuant to Department of Labor Regulation section



                                       17
<PAGE>

         2520.104-23; (C) there has been no transaction described in section 406
         or section 407 of ERISA or section 4975 of the Code unless exempt under
         section 408 of ERISA or section 4975 of the Code,  as  applicable;  (D)
         the bonding  requirements  of section 412 of ERISA have been satisfied;
         (E) there is no issue pending nor any issue  resolved  adversely to the
         Employer  which may subject  the  Employer to the payment of a penalty,
         interest,  tax or other  amount;  (F) each Company  Benefit Plan can be
         unilaterally  terminated  or amended by the Employer on no more than 90
         days notice;  (G) all  contributions  or other  amounts  payable by the
         Employer as of the Closing Date with  respect to each  Company  Benefit
         Plan have  either  been paid or accrued in the  Employer's  most recent
         financial  statements;  and (H) no notice has been given or received by
         the  Employer of an  increase  or proposed  increase in the cost of the
         plan.  There are no pending  or, to the  Knowledge  of Sellers  and the
         Company,  threatened or  anticipated  claims (other than routine claims
         for benefits), actions,  arbitrations,  audits, investigations or suits
         by, on behalf of,  against or relating to any Company  Benefit  Plan or
         their related  trusts.  With respect to each Company  Benefit Plan, the
         Company has provided to Buyer,  to the extent  required by ERISA,  true
         and correct copies of each of the following documents:

                           (A) the  Company  Benefit  Plan  and  any  amendments
                  thereto  (or if the  Company  Benefit  Plan  is not a  written
                  agreement, a description thereof);

                           (B) the three most recent  annual  Form 5500  reports
                  filed with the Internal Revenue Service ("IRS");

                           (C) a  written  summary  of the  legal  basis  for an
                  exemption  from  the  obligation  to  file  annual  Form  5500
                  reports, if such an exemption has been claimed by the Company;

                           (D) the most  recent  summary  plan  description  and
                  summaries of material modifications thereof; and

                           (E) the funding agreement,  if any, that provides for
                  the  funding of the Company  Benefit  Plan.  (ii)  Neither the
                  Company nor any entity (whether or not incorporated)  that was
                  at any  time  during  the six  years  before  the date of this
                  Agreement  treated  as a  single  employer  together  with the
                  Company under section 414 of the Code or section 4001 of ERISA
                  has ever  maintained,  had any  obligation to contribute to or
                  incurred any liability  with respect to a pension plan that is
                  or was  subject  to the  provisions  of  Title  IV of ERISA or
                  section  412 of the  Code.  During  the  last six  years,  the
                  Employer has not  maintained,  had an obligation to contribute
                  to or  incurred  any  liability  with  respect to a  voluntary
                  employees  beneficiary  association that is or was intended to
                  satisfy the requirements of section  501(c)(9) of the Code. No
                  plan,  arrangement or agreement with any one or more employees



                                       18
<PAGE>

                  will cause the Employer to have liability for severance pay as
                  a result of the  transactions  contemplated by this Agreement,
                  except as disclosed in Schedule  4.23.  Except as disclosed in
                  Schedule  4.23,   the  Employer  does  not  provide   employee
                  benefits,     including,     without    limitation,     death,
                  post-retirement  medical or health  coverage  (whether  or not
                  insured) or  contribute  to or maintain any  employee  benefit
                  plan which provides for benefit coverage following termination
                  of employment except as is required by section 4980B(f) of the
                  Code or other similar applicable statute,  nor has it made any
                  representations,   agreements,  covenants  or  commitments  to
                  provide  that  coverage.  Any  employee  benefit  plan that is
                  disclosed  on  Schedule  4.23  has,  at all  times  since  its
                  inception, provided that the sponsor of the plan has the right
                  to  amend  and  terminate  the plan at any  time  without  the
                  consent of any party and no statements  have been made to plan
                  participants or their  dependents that would lead such persons
                  to  reasonably  conclude  the  plan  may  not  be  amended  or
                  terminated  without their consent.  All Company  Benefit Plans
                  that are group  health  plans have been  operated  in material
                  compliance with section 4980B(f) of the Code.

                  (iii) Except as set forth in Schedule  4.23,  the Company does
                  not  maintain  or  contribute  to, and has not  maintained  or
                  contributed to for the three-year period ending on the date of
                  this  Agreement,  a pension  plan that is  intended to qualify
                  under Section  401(a) of the Code or a pension plan  described
                  in  section  3(2) of ERISA.  Any  pension  plan  described  in
                  section 3(2) of ERISA previously maintained by the Company was
                  terminated in accordance with ERISA and the Code.

                  (iv) Except as set forth in Schedule  4.23,  the  transactions
                  contemplated by this Agreement, either alone or in conjunction
                  with another event (such as termination  of  employment)  will
                  not  accelerate the time of payment of any  contribution  to a
                  Company  Benefit  Plan,  accelerate  vesting  under a  Company
                  Benefit Plan, increase the amount of compensation  directly or
                  indirectly  due any Person from the Employer,  or increase the
                  cost of any Company Benefit Plan.

         4.24  Environmental  Compliance.  Except as disclosed in Schedule 4.24,
and  except  to the  extent  that  the  inaccuracy  of  any  of  the  following,
individually  or in the aggregate,  would not have a Material  Adverse Effect on
the Company, to the Knowledge of Sellers and the Company:

         (a)  the  Company  has  complied  in all  material  respects  with  all
Environmental Laws, and there is no existing action, suit, proceeding,  hearing,
investigation,  charge, complaint, claim, demand, or notice filed, commenced or,
to the  Knowledge  of Sellers and the  Company,  threatened  against the Company
which: (i) asserts or alleges that the Company violated any Environmental  Laws;
(ii) asserts or alleges that the Company is required to clean up, remove or take
remedial or other response  action due to the disposal,  depositing,  discharge,
leaking or other release of any Hazardous Materials; or (iii) asserts or alleges
that the  Company is  required  to pay all or a portion of the cost of any past,
present or future  cleanup,  removal or remedial or other response  action which
arises out of or is related to the disposal,  depositing,  discharge, leaking or
other release of any Hazardous Materials; (b) without limiting the generality of
the foregoing,  to the Knowledge of Sellers and the Company, each of the Company



                                       19
<PAGE>

and its Affiliates has obtained and been in compliance in all material  respects
with all of the  terms  and  conditions  of all  permits,  licenses,  and  other
authorizations  which are  required  under,  and has  complied  in all  material
respects  with  all  other  limitations,  restrictions,  conditions,  standards,
prohibitions,  requirements,  obligations,  schedules and  timetables  which are
contained in, Environmental Laws;

         (c) no Person has caused or permitted Hazardous Materials to be stored,
deposited,  treated,  recycled or disposed of on, under or at any real  property
owned,  leased,  used or occupied by the Company which Hazardous  Materials,  if
known to be  present,  would  require  cleanup,  removal or some other  remedial
action under any Environmental Laws;

         (d) there are not now, nor have there  previously  been, tanks or other
facilities  on,  under,  or at the real property  which  contained any Hazardous
Materials which, if known to be present in soils or ground water,  would require
cleanup, removal or some other remedial action under Environmental Laws;

         (e) there are no conditions  existing currently which would subject the
Company to  damages,  penalties,  injunctive  relief or cleanup  costs under any
Environmental Laws or which require cleanup,  removal,  remedial action or other
response pursuant to Environmental Laws by the Company;

         (f) the  Company is not  subject  to any  judgment,  order or  citation
related  to or arising  out of any  Environmental  Laws and is not,  and has not
been,  named or listed as a potentially  responsible  party by any  Governmental
Entity in a matter related to or arising out of any Environmental Laws;

         (g) there  are no  agreements  with any  Person  pursuant  to which the
Company would be required to defend,  indemnify,  hold harmless, or otherwise be
responsible  for any violation by or other  liability or expense of such Person,
or alleged  violation by or other  liability or expense of such Person,  arising
out of any Environmental Law; and

         (h) the Company has provided Buyer copies of all environmental  audits,
assessments or other  evaluations,  if any, of the Company or any of its assets,
properties or business operations.

         4.25 Related Party Transactions.  Except as set forth on Schedule 4.25,
there are no currently  existing  business  arrangements,  other than employment
between the Company and any of Sellers, officers or directors of the Company nor
any of their respective Affiliates and there are no continuing obligations owing
from the  Company to any third  Person  created by any of  Sellers,  officers or
directors of the Company nor any of their Affiliates.  None of Sellers, officers
or directors of the Company,  nor any of their  respective  Affiliates  owns any
material  asset,  tangible or intangible,  which is used in the operation of the
business of the Company.




                                       20
<PAGE>

         4.26     Real Properties.

         (a) Schedule 4.26 lists all real property owned, leased or occupied by
the Company (the "Real Property"), including the legal description of all land,
and all encumbrances thereon, and sets forth a description of all plants,
buildings or other structures located thereon. There are now in full force and
effect, to the extent legally required, duly issued certificates of occupancy
permitting the Real Property and improvements located thereon to be legally used
and occupied as the same are now constituted, and the business activities of the
Company thereon are, in all material respects, consistent with and permitted
under, and not in default of, applicable zoning ordinances, restrictive
covenants or other restrictions. To the Knowledge of Sellers and the Company,
there is not:

         (i)      any  claim  of  adverse  possession  or  prescriptive   rights
                  involving any of the Real Property;

         (ii)     any structure located on any Real Property which encroaches on
                  or over the boundaries of neighboring or adjacent  properties;
                  or

         (iii)    any structure of any other Person which  encroaches on or over
                  the boundaries of any of such Real Property.

To the Knowledge of Sellers and the Company,  no public  improvements  have been
commenced  and none are  planned  which in either  case may  result  in  special
assessments against or otherwise  materially adversely affect any Real Property.
To the  Knowledge  of  Sellers  and the  Company,  no portion of any of the Real
Property  has been used as a landfill or for storage or landfill of hazardous or
toxic  materials.  Except as set forth on Schedule  4.26,  to the  Knowledge  of
Sellers and the Company, there are no:

         (i)      proposed   increases  in  assessed   valuations  of  any  Real
                  Property;

         (ii)     orders  requiring  repair,  alteration  or  correction  of any
                  existing condition  affecting any Real Property or the systems
                  or improvements thereto;

         (iii)    conditions or defects which could give rise to an order of the
                  sort referred to in clause (ii) above;

         (iv)     aboveground or  underground  storage tanks located on the Real
                  Property;

         (v)      wells located on the Real Property;

         (vi)     pending or proposed  modifications  of zoning or similar  laws
                  affecting the Real Property; or



                                       21
<PAGE>

         (vii)    structural,   mechanical,   or  other   defects  of   material
                  significance affecting any of the Real Property.

         (b) No Condemnation or Expropriation. Neither the whole nor any portion
of the Real  Property is subject to any order to be sold or is being  condemned,
expropriated  or  otherwise  taken by any  Governmental  Entity  with or without
payment of  compensation  therefor,  nor to the  Knowledge  of  Sellers  and the
Company has any such condemnation, expropriation or taking been proposed.

         (c) Utilities.  All utilities,  including  telephone,  sewer and water,
electricity  and gas  necessary for the use of the Real  Property,  as currently
used by the Company, are available, connected and operational.

         4.27 Labor Matters. Except as disclosed on Schedule 4.27,

         (a) the Company is not a party to any collective  bargaining  agreement
or other  material  contract or agreement with any labor  organization  or other
representative of employees nor is any such contract being negotiated;

         (b) there is no material  unfair  labor  practice  charge or  complaint
pending nor, to the Knowledge of Sellers and the Company, threatened with regard
to employees of the Company;

         (c)  there is no labor  strike,  labor  dispute,  grievance,  claim for
unfair labor  practices,  collective  bargaining  disputes,  material  slowdown,
material work stoppage or other material labor controversy in effect, or, to the
Knowledge of Sellers and the Company, threatened against the Company;

         (d) to the Knowledge of Sellers and the Company, as of the date hereof
there are no campaigns being conducted to solicit cards from the employees of
the Company to authorize representation by any labor organization;

         (e) the Company is not a party to, and is not otherwise bound by, any
consent decree with any Governmental Entity relating to employees or employment
practices of the Company;

         (f) the Company has not incurred any liability  under,  and the Company
has complied in all material  respects  with, the Worker  Adjustment  Retraining
Notification Act;

         (g) the  Company  is in  compliance  with  all  applicable  agreements,
contracts and policies  relating to  employment,  employment  practices,  wages,
hours and terms and conditions of employment of the employees,  except where the
failure to be in compliance with each such agreement,  contract and policy would
not,  either singly or in the aggregate,  have a Material  Adverse Effect on the
Company;


                                       22
<PAGE>

         (h) there is no  complaint,  lawsuit  or  proceeding  pending or to the
Knowledge  of  Sellers  and  the  Company,   threatened  in  any  forum  by  any
Governmental  Entity,  by or on behalf of any  present or former  employee,  any
applicant for employment or any classes of the foregoing  alleging breach of any
express or implied  contract  of  employment,  any law or  regulation  governing
employment  or the  termination  thereof or other  discriminatory,  wrongful  or
tortious  conduct in connection  with the  employment  relationship  against the
Company pending, or, to the

Knowledge  of Sellers  and the  Company,  threatened,  that has, or would have a
Material Adverse Effect on the Company;

         (i) there is no ongoing or pending  proceeding or investigation  under,
and the Company has not received any notice of a violation of, the  Occupational
Safety and Health Act of 1970 and the regulations promulgated thereunder;

         (j) the Company is in compliance  with all applicable  laws  respecting
employment and employment practices, terms and conditions of employment,  wages,
hours of work and occupational safety and health, except for non-compliance that
does not have, and would not have, a Material Adverse Effect on the Company; and
(x) to the Knowledge of Sellers and the Company, there is no proceeding,  claim,
suit, action or governmental  investigation pending or threatened, in respect of
which any current or former director,  officer, employee or agent of the Company
is or may be entitled to claim  indemnification from the Company (A) pursuant to
the Company Charter Documents, (B) as provided in any indemnification  agreement
to which the Company is a party or (C) pursuant to  applicable  law that, in any
such case, has or would have a Material Adverse Effect on the Company; and

         (k)  there  are no  worker's  compensation  claims  pending  or, to the
Knowledge of Sellers and the Company,  threatened against the Company other than
claims  (A) which are  fully  covered  by  insurance  or (B) for which  adequate
accruals have been made in the Company Balance Sheet.

         4.28  Compliance  with Laws;  Permits.  The Company holds all required,
necessary or applicable federal,  state,  provincial,  local or foreign permits,
licenses,  variances,  exemptions,  orders,  franchises  and  approvals  of  all
Governmental  Entities,  except  where the  failure  to so hold would not have a
Material Adverse Effect on the Company (the "Company  Permits").  The Company is
in compliance with the terms of the Company Permits, except where the failure to
so comply would not have a Material  Adverse Effect on the Company.  The Company
has not received  notice of any revocation or modification of any of the Company
Permits,  the revocation or modification of which would have a Material  Adverse
Effect on the Company. The Company has not violated or failed to comply with any
statute, law, ordinance,  regulation,  rule, permit or order of any Governmental
Entity,  or any  arbitration  award  or any  judgment,  decree  or  order of any
Governmental  Entity,  applicable  to the  Company  or its  business,  assets or
operations,  except  for  violations  and  failures  to comply  that  could not,


                                       23
<PAGE>

individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse  Effect on the  Company.  To the  Knowledge  of Sellers and the Company,
there is no reason the  Company (or its  successors)  would not be able to renew
without material expense any of its permits,  licenses,  or other authorizations
required to conduct and use any of the Company's current or planned  operations.
To the Knowledge of Sellers and the Company,  no  investigation or review by any
Governmental Entity with respect to the Company is threatened,  other than those
the outcome of which would not have a Material Adverse Effect on the Company.




         4.29 Prospects; Outstanding Commitments; Customers and Suppliers.

         (a) Sellers and the Company have no Knowledge  of, nor have any of them
been  informed  of, any existing or  anticipated  changes in the policies of the
customers,  suppliers or others with whom the Company  transacts  business  that
could  affect the  availability  of  materials,  or  supplies,  in any  material
respect, or of any legislation or regulation,  that will have a Material Adverse
Effect on the Company. As of the date of this Agreement, Sellers and the Company
have no  Knowledge  of any proposed or  contemplated  changes in the  employment
status of any members of management or key employees of the Company.

         (b) All  outstanding  commitments  of the Company  for the  delivery of
goods or the performance of services were made on an arms' length basis,  and to
the  Knowledge  of Sellers and the Company  there are no facts or  circumstances
that could have a Material Adverse Effect with respect thereto.

         (c) Schedule 4.29 contains a listing,  based on dollar volumes,  of the
top ten customers of and the top ten suppliers to the Company for the year ended
December 31, 2003.  No such  customer or supplier has advised the Company or any
Seller that the amount of business  presently being  conducted  between any such
customer or supplier and the Company will be materially reduced in the future.

         4.30 Minute Books. The minute books of the Company,  as previously made
available to Buyer,  contain  complete and accurate  records of all meetings and
accurately  reflect all other corporate  action of the shareholders and board of
directors of the Company. The stock certificate books and stock transfer ledgers
of the Company are true and complete.

         4.31 Subchapter S Matters. The Company (i) has made an effective, valid
and binding S election pursuant to Section 1362 of the Code, (ii) has maintained
its status as an S  Corporation  pursuant  to Section  1361 of the Code  without
lapse or interruption,  and (iii) has made and continuously maintained elections
similar to the federal S election in each state or local  jurisdiction where the
Company  does  business  or is  required to file a tax return to the extent such
states or jurisdictions  permit such elections.  The Company neither is nor will
or can be subject to the  built-in  gains tax under  Section 1374 of the Code or
any similar  corporate level tax imposed on the Company by any taxing authority.
To the  Knowledge  of Sellers  and the  Company,  the  Company  has no Tax item,
election,  agreement or adjustment  which will  accelerate or trigger  income or
deferred  deductions  of the Company  solely as a result of  termination  of the
Company's status as an S Corporation.



                                       24
<PAGE>

         4.32 Absence of Certain Business Practices. Neither the Company nor any
officer,  employee or agent of the Company has,  directly or indirectly,  within
the past five years,  given or agreed to give any gift or similar benefit to any
customer,  supplier,  government  employee or other Person who is or may be in a
position to help or hinder the business of the Company (or to assist the Company
in connection with any actual or proposed  transaction)  which (i) might subject
the  Company to any damage or penalty  in any civil,  criminal  or  governmental
litigation  or  proceeding,  (ii) if not  given in the  past,  might  have had a
Material Adverse Effect on the assets,  business or operations of the Company as
reflected in the Financial Statements,  or (iii) if not continued in the future,
might materially  adversely effect the assets,  business operations or prospects
of the  Company  or which  might  subject  the  Company  to suit or penalty in a
private or governmental litigation or proceeding.

         4.33  Completeness  of  Disclosure.  No statement  of material  fact by
Sellers or the Company  contained in this Agreement and no written  statement of
material  fact  furnished  or to be furnished by Sellers or the Company to Buyer
pursuant to or in connection  with this  Agreement  contains or will contain any
untrue  statement  of a material  fact or omits or will omit to state a material
fact necessary in order to make the statements  herein or therein  contained not
misleading.

Disclosure of any fact in any provision of this  Agreement or in any Schedule to
which  reference  is made herein  shall  constitute  disclosure  thereof for the
purposes of all other provisions and Schedules.

                                    ARTICLE 5
                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer represents and warrants to the Company and Sellers as follows:

         5.1  Organization;  Standing  and Power.  Buyer is a  corporation  duly
organized,  validly  existing  and in good  standing  under laws of the State of
Colorado and is duly  qualified  to do business and is in good  standing in each
jurisdiction  in which the nature of its business or the ownership or leasing of
its  properties  makes  such  qualification   necessary,   other  than  in  such
jurisdictions  where the  failure to be so  qualified  to do business or in good
standing  (individually  or in the  aggregate)  would  not  have,  or would  not
reasonably be likely to have, a Material Adverse Effect on Buyer.  Buyer has all
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as now being conducted.

         5.2      Capital Structure.

         (a) As of the  date  hereof,  the  authorized  capital  stock  of Buyer
consists of  30,000,000  shares of common  stock,  par value $.01 per share (the
"Buyer Common Stock"),  and 5,000,000  shares of preferred stock, par value $.01
per share. At the close of business on October 12, 2004 (i) 6,068,269  shares of
common stock were issued and  outstanding  and no shares of preferred stock were



                                       25
<PAGE>

issued and  outstanding;  (ii) 69,000 shares of Buyer Common Stock were reserved
for  issuance by Buyer  pursuant to options or stock  awards  granted  under the
following plans:

                     Plan                         Shares Reserved
                     ----                         ---------------

         Natural Gas Services Group, Inc.             69,000
         1998 Stock Option Plan

(collectively,  the "Buyer Stock  Plans");  (iii) 70,000  shares of Buyer Common
Stock were  reserved  for  issuance  pursuant to options or stock awards not yet
granted under the Buyer Stock Plans; (iv) 2,468,871 shares of Buyer Common Stock
were reserved for issuance pursuant to outstanding  warrants;  and (v) no shares
of  Buyer  Common  Stock  were  held by  Buyer  in its  treasury.  Buyer  has no
outstanding stock appreciation  rights,  phantom units, profit  participation or
similar  rights with  respect to Buyer.  The  outstanding  Buyer Common Stock is
listed on the American Stock  Exchange.  Except as set forth above, no shares of
capital  stock or other  equity or voting  securities  of Buyer are reserved for
issuance or are outstanding. All of the issued and outstanding shares of capital
stock of Buyer are, and all shares of the Buyer Common Stock  issuable  upon the
exercise  of  stock  options,  stock  awards  or  warrants  will be when  issued
thereunder,  duly authorized,  validly issued,  fully paid and nonassessable and
not subject to  preemptive  rights.  At the date of this  Agreement,  no capital
stock has been issued by Buyer since the Buyer  Balance  Sheet Date,  other than
(i) Buyer Common Stock issued pursuant to options or warrants  outstanding on or
prior to such date in accordance  with their terms at such date and (ii) 649,574
shares of Buyer  Common  Stock  issued to CBarney  Investments,  Ltd. and Mark X
Energy  Company.  Except as provided in Section 9.6 of that  certain  Securities
Purchase Agreement,  dated July 20, 2004, between CBarney Investments,  Ltd. and
Buyer, and except for options  described above and warrants  described above, as
of the date hereof there are no outstanding or authorized  securities,  options,
warrants,   calls,   rights,   commitments,   preemptive   rights,   agreements,
arrangements  or  undertakings  of  any  kind  to  which  Buyer  or  any  of its
subsidiaries is a party, or by which any of them is bound,  obligating  Buyer or
any of its  subsidiaries  to  issue,  deliver  or sell,  or cause to be  issued,
delivered  or sold,  any  shares  of  capital  stock or other  equity  or voting
securities of, or other ownership interests in, Buyer or any of its subsidiaries
or obligating Buyer or any of its subsidiaries to issue,  grant, extend or enter
into any such security,  option,  warrant, call, right,  commitment,  agreement,
arrangement or  undertaking.  There are not as of the date of this Agreement and
there will not be at the Closing Date any shareholder agreements,  voting trusts
or other agreements or  understandings  to which Buyer is a party or by which it
is bound relating to the voting of any shares of the capital stock of Buyer.

         (b) The shares of Buyer  Common  Stock  issued as part of the  Purchase
Consideration (i) will, when issued, be duly authorized,  validly issued,  fully
paid and  nonassessable  shares of Buyer  Common  Stock,  and not subject to any
preemptive  rights  created by  statute,  the Buyer  Charter  Documents,  or any
agreement to which Buyer is a party or is bound, (ii) will be issued in reliance
upon certain  exemptions from registration  under the Securities Act of 1933, as
amended  (the   "Securities   Act"),   and  exemptions  from   registration  and
qualification  requirements  under all  applicable  state "Blue Sky"  securities
laws, and (iii) will be "restricted"  securities  within the meaning of Rule 144
under the Securities Act.



                                       26
<PAGE>

         5.3 Authorization;  Enforceability.  Buyer has the requisite  corporate
power  and  authority  to  enter  into  this  Agreement  and to  consummate  the
transactions  contemplated  hereby. The execution and delivery of this Agreement
by Buyer and the consummation by Buyer of the transactions  contemplated  hereby
have been  duly  authorized  by all  necessary  corporate  action on the part of
Buyer.  This  Agreement  has been  duly  executed  and  delivered  by Buyer  and
constitutes a valid and binding obligation of Buyer,  enforceable  against Buyer
in accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy,  insolvency,  reorganization,  moratorium  or other  similar laws or
judicial  decisions  now or hereafter in effect  relating to  creditors'  rights
generally and (ii) the remedy of specific  performance and injunctive relief may
be subject to equitable defenses and to the discretion of the court before which
any  proceeding  therefor  may be brought.  The  execution  and delivery of this
Agreement by Buyer do not, and the consummation of the transactions contemplated
hereby and  compliance  with the provisions  hereof will not,  conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or  both)  under,  or give  rise  to a right  of  termination,  cancellation  or
acceleration  of or "put" right with respect to any  obligation  or to loss of a
material  benefit  under,  or result in the  creation  of any Lien on any of the
properties or assets of Buyer or any of its subsidiaries under, any provision of
(i) the articles of  incorporation  or bylaws of Buyer,  each as amended through
the date  hereof  (the  "Buyer  Charter  Documents"),  or any  provision  of the
comparable organizational documents of its subsidiaries, (ii) any loan or credit
agreement,  note,  bond,  mortgage,   indenture,   lease,  or  other  agreement,
instrument, permit, concession,  franchise or license applicable to Buyer or any
of its subsidiaries or their respective  properties or assets,  or (iii) subject
to governmental filings and other matters referred to in the following sentence,
any judgment,  order,  decree,  statute,  law, ordinance,  rule or regulation or
arbitration  award  applicable  to  Buyer  or any of its  subsidiaries  or their
respective  properties or assets,  other than,  in the case of clause (ii),  any
such conflicts,  violations,  defaults,  rights or Liens that individually or in
the  aggregate  would not have,  or would not  reasonably  be likely to have,  a
material  adverse  effect on Buyer and would  not,  or would not  reasonably  be
likely to,  materially  impair the ability of Buyer to perform  its  obligations
hereunder or prevent the  consummation of any of the  transactions  contemplated
hereby.  No  consent,  approval,  order or  authorization  of, or  registration,
declaration  or filing  with,  any  Governmental  Entity is  required by or with
respect to Buyer or any of its subsidiaries in connection with the execution and
delivery  of this  Agreement  by  Buyer  or the  consummation  by  Buyer  of the
transactions  contemplated hereby,  except for (i) filings in connection,  or in
compliance,  with the provisions of the Securities Act, (ii) the filing with the
Securities and Exchange  Commission (the "SEC") of such reports under Section 13
of the Securities  Exchange Act of 1934, as amended (the "Exchange Act"), as may
be required in connection with this Agreement and the transactions  contemplated
hereby,  and (iii) the filing with the American Stock Exchange of an application
for the listing of the shares of Buyer Common Stock to be issued to Sellers.

         5.4 SEC  Documents.  Buyer  has filed on a timely  basis  all  required
reports,  schedules,  forms,  statements and other  documents with the SEC since
January  1, 2003 (such  documents,  together  with all  exhibits  and  schedules
thereto and documents  incorporated by reference therein,  collectively referred
to  herein  as the "SEC  Documents").  As of  their  respective  dates,  the SEC


                                       27
<PAGE>

Documents  complied  in all  material  respects  with  the  requirements  of the
Securities  Act or the  Exchange  Act,  as the case may be,  and the  rules  and
regulations of the SEC promulgated  thereunder  applicable to the SEC Documents,
and none of the SEC Documents  contained any untrue statement of a material fact
or omitted to state a material fact  required to be stated  therein or necessary
in order to make the statements  therein,  in light of the  circumstances  under
which they were made, not misleading.  The consolidated  financial statements of
Buyer  included  in the SEC  Documents  comply  in all  material  respects  with
applicable  accounting  requirements  and the published rules and regulations of
the SEC with respect  thereto,  have been prepared in accordance  with generally
accepted accounting principles (except, in the case of unaudited statements,  as
permitted by Form 10-QSB of the SEC)  applied on a  consistent  basis during the
periods  involved  (except as may be indicated in the notes  thereto) and fairly
present  the  consolidated  financial  position  of Buyer  and its  consolidated
subsidiaries  as of the dates  thereof  and the  consolidated  results  of their
operations  and cash flows for the periods then ended  (subject,  in the case of
the interim financial statements,  to normal year-end audit adjustments).  There
is  no  liability  or  obligation  of  any  kind,  whether  accrued,   absolute,
determined,  determinable or otherwise, of Buyer or any subsidiary of Buyer that
is required by  generally  accepted  accounting  principles  to be  reflected or
reserved against or otherwise disclosed in the most recent financial  statements
of Buyer  included in the SEC  Documents  which is not so  reflected or reserved
against that  individually  or in the  aggregate  would have a Material  Adverse
Effect on Buyer. For purposes of this Agreement, "Buyer Balance Sheet" means the
balance sheet as of June 30, 2004, set forth in Buyer's Quarterly Report on Form
10-QSB for the quarter ended June 30, 2004, and "Buyer Balance Sheet Date" means
June 30, 2004.

         5.5 Absence of Material  Adverse Change.  Since the Buyer Balance Sheet
Date,  there  has been no  Material  Adverse  Change  in the  business,  assets,
operations or condition,  financial or otherwise, of Buyer and its subsidiaries,
taken as a whole.

         5.6 No Default.  Buyer is not in default,  breach or violation  (and no
event has  occurred  which,  with  notice  or the  lapse of time or both,  would
constitute a default or  violation)  of any term,  condition or provision of (i)
the Buyer Charter Documents; (ii) any note, bond, mortgage,  indenture, license,
agreement or other  instrument or obligation to which Buyer is now a party or by
which Buyer or any of its properties,  business or assets is bound; or (iii) any
order,  writ,  injunction,  decree,  statute,  rule or regulation  applicable to
Buyer,  except in the case of clauses (ii) and (iii) for defaults or  violations
which in the aggregate would not have a Material Adverse Effect on Buyer.

         5.7 No  Undisclosed  Liabilities.  Buyer  has  no  debt,  liability  or
obligation  of  any  kind,  whether  accrued,  absolute,  contingent,  inchoate,
determined,  determinable or otherwise (and there is no basis for any present or
future action, suit,  proceeding,  hearing,  investigation,  charge,  complaint,
claim or  demand  against  Buyer  giving  rise to any such  debt,  liability  or
obligation), except for (i) liabilities or obligations which, individually or in
the  aggregate  would  not  have  a  Material  Adverse  Effect  on  Buyer;  (ii)
liabilities or obligations  under this Agreement or incurred in connection  with
the transactions  contemplated  hereby;  or (iii) liabilities or obligations (A)
disclosed or provided for in the Buyer Balance Sheet or (B) disclosed in the SEC
Documents filed with the SEC prior to the date of this Agreement.



                                       28
<PAGE>

         5.8 Compliance with Laws; Permits.  Buyer and its subsidiaries hold all
required,  necessary or applicable federal, state, provincial,  local or foreign
permits, licenses,  variances,  exemptions,  orders, franchises and approvals of
all Governmental Entities,  except where the failure to so hold would not have a
Material  Adverse  Effect  on  Buyer  (the  "Buyer  Permits").   Buyer  and  its
subsidiaries are in compliance with the terms of the Buyer Permits, except where
the  failure  to so comply  would not have a Material  Adverse  Effect on Buyer.
Neither Buyer nor any of its  subsidiaries has received notice of any revocation
or modification  of any of the Buyer Permits,  the revocation or modification of
which would have a Material  Adverse  Effect on Buyer.  Neither Buyer nor any of
its  subsidiaries  has  violated  or  failed to comply  with any  statute,  law,
ordinance,  regulation, rule, permit or order of any Governmental Entity, or any
arbitration award or any judgment,  decree or order of any Governmental  Entity,
applicable to Buyer or any of its subsidiaries or their  respective  businesses,
assets or  operations,  except for  violations and failures to comply that could
not, individually or in the aggregate, reasonably be expected to have a material
adverse  effect on Buyer.  To the  Knowledge of Buyer,  there is no reason Buyer
would  not be  able  to  renew  without  material  expense  any of its  permits,
licenses,  or other  authorizations  required  to conduct and use any of Buyer's
current or planned  operations.  To the Knowledge of Buyer, no  investigation or
review  by  any  Governmental  Entity  with  respect  to  Buyer  or  any  of its
subsidiaries is threatened, other than those the outcome of which would not have
a Material Adverse Effect on Buyer.

         5.9 Brokers.  Buyer has not employed and has no obligation or liability
to pay any fees or commissions to any broker,  finder,  agent or similar Person,
with respect to the  transactions  contemplated by this  Agreement,  except that
Buyer has employed and will be solely  responsible  for the payment of brokerage
fees,  commissions and any finder's fees to Karifico  Consultants,  Karifico and
R.J. Fisher.

         5.10  No  Litigation.   There  is  no  suit,   action,   proceeding  or
investigation  presently  pending  or, to the  Knowledge  of  Buyer,  threatened
against  or  affecting  Buyer or any of its  subsidiaries  that has had or could
reasonably  be expected to have a Material  Adverse  Effect on Buyer or prevent,
hinder or materially  delay the ability of Buyer to consummate the  transactions
contemplated by this Agreement, nor is there any judgment,  decree,  injunction,
rule or order of any Governmental Entity or arbitrator outstanding against Buyer
or any of its subsidiaries which has had, or which, insofar as reasonably can be
foreseen, in the future could have, any such effect.

         5.11  Financing.  Buyer has or will have at  Closing  sufficient  funds
available on hand and under existing financing  facilities to pay to each holder
of  Company  Shares  at the  Closing  Date  the  cash  portion  of the  Purchase
Consideration and to perform all of its other obligations under this Agreement.

         5.12 Taxes. Buyer has timely filed all federal,  state, local and other
Tax Returns required to be filed under applicable law, except as individually or
in the aggregate would not have a Material Adverse Effect on Buyer. All such Tax



                                       29
<PAGE>

Returns were true and correct in all  material  respects  when filed.  Buyer has
paid all  required  Taxes  (including  any  additions  to Taxes,  penalties  and
interest related  thereto) due and payable on or before the date hereof,  except
as individually or in the aggregate would not have a Material  Adverse Effect on
Buyer.

         5.13 Completeness of Disclosure. No statement of material fact by Buyer
contained in this Agreement and no written  statement of material fact furnished
or to be furnished by Buyer to Sellers  pursuant to or in  connection  with this
Agreement  contains or will contain any untrue  statement of a material  fact or
omits  or will  omit to state a  material  fact  necessary  in order to make the
statements herein or therein contained not misleading.

Disclosure of any fact in any provision of this  Agreement or in any Schedule to
which  reference  is made herein  shall  constitute  disclosure  thereof for the
purposes of all other provisions or Schedules.




                                    ARTICLE 6
                    COVENANTS RELATING TO CONDUCT OF BUSINESS
                            AND ADDITIONAL AGREEMENTS

         6.1 Conduct of Business of the Company.


                  (a) Ordinary  Course.  During the period from the date of this
Agreement to the Closing Date (except as otherwise specifically  contemplated by
the terms of this  Agreement),  the Company  shall,  and Sellers shall cause the
Company to, carry on its businesses in the usual, regular and ordinary course in
substantially  the same  manner as  conducted  at the date  hereof,  and, to the
extent consistent  therewith,  use all reasonable efforts to preserve intact its
current  business  organization,  keep  available  the  services  of its current
officers and employees and preserve its relationships with customers, suppliers,
licensors, licensees,  distributors and others having business dealings with the
Company,  in each case  consistent  with past  practice,  to the end that  their
goodwill  and ongoing  businesses  shall be  unimpaired  to the  fullest  extent
possible at the Closing Date.  Without limiting the generality of the foregoing,
and except as otherwise expressly  contemplated by this Agreement,  prior to the
Closing  Date the  Company  will not,  and Sellers  will not,  without the prior
written consent of Buyer, permit or allow the Company to:

                  (i) (A) declare,  set aside or pay any  dividends  on, or make
         any other  distributions  (other than  distributions to the Sellers for
         amounts  not  exceeding  their   respective  U.S.  federal  income  tax
         liabilities)  in  respect  of,  any of its  capital  stock,  (B) split,
         combine or  reclassify  any of its capital  stock or issue or authorize
         the  issuance of any other  securities  in respect of, in lieu of or in
         substitution for shares of its capital stock or (C) purchase, redeem or
         otherwise  acquire  any shares of capital  stock of the  Company or any
         other securities thereof or any rights,  warrants or options to acquire
         any such shares or other securities;



                                       30
<PAGE>

                  (ii) issue,  deliver,  sell,  pledge,  dispose of or otherwise
         encumber any of its capital stock or any securities  convertible  into,
         or any rights, warrants or options to acquire, any such capital stock;

                  (iii) amend the Company Charter Documents;

                  (iv)   acquire  or  agree  to   acquire   (A)  by  merging  or
         consolidating  with,  or by  purchasing  a  substantial  portion of the
         stock, or other  ownership  interests in, or assets of, or by any other
         manner,  any  business or any  corporation,  partnership,  association,
         joint venture,  limited  liability  company or other entity or division
         thereof,  or (B) any assets that would be material,  individually or in
         the  aggregate,  to the  Company,  except  purchases  of  supplies  and
         inventory  in the  ordinary  course of  business  consistent  with past
         practice;

                  (v)  sell,  lease,  mortgage,  pledge,  grant  a  Lien  on  or
         otherwise  encumber  or  dispose  of any of its  properties  or assets,
         except (A) in the  ordinary  course of  business  consistent  with past
         practice  or  (B)  other  transactions   involving  not  in  excess  of
         $100,000.00 in the aggregate;


                  (vi)  (A)  incur  any   indebtedness  for  borrowed  money  or
         guarantee any such  indebtedness of another  person,  issue or sell any
         debt  securities  or  warrants  or other  rights  to  acquire  any debt
         securities  of the Company,  guarantee  any debt  securities of another
         person,  enter into any "keep well" or other  agreement to maintain any
         financial  statement  condition  of  another  person or enter  into any
         arrangement having the economic effect of any of the foregoing,  except
         for (1) working capital  borrowings under revolving  credit  facilities
         incurred  in the  ordinary  course of  business,  and (2)  indebtedness
         incurred to refund,  refinance  or replace  indebtedness  for  borrowed
         money outstanding on the date hereof,  or (B) make any loans,  advances
         or capital contributions to, or investments in, any other person, other
         than  employees  of the  Company  in the  ordinary  course of  business
         consistent with past practice;

                  (vii) make or incur capital  expenditures  in the aggregate in
         excess of $400,000.00;

                  (viii) make any material election relating to Taxes or settle
         or compromise any material Tax liability;

                  (ix) pay,  discharge  or satisfy  any claims,  liabilities  or
         obligations (absolute,  accrued, asserted or unasserted,  contingent or
         otherwise),  other than the payment, discharge or satisfaction,  in the
         ordinary  course  of  business  consistent  with  past  practice  or in
         accordance  with  their  terms of  liabilities  reflected  or  reserved
         against in, or contemplated by, the Company Balance Sheet;

                  (x) waive the  benefits  of, or agree to modify in any manner,
         any  confidentiality,  standstill  or  similar  agreement  to which the
         Company is a party;



                                       31
<PAGE>

                  (xi)  adopt a plan  of  complete  or  partial  liquidation  or
         resolutions  providing  for  or  authorizing  such a  liquidation  or a
         dissolution, merger, consolidation, restructuring,  recapitalization or
         reorganization;

                  (xii) enter into any new collective bargaining agreement;

                  (xiii) change any accounting  principle used by it, except for
         changes   conforming  to  regulations   promulgated  by  the  Financial
         Accounting Standards Board;

                  (xiv)  settle or  compromise  any  litigation  (whether or not
         commenced prior to the date of this Agreement)  other than  settlements
         or compromises:  (A) of litigation  where the amount paid in settlement
         or compromise does not exceed  $50,000.00,  or (B) in consultation  and
         cooperation with Buyer, and, with respect to any such settlement,  with
         the prior written consent of Buyer;

                  (xv) (A) enter into any new, or amend any existing,  severance
         agreement  or  arrangement,   deferred   compensation   arrangement  or
         employment  agreement  with any officer,  director or employee,  except
         that, the Company may hire additional employees to the extent deemed by
         its  management to be in the best  interests of the Company;  provided,
         that the  Company  may not  enter  into  any  employment  or  severance
         agreement  or any  deferred  compensation  arrangement  with  any  such
         additional  employees;  (B)  adopt  any new  incentive,  retirement  or
         welfare  benefit  arrangements,  plans or  programs  for the benefit of
         current,  former or retired  employees  or amend any  existing  Company
         Benefit Plan (other than amendments  required by law or to maintain the
         tax  qualified  status of such  plans  under the  Code);  (C) grant any
         increases in employee  compensation,  other than in the ordinary course
         or pursuant to promotions,  in each case  consistent with past practice
         (which shall include normal individual periodic performance reviews and
         related   compensation   and  benefit   increases  and  bonus  payments
         consistent  with past  practices);  or (D) grant any stock  options  or
         stock awards; or

                  (xvi) authorize any of, or commit or agree to take any of, the
         foregoing actions.

                  (b) Changes in Employment Arrangements. During the period from
the date of this  Agreement to the Closing Date,  the Company shall not adopt or
amend  (except  as  may  be  required  by  law)  any  bonus,   profit   sharing,
compensation,   stock  option,  pension,   retirement,   deferred  compensation,
employment or other  employee  benefit  plan,  agreement,  trust,  fund or other
arrangement  (including any Company Benefit Plan) for the benefit of any person,
increase  the  compensation  or fringe  benefits  of any person,  or,  except as
provided  in an  existing  Company  Benefit  Plan or in the  ordinary  course of
business  consistent  with past practice,  increase the  compensation  or fringe
benefits  of any person or pay any benefit not  required by any  existing  plan,
arrangement or agreement.

                  (c) Other  Actions.  During the  period  from the date of this
Agreement to the Closing Date, neither the Company nor any Seller shall take any



                                       32
<PAGE>

action that would, or that could reasonably be expected to, result in any of the
representations  and  warranties  of the  Company  and Sellers set forth in this
Agreement becoming untrue in any material respect.

         6.2 Access to Information.

                  (a) Subject to the terms of the Confidentiality  Agreement and
Section 6.2(c), during the period from the date hereof to the Closing Date:

                  (i) The  Company and  Sellers  shall,  and shall cause each of
         their respective officers,  employees,  counsel, financial advisors and
         other  representatives to, afford to Buyer, and to Buyer's accountants,
         counsel,  financial  advisors  and  other  representatives,  reasonable
         access to the Company's properties,  books, contracts,  commitments and
         records for the purpose of conducting such inspections and evaluations,
         including  environmental  inspections and  assessments,  as Buyer deems
         appropriate,  and,  during such period,  the Company and Sellers shall,
         and shall cause each of their respective officers,  employees, counsel,
         financial  advisors and other  representatives  to, furnish promptly to
         Buyer,

                           (A) a copy of  each  report,  schedule,  registration
                  statement and other  document filed by the Company during such
                  period  pursuant  to the  requirements  of  federal  or  state
                  securities laws; and

                           (B) all other  information  concerning  its business,
                  properties,  financial condition,  operations and personnel as
                  Buyer may from time to time reasonably request so as to afford
                  Buyer a  reasonable  opportunity  to make at its sole cost and
                  expense  such review,  examination  and  investigation  of the
                  Company as Buyer may  reasonably  desire to make.  The Company
                  and Sellers agree to advise Buyer of all material developments
                  with respect to the Company and its assets and liabilities.

                  (ii) The Company and Sellers agree to request  Tullius  Taylor
         Sartain &  Sartain,  LLP to permit  Buyer's  accountants  to review and
         examine the work papers of Tullius Taylor  Sartain & Sartain,  LLP with
         respect to the  Company,  and the Company and Sellers  will  furnish to
         Buyer such  financial and  operating  data and other  information  with
         respect to the  business and  properties  of the Company as Buyer shall
         from time to time reasonably request.

                  (iii) The Company and Sellers  shall notify Buyer  promptly of
         any notices from or investigations by Governmental Entities relating to
         the Company's  business or assets or the  consummation of the Purchase.
         Buyer shall notify the Company and Sellers promptly of any notices from
         or investigations by Governmental Entities that could materially affect
         Buyer's consummation of the Purchase.

                  (b) Subject to Section 6.2(c), during the period from the date
hereof to the Closing Date:



                                       33
<PAGE>

                  (i) The Buyer  shall,  and shall  cause each of its  officers,
         employees,  counsel,  financial advisors and other  representatives to,
         afford to  Seller,  and to  Sellers'  accountants,  counsel,  financial
         advisors and other  representatives,  reasonable  access to the Buyer's
         properties,  books, contracts,  commitments and records for the purpose
         of conducting such inspections and evaluations, including environmental
         inspections and assessments,  as Sellers deem appropriate,  and, during
         such  period,  Buyer  shall,  and  shall  cause  each of its  officers,
         employees,  counsel,  financial advisors and other  representatives to,
         furnish promptly to Sellers,

                           (A) a copy of  each  report,  schedule,  registration
                  statement and other document filed by Buyer during such period
                  pursuant to the  requirements  of federal or state  securities
                  laws; and

                           (B) all other  information  concerning  its business,
                  properties,  financial condition,  operations and personnel as
                  Sellers  may from  time to time  reasonably  request  so as to
                  afford Sellers a reasonable  opportunity to make at their sole
                  cost and expense such review, examination and investigation of
                  Buyer as Sellers may reasonably  desire to make.  Buyer agrees
                  to advise Sellers of all material developments with respect to
                  Buyer and its assets and liabilities.

                  (c) Except as required by law,  each of the  Company,  Sellers
and  Buyer  shall,  and  shall  cause  their  respective  directors,   officers,
employees,  accountants,  counsel,  financial advisors and  representatives  and
affiliates to: (i) hold in confidence,  unless compelled to disclose by judicial
or  administrative  process,  or,  in the  opinion  of  its  counsel,  by  other
requirements  of law,  all  nonpublic  information  concerning  the other  party
furnished in connection  with the  transactions  contemplated  by this Agreement
until such time as such information  becomes publicly available  (otherwise than
through the  wrongful  act of such  Person),  (ii) not release or disclose  such
information to any other Person, except in connection with this Agreement to its
auditors,  attorneys,  financial advisors,  other consultants and advisors,  and
(iii) not use such  information  for any competitive or other purpose other than
with  respect  to  its   consideration   and  evaluation  of  the   transactions
contemplated by this Agreement. Any investigation by any party of the assets and
business  of  the  other  party  and  its  subsidiaries  shall  not  affect  any
representations and warranties  hereunder,  any conditions to the obligations of
either party or either  party's right to terminate this Agreement as provided in
Article 8.

                  (d) In the event of the  termination of this  Agreement,  each
party promptly will deliver to the other party (and destroy all electronic  data
reflecting  the same) all  documents,  work papers and other  material  (and any
reproductions or extracts thereof and any notes or summaries  thereto)  obtained
by such party or on its behalf  from such other party or its  subsidiaries  as a
result of this Agreement or in connection  therewith so obtained before or after
the execution hereof.

         6.3 Reasonable Efforts; Notification.

                  (a)  Reasonable  Efforts.  Upon the terms and  subject  to the
conditions set forth in this Agreement,  except to the extent otherwise provided
in this Section 6.3, each of the parties agrees to use  commercially  reasonable



                                       34
<PAGE>

efforts to take,  or cause to be taken,  all actions,  and to do, or cause to be
done,  and to assist and cooperate  with the other parties in doing,  all things
necessary,  proper or advisable to consummate  and make  effective,  in the most
expeditious  manner  practicable,  the  Purchase,  and  the  other  transactions
contemplated  by this  Agreement,  including  (i) the obtaining of all necessary
actions  or  nonactions,  waivers,  consents  and  approvals  from  Governmental
Entities and the making of all necessary  registrations  and filings  (including
filings with  Governmental  Entities,  if any) and the taking of all  reasonable
steps as may be necessary  to obtain an approval or waiver from,  or to avoid an
action or  proceeding  by, any  Governmental  Entity,  (ii) the obtaining of all
necessary consents, approvals or waivers from third parties, (iii) the defending
of any lawsuits or other legal proceedings,  whether judicial or administrative,
challenging this Agreement or the consummation of the transactions  contemplated
hereby,  including  seeking  to have any  stay or  temporary  restraining  order
entered by any court or other Governmental Entity vacated or reversed,  and (iv)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement; provided, however, that neither
the Company nor Buyer  shall be under any  obligation  to take any action to the
extent that the Board of Directors  of such party shall  conclude in good faith,
after  consultation  with and based upon the written advice of their  respective
outside  legal  counsel  (which  advice  in each  case  need not  constitute  an
opinion),  that such  action  would  cause a breach of that Board of  Directors'
fiduciary  obligations  under  applicable  law. In  connection  with and without
limiting the foregoing,  each of the Company and Buyer and its respective  Board
of  Directors  shall  (i) take all  action  necessary  to  ensure  that no state
takeover  statute or similar  statute or regulation is or becomes  applicable to
the  Purchase,  (ii)  if any  state  takeover  statute  or  similar  statute  or
regulation  becomes  applicable  to the Purchase,  take all action  necessary to
ensure that the Purchase may be  consummated  as promptly as  practicable on the
terms  contemplated  by this  Agreement  and otherwise to minimize the effect of
such statute or regulation on the Purchase,  and (iii) cooperate with each other
in the  arrangements  for  refinancing  any  indebtedness  of, or obtaining  any
necessary new financing for, the Company and Buyer.

                  (b)  Notification.  The Company  shall give  prompt  notice to
Buyer,  and  Buyer  shall  give  prompt  notice  to  the  Company,  of  (i)  any
representation  or warranty  made by it  contained  in this  Agreement  becoming
untrue or inaccurate in any material respect or (ii) the failure by it to comply
with or satisfy in any material respect any covenant,  condition or agreement to
be complied  with or satisfied by it under this  Agreement;  provided,  however,
that no such  notification  shall affect the  representations  or  warranties or
covenants or agreements of the parties or the  conditions to the  obligations of
the parties hereunder.

         6.4 Fees and Expenses.  Except as provided in Section 9.2, all fees and
expenses  incurred in  connection  with the  Purchase,  this  Agreement  and the
transactions  contemplated hereby shall be paid by the party incurring such fees
or expenses, whether or not the Purchase is consummated.

         6.5 Public Announcements. The Company and Sellers, on the one hand, and
Buyer,  on the other hand, will consult with each other before issuing any press
release  or  otherwise  making  any  public   statements  with  respect  to  the



                                       35
<PAGE>

transactions  contemplated  by this Agreement and shall not issue any such press
release or make any such public  statement  prior to such  consultation,  except
that each party may respond to questions from shareholders, respond to inquiries
from financial  analysts and media  representatives  in a manner consistent with
its past practice and make such  disclosure as may be required by applicable law
or by  obligations  pursuant to any listing  agreement  with the American  Stock
Exchange  without  prior  consultation  to the extent such  consultation  is not
reasonably  practicable.  The parties  agree that the initial  press  release or
releases to be issued in connection  with the execution of this Agreement  shall
be mutually agreed upon prior to the issuance thereof.

         6.6  Agreement  to  Defend.  In the  event  any  claim,  action,  suit,
investigation or other  proceeding by any  governmental  body or other person or
other legal  administrative  proceeding is commenced that questions the validity
or  legality  of the  transactions  contemplated  hereby  or  seeks  damages  in
connection  therewith,  the  parties  hereto  agree to  cooperate  and use their
reasonable efforts to defend against and respond thereto.

         6.7  American  Stock  Exchange.  Buyer  shall use its  reasonable  best
efforts  to list  on the  American  Stock  Exchange,  upon  official  notice  of
issuance,  the 609,756  shares of Buyer Common Stock to be issued in  connection
with the Purchase.

         6.8 Payment of Indebtedness.  Sellers will cause all indebtedness  owed
to the Company by any Seller or any  Affiliate  of any Seller to be paid in full
prior to Closing.

                                    ARTICLE 7
                              CONDITIONS PRECEDENT

         7.1 Conditions to Each Party's  Obligation to Effect the Purchase.  The
respective  obligations  of each party to effect the Purchase are subject to the
satisfaction prior to the Closing Date of the following conditions:

         (a) Approvals. All authorizations, consents, orders or approvals of, or
declarations  or filings with, or terminations or expirations of waiting periods
imposed  by, any  Governmental  Entity  necessary  for the  consummation  of the
transactions  contemplated by this Agreement  shall have been filed,  shall have
occurred or shall have been obtained.

         (b) American Stock Exchange Listing. The Buyer Common Stock issuable in
the  Purchase  shall have been  authorized  for  listing on the  American  Stock
Exchange, upon official notice of issuance.

         7.2  Conditions to Obligations  of Buyer.  The  obligations of Buyer to
effect the Purchase are subject to the satisfaction of the following conditions,
any or all of which may be waived in whole or in part by Buyer:



                                       36
<PAGE>

                  (a) Obligations.  The Company and Sellers shall have performed
in all  material  respects  all  obligations  to be performed by them under this
Agreement at or prior to the Closing Date.

                  (b) Representations and Warranties. All of the representations
and  warranties  of  the  Company  and  Sellers   contained  in  this  Agreement
(considered  collectively) and each of the representations and warranties of the
Company and Sellers contained in this Agreement (considered  individually) shall
be true and correct in all material  respects  (disregarding  for these purposes
any  exceptions  or  supplemental   disclosures  contained  in  the  certificate
delivered  to  Buyer  pursuant  to  Section   2.4(a)(v)  and   disregarding  any
materiality  qualifications  contained therein) as of the date of this Agreement
and as of the  Closing  Date as if made on and as of such date;  provided,  that
such representations and warranties that are by their express provisions made as
of a specific date need be true and correct only as of such specific date.

                  (c)  Third  Party  Consents.   All  required   authorizations,
consents or approvals  of any third party,  the failure of which to obtain would
have a Material Adverse Effect on Buyer,  assuming the Purchase had taken place,
shall have been obtained.

                  (d) Material  Adverse Change.  There shall not have occurred a
Material Adverse Change to the Company.

                  (e) Absence of Proceedings.  No claim,  suit,  action or other
proceeding shall be pending or threatened  before or by any court,  Governmental
Entity,  arbitrator or other Person against any of the parties to this Agreement
(i) with respect to the  transactions  contemplated  by this  Agreement with the
object of challenging or preventing the Closing,  and no other proceedings shall
be pending with such object or to collect damages from Buyer on account thereof,
(ii) which would  materially  and  adversely  affect the  Company  Shares or the
assets,  property,  operations,  result of operations,  financial condition,  or
prospects of the Company, and (iii) there shall not have been made or threatened
by any Person (other than Sellers to the extent  consistent with the matters set
forth in Section 4.4) any claim  asserting that such Person (a) is the holder or
the  beneficial  owner of, or has the right to acquire  or to obtain  beneficial
ownership  of, any stock of, or any other voting,  equity or ownership  interest
in, the  Company,  or (b) is  entitled  to all or any  portion  of the  Purchase
Consideration payable for the Company Shares. Without limiting the generality of
the foregoing,  no suit,  action or other proceeding shall be pending before any
court or Governmental  Entity in which it is sought to restrain or prohibit,  or
obtain  damages  or other  relief in  connection  with,  this  Agreement  or the
consummation of the transactions contemplated hereby.

                  (f) Deliveries at Closing.  Sellers shall have  delivered,  or
caused to be delivered, to Buyer, the documents,  properly executed and dated as
of the Closing Date, required by Section 2.4(a).

                  (g)  Audited  Financial  Statements.  The  Company  shall have



                                       37
<PAGE>

received the audited financial  statements in accordance with and as required by
Section 9.2, together with an accountant's  report on such financial  statements
which shall be unqualified in all respects.

                  (h) Legal  Opinion.  Buyer  shall have  received an opinion of
counsel to the Company substantially to the effect set forth in Exhibit G.

                  (i)  Certifications.  The Company shall have  furnished  Buyer
with a certified copy of a resolution or  resolutions  duly adopted by the Board
of Directors of the Company  approving  this Agreement and  consummation  of the
transactions contemplated hereby.

                  (j) Additional Documents. Buyer shall have been furnished with
such certificates, documents and opinions as they may reasonably request.

         7.3  Condition  to  Obligations   of  the  Company  and  Sellers.   The
obligations  of the Company and  Sellers to effect the  Purchase  are subject to
satisfaction of the following  conditions,  any or all of which may be waived in
whole or in part by the Company and Sellers:

                  (a)  Obligations.  Buyer shall have  performed in all material
respects all  obligations to be performed by it under this Agreement at or prior
to the Closing Date.

                  (b) Representations and Warranties. All of the representations
and warranties of Buyer  contained in this Agreement  (considered  collectively)
and  each of the  representations  and  warranties  of Buyer  contained  in this
Agreement  (considered  individually)  shall be true and correct in all material
respects  (disregarding  for  these  purposes  any  materiality   qualifications
contained  therein) as of the date of this  Agreement and as of the Closing Date
as if made on and as of such  date;  provided,  that  such  representations  and
warranties that are by their express  provisions made as of a specific date need
be true and correct only as of such specific date.

                  (c) Material  Adverse Change.  There shall not have occurred a
Material Adverse Change to Buyer.

                  (d) Absence of Proceedings.  No claim,  suit,  action or other
proceeding shall be pending or threatened  before or by any court,  Governmental
Entity,  arbitrator or other Person against any of the parties to this Agreement
with respect to the transactions  contemplated by this Agreement with the object
of  challenging  or preventing the Closing,  and no other  proceedings  shall be
pending with such object or to collect damages from Sellers on account thereof.

                  (e)  Deliveries  at Closing.  Buyer shall have  delivered,  or
caused to be delivered,  to Sellers, the documents,  properly executed and dated
as of the Closing Date, required by Section 2.4(b).

                  (f) Legal Opinion.  The Company shall have received an opinion
of counsel to Buyer substantially to the effect set forth in Exhibit H.

                  (g)  Certifications.  Buyer shall have  furnished  the Company



                                       38
<PAGE>

with certified  copies of resolutions  duly adopted by the board of directors of
Buyer  approving  this  Agreement and the  consummation  of the Purchase and the
transactions contemplated hereby.

                  (h) Additional  Documents.  The Company and Sellers shall have
been  furnished  with  such  certificates,  documents  and  opinions  as it  may
reasonably request.



                                    ARTICLE 8
                        TERMINATION, AMENDMENT AND WAIVER

         8.1  Termination.  This Agreement may, by written notice given prior to
the Closing, be terminated at any time:


                  (a) by mutual written consent of Sellers and Buyer;

                  (b) without  liability on the part of any party hereto (unless
occasioned  by reason of failure  of one of the  parties  hereto to perform  its
obligations or a default of its  representations and warranties  hereunder),  by
either  Buyer  or  Sellers,  if the  transactions  contemplated  hereby  are not
consummated on or before the Closing Date;

                  (c) by Buyer, if Sellers or the Company  materially  breach or
default  in  the  performance  of  any  of  their  representations,  warranties,
covenants  or  obligations  hereunder,  and either (i) such breach or default in
performance  shall not have been cured or waived  within  thirty (30) days after
written  notice  thereof from Buyer to Sellers;  or (ii) Sellers  shall not have
provided reasonable assurance  satisfactory to Buyer that such breach or default
will be cured on or before the Closing Date;

                  (d) by Sellers, if Buyer shall materially breach or default in
performance of any of its representations,  warranties, covenants or obligations
hereunder,  and either (i) such breach or default in performance  shall not have
been cured or waived within  thirty (30) days after notice  thereof from Sellers
to  Buyer;  or  (ii)  Buyer  shall  not  have  provided   reasonable   assurance
satisfactory  to Sellers  that such breach or default will be cured on or before
the Closing Date;

                  (e) by Buyer,  if any of the  conditions  set forth in Section
7.1 or Section  7.2 shall not have been  fulfilled  by the  Closing  Date in any
material  respect or if satisfaction of such condition is or becomes  impossible
(unless the  nonfulfillment  results  primarily from Buyer itself  breaching any
representation  or  warranty or failing to perform  any  covenant  or  agreement
contained in this Agreement) and Buyer has not waived such condition on or prior
to the Closing;

                  (f) by Sellers,  if any of the conditions set forth in Section
7.1 or Section  7.3 shall not have been  fulfilled  by the  Closing  Date in any
material  respect or if satisfaction of such condition is or becomes  impossible



                                       39
<PAGE>

(unless  the  nonfulfillment  results  primarily  from the  Company  or  Sellers
themselves  breaching any  representation  or warranty or failing to perform any
covenant or agreement  contained in this  Agreement) and Sellers have not waived
such condition on or prior to the Closing.

         8.2  Procedure  for  Termination,  Amendment,  Extension  or Waiver.  A
termination  of this  Agreement  pursuant to Section  8.1, an  amendment of this
Agreement  pursuant to Section 8.4 or an extension or waiver pursuant to Section
8.5  shall,  in order to be  effective,  require  in the case of the  Company or
Buyer,  action by its Board of Directors or the duly authorized  designee of its
Board of Directors.

         8.3  Effect  of  Termination.  In the  event  of  termination  of  this
Agreement by either  Sellers or Buyer as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect, without any further liability or
obligation  on the part of  Sellers,  the  Company  or Buyer,  or any  director,
officer,  employee  or  shareholder  thereof,  other  than  the  confidentiality
provisions of Sections  6.2(b) and 6.2(c) and the  provisions of Sections  4.20,
5.8, 6.4, 8.3, 9.1 and Article 12; provided,  however, that any such termination
shall  not limit or  relieve  a party's  liability  or  obligation  for  damages
suffered by the other  party  hereto as a result of such  party's  breach of any
representation, warranty or covenant in this Agreement.

         8.4  Amendment.  This  Agreement  may  not  be  amended  except  by  an
instrument in writing signed by or on behalf of each of the parties.

         8.5 Extension; Waiver. At any time on or prior to the Closing Date, the
parties may (a) extend the time for the performance of any of the obligations or
the  other  acts  of the  other  parties,  (b)  waive  any  inaccuracies  in the
representations  and warranties  contained  herein or in any document  delivered
pursuant  hereto,  or  (c)  waive  compliance  with  any of  the  agreements  or
conditions  contained  herein.  Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by or on behalf of such party. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision or
breach of this Agreement,  whether or not similar,  unless  otherwise  expressly
provided. The failure of any party to this Agreement to assert any of his or its
rights under this  Agreement or otherwise  shall not constitute a waiver of such
rights.


                                    ARTICLE 9
                    SPECIAL PROVISIONS AS TO CERTAIN MATTERS

         9.1 No  Negotiation.  Provided that Buyer is not in default  hereunder,
from the date of this  Agreement  until the  earlier  date of the Closing or the
termination  of this  Agreement  pursuant to Section 8.1,  Sellers will not, and
will  cause  the  Company  and  its  officers,  directors,   employees,  agents,
Affiliates and other  representatives  not to, directly or indirectly,  solicit,



                                       40
<PAGE>

initiate,  or encourage  any inquiries or proposals  from,  discuss or negotiate
with,  provide any  non-public  information  to, or  consider  the merits of any
unsolicited  inquiries or proposals from, any Person (other than Buyer) relating
to any  transaction  involving the sale of the business or all or  substantially
all of the assets of the Company, or any of the capital stock of the Company, or
any  merger,   consolidation,   business  combination,  or  similar  transaction
involving the Company.

         9.2 Audited Financial Statements.  Promptly after the execution of this
Agreement  by all  parties  hereto,  the  Company  shall  engage an  independent
accounting  firm meeting the  requirements  of Article 2 of Regulation S-X under
the Securities Act and who shall otherwise be reasonably  satisfactory to Buyer.
The  Company  shall  engage  such  independent  accountants  for the  purpose of
authorizing  and retaining  such firm to conduct,  in accordance  with generally
accepted  auditing  standards,  an audit of the Company's  financial  statements
which shall be prepared in accordance with and satisfy the  requirements of Item
2.01 of Form 8-K and Regulation S-X as now or hereafter in effect.  All fees and
expenses  attributable to the audit of the Company's financial  statements shall
be paid by  Buyer;  provided,  however,  Sellers  will pay and  reimburse  Buyer
one-half of such fees and expenses if there is no Closing  under this  Agreement
as a result of a Seller's or the Company's  breach of Section 9.1 or as a result
of any other material breach of this Agreement by Sellers or the Company.


                                   ARTICLE 10
                                 INDEMNIFICATION

         10.1  Indemnification  of Buyer.  Subject to Section  10.1(d),  Sellers
agree, jointly and severally, to defend,  indemnify and hold harmless Buyer, the
Company,  and their  respective  successors and assigns  (individually  a "Buyer
Indemnitee," and collectively the "Buyer  Indemnitees")  from,  against,  and in
respect of the following:

                  (a) any and all losses,  damages,  deficiencies or liabilities
caused by,  resulting or arising from, or otherwise  relating to: (i) any breach
of the  representations  and  warranties of Sellers or the Company  contained in
this Agreement or in any instrument, certificate or affidavit delivered by or on
behalf  of  Sellers  or the  Company  at the  Closing  in  accordance  with this
Agreement;  or (ii) any  failure by either  Sellers or the Company to perform or
otherwise  fulfill  or  comply  with  (X) if  this  Agreement  shall  have  been
terminated,  Section  6.3,  Section  9.1 or  any  other  covenant,  undertaking,
agreement or obligation  to be performed,  fulfilled or complied with by Sellers
or the Company prior to or in connection  with the Closing or (Y) if the Closing
shall occur,  any  covenant,  undertaking  or other  agreement or  obligation of
Sellers under this  Agreement to be performed,  fulfilled or otherwise  complied
with by Sellers after the Closing; and

                  (b)  any  and  all  actions,   suits,   proceedings,   claims,
liabilities,  demands,  assessments,  judgments,  interest, penalties, costs and
expenses,   including   reasonable   attorneys'  fees,  incurred  by  the  Buyer
Indemnitees in connection with investigating, defending, settling or prosecuting
any action, suit,  proceeding or claim against Buyer hereunder,  incident to any
of the items  referred to in Section  10.1(a);  provided,  that,  if any action,
suit,  proceeding,  claim,  liability,  demand or  assessment  shall be asserted
against any Buyer Indemnitee in respect of which such Buyer Indemnitee  proposes



                                       41
<PAGE>

to demand  indemnification,  such Buyer  Indemnitee shall notify Sellers thereof
within a  reasonable  period of time after  assertion  thereof,  and such notice
shall  include  copies of all suit,  service and claim  documents  and all other
relevant  documents in the possession of the Buyer Indemnitee and an explanation
of the Buyer Indemnitee's  contentions and defenses with as much specificity and
particularity as the circumstances permit;  provided,  further, that the failure
of the Buyer Indemnitee to give such notice or provide such documentation  shall
not relieve  Sellers of their  obligations  under this Section  10.1, if Sellers
shall not have been prejudiced  thereby (and then solely to the extent thereof).
Subject  to rights of or duties to any  insurer  or other  third  Person  having
liability  therefor,  Sellers  shall  have the right  within ten (10) days after
receipt  of such  notice  to assume  in  writing  the  control  of the  defense,
compromise or settlement of any such action, suit, proceeding, claim, liability,
demand, or assessment,  including, at their own expense,  employment of counsel;
provided further,  however, that, if Sellers shall have exercised their right to
assume such control, the Buyer Indemnitee may, in its sole discretion and at its
sole expense, employ counsel to represent it (in addition to counsel employed by
Sellers) in any such matter, and in such event counsel selected by Sellers shall
be required  to  cooperate  with such  counsel of the Buyer  Indemnitee  in such
defense,  compromise  or  settlement  for the purpose of  informing  and sharing
information with such Buyer Indemnitee. So long as Sellers are defending in good
faith any such claim or demand  asserted  by a third  Person  against  the Buyer
Indemnitee,  the Buyer  Indemnitee  shall not settle or compromise such claim or
demand.  If Sellers have  assumed the defense of any such claim or demand,  then
they shall not  consent to the entry of  judgment  or enter into any  settlement
without the prior written consent of the Buyer  Indemnitee,  which consent shall
not be  unreasonably  withheld.  The Buyer  Indemnitee  shall make  available to
Sellers  or  their  agents  all  records  and  other   materials  in  the  Buyer
Indemnitee's  possession reasonably required by them for their use in contesting
any third party claim or demand.

                  (c) Upon notice to Sellers specifying in reasonable detail the
basis for such set-off, any indemnification obligation of Sellers hereunder may,
at the option of Buyer, be set-off and applied  against the outstanding  balance
of the Promissory Notes due to the affected Sellers, in the amount of such claim
for  indemnification,  as  if  such  indemnification  claim  had  resulted  in a
reduction of the Purchase  Consideration  and therefore of the principal balance
of the  Promissory  Notes as of the Closing Date.  The exercise of such right of
set-off by Buyer in good  faith,  whether  or not  ultimately  determined  to be
justified,  will not constitute an event of default under the Promissory  Notes.
Neither the  exercise of nor the failure to exercise  such right of set-off will
constitute  an  election  of  remedies  or  limit  Buyer  in any  manner  in the
enforcement of any other remedies that may be available to it.

                  (d) Breaches of  representations  and warranties  contained in
Sections  4.4,  4.5(b) and 4.6 (as related  solely to the Sellers and not to the
Company)  shall be subject  only to several  indemnification  by the  respective
Sellers who shall have made and breached such representations and warranties.

         10.2 Indemnification of Sellers. Buyer agrees to defend,  indemnify and
hold harmless Sellers and their respective  successors and assigns (individually
a "Seller Indemnitee," and collectively the "Seller  Indemnitees") from, against
and in respect of the following:



                                       42
<PAGE>

                  (a) any and all losses,  damages,  deficiencies or liabilities
caused by, resulting or arising from or otherwise  relating to (i) any breach of
the  representations  and warranties of Buyer  contained in this Agreement or in
any instrument,  certificate or affidavit  delivered by or on behalf of Buyer at
the  Closing in  accordance  with this  Agreement;  (ii) any failure by Buyer to
perform or otherwise  fulfill or comply with: (X) if this  Agreement  shall have
been terminated,  Section 6.3 or any other covenant,  undertaking,  agreement or
obligation to be  performed,  fulfilled or complied with by Buyer prior to or in
connection  with the Closing;  or (Y) if the Closing shall occur,  any covenant,
undertaking  or  other  agreement  or  obligation  hereunder  to  be  performed,
fulfilled  or  otherwise  complied  with by Buyer after the Closing or (iii) any
obligation  or liability  with respect to the  operation of the Company by Buyer
after the Closing;

                  (b)  any  and  all  actions,   suits,   proceedings,   claims,
liabilities,  demands,  assessments,  judgments,  interest, penalties, costs and
expenses,   including  reasonable   attorneys'  fees,  incurred  by  the  Seller
Indemnities in connection with investigating, defending, settling or prosecuting
any action, suit,  proceeding or claim against any Seller Indemnitee  hereunder,
incident to any of the items referred to in Section 10.2(a);  provided, that, if
any action, suit, proceeding,  claim,  liability,  demand or assessment shall be
asserted  against  any  Seller  Indemnitee  in  respect  of  which  such  Seller
Indemnitee  proposes to demand  indemnification,  such Seller  Indemnitee  shall
notify Buyer thereof within a reasonable period of time after assertion thereof,
and such notice shall include copies of all suit,  service and claim  documents,
all other relevant  documents in the possession of the Seller  Indemnitee and an
explanation  of the Seller  Indemnitee's  contentions  and defenses with as much
specificity and particularity as the circumstances  permit;  provided,  further,
that the failure of the Seller  Indemnitee  to give such notice or provide  such
documentation shall not relieve Buyer of its obligations under this Section 10.2
if Buyer shall not have been  prejudiced  thereby (and then solely to the extent
thereof).  Subject to rights of or duties to any insurer or other  third  Person
having liability therefor, Buyer shall have the right within ten (10) days after
receipt of such  notice to assume  the  control of the  defense,  compromise  or
settlement of any such action, suit, proceeding,  claim,  liability,  demand, or
assessment,  including,  at its own expense,  employment  of counsel;  provided,
that, if Buyer shall have exercised its right to assume such control, the Seller
Indemnitee may, in its sole  discretion and at its sole expense,  employ counsel
to represent  it (in addition to counsel  employed by Buyer) in any such matter,
and in such event counsel  selected by Buyer shall be required to cooperate with
such counsel of the Seller Indemnitee in such defense,  compromise or settlement
for  the  purpose  of  informing  and  sharing   information  with  such  Seller
Indemnitee.  So long as Buyer is  defending  in good  faith  any such  claims or
demands  asserted by a third Person  against the Seller  Indemnitee,  the Seller
Indemnitee  shall not settle or  compromise  such claim or demand.  If Buyer has
assumed  the  defense of any such claim or demand,  then it shall not consent to



                                       43
<PAGE>

the entry of judgment  or enter into any  settlement  without the prior  written
consent  of the  Seller  Indemnitee  (which  consent  shall not be  unreasonably
withheld). The Seller Indemnitee shall make available to Buyer or its agents all
records and other  materials in the Seller  Indemnitee's  possession  reasonably
required by it for its use in contesting any third party claim or demand.

         10.3 Remedies; Specific Performance.

                  (a) The  indemnification  provisions of this Article 10 are in
addition to, and not in lieu or in  derogation  of, any other rights or remedies
any  party may have at law or in  equity  for a breach  of any  representations,
warranties or covenants contained in this Agreement.

                  (b) Each of the  parties to this  Agreement  acknowledges  and
agrees  that  Buyer  would be damaged  irreparably  if any of the  covenants  of
Sellers under this Agreement are not performed in accordance with their specific
terms or otherwise are breached.  Accordingly, each of the parties hereto agrees
that Buyer shall be entitled to an injunction or injunctions to prevent breaches
of the  covenants  set  forth  in  this  Agreement  by  Sellers  and to  enforce
specifically this Agreement and the terms and provisions hereof in any competent
court having  jurisdiction over the parties,  in addition to any other remedy to
which it may be entitled, at law or in equity.

                  (c) No Buyer Indemnitee or Seller Indemnitee shall be entitled
to seek indemnification  under this Article 10 with respect to any loss, damage,
deficiency  or  liability   ("Claim"),   unless  such  Indemnitee  notifies  the
indemnifying  party of such Claim in writing  within 24 months after the Closing
Date.

                  (d)  If the  total  amount  of  all  Claims  which  the  Buyer
Indemnitees  collectively  have the right to assert against Sellers  (determined
without regard to any materiality  qualification contained in any representation
or warranty  giving rise to such Claim) under this  Article 10 ("Buyer  Claims")
does not exceed an amount  equal to one  percent of the  Purchase  Consideration
(the "Basket"), then Sellers shall have no obligation under this Article 10 with
respect to any such Claim.  If the total amount of all Buyer Claims  exceeds the
Basket, then Sellers'  obligations under this Article 10 shall be limited to the
amount by which the aggregate amount of all Buyer Claims exceeds the Basket.

                  (e) Except as otherwise  provided in this Section 10.3(e),  in
the absence of fraud or willful  misconduct  on the part of any of Sellers,  the
total  amount of Sellers'  obligations  with  respect to Buyer  Claims  shall be
limited to an  aggregate  maximum  amount  equal to 10  percent of the  Purchase
Consideration.  The total  amount of any  Seller's  obligations  with respect to
Buyer Claims shall be limited to an aggregate maximum amount equal to 10 percent
of the Purchase  Consideration received by such Seller. The liability of Sellers
with  respect to Buyer Claims  shall be pro rata among  Sellers,  based on their
respective  shares of the Purchase  Consideration.  Notwithstanding  anything in
this Section 10.3(e) or elsewhere in this Agreement to the contrary, in no event
shall Sellers' obligations be limited in any manner with respect to Buyer Claims
arising out of or attributable to a breach of Section 4.4.

                  (f)  Notwithstanding  any  provision of this  Agreement to the
contrary,  Buyer's  and  Sellers'  sole  remedy  for  any  breach  of any of the



                                       44
<PAGE>

provisions  of  Article 4  (excluding,  however,  Section  4.4) or 5 shall be to
exercise  their  rights  under this  Article  10,  which shall be subject to the
procedures and limitations set forth in this Article 10, excluding however,  any
cause of action for specific performance.

         10.4 Survival.  Notwithstanding  any other provision to the contrary in
this Agreement,  this Article 10 shall survive termination of this Agreement for
the period set forth in Section 10.3(c).


                                    ARTICLE 11
                                   TAX MATTERS

         The following  provisions shall govern the allocation of responsibility
as between  Buyer,  on the one hand,  and Sellers and the Company,  on the other
hand, for certain Tax matters following the Closing Date:

         11.1 Tax  Periods  Ending on or Before the  Closing  Date.  The Company
shall  prepare  or cause to be  prepared  and file or cause to be filed  all Tax
Returns,  reports and other  informational  statements and documentation for the
Company  for all  periods  ending  on or prior to the  Closing  Date,  which are
required to be filed on, before or after the Closing Date.  Sellers shall permit
Buyer (with  respect to Tax  Returns  filed after the date hereof and before the
Closing Date) or Buyer and the Company shall permit Sellers (with respect to Tax
Returns  filed  after the  Closing  Date) to review and comment on each such Tax
Return  described in the preceding  sentence prior to filing.  The Company shall
pay or cause to be paid any Taxes owed by the Company for all periods  ending on
or before the Closing  Date,  whether or not such Taxes are shown as owed on the
appropriate Tax Returns.

         11.2 Tax Periods  Beginning  Before and Ending After the Closing  Date.
Buyer shall  prepare or cause to be  prepared  and file or cause to be filed any
Tax Returns of the Company for Tax periods  which begin  before the Closing Date
and end after the Closing Date. Buyer shall permit Sellers to review and comment
on each such Tax Return.

         11.3 Cooperation on Tax Matters.

                  (a) Buyer, the Company and Sellers shall reasonably cooperate,
as and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this Article 11 and any audit,  litigation
or other  proceeding  with respect to Taxes for which the other party shall have



                                       45
<PAGE>

liability  therefor under this  Agreement.  Such  cooperation  shall include the
retention  and (upon the other  party's  request)  the  provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees  reasonably  available on a mutually  convenient
basis to provide additional information and explanation of any material provided
hereunder.  The Company  shall  retain all books and records with respect to Tax
matters pertinent to the Company relating to any Tax period beginning before the
Closing Date until the  expiration  of the statute of  limitations  (and, to the
extent notified by Buyer or Sellers,  any extensions  thereof) of the respective
Tax periods,  and to abide by all record retention  agreements entered into with
any taxing authority.

                  (b)  Buyer,  the  Company  and  Sellers  further  agree,  upon
request, to use their commercially  reasonable efforts to obtain any certificate
or other  document  from any  Governmental  Entity or any other Person as may be
necessary  to  mitigate,  reduce  or  eliminate  any Tax that  could be  imposed
(including with respect to the transactions contemplated hereby).

                  (c)  Buyer,  the  Company  and  Sellers  further  agree,  upon
request,  to provide the other party with all information  that either party may
be required  to report  pursuant  to Section  6043 of the Code and all  Treasury
Department Regulations promulgated thereunder.

         11.4 Tax  Sharing  Agreements.  Sellers  shall  cause  the  Company  to
terminate  as of the Closing all tax sharing  agreements  or similar  agreements
with  respect  to or  involving  the  Company,  and as of the  Closing  Date and
thereafter,  the Company shall not be bound thereby or have any liability  under
any such agreement or arrangement.

         11.5 Certain  Taxes.  All transfer,  documentary,  sales,  use,  stamp,
registration  and other such Taxes  incurred in connection  with this  Agreement
shall be paid by Sellers when due, and Sellers will, at their own expense,  file
all  necessary  Tax returns  and other  documentation  with  respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and fees,
and, if required by applicable law, Buyer will join in the execution of any such
Tax Returns and other documentation.

         11.6     Section 338(h)(10) Election.

         (a)  Following  the  Closing,  and if  requested  by  Buyer in its sole
discretion,  Sellers  will  timely  file with Buyer an  election  under  Section
338(h)(10) of the Code,  electing to treat the acquisition of the Company Shares
as an asset  purchase.  Sellers  agree  to  execute  and  deliver  to Buyer  any
documents required to be executed by Sellers in connection with such election.

         (b) In accordance with the provisions of Section 2.2(d) Buyer shall pay
to Sellers an amount (the "338  Adjustment")  which shall be equal to the sum of
(i) the  difference  between the total federal and state income taxes payable by
Sellers and the  Company as a result of the sale of the  Company  Shares and the
amount of such federal and state income taxes that Sellers and the Company would
have paid but for the Section 338(h)(10)  election made pursuant to the terms of
this Agreement, and (ii) a gross up amount equal to the federal and state income
taxes payable by Sellers as a result of their receipt of the 338 Adjustment. The
amount of federal  and state  taxes that are  actually  paid and that would have
been paid shall be calculated using the highest applicable marginal rates.

         (c) Sellers  shall,  at their  expense,  prepare and file the final "S"
corporation, short period Tax Return for the Company for the period from January
1, 2004,  to the Closing Date (the "Final  Return").  Sellers  shall  provide to



                                       46
<PAGE>

Buyer a draft of the Final  Return along with the  Sellers'  calculation  of the
amount of the 338 Adjustment and supporting  document for such calculations,  no
later than 120 days following Closing.

         (d) The total Purchase  Consideration  paid for the Company Shares,  as
described  in Section  2.1,  shall for  purposes of the  338(h)(10)  election be
allocated among the assets of the Company including  contracts in progress based
on a fair market value  balance sheet of the Company as of the Closing Date with
any excess purchase price being allocated to the Company's  goodwill.  Within 90
days after the Closing Date,  Buyer will provide Sellers with a statement of the
allocation  of the  Purchase  Consideration.  Sellers and Buyer will  jointly be
responsible for preparing and filing all documents and materials,  including the
statement  pursuant to Section  1060 of the Code (the  "Allocation  Statement"),
necessary in  connection  with the making of the  338(h)(10)  election,  and any
similar  elections  under  state or local law.  Sellers  and Buyer will file all
reports and returns filed with any Governmental  Entity (including the IRS) in a
manner  consistent  with the  338(h)(10)  election,  the valuation of the assets
determined as provided above in the Allocation Statement.

         (e) If the actual federal,  state and local taxes payable by Sellers as
a result of the sale of the  Company  Shares  are  ultimately  determined  to be
greater  than the  amount  of the 338  Adjustment  then  Buyer  shall pay to the
Sellers the sum of (i) the amount of such difference,  and (ii) the gross amount
equal to all federal,  state,  and local taxes payable by Sellers as a result of
their  receipt of the amount as  calculated  under  clauses (i) and (ii) of this
subparagraph  (e). If the Sellers' actual taxes are ultimately  determined to be
less than the amount of the 338 Adjustment,  then Sellers shall pay to Buyer the
excess of the 338 Adjustment  previously paid to Sellers over the amount the 338
Adjustment would have been if the Sellers' taxes had been as finally determined.
Sellers agree to furnish Buyer with a calculation  of the revised 338 Adjustment
amount and supporting evidence of any final determination of the Sellers' actual
taxes within thirty (30) days after same has occurred, and payment shall be made
under this paragraph  within thirty (30) days after the information is furnished
to Buyer.


                                   ARTICLE 12
                               GENERAL PROVISIONS

         12.1  Survival  of   Representations   and   Warranties.   All  of  the
representations  and  warranties of the parties  hereto (other than the Company)
contained in this Agreement shall survive the Closing and shall continue in full
force and effect for the period set forth in Section  10.3(c).  Any claims  with
respect to the  foregoing  sentence  under Section 10.1 and Section 10.2 must be
asserted  in writing  with  reasonable  particularity  by the party  making such
claims within the applicable survival period. The representations and warranties
of the Company shall not survive the Closing.

         12.2 Survival of Covenants and Agreements. The respective covenants and
agreements of the parties  contained in this Agreement shall survive the Closing



                                       47
<PAGE>

without  limitation  as to time.  Any  claims  as to a breach of a  covenant  or
agreement  under  Article  10 or  Article 11 must be  asserted  in writing  with
reasonable particularity by the party making such claim.

         12.3  Interpretation.  When a reference is made in this  Agreement to a
Section,  Exhibit or Schedule,  such  reference  shall be to a Section of, or an
Exhibit or Schedule to, this Agreement  unless  otherwise  indicated.  The words
"hereof',  "herein" and "hereunder" and similar terms refer to this Agreement as
a whole  and not to any  particular  provision  of this  Agreement,  unless  the
context otherwise requires. The table of contents and headings contained in this
Agreement  are for  reference  purposes only and shall not affect in any way the
meaning or  interpretation  of this  Agreement.  Whenever  the words  "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".

         12.4  Counterparts.  This  Agreement  may be  executed  in one or  more
counterparts,  all of which shall be considered  one and the same  agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.

         12.5   Entire   Agreement;    No   Third-Party    Beneficiaries.    The
Confidentiality  Agreement  and  this  Agreement  (including  the  Exhibits  and
Schedules  hereto and the  documents  and  instruments  referred  to herein) (a)
constitute  the  entire   agreement  and  supersede  all  prior  agreements  and
understandings,  both  written and oral,  among the parties  with respect to the
subject  matter  hereof and (b) are not intended to confer upon any Person other
than the parties any rights or remedies hereunder.

         12.6 Governing Law. This Agreement  shall be governed by, and construed
in accordance with, the laws of the State of Texas,  regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.

         12.7  Assignment.  Neither  this  Agreement  nor  any  of  the  rights,
interests  or  obligations  hereunder  shall be  assigned  by any of the parties
without the prior written  consent of the other  parties,  except that Buyer may
assign its rights to purchase the Company Shares, but not any of its obligations
under  this  Agreement,  to one  of its  Affiliates.  Subject  to the  preceding
sentence,  this Agreement will be binding upon,  inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.

         12.8  Enforcement of the Agreement.  The parties agree that irreparable
damage would occur if any of the provisions of this Agreement were not performed
in  accordance  with their  specific  terms or were  otherwise  breached.  It is
accordingly  agreed that the  parties  shall be  entitled  to an  injunction  or
injunctions to prevent  breaches of this  Agreement and to enforce  specifically
the  terms  and  provisions  hereof in any  court in the  United  States  having
competent jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.

         12.9 Performance by Company.  Sellers hereby agree to cause the Company
to comply with its obligations under this Agreement.



                                       48
<PAGE>

         12.10 Severability.  If any one or more of the provisions  contained in
this Agreement should be held invalid,  illegal or unenforceable in any respect,
the validity,  legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired  thereby.  The parties shall
endeavor  in  good-faith  negotiations  to  replace  the  invalid,   illegal  or
unenforceable  provisions  with valid  provisions,  the economic effect of which
comes as close as  possible  to that of the  invalid,  illegal or  unenforceable
provisions.

         12.11 Joint Participation in Drafting. Each party to this Agreement has
participated  in the  negotiation  and drafting of this  Agreement and the other
ancillary  documents.  As such,  the language  used herein and therein  shall be
deemed to be the language  chosen by the parties  hereto to express their mutual
intent, and no rule of strict  construction will be applied against any party to
this Agreement.

         12.12  Notices.  All  notices,  requests,  demands,  claims  and  other
communications  required or permitted to be given  hereunder shall be in writing
and shall be given by (a)  personal  delivery  (effective  upon  delivery),  (b)
facsimile  (effective  on the  next  day  after  transmission),  (c)  recognized
overnight  delivery  service  (effective  on the next day after  delivery to the
service),  or (d) registered or certified  mail,  return  receipt  requested and
postage prepaid (effective on the third day after being so mailed), in each case
addressed to the intended recipient as set forth below:

         If to Buyer:

                  Natural Gas Services Group, Inc.
                  2911 S. County Road 1260
                  Midland, Texas 79706
                  Attention:  Wallace C. Sparkman
                  Facsimile:  (432) 563-5567
                  With a copy (which shall not constitute notice) to:

                  Lynch, Chappell & Alsup
                  300 N. Marienfeld, Suite 700
                  Midland, Texas 79701
                  Attention:   Thomas W. Ortloff
                  Facsimile:   (432) 683-8346






                                       49
<PAGE>

         If to Sellers:

                  Paul D. Hensley
                  3005 N. 15th Street
                  Broken Arrow, Oklahoma 74012

                  With a copy (which shall not constitute notice) to:

                  John L. Shafer III
                  5918 E. 31st Street
                  Tulsa, Oklahoma 74135
                  Facsimile:   (918) 627-5782


                  Tony Vohjesus
                  5863 E. Hunter Lane
                  Claremore, Oklahoma 74019

                  With a copy (which shall not constitute notice) to:

                  John L. Shafer III
                  5918 E. 31st Street
                  Tulsa, Oklahoma 74135
                  Facsimile:   (918) 627-5782


                  Jim Hazlett
                  10601 E. County Road, Apt. #104
                  Midland, Texas 79706

                  With a copy (which shall not constitute notice) to:

                  John L. Shafer III
                  5918 E. 31st Street
                  Tulsa, Oklahoma 74135
                  Facsimile:   (918) 627-5782


Any party may change his or its address for receiving  notices by giving written
notice of such  change to the other  parties  in  accordance  with this  Section
12.12.






                                       50
<PAGE>

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


                                                NATURAL GAS SERVICES GROUP, INC.


                                                By:  /s/ Wallace C. Sparkman
                                                   -----------------------------
Wallace C. Sparkman, President




                                                SCREW COMPRESSION SYSTEMS, INC.


                                                By:  /s/ Paul D. Hensley
                                                   -----------------------------
                                                   Paul D. Hensley, President


                                                     /s/ Paul D. Hensley
                                                --------------------------------
                                                Paul D. Hensley, individually


                                                     /s/ Tony Vohjesus
                                                --------------------------------
                                                     Tony Vohjesus, individually


                                                     /s/ Jim Hazlett
                                                --------------------------------
                                                     Jim Hazlett, individually






                                       51
<PAGE>

                                  Schedule 4.2


                                  Subsidiaries



None,  except  with  respect  to the  interest  acquired  by the  Company in the
SCS-Jalex  Joint  Venture  (the  "Joint  Venture").  The  Company  now  owns all
interests in the Joint Venture. However, the assets and liabilities of the Joint
Venture are in the process of being  consolidated with the financial  statements
of the Company.
















<PAGE>

                                  Schedule 4.3


                                 Company Shares
                                 --------------



Shares of capital stock of the Company held by Sellers:

1.   Paul D. Hensley. . . . . . . . . . . . . .    70,000 shares

2.   Jim Hazlett. . . . . . . . . . . . . . . .    10,000 shares

3.   Tony Vohjesus. . . . . . . . . . . . . . .    20,000 shares
                                                  -------


Total issued and outstanding shares               100,000



<PAGE>

                                  Schedule 4.4


                             Title to Company Shares
                             -----------------------



Title to shares of capital stock of the Company is held by Sellers, as follows:

1.   Paul D. Hensley. . . . . . . . . . . . . .        70,000 shares

2.   Jim Hazlett. . . . . . . . . . . . . . . . . .    10,000 shares

3.   Tony Vohjesus. . . . . . . . . . . . . . .        20,000 shares
                                                      -------


Total issued and outstanding shares                   100,000











<PAGE>

                                  Schedule 4.6


                             Conflicting Agreements
                             ----------------------



None,  except  for  such  matters  as may  be  contained  in  the  miscellaneous
agreements referred to in the Schedules to this Stock Purchase Agreement.
















<PAGE>

                                  Schedule 4.7


                                  Title Defects
                                  -------------



None,  except for such matters as are shown on Fidelity National Title Insurance
Company,  Owner's Policy No. 1312-242720,  effective March 8, 2002, naming Screw
Compression Systems, Inc. as the Insured.




























<PAGE>

                                  Schedule 4.8


                             Condition of Properties
                             -----------------------



None.















<PAGE>

                                  Schedule 4.9

                               Material Contracts
                               ------------------



1. Promissory Note, dated December 31, 2003, in the original principal amount of
$61,379.00, made by Screw Compression Systems, Inc. payable to the order of Paul
D. Hensley.


2. Promissory  Note,  dated June 30, 2004, in the original  principal  amount of
$158,349.00,  made by Screw  Compression  Systems,  Inc. payable to the order of
Paul D. Hensley.


3. Promissory Note, dated December 31, 2003, in the original principal amount of
$29,360.00, made by Screw Compression Systems, Inc. payable to the order of Tony
Vohjesus.


4. Promissory  Note,  dated June 30, 2004, in the original  principal  amount of
$27,757.00, made by Screw Compression Systems, Inc. payable to the order of Tony
Vohjesus.


5.  Promissory  Note,  dated June 9, 2004, in the original  principal  amount of
$27,632.78,  made by Tony  Vohjesus  payable  to the order of Screw  Compression
Systems, Inc.


6. Promissory Note, dated September 7, 2000, in the original principal amount of
$1,000,000,  made by Screw  Compression  Systems,  Inc.  payable to the order of
Security Bank, Tulsa, Oklahoma and maturing on September 1, 2004, together with:

         (1)      Loan Agreement dated September 7, 2000

         (2)      Guaranty  Agreement  dated  September  7, 2000 from  Marget E.
                  Hensley

         (3)      Acknowledgment of Co-Guarantor from Marget E. Hensley

         (4)      Guaranty  Agreement  dated  September  7,  2000  from  Paul D.
                  Hensley

         (5)      Security  Agreement  dated  September  7, 2000  between  Screw
                  Compression   Systems,   Inc.  and  Security  Bank   (covering
                  accounts, inventory, equipment, fixtures, general intangibles,
                  farm products, proceeds)

         (6)      Security  Agreement  dated  September  7, 2000  between  Screw
                  Compression Systems, Inc. and Security Bank (covering $200,000
                  certificate of deposit)



<PAGE>

         (7)      UCC-1  financing  statement  filed  with the  County  Clerk of
                  Rogers County, Oklahoma naming Screw Compression Systems, Inc.
                  as  debtor  and  Security  Bank  as  secured  party  (covering
                  accounts, inventory, equipment)

         (8)      UCC-1  financing  statement  filed  with the  County  Clerk of
                  __________ County,  Oklahoma naming Screw Compression Systems,
                  Inc. as debtor and Security  Bank as secured  party  (covering
                  accounts, inventory, equipment)

         (9)      UCC-1  financing  statement  filed  with the  County  Clerk of
                  __________ County,  Oklahoma naming Screw Compression Systems,
                  Inc. as debtor and Security  Bank as secured  party  (covering
                  accounts, inventory, equipment)

         (10)     Agreement to Provide Insurance

         (11)     Commercial   Extension   Agreement  dated  September  2,  2003
                  extending  maturity  date of note  from  September  1, 2003 to
                  September 1, 2004, together with:

         (12)     Corporate  Borrowing  Resolutions  for meeting of September 7,
                  2000

         (13)     Corporate Extension Agreement dated August 31, 2004, extending
                  maturity to September 1, 2005 (Note No. 71887).


7. Real Estate Mortgage with Power of Sale dated September 28, 2001,  securing a
note  in the  original  principal  amount  of  $656,000.00,  executed  by  Screw
Compression  Systems,  Inc.,  a Texas  Corporation,  as  Mortgagor,  in favor of
Security Bank,  Mortgagee,  as shown of record in the Office of the County Clerk
of Rogers County,  Oklahoma,  filed on October 4, 2001 at 2:04 o'clock p.m., and
recorded  in Book 1322 at Page 601;  as  modified  by  Modification  of Mortgage
executed by Screw Compression  Systems,  Inc., a Texas Corporation,  in favor of
Security   Bank,   securing  a  note  in  the  original   principal   amount  of
$1,520,000.00,  dated  February 27, 2002,  filed March 8, 2002,  and recorded in
Book 1361 at page 43.

8. Agreement for  Conditional  Sale of Equipment,  dated July 20, 2004,  between
Screw Compression Systems, Inc. and Valerus Compression  Services,  LP, together
with:

         a)       Promissory   Note,  dated  July  20,  2004,  in  the  original
                  principal amount of $118,225.00,  made by Valerus  Compression
                  Services, LP, to the order of Screw Compression Systems, Inc.,
                  together  with  related   Security   Agreement,   UCC-1,   and
                  Collateral Assignment;
         b)       Promissory  Note,  dated  August  1,  2004,  in  the  original
                  principal amount of $118,225.00,  made by Valerus  Compression
                  Services, LP, to the order of Screw Compression Systems, Inc.,
                  together  with  related   Security   Agreement,   UCC-1,   and
                  Collateral Assignment;
         c)       Promissory  Note,  dated  August  1,  2004,  in  the  original
                  principal amount of $118,225.00,  made by Valerus  Compression
                  Services, LP, to the order of Screw Compression Systems, Inc.;
                  and,


<PAGE>

         d)       Promissory  Note,   dated  August1,   2004,  in  the  original
                  principal amount of $118,225.00,  made by Valerus  Compression
                  Services, LP, to the order of Screw Compression Systems, Inc.;

9. Lease Agreement  between The City of Tulsa-Rogers  County Port Authority,  as
Lessor,  and King Finishes & Metal Fabricating,  Inc., as Lessee,  dated June 1,
1999, filed June 21, 1999,  recorded in Book 1177 at Page 0561, in the Office of
the Rogers  County  Clerk;  assigned  by said  Lessee  (with the consent of said
Lessor) on September 28, 2001, in favor of Screw Compression  Systems,  Inc., as
Assignee, now the Lessee, covering the leased premises located in Rogers County,
Oklahoma, at 5725 Bird Creek Avenue, Catoosa, Oklahoma.

10. Master Services Agreement between Screw Compression Systems,  Inc. and Ocean
Energy, Inc.

11.  Defined  Contribution  Prototype Plan and Trust -  Non-standardized  401(k)
Profit Sharing Plan

12. Purchase Orders with Warren CAT previously disclosed to Buyer.

13.  Potential  acquisition  of  approximate  thirty  percent (30%)  interest in
equipment company being formed,  as previously  disclosed to and consented to by
Buyer.

14. Any additional  such matters  referred to in any other  Schedule  annexed to
this Stock Purchase Agreement.













<PAGE>

                                  Schedule 4.12

                                     Leases
                                     ------



1.       Lease Agreement between The City of Tulsa-Rogers County Port Authority,
         as Lessor,  and King  Finishes & Metal  Fabricating,  Inc.,  as Lessee,
         dated June 1, 1999, filed June 21, 1999,  recorded in Book 1177 at Page
         0561, in the Office of the Rogers County Clerk; assigned by said Lessee
         (with the consent of said  Lessor) on September  28, 2001,  in favor of
         Screw Compression Systems, Inc., as Assignee, now the Lessee,  covering
         the leased premises  located in Rogers County,  Oklahoma,  at 5725 Bird
         Creek Avenue, Catoosa, Oklahoma.

2.       Expired   Lease   (primary   term   expired  on   12/21/2003),   now  a
         month-to-month tenancy,  between the Fisk Trust, as Landlord, and Screw
         Compression  Systems,  Inc., as Tenant,  covering  office and warehouse
         space, at 900 W. Pinion St., Farmington, New Mexico.

3.       Month-to-month  tenancy,  between VIP Unlimited, as Landlord, and Screw
         Compression Systems, Inc., as Tenant, covering sales office, at 1004 N.
         Big Spring, Suite 104, Midland, Texas.

4.       Month-to-month  tenancy,  between Wayne Vanaman, as Landlord, and Screw
         Compression Systems, Inc., as Tenant,  covering residential condominium
         at 8524 N. 125 East Ave., Owasso, Oklahoma.

5.       Sub-Lease Agreement between Industrial Leasing Company, a Missouri LLC,
         as Landlord, and Screw Compression Systems, Inc., as Tenant, dated June
         4, 2004, covering the leased premises (office and warehouse) located in
         Rogers County, Oklahoma, at 5725 Bird Creek Avenue, Catoosa, Oklahoma.






<PAGE>

                                  Schedule 4.14

                            Certain Changes or Events
                            -------------------------



1.       Purchase Orders with Warren CAT previously disclosed to Buyer.

2.       Potential  acquisition of approximate  thirty percent (30%) interest in
         equipment  company  being  formed,  as  previously   disclosed  to  and
         consented to by Buyer.

3.       Liquidation of CD No. 6494 and  distribution of proceeds of $450,000.00
         to Sellers,  regarding  advance to pay accrued  income tax liability of
         Sellers.


















<PAGE>

                                  Schedule 4.15


                           Liabilities and Obligations
                           ---------------------------




1.       Accrued but  undetermined  liability for gross  receipts - compensatory
         taxes (sales/use taxes) owed to the State of New Mexico.

2.       Accrued  liability  for balance of insurance  premiums in the amount of
         $114,660.00,  together  with  finance  charges,  financed  with Premium
         Financing Specialists, Inc.

















<PAGE>

                                  Schedule 4.16

                                   Litigation
                                   ----------



         (1) Joe Cisneros,  Plaintiff vs. Screw Compression  Systems,  Inc., and
Paul D. Hensley,  Defendants;  238th Judicial  District Court of Midland County,
Texas, Cause No. CV43086.

         (2) Screw Compression Systems,  Inc., Plaintiff,  vs. Badger Production
Services,  L.L.C.,  a Wyoming  limited  liability  company;  and RTG Operating &
Measurement, Inc., a Wyoming corporation,  Defendants;  District Court of Rogers
County, State of Oklahoma, Case No. CJ 2002-272.

         (3)  Asserted/threatened  claim (unfiled) of ex-employee  terminated on
July 29, 2004.

















<PAGE>

                                  Schedule 4.17


                                      Taxes
                                      -----



Potential  liability for gross receipts - compensatory  tax owed to State of New
Mexico for which a liability has been carried on the Company Balance Sheet.
























<PAGE>
<TABLE>
<CAPTION>

                                  Schedule 4.19


                                    Insurance



         Type of Policy            Effective Dates/Coverage            Insurance Company
         --------------            ------------------------            -----------------
<C>                                <C>                                 <C>
1. Commercial Gen. Liability             9/30/04-05                  Arch Specialty Ins. Co.
                                    $1,000,000 per Occur.
                                    $2,000,000 Aggregate

2. Commercial Auto Policy                9/30/04-05                  Chubb Group of Ins. Cos.

3. Commercial Auto Policy                9/30/04-05                  Chubb Group of Ins. Cos.
    (Texas)
4. Workers Compensation                  9/30/04-05                  CompSource (Okla)
   Coverage                             10/10/04-05                  Texas Mutual (Texas)
                                        10/17/04-05                  NM Mutual (New Mexico)

5. Umbrella Liability                    9/30/04-05                  St. Paul Excess Ins. Co.
     Coverage                       $7,000,000 per Occur.            (increased from $4,000,000)
                                    $7,000,000 Aggregate

6. Property Coverage                     9/28/04-05                  Chubb Group of Ins. Cos.

     Building-5725 Bird Creek            $2,500,000
     Contents (Blanket)                  $4,000,000
       5725 Bird Creek, Catoosa, OK
       5757 Bird Creek, Catoosa, OK
       1004 N. Big Spring, Midland, TX
       900 W. Pinion, Farmington, NM

7. Fidelity Bond (401(k) Plan)           9/19/03-06                  Travelers Ins. Co.
</TABLE>







<PAGE>

                                  Schedule 4.21

                                  Bank Accounts
                                  -------------


                 Bank Accounts at Security Bank, Tulsa, Oklahoma


      Account Description                                         Account Number
--------------------------------                                  --------------

1.       CD                                                         6494
2.       CD                                                         6495
3.       Checking - Operating                                       1007289
4.       Checking - Money Market                                    1007351
5.       Loans - Building                                           800456092490
6.       Loans - Vehicle                                            800456091572
7.       Line of Credit                                             800456085624



Persons with check writing authority on behalf of the Company:

Paul Hensley and Tony Vohjesus













<PAGE>

                                  Schedule 4.22

                                    Employees
                                    ---------



As previously delivered to Buyer.












<PAGE>

                                  Schedule 4.23


                              Company Benefit Plans
                              ---------------------



1. Screw Compression Systems Premium Only Plan (Section 125 Plan)

2. Screw Compression Systems, Inc. 401(k) Plan (401(k) Plan)


























<PAGE>

                                  Schedule 4.24


                               Hazardous Materials
                               -------------------



None,  except with respect to Section  4.24(d),  there are above ground  storage
tanks and containers/drums  for storage of oil, used oil, paint  materials/paint
waste/paint  solvents,  and paint booth filters,  none of which require cleanup,
removal or other remedial action.


























<PAGE>

                                  Schedule 4.25


                           Related Party Transactions
                           --------------------------



None,  except for the Promissory Notes referred to in Paragraphs 1-5 of Schedule
4.9 of this Stock Purchase Agreement.


























<PAGE>

                                  Schedule 4.26


                                  Real Property
                                  -------------



For interests in real properties see Schedule 4.12 Leases.

In addition, the lease described in Schedule 4.12, to-wit:

Lease  Agreement  between The City of  Tulsa-Rogers  County Port  Authority,  as
Lessor,  and King Finishes & Metal Fabricating,  Inc., as Lessee,  dated June 1,
1999, filed June 21, 1999,  recorded in Book 1177 at Page 0561, in the Office of
the Rogers  County  Clerk;  assigned  by said  Lessee  (with the consent of said
Lessor) on September 28, 2001, in favor of Screw Compression  Systems,  Inc., as
Assignee, now the Lessee,

covers the leased  premises  located in Rogers  County,  Oklahoma,  at 5725 Bird
Creek Avenue,  Catoosa,  Oklahoma, more particularly described on Exhibit "1" to
this Schedule 4.26,

and such leasehold is encumbered by the following mortgage:

Real Estate  Mortgage with Power of Sale dated  September  28, 2001,  securing a
note  in the  original  principal  amount  of  $646,000.00,  executed  by  Screw
Compression  Systems,  Inc.,  a Texas  corporation,  as  Mortgagor,  in favor of
Security Bank,  Mortgagee,  as shown of record in the Office of the County Clerk
of Rogers County,  Oklahoma,  filed on October 4, 2001 at 2:04 o'clock p.m., and
recorded  in Book 1322 at Page 601;  as  modified  by  Modification  of Mortgage
executed by Screw Compression  Systems,  Inc., a Texas corporation,  in favor of
Security   Bank,   securing  a  note  in  the  original   principal   amount  of
$1,520,000.00,  dated  February 27, 2002,  filed March 8, 2002,  and recorded in
Book 1361 at page 43.











<PAGE>

                                   EXHIBIT "1"

                                To Schedule 4.26
                                ----------------



         A tract of land  that is part of the SW/4 of  Section 5 and the SE/4 of
Section 6, T-20-N, R-15E, Rogers County, Oklahoma, said tract of land being more
particularly described as follows, to-wit:

         Starting at the Southwest  corner of said Section 5; thence,  due North
for  1179.56';  thence due East for 126.34' to the 'Point of  Beginning' of said
tract of land;  thence N 36(0) 59' 43" W for  570.42';  thence N 53(0) 00' 17" E
for 481.39';  thence S 36(0) 59' 43" E for 570.42'; thence S 53(0) 00' 17" W for
481.39' to the 'Point of  Beginning'  of said tract of land.  Said tract of land
being 6.30 acres.

















<PAGE>

                                  Schedule 4.27


                                  Labor Matters
                                  -------------



None, except with respect to Section 4.27(h), see Schedule 4.16 Litigation, item
3.
























<PAGE>

                                  Schedule 4.29


                             Customers and Suppliers


CUSTOMERS

1.       XTO
2.       KCI
3.       Amoco
4.       Oxy
5.       Greene Energy
6.       Stephens Productions
7.       Midland Air
8.       NA/ Not Material
9.       NA/ Not Material
10.      NA/ Not Material

SUPPLIERS

1.       Warren Cat
2.       Air-X Hemphill
3.       F W Murphy
4.       Arrow Specialties
5.       Stiebel
6.       Frick
7.       Cooler Service Co.
8.       BLM
9.       Keltec
10.      Lewis Industries









<PAGE>

                                    EXHIBIT A


                         Certain Officers of the Company



Paul D. Hensley

Tony Vohjesus

Jim Hazlett

Robert Scott














<PAGE>

                                    EXHIBIT B


                            Certain Officers of Buyer




Wallace C. Sparkman

Earl Wait












<PAGE>

                                    EXHIBIT C

                                 PROMISSORY NOTE



$_____________                   Midland, Texas                 __________, 2004


         FOR VALUE  RECEIVED,  in the  manner,  on the dates and in the  amounts
herein  stipulated,  Natural Gas Services Group, Inc. (the "Maker"),  a Colorado
corporation with principal offices at 2911 S. County Road 1260,  Midland,  Texas
79706,  promises  to pay to the  order  of  ___________________,  an  individual
residing  at  _______________________________  ("Payee"),  at his address in the
City of Tulsa, Tulsa County,  Oklahoma,  in lawful money of the United States of
America, the sum of _____________________________  ($__________),  together with
interest on the outstanding principal balance hereof (calculated on the basis of
actual days elapsed in a year  consisting of 365 days) from date until  maturity
at a rate equal to four percent (4.00%) per annum.

         Principal  on this  Promissory  Note  (this  "Note")  shall  be due and
payable in three equal annual installments as follows:

                  (1) $____________ shall be due and payable on ____________ 15,
         2005; $__________ shall be due and payable on __________ 15, 2006; and

                  (2) one final  installment of all remaining  unpaid  principal
         shall be due and payable in full on _______ 15, 2007.

         Accrued  and unpaid  interest on the unpaid  principal  balance of this
Note shall be due and  payable on the same  dates as,  but in  addition  to, the
installments of principal.

         Subject to the prior written consent of Payee, Maker may, but shall not
be obligated to, make principal payments on this Note:

                  (1) in shares (only whole shares) of Buyer Common Stock valued
         at the Cash Equivalent Amount Per Share for the purposes of determining
         the number of shares of Buyer Common Stock to be issued; or

                  (2) by combination of cash and such shares.

         "Cash  Equivalent  Amount  Per  Share"  means the  average of the daily
closing  prices of Buyer  Common Stock on the  American  Stock  Exchange for the
twenty  consecutive  trading days commencing  thirty trading days before the due
date of any principal payment.


<PAGE>

         All past due  principal on this Note shall bear interest at the rate of
ten percent (10%) per annum until such sums have been paid;  provided,  however,
that in no event  shall  interest on this Note ever be charged or paid at a rate
greater than the maximum  nonusurious  rate  permitted by applicable  federal or
Texas law from time to time in effect,  whichever shall permit the higher lawful
rate (the "Highest Lawful Rate"). Interest shall be computed on the basis of the
actual number of days elapsed in a year composed of 365 or 366 days, as the case
may be. At all such times,  if any, as Chapter One ("Chapter  One") of the Texas
Credit Code shall  establish the Highest  Lawful Rate,  the Highest  Lawful Rate
shall be the "indicated  rate ceiling" (as defined in Chapter One ) from time to
time in effect.

         If, for any reason whatever, the interest paid or received on this note
shall  exceed the Highest  Lawful  Rate,  the owner or holder of this note shall
refund to the payor or, at the option of such owner or  holder,  credit  against
the  principal of this note such portion of said  interest as shall be necessary
to cause  the  interest  actually  paid and  retained  on this note to equal the
Highest Lawful Rate. All sums paid or agreed to be paid to the holder or holders
hereof for the use,  forbearance  or  detention  of the  indebtedness  evidenced
hereby shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of this note.

         Maker  may  prepay  this  Note in whole or in part at any time and from
time to time without the payment of any premium or fee. All  prepayments  hereon
shall be applied to the  installments  of  principal  in inverse  order of their
maturities.

         This  Note is one of the  Promissory  Notes  referred  to in the  Stock
Purchase Agreement,  dated of even date herewith, by and among Screw Compression
Systems, Inc., a Texas corporation, __________, __________, Payee and Maker (the
"Agreement"),  and is subject  to the terms and  conditions  of such  Agreement.
Reference  is made to the  Agreement  for a statement  of the rights,  remedies,
powers,  privileges,  benefits,  duties and obligations of Maker and Payee under
the Agreement.  Capitalized terms used herein which are defined in the Agreement
shall have such defined meanings unless otherwise defined herein.

         Payment  of this Note is secured by that  certain  Irrevocable  Standby
Letter   of   Credit,   dated   _________,   2004,   in  the  face   amount   of
_________________________  Dollars,  issued by Western  National Bank,  Midland,
Texas,  naming Payee as  beneficiary.  Reference is made to the Letter of Credit
for a  statement  of the nature and  extent of the  security  and the rights and
obligations of the Maker and Payee thereunder.

         Time is of the essence of this Note. If Maker fails to pay when due any
installment  of principal and such failure to pay continues for a period of five
days after Maker's receipt of written notice from Payee, the holder of this Note
may, at such holder's option, declare the entirety of the indebtedness evidenced
hereby  immediately due and payable and exercise any other  available  remedies,
and failure to exercise  any remedy  shall not  constitute a waiver at any other
time.



<PAGE>

         If this Note or any  installment  or part  hereof is not paid when due,
whether  at  maturity  or by  acceleration,  or if it  is  collected  through  a
bankruptcy, probate or other court proceeding, whether before or after maturity,
the undersigned  agrees to pay all costs and expenses of collection,  including,
but not limited to, reasonable attorneys' fees, incurred by the holder hereof.

         Maker waives notice (including,  but not limited to, notice of protest,
notice of dishonor,  notice of intent to accelerate and notice of acceleration),
demand,  presentment for payment,  protest,  diligence in collecting or bringing
suit and the filing of suit for the purpose of fixing liability.

         EXECUTED to be effective as of the date and year first written above.


                                               NATURAL GAS SERVICES GROUP, INC.


                                               By:______________________________
                                                  Wallace C. Sparkman, President














<PAGE>

                                    EXHIBIT D

                                     RELEASE


         This Release is being executed and delivered in accordance with Section
2.4(a)(ii) of the Stock Purchase Agreement, dated as of _____________, 2004 (the
"Agreement"),  among Screw Compression  Systems,  Inc., a Texas corporation (the
"Company"),  Paul D. Hensley,  Jim Hazlett and Tony Vohjesus (Paul Hensley,  Jim
Hazlett and Tony  Vohjesus,  each a "Seller"),  and Natural Gas Services  Group,
Inc., a Colorado corporation  ("Buyer").  Capitalized terms used in this Release
which are  defined in the  Agreement  shall have such  defined  meanings  unless
otherwise defined herein.

         Buyer has acquired,  or will acquire  simultaneously with the execution
of this Release,  all of the issued and outstanding capital stock of the Company
pursuant to the terms of the Agreement.

         Each  Seller  acknowledges  that the  execution  and  delivery  of this
Release is a condition to Buyer's obligation to purchase the outstanding capital
stock of the Company pursuant to the Agreement and that Buyer is relying on this
Release in consummating such purchase.

         Each  Seller,  for good and  valuable  consideration  the  receipt  and
sufficiency of which are hereby  acknowledged and intending to be legally bound,
in order to  induce  Buyer to  purchase  the  outstanding  capital  stock of the
Company pursuant to the Agreement, hereby agrees as follows:

         Each Seller,  on behalf of himself and each of his  Affiliates  and his
individual family members (collectively, the "Related Persons"), hereby releases
and forever  discharges  Buyer,  the Company and each of their  respective past,
present and future directors, officers, employees, agents, consultants, advisors
or  other  representatives  (collectively,   the  "Representatives")  and  their
respective   Affiliates,   stockholders,   controlling  persons,   subsidiaries,
successors   and  assigns   (individually,   a  "Releasee"   and   collectively,
"Releasees") from any and all claims,  demands,  proceedings,  causes of action,
orders, obligations,  contracts,  agreements,  debts and liabilities whatsoever,
whether known or unknown,  suspected or unsuspected,  both at law and in equity,
which each Seller or any of his respective Related Persons now has, has ever had
or may hereafter have against the respective  Releasees arising on account of or
out of any matter, cause or event occurring  contemporaneously  with or prior to
the Closing Date, including,  but not limited to, any rights to indemnification,
contribution  or  reimbursement  from  the  Company,  whether  pursuant  to  the
Company's  organizational  documents,  contract or otherwise  and whether or not
relating to claims pending on, or asserted  after,  the Closing Date;  provided,
however,  that nothing contained herein shall operate to release any obligations
of Buyer arising under the Agreement or any  obligation of the Company which has
been disclosed in Exhibit A to this Release.



<PAGE>

         Each Seller hereby irrevocably  covenants to refrain from,  directly or
indirectly, asserting any claim or demand, or commencing, instituting or causing
to be commenced, any proceeding of any kind against any Releasee, based upon any
matter purported to be released hereby.

         Without in any way limiting  any of the rights and  remedies  otherwise
available to any Releasee,  each Seller, jointly and severally,  shall indemnify
and hold harmless each  Releasee  from and against all loss,  liability,  claim,
damage (including  incidental and consequential  damages) or expense  (including
costs of  investigation  and defense and reasonable  attorney's fees) whether or
not involving  third party  claims,  arising  directly or indirectly  from or in
connection  with (i) the  assertion  by or on behalf of  Sellers or any of their
Related Persons of any claim or other matter  purported to be released  pursuant
to this Release and (ii) the assertion by any third party of any claim or demand
against any Releasee which claim or demand arises  directly or indirectly  from,
or in connection  with, any assertion by or on behalf of Sellers or any of their
Related  Persons  against  such  third  party of any  claims  or  other  matters
purported to be released pursuant to this Release.

         If any  provision of this Release is held invalid or  unenforceable  by
any court of competent jurisdiction,  the other provisions of this Release shall
remain in full force and effect.  Any  provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.

         This  Release  may not be  changed  except in a  writing  signed by the
person(s)  against whose interest such change shall operate.  This Release shall
be governed by and construed under the laws of the State of Texas without regard
to principles of conflicts of law.

         IN WITNESS WHEREOF, each of the undersigned have executed and delivered
this Release this _____ day of _______________, 2004.




                                         _______________________________________
                                         Paul D. Hensley



                                         _______________________________________
                                         Jim Hazlett



                                         _______________________________________
                                         Tony Vohjesus






<PAGE>

                                    Exhibit A
                                       to
                                     Release
                                     -------











<PAGE>

                                    EXHIBIT E


                              EMPLOYMENT AGREEMENT



         THIS EMPLOYMENT  AGREEMENT (this  "Agreement"),  dated as of _________,
2004, is between Natural Gas Services Group,  Inc., a Colorado  corporation (the
"Company"),  and  __________________,  an individual residing in Tulsa, Oklahoma
(the "Employee").

         WHEREAS, the Company has acquired, or will acquire  simultaneously with
the execution of this  Agreement,  all of the issued and  outstanding  shares of
capital stock of Screw Compression Systems, Inc., a Texas corporation,  pursuant
to  the  terms  of  that  certain  Stock   Purchase   Agreement  (the  "Purchase
Agreement"),  dated as of _____________,  2004, among Screw Compression Systems,
Inc., _____________________, _______________________, Employee, and the Company;

         WHEREAS,  it  is  a  condition  to  consummation  of  the  transactions
contemplated by the Purchase  Agreement that Employee and the Company enter into
an employment agreement on the terms and conditions hereinafter set forth;

         WHEREAS,  the Company desires to employ the Employee,  and the Employee
desires to be employed by the Company, upon the terms and conditions hereinafter
set forth;

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants and  agreements  herein  contained,  and intending to be legally bound
hereby, the Company and the Employee hereby agree as follows:

         1.  Employment.  The  Company  agrees to employ the  Employee,  and the
Employee  agrees to enter the employ of the Company,  upon the terms and subject
to conditions herein provided.

         2. Term. The employment of the Employee shall be for a period (referred
to herein as the "Employment Term") commencing on the date of this Agreement and
ending on the earlier of (i) _____________, 2007; (ii) the effective date of any
"Fundamental  Change"  with  respect  to the  Company;  or  (iii)  the  date  of
termination of Employee's employment pursuant to Section 5 hereof.

         For purposes hereof, a "Fundamental Change" shall occur with respect to
the Company on the effective  date of any  dissolution,  merger,  consolidation,
sale of all or substantially  all of the Company's assets,  recapitalization  or
any other type of  transaction  which  results in at least 50% of the  Company's
common stock being changed into, or exchanged for,  different  securities of the
Company,  as  applicable,  or other  securities or interests in other persons or
entities.


<PAGE>

         3. Position and Duties.

         (a) Position.  During the Employment  Term, the Employee shall serve as
____________  of the Company.  In such  capacity,  the Employee  shall have such
duties, functions,  responsibilities,  and authority customarily appertaining to
the position of __________ of a  corporation;  subject,  however,  to applicable
restrictions  imposed by the bylaws of the Company and to the  directives of the
Board of Directors of the Company.

         (b) Duties.  During the Employment  Term, the Employee shall devote his
full time,  skill and  attention,  and his best efforts  during normal  business
hours to, and in furtherance of, the business and affairs of the Company and its
subsidiaries and affiliates  (collectively,  the "Related Parties");  except for
usual,  ordinary and customary periods of vacation and absence due to illness or
other disability; provided, however, that Employee may, subject to the Company's
code of ethics and conflict of interest policies as in effect from time to time,
devote reasonable  periods of time in connection with the following  activities,
if  such  activities  do  not  materially  interfere  with  the  performance  of
Employee's  duties and  services  hereunder  and do not consume more than 10% of
Employee's working hours:

                  (i) serving as a director  or a member of a  committee  of any
         organization, if serving in such capacity does not involve any conflict
         with the business of the Related  Parties and such  organization is not
         in  competition  in any  manner  whatsoever  with the  business  of the
         Related Parties;

                  (ii) fulfilling speaking engagements;

                  (iii) engaging in charitable and community activities; and

                  (iv)  managing  his  personal  investments  so  long  as  such
         investment activities do not constitute an actual or potential conflict
         of interest  with the  business of the Related  Parties and comply with
         the provisions in Section 6.

         4. Compensation and Related Matters.

         (a) Base Salary. The Company shall pay to Employee a base salary at the
rate of not less than  $________  per annum.  This base  salary may be  reviewed
periodically  and  increases  in such base  salary  may be  granted  at the sole
discretion  of the  Compensation  Committee  of the  Board of  Directors  of the
Company.

         (b) Benefits.  Employee shall,  during the Employment Term, be eligible
to participate in such  insurance,  medical and other employee  benefit plans of
the Company which may be in effect,  from time to time, to the extent such plans
are generally available to executive officers of the Company.

         (c)  Professional  Organization  Dues.  During the Employment Term, the
Company shall pay the  initiation  fees and periodic dues for  membership in any



<PAGE>

professional organizations in which Employee is currently a member, or which are
otherwise  approved by the Board of Directors of the Company or the Compensation
Committee  of the Board,  and the Company  shall pay all  charges and  expenses,
including  reasonable  travel expenses,  incurred by Employee in connection with
membership in such organizations.

         (d) Vacations.  Employee shall be entitled to take such vacations as he
may desire,  with pay,  provided that such  vacations do not interfere  with the
performance of his duties and services hereunder.

         (e)  Expenses.  Employee  will be reimbursed  for  reasonable  expenses
incurred  in the  performance  of  his  duties  and  services  hereunder  and in
furtherance of the business of the Related Parties upon presentation by Employee
of an itemized account,  accompanied by appropriate receipts satisfactory to the
Company, in substantiation of such expenses.

         5. Termination of Employment.

         (a) Employee's employment hereunder:

                  (i) shall  automatically  terminate upon the occurrence of any
         of the following: (A) the mental or physical incapacity or inability of
         Employee to perform his duties for a consecutive  period of one hundred
         twenty  (120) days or a  non-consecutive  period of one hundred  eighty
         (180)  days  during  any  twelve  month  period;  (B) the  death of the
         Employee;  or (C) the voluntary  resignation or retirement of Employee;
         and

                  (ii)  may be  terminated  by the  Company,  at any  time,  for
         "cause",  which  shall  mean by  reason  of any of the  following:  (A)
         Employee's  conviction of, or plea of nolo contendere to, any felony or
         to any crime or offense causing  substantial harm to any of the Related
         Parties  (whether or not for personal gain) or involving acts of theft,
         fraud,   embezzlement,   moral  turpitude  or  similar   conduct;   (B)
         malfeasance  in the conduct of Employee's  duties,  including,  but not
         limited to, (1) willful and  intentional  misuse or diversion of any of
         the Related  Parties'  funds,  (2)  embezzlement,  or (3) fraudulent or
         willful and material  misrepresentations or concealments on any written
         reports  submitted to any of the Related Parties,  (C) material failure
         to perform the duties of Employee's  employment or material  failure to
         follow or comply with the reasonable  and lawful written  directives of
         the Board of Directors of the Company, provided, however, that Employee
         shall have been  informed,  in writing,  of such  material  failure and
         given a  period  of not  more  than 60 days to  remedy  same;  or (D) a
         material  breach  by  Employee  of the  provisions  of  this  Agreement
         (including,  without  limitation,  any breach of  Section  3(b) of this
         Agreement).

         (b) Upon any  termination  of  Employee's  employment  pursuant to this
Section 5, all obligations of the Company under this Agreement shall terminate.




<PAGE>


         6.  Business   Opportunities   and  Intellectual   Property;   Personal
Investments;  Covenant not to Compete;  Confidentiality.  Employee  acknowledges
that in the course of his employment by the Company and  performance of services
on behalf of the  Related  Parties  he will  become  privy to  various  business
opportunities,  economic  and trade  secrets  and  relationships  of the Related
Parties.  Therefore,  in consideration of this Agreement and the consummation of
the Transaction, Employee hereby agrees as provided below in this Section 6.

         (a) Business Opportunities and Intellectual Property. The Employee:

                  (i)  shall  promptly  disclose  to the  Company  all  business
         opportunities  (including,  without  limitation,  those relating to the
         business   of   manufacturing,   fabricating,   selling,   leasing  and
         maintaining of natural gas compressors or the design and manufacture of
         natural gas flare systems,  components and ignition systems)  developed
         by Employee  during the  Employment  Term,  or  originated by any third
         party and brought to the  attention of Employee  during the  Employment
         Term, together with information  relating thereto (herein  collectively
         called "Business Opportunities");

                  (ii)  shall  promptly  disclose  to  the  Company  any  ideas,
         inventions,   discoveries,  processes,  designs,  methods,  substances,
         articles, computer programs and improvements, whether or not patentable
         or copyrightable  (all of the foregoing being hereinafter  collectively
         called   "Intellectual   Property"),   which  the  Employee  discovers,
         conceives,  invents,  creates or develops, alone or with others, during
         the Employment Term, if such discovery, conception, invention, creation
         or development  (A) occurs in the course of the  Employee's  employment
         with the  Company,  or (B)  occurs  with the use of any of the  Related
         Parties' time,  materials or  facilities,  or (C) in the opinion of the
         Board of Directors  of the  Company,  relates or pertains in any way to
         the Related Parties' purposes, activities or affairs;

                  (iii)  hereby  assigns and agrees to assign to the Company and
         its  successors,  assigns or designees,  all of the  Employee's  right,
         title  and   interest  in  and  to  all  Business   Opportunities   and
         Intellectual Property that the Employee is obligated to disclose to the
         Company pursuant hereto; and

                  (iv)  acknowledges and agrees that all Business  Opportunities
         and  Intellectual  Property  constitute  the exclusive  property of the
         Company and accordingly agrees that other than Employee's investment in
         the Company,  Employee  will not  (directly or  indirectly  through any
         family members),  and will not permit any of his controlled  affiliates
         to, (A) invest or otherwise  participate  alongside the Related Parties
         in any Business  Opportunities,  (B) invest or otherwise participate in
         any business or activity relating to a Business Opportunity, regardless
         of whether any of the Related Parties  ultimately  participates in such
         business or activity,  or (C) use for any purpose  other than on behalf
         of  the  Related  Parties,  any  information   pertaining  to  Business
         Opportunities.


<PAGE>

         (b) Personal  Investments.  Employee  agrees that during the Employment
Term and the Noncompetition Period,  Employee (whether in his own name or in the
name of any family members or made by Employee's controlled affiliates) will not
make any  investments  with or in any person or entity  (other than the Company)
which relates to the business of manufacturing,  fabricating,  selling,  leasing
and  maintaining  of natural gas  compressors  or the design and  manufacture of
natural gas flare systems, components and ignition systems.

         (c)  Confidentiality  Obligations.  Employee  agrees  that  during  the
Employment Term and the Noncompetition  Period,  Employee will not use, publish,
disseminate or otherwise disclose,  directly or indirectly,  to any person other
than the Related Parties and their respective officers, directors and employees,
any Business  Opportunities,  Intellectual  Property  and any other  information
heretofore  or  hereafter  acquired,  developed  or used  by any of the  Related
Parties relating to their business or their operations,  properties,  prospects,
employees,   customers,   consultants,   vendors,   joint  venture  partners  or
co-investors which constitutes proprietary or confidential information of any of
the Related Parties ("Confidential Information"), including, without limitation,
any Confidential  Information  contained in any customer files,  contract files,
production records,  maintenance records,  reports and related data,  memoranda,
notes,  records,  drawings,  manuals,  correspondence,  financial and accounting
information,  customer  lists,  statistical  data  and  compilations,   patents,
copyrights,  trademarks, trade names, inventions,  formulae, methods, processes,
agreements,  contracts,  manuals or any other documents relating to the business
of the Related Parties (collectively,  the "Related Parties' Business Records"),
but  excluding  any  Confidential  Information  which has become  part of common
knowledge or understanding  in the natural gas compressor  industry or otherwise
in the public  domain  (other than from  disclosure  by Employee in violation of
this Agreement),  provided,  however, this paragraph (c) shall not be applicable
to the extent  Employee  is  required  to testify  in a judicial  or  regulatory
proceeding  pursuant to the order of a judge or  administrative  law judge after
Employee requests that such Confidential Information be preserved.

         (d)  Non-Compete  Covenant.  Employee agrees that during the Employment
Term, Employee will not:

                  (i) engage or participate in any manner,  whether  directly or
         indirectly  through  any  family  member or as an  employee,  employer,
         consultant,   agent,   principal,   partner,   more  than  one  percent
         shareholder,  officer,  director,  licensor,  lendor,  lessor or in any
         other individual or representative  capacity,  in any business activity
         that  relates  to  (A)  the  business  of  manufacturing,  fabricating,
         selling,  leasing and maintaining of natural gas  compressors,  (B) the
         design and  manufacture  of natural gas flare  systems,  components and
         ignition systems, (C) installing and servicing flare stacks and related
         ignition and control  devices or (D) in any other  business or activity
         related to the natural gas  compressor  industry that is in competition
         in any  manner  whatsoever  with  the  business  of any of the  Related
         Parties  within a 700 mile radius of Tulsa,  Oklahoma;  provided  that,
         this shall not preclude Employee from:


<PAGE>

                           (A) making  investments  in securities of oil and gas
                  companies  and  natural  gas  compressor  companies  which are
                  registered  on a national  stock  exchange,  if the  aggregate
                  amount owned by Employee and all family members and affiliates
                  does not exceed  one  percent  of such  company's  outstanding
                  securities; or

                           (B) maintaining his personal  investments (whether in
                  his own name or in the name of any family members) (including,
                  without   limitation,   his   investments   in  the  following
                  controlled affiliates of Employee:  ________________________),
                  if such personal investments and controlled  affiliates do not
                  engage in any business  activity  that relates to the business
                  of   manufacturing,    fabricating,   selling,   leasing   and
                  maintaining  of  natural  gas  compressors,  or the design and
                  manufacture  of  natural  gas flare  systems,  components  and
                  ignition  systems,  or the installation and servicing of flare
                  stacks and related ignition and control devices; or

                  (ii)  solicit,   entice,   persuade  or  induce,  directly  or
         indirectly,  any  employee (or person who within the  preceding  ninety
         (90) days was an employee)  of any of the Related  Parties or any other
         person who is under  contract with or rendering  services to any of the
         Related Parties,  to terminate his or her employment by, or contractual
         relationship with, such person or to refrain from extending or renewing
         the same  (upon the same or new  terms) or to  refrain  from  rendering
         services  to or for such  person or to become  employed  by or to enter
         into  contractual  relations with any Persons other than such person or
         to enter into a  relationship  with a competitor  of any of the Related
         Parties.

         (e) For purposes of this Agreement,  the term  "Noncompetition  Period"
means the period commencing on the date Employee ceases to be employed hereunder
and ending on the second anniversary of such date.

         (f) The  invalidity  or  non-enforceability  of this  Section  6 in any
respect shall not affect the validity or enforceability of this Section 6 in any
other respect or of any other provision of this  Agreement.  If any provision of
this  Section 6 shall be held invalid or  unenforceable  by a court of competent
jurisdiction  by reason of the  geographic  or  business  scope or the  duration
thereof,  such invalidity or unenforceability  shall attach only to the scope or
duration  of  such   provision  and  shall  not  affect  or  render  invalid  or
unenforceable any other provision of this Agreement,  and, to the fullest extent
permitted by law,  this  Agreement  shall be construed as if the  geographic  or
business scope or the duration of such provision had been more narrowly  drafted
so as not to be invalid or unenforceable.

         (g)  Employee  acknowledges  that the  Company's  remedy at law for any
breach  of the  provisions  of this  Section 6 is and will be  insufficient  and
inadequate and that the Company shall be entitled to equitable relief, including
by way of temporary  and permanent  injunction,  in addition to any remedies the
Company may have at law.


<PAGE>

         (h) The provisions of this Section 6 shall survive  termination of this
Agreement.

         (i) The  representations  and covenants  contained in this Section 6 on
the part of the Employee  will be construed as ancillary to and  independent  of
any other provision of this  Agreement,  and the existence of any claim or cause
of  action of the  Employee  against  the  Company  or any of the other  Related
Parties or any  officer,  director or  shareholder  of the Company or any of the
other Related Parties, whether predicated on this Agreement or otherwise,  shall
not  constitute a defense to the  enforcement by the Company of the covenants of
the Employee  contained in this Section 6. In addition,  the  provisions of this
Section 6 shall  continue to be binding  upon the  Employee in  accordance  with
their  terms,  notwithstanding  the  termination  of the  Employee's  employment
hereunder for any reason.

         (j) The parties to this Agreement agree that the limitations  contained
in this Section 6 with respect to time,  geographical area and scope of activity
are  reasonable.   However,   if  any  court  shall  determine  that  the  time,
geographical  area or scope of activity  of any  restriction  contained  in this
Section  6 is  unenforceable,  it is the  intention  of the  parties  that  such
restrictive  covenant set forth herein shall not thereby be terminated but shall
be deemed amended to the extent required to render it valid and enforceable.

         7. Business  Records.  The Employee  agrees to promptly  deliver to the
Company, upon termination of his employment hereunder, or at any other time when
the Company so requests,  all of the Related Parties'  Business Records (and all
copies  thereof and  therefrom).  The Employee  confirms that all of the Related
Parties' Business Records (and all copies thereof and therefrom)  constitute the
exclusive property of the Company and the other Related Parties.  The obligation
of  confidentiality  set forth in Section 6 shall continue  notwithstanding  the
Employee's  delivery of any such documents to the Company.  Notwithstanding  the
foregoing provisions of this Section 7 or any other provision of this Agreement,
the Employee shall be entitled to retain any written  materials  received by the
Employee in his capacity as a shareholder of the Company. The provisions of this
Section 7 shall continue in effect notwithstanding termination of the Employee's
employment hereunder for any reason.

         8.  Divisibility of Agreement.  If any term,  condition or provision of
this Agreement is for any reason rendered void, all remaining terms,  conditions
and provisions shall remain and continue as valid and enforceable obligations of
the parties hereto.

         9. Notices. Any notices or other  communications  required or permitted
to be sent  hereunder  shall be in writing and shall be duly given if personally
delivered or sent  postage  pre-paid by certified  or  registered  mail,  return
receipt requested, as follows:



<PAGE>

                  (a) If to Employee:



                  (b) If to the Company:

                      Natural Gas Services Group, Inc.
                      2911 S. County Road 1260
                      Midland, Texas 79706


Either  party may change his or its  address  for the  sending of notice to such
party  by  written  notice  to the  other  party  sent in  accordance  with  the
provisions hereof.

         10.   Complete   Agreement.   This   Agreement   contains   the  entire
understanding  of the parties  with  respect to the  employment  of Employee and
supersedes all prior arrangements or understandings with respect thereto and all
oral or written employment  agreements or arrangements  between the Company (and
any of its  subsidiaries)  and  Employee.  This  Agreement may not be altered or
amended  except by a  writing,  duly  executed  by the party  against  whom such
alteration or amendment is sought to be enforced.

         11.  Assignment.  This  Agreement  is personal  and  non-assignable  by
Employee.  It shall inure to the benefit of any corporation or other entity with
which the Company shall merge or consolidate or to which the Company shall lease
or sell  all or  substantially  all of its  assets  and may be  assigned  by the
Company to any  affiliate  of the Company or to any  corporation  or entity with
which such affiliate  shall merge or consolidate or which shall lease or acquire
all or substantially all of the assets of such affiliate.

         12. Counterparts.  This Agreement may be executed in counterparts, each
of which shall be an original and all of which together shall constitute one and
the same instrument.

         IN  WITNESS  WHEREOF,  each of the  parties  hereto has  executed  this
Agreement in multiple counterparts as of the day and year first above written.


                                               COMPANY:

                                               NATURAL GAS SERVICES GROUP, INC.


                                               By:______________________________

                                               Wallace C. Sparkman, President



                                               EMPLOYEE:

                                               _________________________________






<PAGE>

                                    EXHIBIT F


                             Stockholders' Agreement
                             -----------------------



Natural Gas Services Group, Inc.
2911 South County Road 1260
Midland, Texas 79706

Gentlemen:

         Natural Gas Services Group, Inc. ("NGSG "), a Colorado corporation,  is
issuing an aggregate of 609,756  shares of its common stock,  par value $.01 per
share (the  "Restricted  Securities"),  to Paul  Hensley,  Jim  Hazlett and Tony
Vohjesus  (collectively,  the  "Sellers" and each  individually,  a "Seller") as
partial  consideration for NGSG's purchase (the "Purchase") of all of the issued
and outstanding  shares of capital stock of Screw Compression  Systems,  Inc., a
Texas corporation,  from Sellers pursuant to the Stock Purchase Agreement, dated
as of , 2004 (the "Purchase  Agreement").  The undersigned  understands that the
issuance is being made pursuant to exemptions from the registration requirements
of the Securities Act of 1933, as amended (the  "Securities  Act"), and pursuant
to exemptions from the registration  and other  requirements of applicable state
securities  laws.  In order to induce NGSG to consummate  the Purchase,  Sellers
have executed and delivered this  Stockholders'  Agreement (this "Agreement") to
NGSG.

1.  Representations,  Warranties  and  Covenants  of Each  Seller.  Each Seller,
severally and not jointly, hereby represents,  warrants and covenants to NGSG as
follows:

         a. Such  Seller is  acquiring  the  Restricted  Securities  for his own
account for  investment  purposes only, and not with a view to, or for resale in
connection with, any distribution other than in compliance with the registration
requirements  under the Securities  Act or the  securities  laws of any state or
pursuant to an exemption therefrom.

         b. Such Seller understands that (A) the Restricted  Securities (1) have
not been registered  under the Securities Act or any state  securities laws, (2)
will be  issued  in  reliance  upon  an  exemption  from  the  registration  and
prospectus delivery requirements of the Securities Act and state securities laws
for an offer and sale of securities not involving a public offering which relate
to private purchases and (3) may not be sold,  transferred or otherwise disposed
of without satisfaction of certain conditions,  including registration under, or
the availability of an exemption from registration under, the Securities Act and
applicable  state  securities  laws, and (B) such Seller must therefore bear the
economic risk of such investment  indefinitely  unless a subsequent  disposition
thereof is registered  under the Securities Act and applicable  state securities
laws  or  is  exempt  therefrom.  Such  Seller  further  understands  that  such
exemptions depend upon, among other things,  the nature of the investment intent
of the undersigned expressed herein.


<PAGE>

         c. Such Seller has been furnished by NGSG all  information (or provided
access to all  information)  regarding the business and  financial  condition of
NGSG, the attributes of the Restricted Securities and the merits and risks of an
investment  in the  Restricted  Securities  which such Seller has  requested  to
evaluate  an  investment  in  the  Restricted  Securities.   Specifically,   the
undersigned  acknowledges that such Seller has had an opportunity to review NGSG
's  Annual  Report on Form  10-KSB  for the year  ended  December  31,  2003 and
Quarterly  Reports on Form 10-QSB for the fiscal  quarters  ended March 31, 2004
and June 30,  2004 and the other  SEC  Documents  (as  defined  in the  Purchase
Agreement).

         d. Such Seller is an  "accredited  investor"  as defined in Rule 501 of
Regulation D  promulgated  under the  Securities  Act, and he, or those  persons
retained by him, has knowledge, skill and experience in financial,  business and
investment  matters  relating  to an  investment  of  the  same  nature  as  the
Restricted  Securities and is capable of evaluating the merits and risks of such
investment  and  protecting  himself  in  connection  with the  Purchase  and an
investment in the Restricted  Securities.  Such Seller has, to the extent deemed
necessary  by him  retained,  at his own expense,  and relied upon,  appropriate
professional  advice  regarding  the  investment,   tax  and  legal  merits  and
consequences  of an investment  in the  Restricted  Securities.  Such Seller has
examined  the  SEC  Documents,  or  caused  the  same  to be  examined,  by  his
representatives to the extent he deems necessary or appropriate. Such Seller has
not received any legal,  business, tax or other advice from NGSG, its counsel or
other representatives.

         e.  Such  Seller  acknowledges  that  (i) it  has  been  called  to his
attention  that his investment in the  Restricted  Securities  involves risk and
(ii) he understands that the Restricted  Securities to be issued in the Purchase
will be an illiquid investment,  subject to any future registration  pursuant to
this Agreement.

         f. No person or entity,  other than NGSG,  has been  authorized to give
any information or to make any  representations  on behalf of NGSG in connection
with the Purchase,  and, if given or made, such  information or  representations
have not been relied upon by such  Seller as having been made or  authorized  by
NGSG.  The only  representations,  warranties  and  information  made by NGSG in
connection with the Purchase are those  contained in the Purchase  Agreement and
the SEC Documents.

         g. NGSG has provided such Seller the  opportunity  to ask questions of,
and receive  answers  from,  NGSG  concerning  the Purchase  and the  Restricted
Securities and to obtain any appropriate additional information necessary to the
investment  decision  being made by him in connection  with the Purchase and the
Restricted Securities.

         h. Such Seller acknowledges that he has been advised that:

         IN MAKING AN INVESTMENT  DECISION REGARDING THE RESTRICTED  SECURITIES,
HE MUST  RELY ON HIS OWN  EXAMINATION  OF NGSG AND THE  TERMS  OF THE  PURCHASE,
INCLUDING THE MERITS AND RISKS INVOLVED.


<PAGE>

THE RESTRICTED SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY.

         THE   RESTRICTED    SECURITIES   ARE   SUBJECT   TO   RESTRICTIONS   ON
TRANSFERABILITY  AND  RESALE,  AND MAY NOT BE  TRANSFERRED  OR RESOLD  EXCEPT AS
PERMITTED  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED,  AND APPLICABLE  STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES
ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFERABILITY SET FORTH IN THIS
AGREEMENT.

         The foregoing  representations and warranties and undertakings are made
by and on behalf of each Seller with the intent that they be relied upon by NGSG
in  determining  each Seller's  suitability  as an investor.  Each Seller hereby
agrees that such  representations  and warranties  shall survive his purchase of
the Restricted Securities.

2.  Standstill.  Unless waived in writing by NGSG from time to time,  during the
period  commencing  on the  Closing  Date and  ending on the  third  anniversary
thereof,  neither Sellers nor any of their respective  affiliates (as defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended) will:

         (a)  acquire or agree,  offer,  seek or propose to acquire  (or request
permission  to do so),  ownership  (including,  but not limited  to,  beneficial
ownership as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of any assets or  businesses  or any  additional  securities  issued by
NGSG, or any rights or options to acquire such ownership (including from a third
party), or

         (b) contest any election of directors by the stockholders of NGSG, or

         (c)  otherwise  act,  alone or in  concert  with  others,  to induce or
attempt to induce any other  person to initiate  any  stockholder  proposal or a
tender offer for any voting secutrites of NGSG, or

         (d)  enter  into  any   discussions,   negotiations,   arrangements  or
understandings with any third party with respect to any of the foregoing.

3. Restrictions on Transferability; Registration Rights.

         The Restricted  Securities  shall not be  transferable  except upon the
conditions specified in this Section 3; provided that, notwithstanding any other
provision  of this  Section 3, each Seller  shall have the right to transfer any
Restricted  Securities  upon the prior written  consent of NGSG. Each transferee
shall be subject to the same  transfer  restrictions  imposed on Sellers by this
Agreement.  All rights and  obligations  of Sellers set forth in this  Section 3
will  inure  to the  benefit  of and  be  binding  upon  any  transferee  of the
Restricted Securities.



<PAGE>


         3.1 Restrictive  Legend.  Unless and until otherwise  permitted by this
Section 3, each certificate for Restricted  Securities issued under the Purchase
Agreement,  and each  certificate  for any Restricted  Securities  issued to any
subsequent  permitted  transferee of any such  certificate,  shall be stamped or
otherwise imprinted with a legend in substantially the following form:

         "The shares  evidenced  by this  certificate  have not been  registered
         under the Securities Act of 1933, as amended,  and may be reoffered and
         sold only if registered  pursuant to the provisions of said  Securities
         Act or if an exemption from registration is available."

         3.2 Notice of Proposed  Transfers.  Prior to any  transfer or attempted
transfer of any Restricted Securities (other than pursuant to Rule 144 under the
Securities Act or registration of the Restricted Securities under the Securities
Act), the Seller of such Restricted Securities shall give written notice to NGSG
of such Seller's  intention to effect such transfer.  Each such notice (i) shall
describe the manner and  circumstances  of the proposed  transfer in  sufficient
detail,  and shall  contain an  undertaking  by the Seller giving such notice to
furnish such other  information as may be required,  to enable counsel to render
the opinions  referred to below,  and (ii) shall  designate  the counsel for the
Seller  giving such  notice.  Such Seller  shall  obtain the services of counsel
described below at his own expense. The Seller giving such notice shall submit a
copy thereof to the counsel designated in such notice. If in the opinion of such
counsel, which is reasonably satisfactory to NGSG, the proposed transfer of such
Restricted  Securities may be effected  without  registration of such Restricted
Securities under the Securities Act, NGSG shall,  within ten business days after
delivery  of such  opinion  to NGSG,  so notify  the  Seller of such  Restricted
Securities  and such  Seller  shall  thereupon  be  entitled  to  transfer  such
Restricted  Securities in accordance  with the terms of the notice  delivered by
such Seller to NGSG. Each certificate  evidencing the Restricted Securities thus
to be transferred (and each certificate  evidencing any untransferred balance of
the  Restricted  Securities)  shall  bear the  restrictive  legend  set forth in
Section 3.1.

         3.3 Piggy-Back Registration Rights.

         (a) Registration Initiated by NGSG. If NGSG shall determine to register
any shares of common stock of NGSG (other than a registration  relating to stock
options or employee  benefit  plans,  any  dividend  reinvestment  plan,  or the
acquisition  or purchase by or  combination by merger or otherwise of NGSG of or
with another company or business entity or partnership), whether or not for sale
for its own account, NGSG will:

                  (i) promptly give to Sellers  written  notice  thereof  (which
         shall  include  (to the extent  known) a list of the  jurisdictions  in
         which NGSG  intends to attempt  to qualify  such  securities  under the
         applicable blue sky or other state securities laws); and


<PAGE>

                  (ii)   include   in  such   registration   (and  any   related
         qualification  under  blue sky laws or  other  compliance),  and in any
         underwriting  involved therein, all the Restricted Securities specified
         in a written request or requests,  made within 20 days after receipt of
         such  written  notice  from NGSG,  by  Sellers,  except as set forth in
         Section 3.3(b) below.

         (b)  Underwriting.  If the  registration  of which NGSG gives notice to
Sellers is for a registered  public  offering  involving an  underwriting,  NGSG
shall so advise  Sellers  as a part of the  written  notice  given  pursuant  to
Section  3.3(a)(i).  In such  event,  the right of each  Seller to  registration
pursuant  to this  Section  3.3 shall be  conditioned  upon  each such  Seller's
participation  in such  underwriting  and the  inclusion  of each such  Seller's
Restricted  Securities in the  underwriting  to the extent  provided  herein.  A
Seller proposing to distribute shares of his Restricted  Securities through such
underwriting  (together  with NGSG and the other  holders (if any)  distributing
their  securities  through such  underwriting)  shall enter into an underwriting
agreement in customary form with the  underwriter or  underwriters  selected for
such underwriting by NGSG.  Notwithstanding  any other provision of this Section
3.3, if the lead managing underwriter determines,  in good faith, that marketing
factors  require a limitation  of the number of shares to be  underwritten,  the
underwriter  may limit the  number of  shares  of  Restricted  Securities  to be
included in the  registration  and  underwriting to the extent such  underwriter
deems  necessary.  NGSG  shall so advise  Sellers,  and the  number of shares of
Restricted  Securities that may be included in the registration and underwriting
shall be reduced to the number  which the  underwriter  is willing to include in
the registration. If a Seller disapproves of the terms of any such underwriting,
such Seller may elect to withdraw  therefrom  by written  notice to NGSG and the
underwriter.

         (c)  Expenses  of  Registration  by the  Company.  NGSG  shall bear all
expenses  incurred  in  connection  with  each  registration,  qualification  or
compliance  pursuant to this Section 3.3,  including,  without  limitation,  all
registration, filing and qualification fees, printing expenses, audit fees, fees
and disbursements of counsel for NGSG and counsel for the  underwriters,  if any
(unless any such  underwriter  pays such counsel fees) and  reasonable  fees and
disbursements  of one special  counsel for Sellers (but excluding  underwriter's
commissions, fees and expenses allocable to the Restricted Securities of Sellers
and fees of independent  accountants,  if any, for Sellers,  which  commissions,
fees and expenses and fees of accountants  shall be borne pro rata (by share) by
Sellers and any other  offeror  employing  such  accountants  in such  requested
registration).

         (d)  Limitations  on  Registration.   NGSG's  obligation  to  effect  a
registration  under  Section  3.3(a)  shall  expire  two years  from the date of
consummation of the Purchase.  Notwithstanding  any provision to the contrary in
this Section  3.3,  NGSG shall not be obligated to take any action to effect any
such registration,  qualification or compliance  pursuant to Section 3.3 on more
than two occasions; provided, however, only registrations which actually include
all of the  Restricted  Securities of Sellers  requested to be included shall be
counted for this purpose.

         (e)  Assignability and Assumption.  The registration  rights granted to
Sellers in this  Section  3.3 may be  assigned in whole or in part by the holder
thereof in connection with any transfer of Restricted  Securities  provided that
(i) the assignor provides NGSG with written notice of such assignment,  and (ii)
the  assignee  of such  rights  agrees in  writing  to be bound by the terms and


<PAGE>

conditions of this Section 3. In the event of a partial assignment,  the holders
of Restricted  Securities  shall possess the rights  granted in this Section 3.3
pro rata in  accordance  with the  number  of shares  of  Restricted  Securities
beneficially  owned by each of them and each such  holder  shall be  entitled to
receive a copy of all notices  provided  for in this  Agreement  and to exercise
such part of the rights so granted.

         3.4  Registration  Procedures.   In  the  case  of  each  registration,
qualification or compliance effected by NGSG pursuant to this Agreement pursuant
to which Restricted  Securities of Sellers are included therein,  NGSG will keep
Sellers  advised  in  writing  as  to  the  initiation  of  each   registration,
qualification and compliance and as to the completion  thereof.  At its expense,
NGSG will:

         (a) keep such registration, qualification or compliance effective for a
period of at least 120 days or until  Sellers have  completed  the  distribution
described  in the  registration  statement  relating  thereto,  whichever  first
occurs;

         (b) furnish such number of prospectuses  and other  documents  incident
thereto as Sellers from time to time may reasonably request;

         (c) list such  Restricted  Securities on each  securities  exchange (if
any) on which the common stock of NGSG is listed; and

         (d)  provide  to  Sellers  and  their  special   counsel  a  reasonable
opportunity to review in advance the  registration  statement and all amendments
thereto.

         3.5 Indemnification.

         (a) NGSG shall,  if Restricted  Securities held by Sellers or any other
holder of Restricted  Securities are included in the securities as to which such
registration,  qualification or compliance is being effected,  indemnify Sellers
and each other  holder of  Restricted  Securities,  each of their  officers  and
directors,  and each  person  controlling  any of  Sellers  or other  holder  of
Restricted  Securities,  with  respect to each  registration,  qualification  or
compliance   which  has  been  effected   pursuant  to  Section  3.3,  and  each
underwriter,  if any, and each person who controls any underwriter,  against all
claims,  losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue  statement  (or  alleged  untrue  statement)  of a
material fact contained in any prospectus,  offering  circular or other document
(including  any  related  registration  statement,  notification  or  the  like)
incident to any such registration,  qualification or compliance, or based on any
omission (or alleged  omission) to state  therein a material fact required to be
stated  therein or necessary to make the  statements  not  misleading,  and will
reimburse Sellers and each other holder of Restricted Securities,  each of their
officers  and  directors,  and each person  controlling  any of Sellers or other
holder of  Restricted  Securities,  each such  underwriter  and each  person who
controls any such underwriter,  for any legal and any other expenses  reasonably
incurred in connection  with  investigating  or defending any such claim,  loss,
damage,  liability or action;  provided that NGSG will not be liable in any such
case to the extent  that any such  claim,  loss,  damage,  liability  or expense
arises out of or is based on any untrue statement or omission based upon written


<PAGE>

information  furnished  to  NGSG  by  Sellers  or  other  holder  of  Restricted
Securities or underwriter  specifically  for use therein.  Such indemnity  shall
remain in full force and effect  regardless of any  investigation  made by or on
behalf of such party and shall  survive  the  subsequent  transfer  of shares of
common  stock of NGSG by the seller  thereof  and the  transfer of any shares of
common stock of NGSG which were the subject of such registration,  qualification
or listing.

         (b) Each of the Sellers and each other holder of Restricted Securities,
severally and not jointly, will, if Restricted Securities held by such Seller or
other holder of Restricted Securities are included in the securities as to which
such  registration,  qualification  or compliance is being  effected,  indemnify
NGSG,  each of its directors and  officers,  each legal counsel and  independent
accountants of NGSG, each underwriter,  if any, of NGSG's securities  covered by
such registration  statement,  each person who controls NGSG or such underwriter
within the meaning of the Securities  Act, and each other holder of common stock
of  NGSG  registering  securities  of NGSG  in  such  registration,  each of its
officers and  directors  and each person  controlling  such holder,  against all
claims,  losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue  statement  (or  alleged  untrue  statement)  of a
material fact contained in any such registration statement, prospectus, offering
circular or other  document,  or any  omission  (or alleged  omission)  to state
therein a material fact  required to be stated  therein or necessary to make the
statements therein not misleading,  and will reimburse NGSG, such holders,  such
directors,  officers, persons,  underwriters or control persons for any legal or
any other  expenses  reasonably  incurred in connection  with  investigating  or
defending any such claim, loss, damage, liability or action, in each case to the
extent,  but only to the extent,  that such untrue  statement (or alleged untrue
statement)  or  omission  (or  alleged  omission)  is made in such  registration
statement,  prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to NGSG by such Seller or other
holder of Restricted Securities specifically for use therein; provided; however,
that (i) the  obligations  of each  Seller and each other  holder of  Restricted
Securities hereunder shall be limited to an amount equal to the proceeds to such
Seller or each other holder of Restricted Securities sold as contemplated herein
and (ii) the indemnity for untrue statements or omissions  described above shall
not apply if Sellers or other holder of  Restricted  Securities  providing  such
written  information provide NGSG with such additional written information prior
to the  effectiveness  of the registration as is required to make the previously
supplied written  information true and complete,  together with a description in
reasonable  detail of the  information  previously  supplied which was untrue or
incomplete.

         (c) Each person entitled to indemnification under this Section 3.5 (the
"Indemnified  Person")  shall  give  notice to the  party  required  to  provide
indemnification  (the  "Indemnifying  Party")  promptly  after such  Indemnified
Person has actual  knowledge of any claim as to which  indemnity  may be sought,
and shall permit the Indemnifying  Party to assume the defense of any such claim
or  any  litigation   resulting   therefrom,   provided  that  counsel  for  the
Indemnifying  Party,  who shall conduct the defense of such claim or litigation,

<PAGE>

shall  be  approved  by  the  Indemnified   Person  (whose  approval  shall  not
unreasonably be withheld),  and the  Indemnified  Person may participate in such
defense at such person's  expense,  and provided further that the failure of any
Indemnified  Person to give  notice as  provided  herein  shall not  relieve the
Indemnifying  Party of any  obligations it may have otherwise than on account of
this Section 3.5. After notice from the  Indemnifying  Party to the  Indemnified
Person of its  election to assume the defense of such claim or  litigation,  the
Indemnifying  Party will not be liable to such Indemnified  Person for any legal
or other expenses subsequently incurred by such Indemnified Person in connection
with the defense thereof other than reasonable  costs of  investigation,  unless
the  Indemnifying  Party  abandons the defense of such claim or  litigation.  No
Indemnifying  Party,  in the  defense  of any such claim or  litigation,  shall,
except  with the  consent of each  Indemnified  Person,  consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified  Person
of a release from all liability in respect to such claim or litigation.

         (d) The  indemnification  required by this Section 3.5 shall be made by
periodic  payments of the amount thereof during the course of the  investigation
or defense, as and when bills are received or expense, loss, damage or liability
is incurred.

         3.6 Information by Sellers and Other Holders.  Sellers or other holders
of Restricted Securities included in any registration shall furnish to NGSG such
information  regarding Sellers or other holders and the distribution proposed by
Sellers or other holders as NGSG may reasonably request in writing, and as shall
be required in connection  with any  registration,  qualification  or compliance
referred to in this Agreement.

4.  Appointment and Nomination for Director.  Paul D. Hensley shall be appointed
to fill the vacancy  existing on the Board of Directors  at the date hereof,  to
hold office until the next annual  stockholders'  meeting at which directors are
elected,  and in connection with the next annual meeting of  stockholders,  NGSG
will nominate Paul D. Hensley for election as a director to serve for a term the
same as the class of directors then standing for election.

5. Miscellaneous.

         (a) This  Agreement  shall be governed by and  construed in  accordance
with the laws of the State of Texas,  notwithstanding principles of conflicts of
laws.

         (b) This Agreement  constitutes the entire  agreement among the parties
hereto with respect to the subject matter  hereof,  and may be amended only by a
writing executed by all parties hereto.

         (c) This Agreement and the  representations  and  warranties  contained
herein  shall be  binding  upon the  heirs,  executors,  legal  representatives,
administrators, successors and permitted assigns of the undersigned.




<PAGE>

IN WITNESS WHEREOF,  Sellers have executed this Stockholders' Agreement this ___
day of _________________, 2004.



                                 [LIST SELLERS]





                                                ________________________________

                                                ________________________________
                                                     Printed Name of Seller


                                                Address of Seller:

                                                ________________________________
                                                ________________________________
                                                ________________________________






Accepted and Agreed to this ____ day of _____________, 2004:



                                                NATURAL GAS SERVICES GROUP, INC.



                                                By:_____________________________
                                                   Name:________________________
                                                   Title:_______________________











<PAGE>

                                    EXHIBIT G


         (i) The incorporation,  existence, and good standing of the Company are
as stated in the Agreement;  the authorized  Company Shares are as stated in the
Agreement;  all outstanding  Company Shares are duly and validly  authorized and
issued,  fully paid and  non-assessable and have not been issued in violation of
any preemptive right of shareholders.

         (ii) The Company has the  requisite  corporate  power and  authority to
execute,  deliver and perform the  Agreement,  and the  Agreement  has been duly
authorized,  executed and  delivered by the Company,  and  (assuming the due and
valid  authorization,  execution and delivery by Buyer)  constitutes  the legal,
valid and binding  agreement of the Company  enforceable  against the Company in
accordance with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws of general  applicability  relating to or affecting the enforcement
of  creditors'  rights  and  by the  effect  of  general  principles  of  equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).

         (iii) The  execution  and  performance  by the Company of the Agreement
will not violate the Company Charter Documents and will not violate, result in a
breach  of, or  constitute  a  default  under,  any  material  lease,  mortgage,
contract,  agreement,  instrument,  law, rule,  regulation,  judgment,  order or
decree  known to such  counsel to which the Company is a party or to which it or
any of its properties or assets may be bound.

         (iv) The  Board of  Directors  of the  Company  has  taken  all  action
required by the Texas Business Corporation Act and the Company Charter Documents
to authorize the  execution  and delivery of the Agreement and the  transactions
contemplated thereby.

         (v)  Sellers  have the power and  authority  to  execute,  deliver  and
perform the Agreement, and the Agreement has been duly executed and delivered by
Sellers, and (assuming the due and valid  authorization,  execution and delivery
by  Buyer)  constitutes  the  legal,  valid and  binding  agreement  of  Sellers
enforceable  against Sellers in accordance with its terms,  except to the extent
enforceability  may  be  limited  by  bankruptcy,  insolvency,   reorganization,
moratorium,  fraudulent transfer or other similar laws of general  applicability
relating to or affecting the enforcement of creditors'  rights and by the effect
of  general  principles  of equity  (regardless  of  whether  enforceability  is
considered in a proceeding in equity or at law).

         (vi) The execution and performance by Sellers of the Agreement will not
violate,  result in a breach of, or  constitute  a default  under,  any material
lease,  mortgage,  contract,  agreement,   instrument,  law,  rule,  regulation,
judgment,  order or decree  known to such counsel to which any Seller is a party
or to which any Seller or any Seller's properties or assets may be bound.



<PAGE>

         (vii) To the knowledge of such counsel,  there are no actions, suits or
proceedings,  pending or  threatened  against or affecting  the Company,  by any
Governmental  Entity  which  seek  to  restrain,   prohibit  or  invalidate  the
transactions contemplated by the Agreement.

         (vii)  To  the  knowledge  of  such  counsel,  no  consent,   approval,
authorization or order of any court or governmental agency or body which has not
been  obtained is required  on behalf of the  Company  for  consummation  of the
transactions contemplated by the Agreement.

         In rendering such opinion, counsel for the Company and Sellers may rely
as to matters of fact upon the representations of Sellers and of officers of the
Company contained in any certificate  delivered to such counsel and certificates
of public officials.















<PAGE>

                                    EXHIBIT H


         (i) The  incorporation,  existence,  and good  standing of Buyer are as
stated in the  Agreement;  the  authorized  shares of Buyer  Common Stock are as
stated in the Agreement.

         (ii)  Buyer has taken  all  action  required  by  Colorado  law and the
organizational  documents to approve the Purchase and to authorize the execution
and delivery of the Agreement and the transactions contemplated hereby.

         (iii) Buyer has the requisite corporate power and authority to execute,
deliver and perform the Agreement,  and the Agreement has been duly  authorized,
executed and delivered by Buyer, and (assuming the due and valid  authorization,
execution and delivery by Sellers and the Company)  constitutes the legal, valid
and binding agreement of Buyer enforceable  against Buyer in accordance with its
terms,  except  to the  extent  enforceability  may be  limited  by  bankruptcy,
insolvency,  reorganization,  moratorium,  fraudulent  transfer or other similar
laws of general  applicability  relating  to or  affecting  the  enforcement  of
creditors' rights and by the effect of general  principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at law).

         (iv) The execution and  performance  by Buyer of the Agreement will not
violate Buyer Charter Documents and will not violate,  result in a breach of, or
constitute a default under, any material lease, mortgage,  contract,  agreement,
instrument,  law,  rule,  regulation,  judgment,  order or decree  known to such
counsel to which Buyer or any of its subsidiaries is a party or to which they or
any of their properties or assets may be bound.

         (v) To the  knowledge of such counsel,  there are no actions,  suits or
proceedings,  pending or  threatened  against or  affecting  Buyer or any of its
subsidiaries,  by any  Governmental  Entity which seek to restrain,  prohibit or
invalidate the transactions contemplated by the Agreement.

         (vi)  To  the  knowledge  of  such  counsel,   no  consent,   approval,
authorization or order of any court or governmental agency or body which has not
been  obtained  is  required  on  behalf  of  Buyer  for   consummation  of  the
transactions contemplated by the Agreement.

         (vii) The shares of Buyer Common Stock that will be issued  pursuant to
the  Agreement  have been duly  authorized  and,  when issued and  delivered  in
accordance  with the terms  and  conditions  of the  Agreement  will be  validly
issued, fully paid and non-assessable.

         In rendering such opinion,  counsel for Buyer may rely as to matters of
fact upon the  representations of officers of Buyer contained in any certificate
delivered to such counsel and certificates of public officials.