exv10w2



 





Exhibit 10.2




MULTIPLE ADVANCE TERM PROMISSORY NOTE




			
	 	 	 
	$16,891,105.87
	 	October 15, 2006






     FOR VALUE RECEIVED, in the manner, on the dates and in the amounts herein stipulated, NATURAL
GAS SERVICES GROUP, INC., a Colorado corporation (the “Borrower”), hereby promises and
agrees to pay to the order of WESTERN NATIONAL BANK, a national banking association (the
“Lender”), in Midland, Midland County, Texas, the principal sum of SIXTEEN MILLION EIGHT
HUNDRED NINETY-ONE THOUSAND ONE HUNDRED FIVE AND 87/100 DOLLARS ($16,891,105.87) (the “Total
Principal Amount”), or such amount less than the Total Principal Amount which is outstanding
from time to time if the total amount outstanding under this Promissory Note (this “Note”)
is less than the Total Principal Amount, together with interest at the rate of Seven and one-half
percent (7.50%) per annum on such portion of the Total Principal Amount which has been advanced to
Borrower from the date advanced until paid as hereinafter provided. Interest on the indebtedness
evidenced by this Note shall be calculated on the basis of a three hundred sixty (360) day year.



     This Note is given in renewal, extension and modification, but not in extinguishment, of that
certain $10,000,000.00 Multiple Advance Term Promissory Note dated March 14, 2005, as modified
effective March 24, 2006, and further modified effective August 28, 2006, and is the $10,000,000.00
Multiple Advance Term Promissory Note referred to in the Fourth Amended and Restated dated March
14, 2005, by and between the Borrower, the Guarantor, and the Lender (the “Prior Loan
Agreement”). This Note is made pursuant to that certain Seventh Amended and Restated Loan
Agreement, as the same may be amended, supplemented or otherwise modified from time to time, the
“Loan Agreement”), by and among Borrower, the Guarantor, and the Lender, and is subject to
the terms and conditions thereof. Reference is made to the Loan Agreement for provisions for the
disbursement of funds hereunder and for a further statement of the rights, remedies, powers,
privileges, benefits, duties and obligations of Borrower, Guarantor and Lender under the Loan
Agreement and this Note. Terms used herein which are defined in the Loan Agreement shall have such
defined meanings unless otherwise defined herein. The holder of this Note shall be entitled to the
benefits of the Loan Agreement.



     Subject to the terms hereof and of the Loan Agreement, from the date of this Note until
maturity, the Lender will make Advances and Subsequent Advances under this Note in accordance with
the provisions of the Loan Agreement. The aggregate principal amount of all such Advances as may
be made by the Lender to the Borrower under this Note shall never exceed Sixteen Million Eight
Hundred Ninety-One Thousand One Hundred Five and 87/100 Dollars ($16,891,105.87).



     The principal of this Note shall be due and payable in (a) fifty-nine (59) consecutive monthly
installments which shall each be in an amount of $281,500.00, with the first such installment being
due and payable on November 1, 2006, and a like installment being due and payable on the first
(1st) day of each succeeding month, to and including September 1, 2011, and



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(b) one final installment in an amount equal to all remaining unpaid principal and accrued and
unpaid interest on this Note shall be due and payable on October 1, 2011. Interest computed on the
unpaid balance of this Note, shall be due and payable monthly as it accrues, on the same dates as,
but in addition to, each installment of principal. All payments and prepayments shall be applied
first to accrued and unpaid interest, and the balance to principal. Partial prepayments of
principal shall be applied to the installments of principal thereof in the inverse order of their
maturity. All of the past due principal and accrued interest hereunder shall, at the option of
Lender, bear interest from maturity (stated or by acceleration) until paid at a rate per annum
equal to the Highest Lawful Rate. The interest rate on this Note is a fixed rate until maturity.
Any adjustment downward as a result or otherwise is subject to an adjustment fee.




     This Note is secured as provided in the Loan Agreement and in the other Loan Papers, to which
reference is hereby made for a description of the properties and assets in which a lien and
security interest has been granted, the nature and extent of the security, the terms and conditions
upon which the liens and security interests were granted and the rights of the holder of this Note
with respect thereto.



     Time is of the essence of this Note. Upon the occurrence of any one or more of the Events of
Default specified in the Loan Agreement (after expiration of any applicable notice and cure
periods), all amounts then remaining unpaid on (a) this Note and (b) the Revolving Line of Credit
Promissory Note dated October 15, 2006, from Borrower to Lender in the original principal amount of
$40,000,000.00, shall become, or may be declared to be, immediately due and payable, all as
provided therein.



     Upon the occurrence and during the continuance of any Event of Default, or if Borrower or
Guarantor become insolvent, however evidenced, Lender is hereby authorized at any time and from
time to time, without prior notice to Borrower or Guarantor, to setoff and apply any and all
deposits (general or special, time or demand, provisional or final) at any time held or other
indebtedness at any time owing by Lender to or for the credit or the account of Borrower or
Guarantor against any and all of the Obligations, irrespective of whether or not Lender shall have
made any demand under the Loan Agreement or this Note and although such Obligations may be
unmatured. Lender agrees promptly to notify Borrower or Guarantor after any such setoff and
application, provided that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of Lender under this paragraph are in addition to other rights
and remedies (including, without limitation, other rights of setoff) which Lender may have.



     Borrower and any and all co-makers, endorsers, guarantors and sureties severally waive 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, and consent
that the time of payment hereof may be extended and re-extended from time to time without notice to
them or any of them, and each agrees that his, her or its liability on or with respect to this Note
shall not be affected, diminished or impaired by any (a) release of any security at any time
existing for this Note, (b) substitution for any security at any time existing for this Note, or
(c) failure to perfect



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(or to maintain perfection of) any lien on or security interest in any such security, in each case
in whole or in part, with or without notice, before or after maturity.




     It is the intention of Borrower and Lender that Lender shall conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated by the Loan Agreement and this
Note would be usurious as to Lender under laws applicable to it (including the laws of the United
States of America and the State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to Lender notwithstanding the other provisions of the Loan Agreement and this Note),
then, in that event, notwithstanding anything to the contrary in this Note, the Loan Agreement or
any other Loan Paper or other agreement entered into in connection with or as security for this
Note, (i) the aggregate of all consideration which is contracted for, taken, reserved, charged or
received by Lender under this Note, the Loan Agreement or any other Loan Paper or agreement entered
into in connection with or as security for this Note shall under no circumstances exceed the
maximum amount allowed by such applicable law, and any excess shall be credited by Lender on the
principal amount of the Obligations to Lender (or, to the extent that the principal amount of the
Obligations shall have been or would thereby be paid in full, refunded by Lender to the Borrower);
and (ii) in the event that the maturity of this Note is accelerated by reason of an Event of
Default under the Loan Agreement or otherwise, or in the event of any prepayment, then such
consideration that constitutes interest under law applicable to Lender may never include more than
the maximum amount allowed by such applicable law, and excess interest, if any, provided for in
this Note, the Loan Agreement or otherwise shall be cancelled automatically by Lender as of the
date of such acceleration or prepayment and, if theretofore paid, shall be credited by Lender on
the principal amount of the Obligations (or, to the extent that the principal amount of such
Obligations shall have been or would thereby be paid in full, refunded by Lender to the Borrower).



     To the extent that Texas Finance Code Section 303.002 is relevant to Lender for the purposes
of determining the Highest Lawful Rate, the applicable rate ceiling under such provisions shall be
determined by the indicated (weekly) rate ceiling from time to time in effect, subject to Lender’s
right subsequently to change such method in accordance with applicable law. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Papers, it is not the
intention of the Lender to accelerate the maturity of any interest that has not accrued at the time
of such acceleration or to collect unearned interest at the time of such acceleration.



     THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS, EXCEPT AS SUCH LAWS ARE PREEMPTED BY APPLICABLE FEDERAL LAWS. THIS
NOTE HAS BEEN ENTERED INTO IN MIDLAND COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL PURPOSES
IN MIDLAND COUNTY, TEXAS. COURTS WITHIN THE STATE OF TEXAS SHALL HAVE JURISDICTION OVER ANY AND
ALL DISPUTES BETWEEN BORROWER AND LENDER, WHETHER AT LAW OR IN EQUITY, AND VENUE IN ANY SUCH



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DISPUTE, WHETHER IN FEDERAL OR STATE COURTS, SHALL BE LAID IN MIDLAND COUNTY, TEXAS. BORROWER
HEREBY CONSENTS TO PERSONAL JURISDICTION IN MIDLAND COUNTY, TEXAS AND WAIVES ANY RIGHTS IT MAY HAVE
TO BE SUED ELSEWHERE.



     BORROWER AND THE HOLDER OF THIS NOTE (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG BORROWER AND SUCH HOLDER ARISING
OUT OF OR IN ANY WAY RELATED TO THIS NOTE, AND OTHER LOAN DOCUMENT OR ANY RELATIONSHIP BETWEEN
HOLDER AND BORROWER RELATED TO THE LOAN EVIDENCED BY THE LOAN DOCUMENTS. THIS PROVISION IS A
MATERIAL INDUCEMENT TO THE HOLDER OF THIS NOTE TO PROVIDE THE FINANCING DESCRIBED HEREIN AND IN THE
OTHER LOAN DOCUMENTS.



     THIS NOTE, THE LOAN AGREEMENT, AND THE OTHER LOAN PAPERS REPRESENT THE ENTIRE AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES.



	 	 	 	 	 
	 	NATURAL GAS SERVICES GROUP, INC.

 	 
	 	By:  	     /s/ Stephen C. Taylor
 	 
	 	 	     Stephen C. Taylor, President 	 
	 	 	 	 
	 




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