Document:

<PAGE>
                                                                   EXHIBIT 10.15

                        SIXTH AMENDMENT TO LOAN AGREEMENT

     This Sixth Amendment to Loan Agreement (this "Amendment"), dated as of May
6, 2002, is made and entered into by and among Natural Gas Services Group, Inc.,
a Colorado corporation ("Borrower"), Wallace C. Sparkman, Wallace O. Sellers,
CAV-RDV, LTD., Diamente Investments, L.P., Richard L. Yadon, Rotary Gas Systems,
Inc., NGE Leasing, Inc. and Western National Bank, a national banking
association ("Lender").

                                   WITNESSETH:

         WHEREAS, Borrower and Lender entered into that certain Loan Agreement,
dated as of September 15, 1999, as amended by that certain First Amendment and
Waiver to Loan Agreement, dated as of March 9, 2001, as further amended by that
certain Second Amendment to Loan Agreement, dated as of March 20, 2001, as
further amended by that certain Third Amendment and Waiver to Loan Agreement,
dated as of July 25, 2001, as further amended by that certain Fourth Amendment
to Loan Agreement, dated as of December 12, 2001, and as further amended by that
certain Fifth Amendment to Loan Agreement, dated as of April 3, 2002 (said Loan
Agreement, as so amended, and as the same may be further amended, supplemented
or otherwise modified from time to time, the "Agreement"), providing for, among
other things, loans to Borrower evidenced by (i) that certain Revolving Line of
Credit Promissory Note, dated April 3, 2002, in the original principal amount of
$750,000.00, (ii) that certain Consolidated Term Promissory Note, dated April 3,
2002, in the original principal amount of $2,146,660.93, and (iii) that certain
Multiple Advance Term Promissory Note, dated April 3, 2002, in the original
principal amount of $1,853,340.00.

         WHEREAS, Borrower has requested that Lender waive for a period of six
months the Borrower's compliance with Section 6.1(a) of the Agreement;

         WHEREAS, the Lender has agreed to Borrower's requests, but only upon
and subject to the terms and provisions which are hereinafter specified.

         NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:

<PAGE>

SECTION 1. DEFINED TERMS.

         In addition to the terms defined in this Amendment, all terms defined
in the Agreement, and not otherwise defined herein, shall have the meaning given
them in the Agreement when used herein.

SECTION 2. WAIVER. The Lender hereby waives Borrower's compliance with Section
6.1(a) of the Agreement until November 29, 2002.

SECTION 3. AMENDMENT TO LOAN AGREEMENT. Section 6.1(a) of the Agreement is
amended to read in full as follows:

                  (a) Consolidated Current Ratio. Permit the Consolidated
                  Current Ratio, as defined herein and calculated pursuant to
                  Exhibit L hereto, to be less than 1.0 to 1.0 as of November
                  30, 2002 and as of the end of each month after November 30,
                  2002.

SECTION 4. REPRESENTATIONS AND WARRANTIES.

         To induce Lender to enter into this Amendment, Borrower hereby
represents and warrants to the Lender as follows:

         (a) Borrower has the corporate power, authority and legal right (i) to
make and deliver this Amendment; and (ii) to perform its obligations under the
Notes and the Agreement, as amended hereby; and Borrower has taken all action
necessary to authorize the execution and delivery of this Amendment and the
performance of the Agreement, as amended hereby.

         (b) This Amendment has been duly executed and delivered on behalf of
Borrower by its duly authorized officer, and this Amendment constitutes the
legal, valid and binding obligation of Borrower, enforceable in accordance with
its terms, except as the enforceability thereof may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

                                      -2-
<PAGE>

         (c) The execution, delivery and performance by Borrower of this
Amendment and the transactions contemplated hereby do not violate or constitute
a default under any provision of applicable law or any agreement binding upon
Borrower or the Subsidiaries of Borrower or result in the creation or imposition
of any Lien upon any of the assets of Borrower or the Subsidiaries of Borrower,
except Liens expressly permitted by the Agreement.

         (d) The representations and warranties contained in Article IV of the
Agreement are true and correct on and as of the date hereof as though made on
and as of the hereof.

         (e) No Event of Default has occurred and is continuing (after giving
effect to this Amendment).

SECTION 5. CONDITIONS PRECEDENT.

         This Amendment shall be effective only upon satisfaction of the
following conditions precedent:

         (a) Lender shall have received counterparts of this Amendment duly
executed and delivered by the Borrower and Guarantors;

         (b) No Event of Default shall have occurred and be continuing as of the
date of this Amendment, both before and after giving effect to this Amendment;
and

         (c) Lender shall have received such other agreements, documents or
instruments as Lender may require.

                                      -3-
<PAGE>

SECTION 6. NO OTHER AMENDMENTS; RATIFICATION OF LOAN PAPERS.

         Except as expressly amended and modified by this Amendment, all of the
provisions and covenants of the Agreement, all exhibits thereto and all other
Loan Papers (as any of the same have been amended) are and shall continue to
remain in full force and effect in accordance with the terms thereof and are
hereby ratified and confirmed by Borrower, the Subsidiaries parties hereto and
the Limited Guarantors as of the date of this Amendment as if the Agreement and
such other Loan Papers were re-executed as of the date of this Amendment.

SECTION 7. COUNTERPARTS.

         This Amendment may be executed by one or more of the parties hereto in
any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.

SECTION 8. GOVERNING LAW.

         THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.

SECTION 9. GLOBAL AMENDMENT OF LOAN PAPERS.

         All of the Loan Papers are hereby modified wherever necessary, and even
though not specifically addressed herein, so as to conform to the amendments to
the Agreement as set forth herein, and Borrower, the Subsidiaries and Guarantors
covenant to observe, comply with and perform each of the terms and provisions of
the Loan Papers to which they are parties, as modified hereby. Each Loan Paper
to which Borrower and the Subsidiaries or any Guarantor is a party is hereby
amended so that any reference in each such Loan Paper to the Agreement shall
mean a reference to the Agreement as amended hereby.

                                      -4-
<PAGE>

SECTION 10. FINAL AGREEMENT.

         THE AGREEMENT, AS AMENDED BY THIS AMENDMENT, AND THE OTHER LOAN PAPERS
REPRESENTS 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 ORAL AGREEMENTS BETWEEN THE PARTIES.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the
date and year first above written.

                                      BORROWER:

                                          NATURAL GAS SERVICES GROUP, INC.

                                          By: /s/ Wayne Vinson
                                              President

                                      LENDER:

                                          WESTERN NATIONAL BANK

                                          /s/ Scott A. Lovett, Executive Vice
                                                President

                                      -5-
<PAGE>

                                      LIMITED GUARANTORS:

                                         /s/ Wallace O. Sellers, Individually

                                         CAV-RDV, LTD.
                                         /s/ Kirk Mehaffey, General Partner

                                         DIAMENTE INVESTMENTS, L.P.

                                         By: Diamente Management, LLC, its
                                                general partner

                                         /s/ Wallace C. Sparkman, President

                                         /s/ Wallace C. Sparkman, Individually

                                         /s/ Richard L. Yadon, Individually

                                      SUBSIDIARY GUARANTORS:

                                         ROTARY GAS SYSTEMS, INC.

                                         /s/ Wayne Vinson, President

                                         NGE LEASING, INC.

                                         /s/ Wallace C. Sparkman, President

                                      -6-<PAGE>
                                                                   EXHIBIT 10.16

                                   SCHEDULE II

         The following indebtedness of the Borrower will be repaid in its
entirety with proceeds of the Term Promissory Note:

                  1. C.N.G. Engines Company. Promissory Note, dated August 20,
         1998, in the original principal amount of $350,000.00, made by C.N.G.
         Engines Company payable to NorwestBank Texas, N.A. and maturing on
         April 30, 1999, the outstanding principal balance and accrued interest
         of which on September 16, 1999 will be $319,790.79.

                  2. Flare King, Inc. Commercial Variable Rate Revolving or Draw
         Note, dated June 17, 1998, in the original principal amount of
         $125,000.00, made by Flare King, Inc. payable to Midland American Bank
         and maturing on June 17, 1999, the outstanding principal balance and
         accrued interest of which on September 16, 1999 will be $126,772.04.

                  3. Flare King, Inc. Commercial Revolving or Draw Note -
         Variable Rate, dated June 19, 1997, in the original principal amount of
         $150,000.00, made by Flare King, Inc. payable to Midland American Bank
         and maturing on June 19, 2000, the outstanding principal balance and
         accrued interest of which on September 16, 1999 will be $52,064.99.

                  4. Gas Engine Service, LLC. Term Promissory Note, dated July
         9, 1996, in the original principal amount of $40,000.00 made by Gas
         Engine Service, LLC payable to Texas Commerce Bank National Association
         and maturing on July 15, 2000, the outstanding principal balance and
         accrued interest of which on September 16, 1999 will be $2,295.98.

                  5. Gas Engine Service, LLC. Revolving Promissory Note, dated
         July 23, 1998, in the original principal amount of $50,000.00, made by
         Gas Engine Service, LLC payable to Chase Bank of Texas, National
         Association and maturing on July 23, 1999, the outstanding principal
         balance and accrued interest of which on September 16, 1999 will be
         $49,132.41.

                  6. Natural Gas Engine Co. Promissory Note, dated May 24, 1999,
         in the original principal amount of $750,000.00, made by Natural Gas
         Engine Co. payable to Western National Bank and maturing on September
         21, 1999, the outstanding principal balance and accrued interest of
         which on September 16, 1999 will be $752,927.09.

<PAGE>

                                    EXHIBIT A

                              TERM PROMISSORY NOTE

$1,500,000.00                                                 SEPTEMBER 15, 1999

         FOR VALUE RECEIVED, in the manner, on the dates and in the amounts
herein stipulated, NATURAL GAS SERVICES GROUP, INC., a Texas corporation
("Borrower"), hereby promises and agrees to pay to the order of WESTERN NATIONAL
BANK, a national banking association ("Lender"), in Midland, Midland County,
Texas, the principal sum of One Million Five Hundred Thousand and No/100 Dollars
($1,500,000.00)in lawful money of the United States of America, which shall be
legal tender in payment of all debts and dues, public and private, at the time
of payment, together with interest on the unpaid principal amount hereof from
time to time outstanding until maturity at a rate per annum which shall from day
to day be equal to the lesser of (a) one percent (1.00%) over the Prime Rate
(the "Established Rate") in effect from day to day (calculated on the basis of
actual days elapsed, but computed as if each calendar year consisted of 360
days) or (b) the Highest Lawful Rate. Each change in the rate of interest
charged under this Term Promissory Note (this "Note") shall, subject to the
terms hereof, become effective, without notice to Borrower, upon the effective
date of each change in the Prime Rate or the Highest Lawful Rate, as the case
may be. Notwithstanding the foregoing, if at any time the Established Rate
exceeds the Highest Lawful Rate, the rate of interest on this Note shall be
limited to the Highest Lawful Rate, but any subsequent reductions in the
Established Rate shall not reduce the rate of interest hereon below the Highest
Lawful Rate until the total amount of interest accrued hereon approximately
equals the amount of interest which would have accrued hereon if the Established
Rate had at all times been in effect. In the event that at maturity (stated or
by acceleration), or at final payment of this Note, the total amount of interest
paid or accrued hereon is less than the amount of interest which would have
accrued if the Established Rate had at all times been in effect, then, at such
time and to the extent permitted by applicable laws, Borrower shall pay to
Lender an amount equal to the difference between (a) the lesser of the amount of
interest which would have accrued if the Established Rate had at all times been
in effect or the amount of interest which would have accrued if the Highest
Lawful Rate had at all times been in effect, and (b) the amount of interest
actually paid or accrued on this Note. Interest calculations may be made ten
days prior to any interest installment due date under this Note, in which event,
if there is an adjustment in the interest rate in accordance with the terms
hereof during such ten-day period, then Borrower shall subsequently, on demand,
pay to Lender any underpayment, or Lender shall pay to Borrower, any
overpayment, as the case may be, as a result of any adjustment during such
ten-day period.

         This Note is the Term Promissory Note referred to in the Loan
Agreement, dated as of the date hereof (as the same may be amended, supplemented
or otherwise modified from time to time, the "Loan Agreement"), by and between
Borrower and 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 and Lender under the
Loan Agreement and this Note. Terms used herein which are defined in the Loan
Agreement shall have such

<PAGE>

defined meanings unless otherwise defined herein. The holder of this Note shall
be entitled to the benefits of the Loan Agreement.

         Interest only on this Note shall be due and payable on October 15,
1999, November 15, 1999 and December 15, 1999. Thereafter, the principal of this
Note shall be due and payable (a) in fifty-nine consecutive monthly installments
of $25,000.00 each, with the first such installment being due and payable on
January 15, 2000, and a like installment being due and payable on the first day
of each succeeding month to and including November 15, 2004; and (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 December 15, 2004.
Interest, computed on the unpaid balance of this Note, shall be due and payable
as it accrues, on the same dates as, but in addition to, the installments 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.

         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, all amounts then
remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable, all as provided therein.

         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 (or to maintain perfection of) any lien on or security interest in
any such security, in each casein 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

                                       2
<PAGE>

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
of 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 303.201, as supplemented
by Article 5069-ID.002 of the Texas Revised Civil Statutes (Texas Credit Title)
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 is performable and payable in the County of Midland, State of
Texas, and shall be construed in accordance with, and governed by, the laws of
the State of Texas; provided, however, that the laws pertaining to allowable
rates of interest may, from time to time, be governed by the laws of the United
States of America.

                                               NATURAL GAS SERVICES GROUP, INC.

                                               By:
                                                   -----------------------------

                                       3
<PAGE>

                                    EXHIBIT B

                    REVOLVING LINE OF CREDIT PROMISSORY NOTE

$750,000.00                                                   September 15, 1999

         FOR VALUE RECEIVED, in the manner, on the dates and in the amounts
herein stipulated, NATURAL GAS SERVICES GROUP, INC., a Texas corporation
("Borrower"), hereby promises and, agrees to pay to the order of WESTERN
NATIONAL BANK, a national banking association ("Lender"), in Midland, Midland
County, Texas, the principal sum of Seven Hundred Fifty Thousand and No/100
Dollars ($750,000.00) or, if less, the aggregate unpaid principal amount
outstanding hereunder, in lawful money of the United States of America, which
shall be legal tender in payment of all debts and dues, public and private, at
the time of payment, together with interest on the unpaid principal amount
hereof from time to time outstanding until maturity at a rate per annum which
shall from day to day be equal to the lesser of (a) one percent (1.00%) over the
Prime Rate (the "Established Rate") in effect from day to day (calculated on the
basis of actual days elapsed, but computed as if each calendar year consisted of
360 days) or (b) the Highest Lawful Rate. Each change in the rate of interest
charged under this Revolving Line of Credit Promissory Note (this "Note") shall,
subject to the terms hereof, become effective, without notice to Borrower, upon
the effective date of, each change in the Prime Rate or the Highest Lawful Rate,
as he case may be. Notwithstanding the foregoing, if at any time the Established
Rate exceeds the Highest Lawful Rate, the rate of interest on this Note shall be
limited to the Highest Lawful Rate, but any subsequent reductions in the
Established Rate shall not reduce the rate of interest hereon below the Highest
Lawful Rate until the total amount of interest accrued hereon approximately
equals the amount of interest which would have accrued hereon if the Established
Rate had at all times been in effect. In the event that at maturity (stated or
by acceleration), or at final payment of this Note, the total amount of interest
paid or accrued; hereon is less than the amount of interest which would have
accrued if the Established Rate had at all times been in effect, then, at such
time and to the extent permitted by applicable laws, Borrower shall pay to
Lender an amount equal to the difference between (a) the lesser of the amount of
interest which would have accrued if the Established Rate had at all times been
in effect or the amount of interest which would have accrued if the Highest
Lawful Rate had at all times been in effect, and (b) the amount of interest
actually paid or accrued on this Note. Interest calculations may be made ten
days prior to any interest installment due date under this Note, in which event,
if there is an adjustment in the interest rate in accordance with the terms
hereof during such ten-day period, then Borrower shall subsequently, on demand,
pay to Lender any underpayment, or Lender shall pay to Borrower, any
overpayment, as the case may be, as a result of any adjustment during such
ten-day period.

         This Note is the Revolving Line of Credit Promissory Note referred to
in the Loan Agreement, dated as of the date hereof (as the same may be amended,
supplemented or otherwise modified from time to time, the "Loan Agreement"), by
and between Borrower and 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 and
Lender under the Loan Agreement and this Note. Terms used herein which are
defined in the Loan Agreement

<PAGE>

shall have such defined meanings unless otherwise defined herein. The holder of
this Note shall be entitled to the benefits of the Loan Agreement.

         Advances and Subsequent Advances under this (Note shall be made in
accordance with the provisions of the Loan Agreement. Subject to the terms
hereof and of the Loan Agreement, Borrower may borrow, repay and reborrow at any
time and from time to time under his Note; provided, however, that the principal
sum outstanding hereunder at any one time shall never exceed the lesser of (i)
$750,000.00 or (ii) the Borrowing Base then in effect.

         Interest on the outstanding principal balance of this Note shall be due
and payable monthly on the first day of each month, commencing October 15, 1999.
The then outstanding principal balance of this Note and all accrued and unpaid
interest shall be due September 15, 2001. 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.

         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, all amounts then
remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable, all as provided therein.

         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 (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

                                       2
<PAGE>

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 of 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 303.201, as supplemented
by Article 5069-ID.002 of the Texas Revised Civil Statutes (Texas Credit Title)
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 is performable and payable in the County of Midland, State of
Texas, and shall be construed in accordance with, and governed by, the laws of
the State of Texas; provided, however, that the laws pertaining to allowable
rates of interest may, from time to time, be governed by the laws of the United
States of America.

                                           NATURAL GAS SERVICES GROUP, INC.

                                           By:
                                               ---------------------------------

                                       3
<PAGE>

                             STOCK PLEDGE AGREEMENT

         THIS STOCK PLEDGE AGREEMENT, dated as of September __, 1999, is made by
and between NATURAL GAS SERVICES GROUP, INC., a Texas corporation (the
"Pledgor"), and WESTERN NATIONAL BANK, a national banking association (the
"Lender").

                                   WITNESSETH

         WHEREAS, pursuant to that certain Loan Agreement, dated as of
__________, 1999, between the Pledgor and the Lender (as amended, supplemented
or otherwise modified from time to time, the "Loan Agreement"), the Lender has
agreed to make loans to the Pledgor upon the terms and subject to the conditions
set forth therein, to be evidenced by the Notes (as defined in the Loan
Agreement) issued by the Pledgor thereunder; the Pledgor is the legal and
beneficial owner of the shares of Pledged Stock (as hereinafter defined) issued
by ____________________, a ___________________ organized under the laws of Texas
(the "Issuer"); it is a condition precedent to the obligation of the Lender to
make loans to the Pledgor under the Loan Agreement that the Pledgor shall have
executed and delivered this Stock Pledge Agreement to the Lender; and

         NOW, THEREFORE in consideration of the premises and to induce the
Lender to enter into the Loan Agreement and to make loans to Pledgor under the
Loan Agreement, the Pledgor hereby agrees with the Lender, as follows:

         1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Loan Agreement and used herein are so used as so defined, and the
following terms shall have the following meanings:

                  "Code" means the Uniform Commercial Code from time to time in
         effect in the State of Texas.

                  "Collateral" means the Pledged Stock and all Proceeds from the
         Pledged Stock.

                  "Obligations" means the unpaid principal of and interest on
         the Notes and all other present and future indebtedness, obligations
         and liabilities of the Pledgor and any of its Subsidiaries to the
         Lender, and all renewals, rearrangements and extensions thereof, or any
         part thereof, now or hereafter owed to Lender by the Pledgor or any of
         its Subsidiaries arising from, by virtue of, or pursuant to any Loan
         Paper, or otherwise, together with all interest accruing thereon and
         all costs, expenses and attorneys' fees incurred in the enforcement or
         collection thereof, whether such indebtedness, obligations and
         liabilities are direct, indirect, fixed, contingent, liquidated,
         unliquidated, joint, several, or joint and several or were, prior to
         acquisition thereof by Lender, owed to some other person.

                  "Stock Pledge Agreement" means this Stock Pledge Agreement, as
         amended, supplemented or otherwise modified from time to time.

<PAGE>

                  "Pledged Stock" means the shares of capital stock of the
         Issuer listed on Schedule 1 hereto, together with all stock
         certificates, options or rights of any nature whatsoever that may be
         issued or granted by the Issuer to the Pledgor while this Stock Pledge
         Agreement is in effect.

                  "Proceeds" means all "proceeds" as such term is defined in
         Section 9.306(1) of the Code and, in any event, shall include, without
         limitation, all dividends or other income from the Pledged Stock,
         collections thereon or distributions with respect thereto.

         2. Pledge; Grant of Security Interest. The Pledgor hereby delivers to
the Lender all the Pledged Stock and hereby, grants to the Lender, a first and
prior security interest and Bank Lien in the Collateral, as collateral security
for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations.

         3. Stock Powers. Concurrently with the delivery to the Lender of each
certificate representing one or more shares of Pledged Stock to the Lender, the
Pledgor shall deliver an undated stock power covering such certificate, duly
executed in blank by the Pledgor with, if the Lender so requests, signature
guaranteed.

         4. Representations and Warranties. The Pledgor represents and warrants
that:

                  (a) the shares of Pledged Stock listed on Schedule I
         constitute all the issued and outstanding shares of all classes of
         capital stock of the Issuer;

                  (b) all the shares of the Pledged Stock have been duly and
         validly issued and are fully paid and nonassessable;

                  (c) the Pledgor is the record and beneficial owner of, and has
         good and marketable title to, the Pledged Stock listed on Schedule I,
         free of any and all Liens or options in favor of, or claims of, any
         other person, except the Bank Lien created by this Stock Pledge
         Agreement;

                  (d) upon delivery to the Lender of the stock certificates
         evidencing the Pledged Stock, the Lien granted pursuant to this Stock
         Pledge Agreement will constitute a valid, perfected first priority Bank
         Lien on the Collateral, enforceable as such against all creditors of
         the Pledgor and any person purporting to purchase any Collateral from
         the Pledgor; and

                  (e) with respect to the Pledged Stock, the Pledgor has
         obtained from the Issuer and has delivered to the Lender an
         Acknowledgment and Consent, substantially in the form attached hereto
         as Annex I, executed by the Issuer.

         5. Covenants. The Pledgor covenants and agrees with the Lender that,
from and after the date of this Stock Pledge Agreement until the, Obligations
are paid in full:

         If the Pledgor shall, as a result of its ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate

                                      -2-
<PAGE>

representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights, whether in addition to,
in substitution of, as a conversion of, or in exchange for any shares of the
Pledged Stock, or otherwise in respect thereof, the Pledgor shall accept the
same as the agent of the Lender, and deliver the same forthwith to the Lender in
the exact form received, duly indorsed by the Pledgor to the Lender, if
required, together with an undated stock power covering such certificate duly
executed in blank by the Pledgor and with, if the Lender so requests, signature
guaranteed, to be held by the Lender, subject to the terms hereof, as additional
collateral security for the Obligations. Any sums paid upon or in respect of the
Pledged Stock upon the liquidation or dissolution of the Issuer shall be paid
over to the Lender to be held by it hereunder as additional collateral security
for the Obligations, and in case any distribution of capital shall be made on or
in respect of the Pledged Stock or any property shall be distributed upon or
with respect to the Pledged Stock pursuant to the recapitalization or
reclassification of the capital of the Issuer, or pursuant to the reorganization
thereof, the property so distributed shall be delivered to the Lender to be held
by it hereunder as additional collateral security for the Obligations. If any
sums of money or property so paid or distributed in respect of the Pledged Stock
shall be received by the Pledgor, the Pledgor shall, until such money or
property is paid or delivered to the Lender, hold such money or property in
trust for the Lender, segregated from other funds of the Pledgor, as additional
collateral security for the Obligations.

         Without the prior written consent of the Lender, the Pledgor will not
(i) vote to enable, or take any other action to permit, the Issuer to issue any
stock or other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of the Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Collateral, or (iii) create, incur or permit to exist any Lien or option
in favor of, or any claim of any person with respect to, any of the Collateral,
or any interest therein, except for the Bank Lien provided for by this Stock
Pledge Agreement. The Pledgor will defend the right, title and interest of the
Lender in and to the Collateral against the claims and demands of all persons
whomsoever.

         At any time and from time to time, upon the written request of the
Lender, and at the sole expense of the Pledgor, the Pledgor will promptly and
duly execute and deliver such further instruments and documents and take such
further actions as the Lender may reasonably request for the purposes of
obtaining or preserving the full benefits of this Stock Pledge Agreement and of
the rights and powers herein granted. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note, other instrument or chattel paper, such note, instrument or
chattel paper shall be immediately delivered to the Lender, duly endorsed in a
manner satisfactory to the Lender, to be held as Collateral pursuant to this
Stock Pledge Agreement.

         The Pledgor agrees to pay, and to save the Lender harmless from, any
and all liabilities with respect to, or resulting from any delay in paying, any
and all stamps, excise, sales or other taxes which may be payable or determined
to be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Stock Pledge Agreement.

         6. Cash Dividends; Voting Rights; Interest and Principal Payments.
Unless an Event of Default shall have occurred and be continuing and the Lender
shall have given notice to the

                                      -3-
<PAGE>

Pledgor of the Lender's intent to exercise its corresponding rights pursuant to
paragraph 7 below, the Pledgor shall be permitted to receive all cash dividends
paid in the normal course of business of the Issuer, to the extent permitted in
the Loan Agreement, in respect of the Pledged Stock and to exercise all voting
and corporate rights with respect to the Pledged Stock, provided, however, that
no vote shall be cast or corporate right exercised or other action taken which,
in the Lender's reasonable judgment, would impair the Collateral or which would
be inconsistent with or result in any violation of any provision of the Loan
Agreement, the Notes or this Stock Pledge Agreement.

         7. Rights of the Lender. (a) If an Event of Default shall occur and be
continuing and the Lender shall give notice of its intent to exercise: such
rights to the Pledgor, (i) the Lender shall have the right to receive any and
all cash dividends paid in respect of the Pledged Stock and make application
thereof to the Obligations in such order as the Lender may determine and (ii)
all shares of the Pledged Stock shall be registered in the name of the Lender or
its nominee, and the Lender or its nominee may thereafter exercise (A) all
voting, corporate and other rights pertaining to such shares of the Pledged
Stock at any meeting of shareholders of the Issuer or otherwise and (B) any and
all right of conversion, exchange, subscription and any other rights, privileges
or options pertaining to such shares of the Pledged Stock as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Stock upon the merger, conversion,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of the Issuer, or upon the exercise by the Pledgor or
the Lender of any rights, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit and deliver any
and all of the Pledged Stock with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it may
determine).

                  (b) The rights of the Lender hereunder shall not be
         conditioned or contingent upon the pursuit by the Lender of any right
         or remedy against the Issuer, any Guarantor or any other person which
         may be or become liable in respect of all or any part of the
         Obligations or against any collateral security or guarantee therefor or
         right of offset with respect thereto. Lender shall not be liable for
         any failure to demand, collect or realize upon all or any part of the
         Collateral or for any delay in doing so, nor shall the Lender be under
         any obligation to sell or otherwise dispose of any Collateral upon the
         request of the Pledgor or any other person or to take any other action
         whatsoever with regard to the Collateral or any part thereof.

         8. Remedies. If an Event of Default shall occur and be continuing, the
Lender may exercise, in addition to all other rights and remedies granted in
this Stock Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Lender, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Pledgor, the Issuer or any other person (all and each
of which demands, defenses, advertisements and notices are hereby waived) may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, assign, give option
or options to purchase or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels at
public or

                                      -4-
<PAGE>

private sale or sales, in the over-the-counter market, at any exchange, broker's
board or office of the Lender or elsewhere upon such terms and conditions as
Lender may deem advisable and at such prices as Lender may deem best, for cash
or on credit or for future delivery without assumption of any credit risk. The
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted bylaw, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Pledgor, which right or equity is hereby waived or released.
The Lender shall apply any Proceeds from time to time held by it and the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred in respect thereof or incidental to the care or safekeeping of any of
the Collateral or in any way relating to the Collateral or the rights of the
Lender hereunder, including, without limitation, reasonable attorneys-fees and
disbursements of counsel to the Lender, to the payment in whole or in part of
the Obligations, in such order as the Lender may elect, and only after such
application and after the payment by the Lender of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Lender account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor waives all claims, damages and
demands it may acquire against the Lender arising out of the exercise by it of
any rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.

         9. Private Sales. (a) If the Lender exercises its right to sell any or
all of the Pledged Stock pursuant to paragraph 8 hereof, the Pledgor recognizes
that the Lender may be unable to effect a public sale of any or all the Pledged
Stock, by reason of certain prohibitions contained in the Securities Act of
1933,as amended (the "Securities Act"), and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Lender shall be under no
obligation to delay, a sale of any of the Pledged Stock for the period of time
necessary to permit the Issuer to register such securities for public sale under
the Securities Act, or under applicable state securities laws, even if the
Issuer would agree to do so.

                  (b) The Pledgor further agrees to use its best efforts to do
         or cause to be done all such other acts as may be necessary to make
         such sale or sales of all or any portion of the Pledged Stock pursuant
         to this paragraph 9 valid and binding and in compliance with any and
         all other applicable Requirements of Law. The Pledgor further agrees
         that a breach of any of the covenants contained in this paragraph 9
         will cause irreparable injury to the Lender, that the Lender has no
         adequate remedy at law in respect of such breach and, as a consequence,
         that each and every covenant contained in this paragraph 9 shall be
         specifically enforceable against the Pledgor, and the Pledgor hereby
         waives and agrees not to assert any defenses against an action for
         specific performance of such covenants, except for a defense that no
         Event of Default has occurred under the Loan Agreement.

                                      -5-
<PAGE>

         10. Limitation on Duties Regarding Collateral. The Lender's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-2 07 of the Code or otherwise,
shall be to deal with it in the same manner as the Lender deals with similar
securities and property for its own account. Neither the Lender nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Pledgor or otherwise.

         11. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.

         12. Severability. Any provision of this Stock Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         13. Paragraph Headings. The paragraph headings used in this Stock
Pledge Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.

         14. No Waiver: Cumulative Remedies. The Lender shall not by any act
(except by a written instrument pursuant to paragraph 15 hereof) be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Event of
Default under the Loan Agreement or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Lender, any rights, powers or privileges hereunder shall operate as
a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Lender would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided
bylaw.

         15. Waivers and Amendments Successors and Assigns; Governing Law. None
of the terms or provisions of this Stock Pledge Agreement may be amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and the Lender, provided that any provision of this Stock Pledge
Agreement may be waived by the Lender in a letter or agreement executed by the
Lender or by telex or facsimile transmission from the Lender. This Stock Pledge
Agreement shall be binding upon the permitted successors and assigns of the
Pledgor and shall inure to the benefit of the Lender and its successors and
assigns.

         THIS STOCK PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

                                      -6-
<PAGE>

         16. Notices. Notices by the Lender to the Pledgor or the Issuer may be
given by mail, by telegraph or by facsimile transmission; addressed or
transmitted to the appropriate party at the Pledgor's address set forth in the
Loan Agreement and shall be effective (a) in the case of mail, three days after
deposit in the postal system, postage pre-paid, (b) in the case of facsimile
notices, when sent and (c) in the case of telegraphic notice, when delivered to
the telegraph company. The Pledgor and the Issuer may change their respective
addresses and transmission numbers by written notice to the Lender.

         17. Irrevocable Authorization and Instruction to Issuer. The Pledgor
hereby authorizes and instructs the Issuer to comply with any instruction
received by it from the Lender in writing that (a) states that an Event of
Default has occurred and (b) is otherwise in accordance with the terms of this
Stock Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Issuer shall be fully protected in so
complying.

                                      -7-
<PAGE>

         IN WITNESS WHEREOF, the undersigned has caused this Stock Pledge
Agreement to be duly executed and delivered as of the date first above written.

                                              NATURAL GAS SERVICES GROUP, INC.

                                              By:
                                                  ------------------------------

                                      -8-
<PAGE>

                                     ANNEX I

                           ACKNOWLEDGMENT AND CONSENT

         The Issuer referred to in the foregoing Stock Pledge Agreement hereby
(i) consents to the pledge of the Pledged Stock and waives any and all
restrictions applicable thereto, (ii) acknowledges receipt of a copy of the
Stock Pledge Agreement and (iii) agrees to be bound thereby and to comply with
the terms thereof insofar as such terms are applicable to it. The Issuer agrees
to notify the Lender promptly in writing of the occurrence of any of the events
described in paragraph 5(a) of the Stock Pledge Agreement.

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

<PAGE>

                                   SCHEDULE I
                                       TO
                             STOCK PLEDGE AGREEMENT

                          DESCRIPTION OF PLEDGED STOCK

<Table>
<Caption>

                                                                        STOCK
                                         CLASS OF                    CERTIFICATE                    NO. OF
            ISSUER                        STOCK                           NO.                       SHARES
            ------                       --------                    -----------                    ------
<S>                                      <C>                         <C>                            <C>

</Table>

<PAGE>

                   LIMITED LIABILITY COMPANY PLEDGE AGREEMENT

         THIS LIMITED LIABILITY COMPANY PLEDGE AGREEMENT, dated as of September
____, 1999, is made by and between ___________________, a Texas ________________
(the "Pledgor"), and WESTERN NATIONAL BANK, a national banking association (the
"Lender").

                                   WITNESSETH

         WHEREAS, pursuant to that certain Loan Agreement, dated as of
_________________, 1999, between _______________________ and the Lender (as
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement"), the Lender has agreed to make loans to
__________________________________ upon the terms and subject to the conditions
set forth therein, to be evidenced by the Notes (as defined in the Loan
Agreement) issued by __________________________ thereunder; the Pledgor is the
legal and beneficial owner of the Pledged Interests (as hereinafter defined)
issued by ___________________________, a ___________________ organized under the
laws of Texas (the "Issuer"); it is a condition precedent to the obligation of
the Lender to make loans to under the Loan Agreement that the Pledgor shall have
executed and delivered this Pledge Agreement to the Lender; and

         NOW, THEREFORE, in consideration of the premises and to induce the
Lender to enter into the Loan Agreement and to make loans to
_____________________ under the Loan Agreement, the Pledgor hereby agrees with
the Lender, as follows:

         1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Loan Agreement and used herein are so used as so defined, and the
following terms shall have the following meanings:

                  "Code" means the Uniform Commercial Code from time to time in
         effect in the State of Texas.

                  "Collateral" means the Pledged Interests and all Proceeds from
         the Pledged Interests.

                  "Obligations" means the unpaid principal of and interest on
         the Notes and all other present and future indebtedness, obligations
         and liabilities of _____________________ and any of its Subsidiaries to
         the Lender, and all renewals, rearrangements and extensions thereof, or
         any part thereof, now or hereafter owed to Lender by
         ________________________ or any of its Subsidiaries arising from, by
         virtue of, or pursuant to any Loan Paper, or otherwise, together with
         all interest accruing thereon and all costs, expenses and attorneys'
         fees incurred in the enforcement or collection thereof, whether such
         indebtedness, obligations and liabilities are direct, indirect, fired,
         contingent, liquidated, unliquidated, joint, several, or joint and
         several or were, prior to acquisition thereof by Lender, owed to some
         other person.

<PAGE>

                  "Pledge Agreement" means this Limited Liability Company Pledge
         Agreement, as amended, supplemented or otherwise modified from time to
         time.

                  "Pledged Interests" means the limited liability company
         interests in the Issuer listed on Schedule I hereto, together with all
         certificates, options or rights of any nature whatsoever that may be
         issued or granted by the Issuer to the Pledgor while this Pledge
         Agreement is in effect.

                  "Proceeds" means all "proceeds" as such term is defined in
         Section 9.306(1) of the Code and, in any event, shall include, without
         limitation, all dividends or other income from the Pledged Interests,
         collections thereon or distributions with respect thereto.

         2. Pledge; Grant of Security Interest. The Pledgor hereby delivers to
the Lender all the Pledged Interests and hereby grants to the Lender, a first
and prior security interest and Bank Lien in the Collateral, as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations.

         3. Stock Powers. Concurrently with the delivery to the Lender of each
certificate representing the Pledged Interests to the Lender, the Pledgor shall
deliver an undated stock power (in form and substance satisfactory to the
Lender) covering such certificate, duly executed in blank by the Pledgor with,
if the Lender so requests, signature guaranteed.

         4. Representations and Warranties. The Pledgor represents and warrants
that:

                  (a) the Pledged Interests listed on Schedule I constitute the
         indicated percentage interest of the issued and outstanding membership
         interests of all classes of interest in the Issuer;

                  (b) all the Pledged Interests have been duly and validly
         issued and are fully paid and nonassessable;

                  (c) the Pledgor is the record and beneficial owner of, and has
         good and marketable title to, the Pledged Interests listed on Schedule
         I, free of any and all Liens or options in favor of, or claims of, any
         other person, except the Bank Lien created by this Pledge Agreement;

                  (d) upon delivery to the Lender of the certificates evidencing
         the Pledged Interests, the Lien granted pursuant to this Pledge
         Agreement will constitute a valid, perfected first priority Bank Lien
         on the Collateral, enforceable as such against all creditors of the
         Pledgor and any person purporting to purchase any Collateral from the
         Pledgor; and

                  (e) with respect to the fledged Interests, the Pledgor has
         obtained from the Issuer and has delivered to the Lender an
         Acknowledgment and Consent, substantially in the form attached hereto
         as Annex I, executed by the Issuer.

                                       2
<PAGE>

         5. Covenants. The Pledgor covenants and agrees with the Lender that,
from and after the date of this Pledge Agreement until the Obligations are paid
in full:

                  (a) If the Pledgor shall, as a result of its ownership of the
         Pledged Interests, become entitled to receive or shall receive any
         certificate (including, without limitation, any certificate
         representing a dividend or a distribution in connection with any
         reclassification, increase or reduction of capital or any certificate
         issued in connection with any reorganization), option or rights,
         whether in addition to, in substitution of, as a conversion of, or in
         exchange for any part of the Pledged Interests, or otherwise in respect
         thereof, the Pledgor shall accept the same as the agent of the Lender,
         and deliver the same forthwith to the Lender in the exact form
         received, duly indorsed by the Pledgor to the Lender, if required,
         together with an undated stock power covering such certificate duly
         executed in blank by the Pledgor and with, if the Lender so requests,
         signature guaranteed, to be held by the Lender, subject to the terms
         hereof, as additional collateral security for the Obligations. Any sums
         paid upon or in respect of the Pledged Interests upon the liquidation
         or dissolution of the Issuer shall be paid over to the Lender to be
         held by it hereunder as additional collateral security for the
         Obligations, and in case any distribution of capital shall be made on
         or in respect of the Pledged Interests or any property shall be
         distributed upon or with respect to the Pledged Interests pursuant to
         the recapitalization or reclassification of the capital of the Issuer,
         or pursuant to the reorganization thereof, the property so distributed
         shall be delivered to the Lender to be held by it hereunder as
         additional collateral security for the Obligations. If any sums of
         money or property so paid or distributed in respect of the Pledged
         Interests shall be received by the Pledgor, the Pledgor shall, until
         such money or property is paid or delivered to the Lender, hold such
         money or property in trust for the Lender, segregated from other funds
         of the Pledgor, as additional collateral security for the Obligations.

                  (b) Without the prior written consent of the Lender, the
         Pledgor will not (i) vote to enable, or take any other action to
         permit, the Issuer to issue any equity securities of any nature or to
         issue any other securities convertible into or granting the right to
         purchase or exchange for any interest or other equity securities of any
         nature of the Issuer, (ii) sell, assign, transfer, exchange, or
         otherwise dispose of, or grant any option with respect to, the
         Collateral, or (iii) create, incur or permit to exist any Lien or
         option in favor of, or any claim of any person with respect to, any of
         the Collateral, or any interest therein, except for the Bank Lien
         provided for by this Pledge Agreement. The Pledgor will defend the
         right, title and interest of the Lender in and to the Collateral
         against the claims and demands of all persons whomsoever.

                  (c) At anytime and from time to time, upon the written request
         of the Lender, and at the sole expense of the Pledgor, the Pledgor will
         promptly and duly execute and deliver such further instruments and
         documents and take such further actions as the Lender may reasonably
         request for the purposes of obtaining or preserving the full benefits
         of this Pledge Agreement and of the rights and powers herein granted.
         If any amount payable under or in connection with any of the Collateral
         shall be or become evidenced by any promissory note, other instrument
         or chattel paper, such note, instrument or chattel paper shall be
         immediately delivered to the Lender, duly endorsed

                                       3
<PAGE>

         in a manner satisfactory to the Lender, to be held as Collateral
         pursuant to this Pledge Agreement.

                  (d) The Pledgor agrees to pay, and to save the Lender harmless
         from, any and all liabilities with respect to, or resulting from any
         delay in paying, any and all stamps, excise, sales or other taxes which
         may be payable or determined to be payable with respect to any of the
         Collateral or in connection with any of the transactions contemplated
         by this Pledge Agreement.

         6. Cash Dividends; Voting Rights; Interest and Principal Payments.
Unless an Event of Default shall have occurred and be continuing and the Lender
shall have given notice to the Pledgor of the Lender's intent to exercise its
corresponding rights pursuant to paragraph 7 below, the Pledgor shall be
permitted to receive all cash dividends or distributions paid in the normal
course of business of the Issuer, to the extent permitted in the Loan Agreement,
in respect of the Pledged Interests and to exercise all voting and corporate
rights with respect to the Pledged Interests, provided, however, that no vote
shall be cast or right exercised or other action taken which, in the Lender's
reasonable judgment, would impair the Collateral or which would be inconsistent
with or result in any violation of any provision of the Loan Agreement, the
Notes or this Pledge Agreement.

         7. Rights of the Lender.

                  (a) If an Event of Default shall occur and be continuing and
         the Lender shall give notice of its intent to exercise such rights to
         the Pledgor, (i) the Lender shall have the right to receive any and all
         cash dividends or distributions paid in respect of the Pledged
         Interests and make application thereof to the Obligations in such order
         as the Lender may determine and (ii) all of the Pledged Interests shall
         be registered in the name of the Lender or its nominee, and the Lender
         or its nominee may thereafter exercise (A) all voting, membership and
         other rights pertaining to the Pledged Interests at any meeting of
         members of managers of the Issuer or otherwise and (B) any and all
         rights of conversion, exchange, subscription and any other rights,
         privileges or options pertaining to such shares of the fledged
         Interests as if it were the absolute owner thereof (including, without
         limitation, the right to exchange at its discretion any and all of the
         Pledged Interests upon the merger, conversion, consolidation,
         reorganization, recapitalization or other fundamental change in the
         structure of the Issuer, or upon the exercise by the Pledgor or the
         Lender of any rights, privilege or option pertaining to the Pledged
         Interests, and in connection therewith, the right to deposit and
         deliver any and all of the Pledged Interests with any committee,
         depositary, transfer agent, registrar or other designated agency upon
         such terms and conditions as it may determine).

                  (b) The rights of the Lender hereunder shall not be
         conditioned or contingent upon the pursuit by the Lender of any right
         or remedy against the Issuer, any Guarantor or any other person which
         may be or become liable in respect of all or any part of the
         Obligations or against any collateral security or guarantee therefor or
         right of offset with respect thereto. Lender shall not be liable for
         any failure to demand, collect or realize upon all or any part of the
         Collateral or for any delay in doing so, nor shall the Lender be under
         any obligation to sell or otherwise dispose of any Collateral upon the
         request of the

                                       4
<PAGE>

         Pledgor or any other person or to take any other action whatsoever with
         regard to the Collateral or any part thereof.

         8. Remedies. If an Event of Default shall occur and be continuing, the
Lender may exercise, in addition to all other rights and remedies granted in
this Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Lender, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Pledgor, the Issuer or any other person (all and each
of which demands, defenses, advertisements and notices are hereby waived) may in
such circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, assign, give option
or options to purchase or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, in the over-the-counter market, at any,
exchange, broker's board or office of the Lender or elsewhere upon such terms
and conditions as Lender may deem advisable and at such prices as Lender may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in the Pledgor, which right or equity is hereby waived
or released. The Lender shall apply any Proceeds from time to time held by it
and the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred in respect thereof or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Lender hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Lender, to the payment in whole or in part of
the Obligations, in such order as the Lender may elect, and only after such
application and after the payment by the Lender of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Lender account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor waives all claims, damages and
demands it may acquire against the Lender arising out of the exercise by it of
any rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law; such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.

         9. Private Sales.

                  (a) If the Lender exercises its right to sell any or all of
         the Pledged Interests pursuant to paragraph 8 hereof, the Pledgor
         recognizes that the Lender may be unable to effect a public sale of any
         or all the Pledged Interests, by reason of certain prohibitions
         contained in the Securities Act of 1933, as amended (the "Securities
         Act"), and applicable state securities laws or otherwise, and may be
         compelled to resort to one or more private sales thereof to a
         restricted group of purchasers which will be obliged to agree, among
         other things, to acquire such securities for their own account for
         investment and not with a view to the distribution or resale thereof.
         The Pledgor acknowledges and agrees that any such private sale may
         result in prices and other terms less favorable than if such sale were
         a public sale and, notwithstanding such circumstances, agrees that any

                                       5
<PAGE>

         such private sale shall be deemed to have been made in a commercially
         reasonable manner. The Lender shall be under no obligation to delay a
         sale of any of the Pledged Interests for the period of time necessary
         to permit the Issuer to register such securities for public sale under
         the Securities Act, or under applicable state securities laws, even if
         the Issuer would agree to do so.

                  (b) The Pledgor further agrees to use its best efforts to do
         or cause to be done all such other acts as may be necessary to make
         such sale or sales of all or any portion of the Pledged Interests
         pursuant to this paragraph 9 valid and binding and in compliance with
         any and all other applicable Requirements of Law. The Pledgor further
         agrees that a breach of any of the covenants contained in this
         paragraph 9 will cause irreparable injury to the Lender, that the
         Lender has no adequate remedy at law in respect of such breach and, as
         a consequence, that each and every covenant contained in this paragraph
         9 shall be specifically enforceable against the Pledgor, and the
         Pledgor hereby waives and agrees not to assert any, defenses against an
         action for specific performance of such covenants, except for a defense
         that no Event, of Default has occurred under the Loan Agreement.

         10. Limitation on Duties Regarding Collateral. The Lender's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Lender deals with similar
securities and property for its own account. Neither the Lender nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Pledgor or otherwise.

         11. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.

         12. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         13. Paragraph Headings. The paragraph headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.

         14. No Waiver; Cumulative Remedies. The Lender shall not by any act
(except by a written instrument pursuant to paragraph 15 hereof) be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Event of
Default under the Loan Agreement or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Lender, any rights, powers or privileges hereunder shall operate as
a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Lender would otherwise have on any

                                       6
<PAGE>

future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided bylaw.

         15. Waivers and Amendments; Successors and Assigns; Governing Law. None
of the terms or provisions of this Pledge Agreement may be amended, supplemented
or otherwise modified except by a written instrument executed by the Pledgor and
the Lender, provided that any provision of this Pledge Agreement may be waived
by the Lender in a letter or agreement executed by the Lender or by telex or
facsimile transmission from the Lender. This Pledge Agreement shall be binding
upon the permitted successors and assigns of the Pledgor and shall inure to the
benefit of the Lender and its successors and assigns.

         THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

         16. Notices. Notices by the Lender to the Pledgor or the Issuer may be
given by mail, by telegraph or by facsimile transmission, addressed or
transmitted to the appropriate party at the Pledgor's address set forth in the
Loan Agreement and shall be effective (a) in the case of mail, three days after
deposit in the postal system, postage pre-paid, (b) in the case of facsimile
notices, when sent and (c) in the case of telegraphic notice, when delivered to
the telegraph company. The Pledgor and the Issuer may change their respective
addresses and transmission numbers by written notice to the Lender.

         17. Irrevocable Authorization and Instruction to Issuer. The Pledgor
hereby authorizes and instructs the Issuer to comply with any instruction
received by it from the Lender in writing that (a) states that an Event of
Default has occurred and (b) is otherwise in accordance with the terms of this
Pledge Agreement, without any other or further instructions from the Pledgor,
and the Pledgor agrees that the Issuer shall be fully protected in so complying.

         IN WITNESS WHEREOF, the undersigned has caused this Pledge Agreement to
be duly executed and delivered as of the date first above written.

                                                 By:
                                                    ----------------------------

                                       7
<PAGE>

                                     ANNEX I

                           ACKNOWLEDGMENT AND CONSENT

         The Issuer referred to in the foregoing Pledge Agreement hereby (i)
consents to the pledge of the Pledged Interests and waives any and all
restrictions applicable thereto, (ii) acknowledges receipt of a copy of the
Pledge Agreement and (iii) agrees to be bound thereby and to comply with the
terms thereof insofar as such terms are applicable to it. The Issuer agrees to
notify the Lender promptly in writing of the occurrence of any of the events
described in paragraph 5(a) of the Pledge Agreement.

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

                                   Annex I - 1
<PAGE>

                                   SCHEDULE I

                                       TO

                                PLEDGE AGREEMENT

                        DESCRIPTION OF PLEDGED INTERESTS

<Table>
<Caption>

                             MEMBERSHIP              PERCENTAGE
        ISSUER             CERTIFICATE NO.           INTEREST
        ------             ---------------           ---------
<S>                        <C>                       <C>

</Table>

<PAGE>

                                                                      [Borrower]

                               SECURITY AGREEMENT

         This SECURITY AGREEMENT ("Security Agreement"), dated as of the ____
day of September, 1999, is made by NATURAL GAS SERVICES GROUP, INC., a Colorado
corporation, with its principal offices at 710 Buffalo Street, Suite 201,
Corpus, Texas, 78401 in favor of WESTERN NATIONAL BANK, a national banking
association with banking quarters at 500 West Wall, Suite 100, Midland, Texas
79701.

         WHEREAS, Natural Gas Services Group, Inc. and Western National Bank
executed that certain Loan Agreement, dated of even date herewith (which,
together with all amendments and supplements thereto, is herein called the "Loan
Agreement"), pursuant to which Western National Bank agreed, subject to certain
terms and conditions therein stated, to make loans to Natural Gas Services
Group, Inc. as provided in the Loan Agreement; and

         WHEREAS, Western National Bank has conditioned its obligations under
the Loan Agreement upon the execution and delivery by Natural Gas Services
Group, Inc. of this Security Agreement, and Natural Gas Services Group, Inc. has
agreed to make and deliver this Security Agreement.

         NOW, THEREFORE, (i) in compliance with the terms and conditions of the
Loan Agreement, (ii) for and in consideration of the premises and the agreements
herein contained, and (iii) for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Natural Gas Services
Group, Inc. and Western National Bank agree as follows:

SECTION 1. DEFINITIONS

         Unless otherwise defined herein, terms which are defined in the Loan
Agreement and used herein are so used as so defined; and the following terms
shall have the following meanings:

                  (a) "Accounts" means all accounts receivable, leases
         receivable book debts, notes, drafts, instruments, documents,
         acceptances and other forms of obligations now owned or hereafter
         received or acquired by or belonging or owing to Debtor (including
         under any trade names, styles or divisions thereof) whether arising out
         of goods sold or leased by it or services rendered by it or from any
         other transaction, whether or not the same involves the sale of goods
         or performance of services by Debtor (including, without limitation,
         any such obligation which would be characterized as an account, general
         intangible or chattel paper under the UCC) and all of Debtor's rights
         in, to and under all purchase orders now owned or hereafter received or
         acquired by it for goods or services, and all of Debtor's rights to any
         goods represented by any of the foregoing (including returned or
         repossessed goods and unpaid seller's rights) and all moneys due or to
         become due to Debtor under all contracts for the sale of goods and/or
         the performance of services by it (whether or not yet earned by
         performance) or in connection with any other transaction, now in
         existence or hereafter arising, including, without limitation, the
         right

<PAGE>

         to receive the proceeds of said purchase orders and contracts, and all
         collateral security and guarantees of any kind given by any person with
         respect to any of the foregoing.

                  (b) "Contracts" means the contracts between any person and
         Debtor, as the same may from time to time be amended, supplemented or
         otherwise modified, including, without limitation, (i) all rights of
         Debtor to receive moneys due and to become due to it thereunder or in
         connection therewith, (ii) all rights of Debtor to damages arising out
         of, or from, breach or default in respect thereof and (iii) all rights
         of Debtor to perform and to exercise all remedies thereunder.

                  (c) "Debtor" is Natural Gas Services Group, Inc., a Colorado
         corporation, and its permitted successors and assigns.

                  (d) "Documents" has the meaning assigned in Section 9.105(6)
         of the UCC.

                  (e) "Equipment" means all machinery and equipment, now owned
         or hereafter acquired by Debtor, or in which Debtor now has or
         hereafter may acquire any right, title or interest and any and all
         additions, substitutions and replacements thereof, wherever located,
         together with all attachments, components, parts equipment and
         accessories installed therein or affixed thereto, including, but not
         limited to, all equipment as defined in Section 9.109(2) of the UCC.

                  (f) "Instrument" has the meaning assigned in Section 9.105(9)
         of the UCC.

                  (g) "Inventory" means all inventory, wherever located, now
         owned or hereafter acquired by the Debtor or in which the Debtor now
         has or hereafter may acquire any right, title or interest, including,
         without limitation, all goods and other personal property now or
         hereafter owned by the Debtor which are held for sale or lease or are
         furnished or are to be furnished under a contract of service or which
         constitute raw materials, work in process or materials used or consumed
         or to be used or consumed in the business of the Debtor, or in the
         processing, packaging or shipping of the same, and all finished good,
         including, but not limited to, all inventory as defined in Section
         9.109(4) of the UCC.

                  (h) "Obligations" means the unpaid principal of and interest
         on the Notes and all other present and future indebtedness, obligations
         and liabilities of the Debtor and any of its Subsidiaries to the
         Secured Party, and all renewals, rearrangements and extensions thereof,
         or any part thereof, now or hereafter owed to Secured Party by the
         Debtor or any of its Subsidiaries arising from, by virtue of, or
         pursuant to any Loan Paper, or otherwise, together with all interest
         accruing thereon and all costs, expenses and attorneys' fees incurred
         in the enforcement or collection thereof, whether such indebtedness,
         obligations and liabilities are direct, indirect, fixed, contingent,
         liquidated, unliquidated, joint, several, or joint and several or were,
         prior to acquisition thereof by Lender, owed to some other person.

                  (i) "Proceeds" means all "proceeds" as such term is defined in
         Section 9.306(a) of the UCC and, in any event, shall mean and include,
         but not be limited to, the following at any time whatsoever arising or
         receivable: (i) whatever is received

                                       2
<PAGE>

         upon any collection, exchange, sale or other disposition of any of the
         Collateral, and any property into which any of the Collateral is
         converted, whether cash or non-cash proceeds, (ii) any and all proceeds
         of any insurance, indemnity, warranty or guaranty payable to Debtor
         from time to time with respect to any of the Collateral, and (iii) any
         and all payments (in any form whatsoever) made or due and payable to
         Debtor from time to time in connection with any requisition,
         confiscation, condemnation, seizure or forfeiture of all or any part of
         the Collateral by any governmental body, authority, bureau or agency
         (or any person acting under color of Governmental Authority).

                  (j) "Secured Party" is Western National Bank, a national
         banking association, and its successors and assigns.

                  (k) "UCC" means the Uniform Commercial Code as from time to
         time in effect in the State of Texas.

SECTION 2. GRANT OF SECURITY INTEREST

         As collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations, the Debtor hereby grants to the Secured Party a
security interest and Bank Lien in all of the following property now owned or at
any time hereafter acquired by the Debtor or in which the Debtor now has or at
any time in the future may acquire any right, title or interest (collectively,
the "Collateral"):

                  (i) all Accounts;

                  (ii) all Contracts;

                  (iii) all Documents;

                  (iv) all Equipment;

                  (v) all Instruments;

                  (vi) all Inventory; and

                  (vii) all Proceeds and all present and future increases,
         combinations, reclassifications, improvements and products of,
         accessions, attachments, and other additions to, and substitutes and
         replacements for all or any part of the foregoing.

SECTION 3. DEBTOR'S REPRESENTATIONS AND WARRANTIES

         The Debtor hereby represents and warrants that:

                  (a) Title; No Other Liens. Except for the Bank Lien granted to
         the Secured Party for the benefit of the Secured Party pursuant to this
         Security Agreement and the other Liens permitted to exist on the
         Collateral pursuant to the Loan Agreement, the Debtor owns each item of
         the Collateral free and clear of any and all Liens or claims of

                                       3
<PAGE>

         others. No security agreement, financing statement or other public
         notice with respect to all or any part of the Collateral is on file or
         of record in any public office, except (i) such as may have been filed
         in favor of the Secured Party, for the benefit of the Secured Party,
         pursuant to this Security Agreement or any other Loan Paper, and (ii)
         such as may have been filed by third parties to perfect Liens permitted
         by the Loan Agreement.

                  (b) Perfected First Priority Liens. The Bank ,Liens granted
         pursuant to this Security Agreement constitute perfected Liens on the
         Collateral in favor of the Secured Party, which are prior to all other
         Liens on the Collateral created by the Debtor and in existence on the
         date hereof and which are enforceable as such against all creditors of
         and purchasers from the Debtor and against any owner or purchaser of
         the real property where any of the Collateral is located and any
         present or future creditor obtaining a Lien on such real property.

                  (c) Accounts. The amount represented by the Debtor to the
         Secured Party from time to time as owing by each account debtor or by
         all account debtors in respect of the Accounts will at such time be the
         correct amount actually owing by such account debtor or debtors
         thereunder. No amount payable to the Debtor under or in connection with
         any Account is evidenced by any Instrument which has not been delivered
         to the Secured Party. Debtor's Accounts arose in the ordinary course of
         Debtor's business from the performance of services that Debtor has
         fully and satisfactorily performed or from the sale or lease of goods
         in which Debtor had sole and complete ownership. No such Account is
         subject to counterclaim or defense (other than discount for prompt
         payment as shown on the invoices).

                  (d) Use and Protection of Collateral. The Collateral will be
         used for business purposes only and certain of the Collateral is of a
         type normally used in more than one state.

                  (e) Debtor's Address and Location of Collateral. Debtor's
         chief executive office/chief place of business is located at
         __________________________________, ________________, Texas
         ___________. The Collateral will remain in Debtor's possession or
         control at all times (at Debtor's risk of loss) and will be kept at the
         locations described on Exhibit A hereto, as the same may be amended or
         supplemented from time to time.

                  (f) Governmental Obligors. None of the obligors on any
         Accounts, and none of the parties to any Contracts, is a Governmental
         Authority.

                  (g) Consents. No consent of any party (other than the Debtor)
         to any Contract or any obligor in respect of any Account is required,
         or purports to be required, in connection with the execution, delivery
         and performance of this Security Agreement. Each Account and each
         Contract is in full force and effect and constitutes a valid and
         legally enforceable obligation of the obligor in respect thereof or
         parties thereto, except as enforceability may be limited by bankruptcy,
         insolvency, reorganization, moratorium or similar laws affecting the
         enforcement of creditor's rights generally. No consent or authorization
         of, filing with or other act by or in respect of any Governmental
         Authority

                                       4
<PAGE>

         is required in connection with the execution, delivery, performance,
         validity or enforceability of any of the Accounts or Contracts by any
         party thereto other than those which have been duly obtained, made or
         performed, are in full force and effect and do not subject the scope of
         any such Account or Contract to any material adverse limitation, either
         specific or general in nature. Neither the Debtor nor (to the best
         knowledge of the Debtor) any other party to any Account or Contract is
         in default or is likely to become in default in the performance or
         observance of any of the terms thereof. The Debtor has fully performed
         all its obligations under each Contract. The right, title and interest
         of the Debtor in, to and under each Account or Contract are not subject
         to any defense, offset, counterclaim, or claim which would materially
         adversely affect the value of such Account or Contract as Collateral,
         nor have any of the foregoing been asserted or alleged against the
         Debtor as to any of the foregoing. Upon request by Secured Party, the
         Debtor will deliver to the Secured Party a complete and correct copy of
         each Contract, including all amendments, supplements and other
         modifications thereto. No account payable to the Debtor under or in
         connection with any Account or Contract is evidenced by any Instrument
         which has not been delivered to the Secured Party.

                  (h) Power and Authority; Authorization. The Debtor has the
         power and authority and the legal right to execute and deliver, to
         perform its obligations under, and to grant the Bank Liens on the
         Collateral pursuant to, this Security Agreement and has taken all
         necessary corporate and other action to authorize its execution,
         delivery and performance of, and grant of the Bank Liens on the
         Collateral pursuant to, this Security Agreement.

                  (i) Enforceability. This Security Agreement constitutes a
         legal, valid and binding obligation of the Debtor enforceable in
         accordance with its terms, except as enforceability may be limited by
         bankruptcy, insolvency, reorganization, moratorium or similar laws
         affecting the enforcement of creditors' rights generally.

                  (j) No Conflict. The execution, delivery and performance of
         this Security Agreement will not violate or constitute a default under
         (i) any provision of any agreement to which Debtor is a party or by
         which any of its assets may be bound or subject to, or (ii) the
         articles of incorporation or by-laws of the Debtor, and (iii) will not
         result in the creation or imposition of any Lien on any of the
         properties or revenues of the Debtor except as contemplated hereby.

                  (k) No Consents, Etc. No consent or authorization of, filing
         with, or other act by or in respect of, any arbitrator or Governmental
         Authority and no consent of any other person (including, without
         limitation, any stockholder or creditor or Affiliate of the Debtor), is
         required in connection with the execution, delivery, performance,
         validity or enforceability of this Security Agreement.

                  (l) No Litigation. No litigation, investigation or proceeding
         of or before any arbitrator or Governmental Authority is pending or, to
         the knowledge of the Debtor, threatened by or against the Debtor or
         against any of its properties or revenues which could reasonably be
         expected to have a Material Adverse Effect.

                                       5
<PAGE>

SECTION 4. DEBTOR'S COVENANTS

         The Debtor covenants and agrees with the Secured Party that, from and
after the date of this Security Agreement until the Obligations are paid in
full:

                  (a) Principal Obligations. Debtor shall pay the Obligations in
         accordance with the terms thereof and shall otherwise perform all
         covenants and agreements of Debtor contained in the Loan Agreement,
         this Security Agreement and in all other Loan Papers.

                  (b) Debtor Remains Liable under Accounts and Contracts.
         Anything herein to the contrary notwithstanding, the Debtor shall
         remain liable under each of the Accounts and Contracts to observe and
         perform all the conditions and obligations to be observed and performed
         by it thereunder, all in accordance with the terms of any agreements
         giving rise to each such Account or Contract in accordance with and
         pursuant to the terms and provisions of each such Contract or agreement
         giving rise to an Account.

                  (c) Costs. Debtor shall pay Secured Party on demand every
         expense (including reasonable attorney's fees and other legal expenses)
         incurred or paid by Secured Party in exercising or protecting its
         interests, rights, and remedies under this Security Agreement, plus
         interest at a rate per annum 2% above the Prime Rate on each such
         amount commencing on the date notice of such expenses is given to
         Debtor by Secured Party until paid by Debtor.

                  (d) Further Documentation; Pledge of Instruments. At any time
         and from time to time, upon the written request of the Secured Party,
         and at the sole expense of the Debtor, the Debtor will promptly and
         duly execute and deliver such further instruments and documents and
         take such further action as the Secured Party may reasonably request
         for the purpose of obtaining or preserving the full benefits of the
         Loan Agreement and this Security Agreement and of the rights and powers
         therein and herein granted, including, without limitation, the filing
         of any financing or continuation statements under the Uniform
         Commercial Code in effect in any jurisdiction with respect to the Bank
         Liens created hereby. The Debtor also hereby authorizes the Secured
         Party to file any such financing or continuation statement without the
         signature of the Debtor to the extent permitted by applicable law. A
         carbon, photographic or other reproduction of this Security Agreement
         shall be sufficient as a financing statement for filing in any
         jurisdiction. If any amount payable under or in connection with any of
         the Collateral shall be or become evidenced by any Instrument, such
         Instrument shall be immediately delivered to the Secured Party, duly
         endorsed in a manner satisfactory to the Secured Party, to be held as
         Collateral pursuant to this Security Agreement.

                  (e) Indemnification. The Debtor agrees to pay, and to save the
         Secured Party harmless from, any and all liabilities, costs and
         expenses (including, without limitation, legal fees and expenses) (i)
         with respect to, or resulting from, any delay in paying, any and all
         excise, sales or other taxes which may be payable or determined to be
         payable with respect to any of the Collateral, (ii) with respect to, or
         resulting from, any delay in complying with any law applicable to any
         of the Collateral or (iii) in connection with any

                                       6
<PAGE>

         of the transactions contemplated by this Security Agreement. In any
         suit, proceeding or action brought by the Secured Party under any
         Account or Contract for any sum owing thereunder, or to enforce any
         provisions of any Account or Contract, the Debtor will save, indemnify
         and keep the Secured Party harmless from and against all expense, loss
         or damage suffered by reason of any defense, setoff, counterclaim,
         recoupment or reduction or liability whatsoever of the account debtor
         or obligor thereunder, arising out of a breach by the Debtor of any
         obligation thereunder or arising out of any other agreement,
         indebtedness or liability at any time owing to or in favor of such
         account debtor or obligor or its successors from the Debtor.

                  (f) Maintenance of Records. The Debtor will keep and maintain
         at its own cost and expense satisfactory and complete records of the
         Collateral, including, without limitation, a record of all payments
         received and all credits granted with respect to the Accounts and
         Contracts. The Debtor will mark its books and records pertaining to the
         Collateral to evidence this Security Agreement and the security
         interests granted hereby. For the further security of the Secured
         Party, the Secured Party shall have a security interest in all of the
         Debtor's books and records pertaining to the Collateral, and the Debtor
         shall turn over any such books and records to the Secured Party or to
         its representatives during normal business hours at the request of the
         Secured Party.

                  (g) Right of Inspection. The Secured Party shall at all times
         have full and free access during normal business hours to all the
         books, correspondence and records of the Debtor, and the Secured Party
         and its representatives may examine the same, take extracts therefrom
         and make photocopies thereof, and the Debtor agrees to render to the
         Secured Party, at the Debtor's cost and expense, such clerical and
         other assistance as may be reasonably requested with regard thereto.
         The Secured Party and its representatives shall at all times also have
         the right to enter into and upon any premises where any of the
         Collateral is located for the purpose of inspecting the same, observing
         its use or otherwise protecting its interests therein.

                  (h) Compliance with Laws, Etc. The Debtor will comply in all
         material respects with all Requirements of Law applicable to the
         Collateral or any part thereof or to the operation of the Debtor's
         businesses; provided, however, that the Debtor may contest any
         Requirement of Law in any reasonable manner which shall not, in the
         sole opinion of the Secured Party, adversely affect the Secured Party's
         rights or the priority of its Bank Liens on the Collateral.

                  (i) Compliance with Terms of Contracts, Etc. The Debtor will
         perform and comply in all material respects with all its obligations
         under the Contracts and all its other contractual obligations relating
         to the Collateral.

                  (j) Payment of Obligations. The Debtor will pay promptly when
         due all taxes, assessments and governmental charges or levies imposed
         upon the Collateral or in respect of its income or profits therefrom,
         as well as all claims of any kind (including, without limitation,
         claims for labor, materials and supplies) against or with respect to
         the Collateral, except that no such charge need be paid if (i) the
         validity thereof is being contested in good faith by appropriate
         proceedings, (ii) such proceedings do not involve

                                       7
<PAGE>

         any material danger of the sale, forfeiture or loss of any of the
         Collateral or any interest therein and (iii) such charge is adequately
         reserved against on the Debtor's books in accordance with generally
         accepted accounting principles.

                  (k) Limitation of Liens on Collateral. The Debtor will not
         create, incur or permit to exist, will defend the Collateral against,
         and will take such other action as is necessary to remove, any Lien or
         claim on or to the Collateral, other than the Bank Liens created hereby
         and other than as permitted pursuant to the Loan Agreement, and will
         defend the right, title and interest of the Secured Party in and to any
         of the Collateral against the claims and demands of all persons
         whomsoever.

                  (l) Limitations on Dispositions of Collateral. The Debtor will
         not sell, transfer, lease or otherwise dispose of any of the
         Collateral, or attempt, offer or contract to do so, except as expressly
         permitted in the Loan Agreement.

                  (m) Limitations on Modifications, Waivers, Extensions of
         Contracts and Agreements Giving Rise to Accounts. The Debtor will not
         (i) amend, modify, terminate or waive any provision of any Contract or
         any agreement giving rise to an Account in any manner which could
         reasonably be expected to materially adversely affect the value of such
         Contract or Account as Collateral, (ii) fail to exercise promptly and
         diligently each and every material right which it may have under each
         Contract and each agreement giving rise to an Account (other than any
         right of termination) or (iii) fail to deliver to the Secured Party a
         copy of each material demand, notice or document received by it
         relating in any way to any Contractor any agreement giving rise to an
         Account.

                  (n) Limitations on Discounts, Compromises, Extensions of
         Accounts. Other than in the ordinary course of business as generally
         conducted by the Debtor over a period of time, the Debtor will not
         grant any extension of the time of payment of any of the Accounts,
         compromise, compound or settle the same for less than the full amount
         thereof, release, wholly or partially, any person liable for the
         payment thereof, or allow any credit or discount whatsoever thereon.

                  (o) Maintenance of Equipment. The Debtor will maintain each
         item of Equipment in good operating condition, ordinary wear and tear
         and immaterial impairments of value and damage by the elements
         excepted, and will provide all maintenance, service and repairs
         necessary for such purpose.

                  (p) Maintenance of Insurance. The Debtor will maintain, with
         financially sound and reputable companies, insurance policies (i)
         insuring the Equipment and Inventory against loss by fire, explosion,
         theft and such other casualties as may be reasonably satisfactory to
         the Secured Party and (ii) insuring the Debtor and the Secured Party
         against liability for personal injury and property damage relating to
         such Equipment and Inventory, such policies to be in such form and
         amounts and having such coverage as may be reasonably satisfactory to
         the Secured Party, with losses payable to the Debtor and the Secured
         Party as its interests may appear. All such insurance shall (i) provide
         that no cancellation, material reduction in amount or material change
         in coverage thereof shall be effective until at least 30 days after
         receipt by the Secured Party of written notice

                                       8
<PAGE>

         thereof, (ii) name the Secured Party as insured party, and (iii) be
         reasonably satisfactory in all other respects to the Secured Party. The
         Debtor shall deliver to the Secured Party a report of a reputable
         insurance broker or agent with respect to such insurance during a month
         specified by the Secured Party in its discretion in each calendar year
         and such supplemental reports with respect thereto as the Secured Party
         may from time to time reasonably request.

                  (q) Further Identification of Collateral. The Debtor will
         furnish to the Secured Party from time to time statements and schedules
         further identifying and describing the Collateral and such other
         reports in connection with the Collateral as the Secured Party may
         reasonably request, all in reasonable detail.

                  (r) Notices. The Debtor will advise the Secured Party
         promptly, in reasonable detail, at its address set forth in the Loan
         Agreement, (i) of any Lien (other than Bank Liens created hereby or
         permitted under the Loan Agreement) on, or claim asserted against, any
         of the Collateral and (ii) of the occurrence of any other event which
         could reasonably be expected to have a material adverse effect on the
         aggregate value of the Collateral or on the Bank Liens created
         hereunder.

                  (s) Changes in Locations, Name, Etc. The Debtor will not (i)
         change the location of its chief executive office/chief place of
         business from that specified in Section 3 or (ii) change its name,
         identity or organizational structure to such an extent that any
         financing statement filed by the Secured Party in connection with this
         Security Agreement would become misleading.

                  (t) Removal of Collateral from One State to Another State. At
         least three days prior to the removal of any Collateral from the State
         of Texas to any other state, the Debtor will advise the Secured Party
         in writing of such intended removal. With reference to any such
         removal, the Debtor shall take all steps required to perfect, protect,
         preserve and maintain the interest of the Secured Party in the
         Collateral; provided, however, that the Secured Party consents that the
         Debtor may, in the ordinary course of its business and without prior
         notice to the Secured Party, temporarily remove the Collateral or any
         part thereof from the State of Texas for a period not to exceed thirty
         days.

SECTION 5. PERFORMANCE BY SECURED PARTY OF DEBTOR'S AGREEMENTS

         If the Debtor fails to perform or comply with any of the agreements
contained herein and the Secured Party, as provided for by the terms of this
Security Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the Secured
Party incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum 2% above the Prime Rate, shall be payable
by the Debtor to the Secured Party on demand and shall constitute Obligations
secured hereby.

SECTION 6. SECURED PARTY'S APPOINTMENT AS ATTORNEY-IN-FACT

                  (a) Attorney-in-Fact. Debtor hereby irrevocably constitutes
         and appoints the Secured Party and any officer or agent thereof, with
         full power of substitution, as its true and lawful attorney-in-fact
         with full irrevocable power and authority in the place and

                                       9
<PAGE>

         stead, of the Debtor and in the name of the Debtor or in its own name,
         from time to time in the Secured Party's discretion, for the purpose of
         carrying Out the terms of this Security Agreement, to take any and all
         appropriate action and to execute any and all documents and instruments
         which may be necessary or desirable to accomplish the purposes of this
         Security Agreement, and, without limiting the generality of the
         foregoing, the Debtor hereby gives the Secured Party the power and
         right, on behalf of the Debtor, without notice to or assent by the
         Debtor, to do the following:

                           (1) in the case of any Account, at any time when the
                  authority of the Debtor to collect the Accounts has been
                  curtailed or terminated pursuant to the first sentence of
                  Section 9(c) hereof, or in the case of any other Collateral,
                  at any time when any Event of Default shall have occurred and
                  is continuing, in the name of the Debtor or its own name, or
                  otherwise, to take possession of and indorse and collect any
                  checks, drafts, notes, acceptances or other instruments for
                  the payment of moneys due under, or with respect to, any
                  Collateral and to file any claim or to take any other action
                  or proceeding in any court of law or equity or otherwise
                  deemed appropriate by the Secured Party for the purpose of
                  collecting any and all such moneys due or with respect to such
                  Collateral whenever payable;

                           (2) to pay or discharge taxes and Liens levied or
                  placed on or threatened against the Collateral, to effect any
                  repairs or any insurance called for by the terms of this
                  Security Agreement and to pay all or any part of the premiums
                  therefore and the costs thereof; and

                           (3) upon the occurrence and during the continuance of
                  any Event of Default, (a) to direct any party liable for any
                  payment under any of the Collateral to make payment of any and
                  all moneys due or to become due thereunder directly to the
                  Secured Party or as the Secured Party shall direct; (b) to ask
                  for or demand, collect, receive payment of and receipt for,
                  any and all moneys, claims and other amounts due or to become
                  due at any time in respect of or arising out of any
                  Collateral; (c) to sign and indorse any invoices, freight or
                  express bills, bills of lading, storage or warehouse receipts,
                  drafts against debtors, assignments, verifications, notices
                  and other documents in connection with any of the Collateral;
                  (d) to commence and prosecute any suits, actions or
                  proceedings at law or in equity in any court of competent
                  jurisdiction to collect the Collateral or any thereof and to
                  enforce any other right in respect of any Collateral; (e) to
                  defend any suit, action or proceeding brought against the
                  Debtor with respect to any Collateral; (f) to settle,
                  compromise or adjust any suit, action or proceeding described
                  in the preceding clause and, in connection therewith, to give
                  such discharges or releases as the Secured Party may deem
                  appropriate; and (g) generally, to sell, transfer, pledge and
                  make any agreement with respect to or otherwise deal with any
                  of the Collateral as fully and completely as though the
                  Secured Party were the absolute owner thereof for all
                  purposes, and to do, at the Secured Party's option and the
                  Debtor's expense, at any time, or from time to time, all acts
                  and things which the Secured Party deems necessary to protect,
                  preserve or realize upon the Collateral and the Bank Liens of
                  the Secured Party

                                       10
<PAGE>

                  thereon and to effect the intent of this Security Agreement,
                  all as fully and effectively as the Debtor might to.

                           The Debtor hereby ratifies all that said attorneys
                  shall lawfully do or cause to be done by virtue hereof. This
                  power of attorney is a power coupled with an interest and
                  shall be irrevocable.

                  (b) Other Powers. The Debtor also authorizes the Secured
         Party, at any time and from time to time, to execute, in connection
         with the sale provided for in Sections 6(a) and 9(d),any endorsements,
         assignments or other instruments of conveyance or transfer with respect
         to the Collateral.

SECTION 7. PROCEEDS

         In addition to the rights of the Secured Party specified in Section 9
with respect to payments of Accounts, it is agreed that if an Event of Default
shall occur and be continuing (i) all Proceeds received by the Debtor consisting
of cash, checks and other near-cash items shall be held by the Debtor, in trust
for the Secured Party, segregated from other funds of the Debtor, and shall,
forthwith upon receipt by the Debtor, be turned over to the Secured Party in the
exact form received by the Debtor (duly indorsed by the Debtor to the Secured
Party), and (ii) any and all such Proceeds received by the Secured Party
(whether from the Debtor or otherwise) may, in the sole discretion of the
Secured Party, be held by the Secured Party for the Secured Party as collateral
security for, and/or then or at any time thereafter may be applied by the
Secured Party against, the Obligations (whether matured or unmatured), such
application to be in such order as the Secured Party shall elect. Any balance of
such Proceeds remaining after the Obligations shall have been paid in full shall
be paid over to the Debtor or to whomsoever may be lawfully entitled to receive
the same.

SECTION 8. EVENTS OF DEFAULT

         If any one or more of the following shall occur and shall not have been
remedied in the period, if any, provided for, an "Event of Default" shall be
deemed to have occurred hereunder and with respect to all of the Obligations,
unless waived in writing by Secured Party:

                  (a) default shall be made by Debtor in the payment when due of
         any installment of principal or interest on the Notes or any other
         Obligations;

                  (b) any representation or warranty made by Debtor in this
         Security Agreement, or by Debtor in the Loan Agreement or in any of the
         other Loan Papers or in any certificate, document or financial or other
         statement furnished to Secured Party under or in connection with this
         Security Agreement, the Loan Agreement or any other Loan Paper shall be
         or shall prove to have been incorrect or untrue or misleading in any
         material respect on or as of the date made or deemed made and shall
         continue unremedied for a period of 30 days after the earlier of (i)
         the Debtor becoming aware of such default or (ii) the Secured Party
         giving notice thereof to the Debtor;

                  (c) default shall be made by Debtor in the due performance or
         observance of any covenant, condition or agreement contained in this
         Security Agreement, or default

                                       11
<PAGE>

         shall be made by Debtor in the due performance or observance of any
         covenant, condition or agreement contained in the Loan Agreement or in
         any of the other Loan Papers and such default shall continue unremedied
         for a period of 30 days after the earlier of (i) Debtor becoming aware
         of such default or (ii) the Secured Party giving notice thereof to the
         Debtor;

                  (d) Debtor shall (i) apply for or consent to the appointment
         of a receiver, trustee or liquidator of Debtor or of all or a
         substantial part of Debtor's assets; (ii) be unable, or admit in
         writing its inability, or fail to confirm its ability (when requested
         to do so by Secured Party) to pay its debts as they become due; (iii)
         make a general assignment for the benefit of creditors; (iv) be
         adjudicated a bankrupt or insolvent or file a voluntary petition in
         bankruptcy; (v) file a petition or an answer seeking reorganization or
         an arrangement with creditors or to take advantage of any bankruptcy or
         insolvency law; (vi) file an answer admitting the material allegations
         of, or consent to, or default in answering, a petition filed against it
         in any bankruptcy, reorganization or insolvency proceedings; or (vii)
         take any action for the purpose of effecting any of the foregoing;

                  (e) an order, judgment or decree shall be entered by any court
         of competent jurisdiction approving a petition seeking reorganization
         of Debtor or appointing a receiver, trustee or liquidator of Debtor or
         of all or a substantial part of its assets, and such order, judgment or
         decree shall continue unstayed in effect for any period of 30
         consecutive days;

                  (f) the failure of Debtor to have discharged within a period
         of 30 days after the commencement thereof any attachment, sequestration
         or similar proceeding against any of its properties or assets having a
         value of $100,000.00 or more;

                  (g) any acceleration, notice of default, filing of suit or
         notice of breach by any lender, lessor, creditor or other party to any
         Material Agreement to which Debtor is a party, or to which its
         properties or assets are subject;

                  (h) the occurrence of a Material Adverse Effect with respect
         to Debtor;

                  (i) the occurrence of a Change of Control;

                  (j) final judgment or judgments shall be entered against
         Borrower involving in the aggregate a liability (not paid or fully
         covered by insurance or not otherwise covered by indemnity agreements
         acceptable to Lender in its sole discretion) of $ 50,000.00 or more,
         and such judgment or judgments shall not have been vacated, discharged,
         stayed or bonded pending appeal within 60 days from the entry thereof;
         or

                  (k) the occurrence of any other Event of Default under the
         Loan Agreement.

SECTION 9. SECURED PARTY'S RIGHTS, REMEDIES AND POWERS

                  (a) Analysis of Accounts. The Secured Party shall have the
         right to make test verifications of the Accounts in any manner and
         through any medium that it reasonably considers advisable, and the
         Debtor shall furnish all such assistance and information as

                                       12
<PAGE>

         the Secured Party may require in connection therewith. At any time and
         from time to time, upon the Secured Party's request and at the expense
         of the Debtor, the Debtor shall cause independent public accountants or
         others satisfactory to the Secured Party to furnish to the Secured
         Party reports showing reconciliations, aging and test verifications of,
         and trial balances for, the Accounts.

                  (b) Notice to Account Debtors and Contracting Parties. Upon
         the request of the Secured Party at any time, the Debtor shall notify
         account debtors of the Accounts and parties to the Contracts that the
         Accounts and the Contracts have been assigned to the Secured Party and
         that payments in respect thereof shall be made directly to the Secured
         Party. The Secured Party may in its own name or in the name of others
         communicate with account debtors on the Accounts and parties to the
         Contracts to verify with them to its satisfaction the existence, amount
         and terms of any Accounts or Contracts.

                  (c) Collections on Accounts and Contracts. The Secured Party
         hereby authorizes the Debtor to collect the Accounts and Contracts,
         subject to the Secured Party's direction and control, and the Secured
         Party may curtail or terminate said authority at any time. If required
         by the Secured Party at any time, any payments of Accounts and
         Contracts, when collected by the Debtor, shall be forthwith (and, in
         any event, within two Business Days) deposited by the Debtor in the
         exact form received, duly indorsed by the Debtor to the Secured Party
         if required, in a special collateral account maintained by the Secured
         Party, subject to withdrawal by the Secured Party for the account of
         the Secured Party only, as provided in this Security Agreement, and,
         until so turned over, shall be held by the Debtor in trust for the
         Secured Party, segregated from other funds of the Debtor. All Proceeds
         while held by the Secured Party (or by the Debtor in trust for the
         Secured Party) shall continue to be collateral security for all of the
         Obligations and shall not constitute payment thereof until applied as
         provided in this Security Agreement. At such intervals as may be agreed
         upon by the Debtor and the Secured Party, or, if an Event of Default
         shall have occurred and be continuing, at any time at the Secured
         Party's election, the Secured Party shall apply all or any part of the
         funds on deposit in said special collateral account on account of the
         Obligations in such order as the Secured Party may elect, and any part
         of such funds which the Secured Party elects not so to apply and deems
         not required as collateral security for the Obligations shall be paid
         over from time to time by the Secured Party to the Debtor or to
         whomsoever may be lawfully entitled to receive the same. At the Secured
         Party's request, the Debtor shall deliver to the Secured Party all
         original and other documents evidencing, and relating to, the
         agreements and transactions which gave rise to the Accounts and
         Contracts, including, without limitation, all original orders, invoices
         and shipping receipts.

                  (d) Remedies; Acceleration of Maturity of Obligations;
         Repossession and Sale of Collateral. At any time after an Event of
         Default occurs and is continuing, Secured Party may declare every
         Obligation to be immediately due and payable and may exercise, in
         addition to all other rights and remedies granted to it in this
         Security Agreement, the Loan Agreement and in any of the other Loan
         Papers securing, evidencing or relating to the Obligations, all rights
         and remedies of a secured party under the UCC. Without limiting the
         generality of the foregoing, the Secured Party, without demand of

                                       13
<PAGE>

         performance or other demand, presentment, protest, advertisement or
         notice of any kind (except any notice required by law referred to
         below) to or upon the Debtor or any other person (all and each of which
         demands, defenses, advertisements and notices are hereby waived), may
         in such circumstances forthwith collect, receive, appropriate and
         realize upon the Collateral, or any party thereof, and/or may forthwith
         sell, lease, assign, give option or options to purchase, or otherwise
         dispose of and deliver the Collateral or any part thereof (or contract
         to do any of the foregoing), in one or more parcels at public or
         private sale or sales, at any exchange, broker's board or office of the
         Secured Party or elsewhere upon such terms and conditions as Secured
         Party may deem advisable and at such prices as Secured Party may deem
         best, for cash or on credit or for future delivery without assumption
         of any credit risk. The Secured Party shall have the right upon any
         such public sale or sales, and, to the extent permitted bylaw, upon any
         such private sale or sales, to purchase the whole or any part of the
         Collateral so sold, free of any right or equity of redemption in the
         Debtor, which right or equity is hereby waived or released. The Debtor
         further agrees, at the Secured Party's request, to assemble the
         Collateral and make it available to the Secured Party at places which
         the Secured Party shall reasonably select, whether at the Debtor's
         premises or elsewhere. The Secured Party shall apply the net proceeds
         of any such collection, recovery, receipt, appropriation, realization
         or sale, after deducting all reasonable costs and expenses of every
         kind incurred therein or incidental to the care or safekeeping of any
         of the Collateral or in any way relating to the Collateral or the
         rights of the Secured Party hereunder, including, without limitation,
         reasonable attorneys' fees and disbursements, to the payment in whole
         or in part of the Obligations, in such order as the Secured Party may
         elect, and only after such application and after the payment by the
         Secured Party of any other amount required by any provision of law,
         need the Secured Party account for the surplus, if any, to the Debtor.
         To the extent permitted by applicable law, the Debtor waives all
         claims, damages and demands it may acquire against the Secured Party
         arising out of the exercise by it of any rights hereunder. If any
         notice of a proposed sale or other disposition of Collateral shall be
         required by law, such notice shall be deemed reasonable and proper if
         given at least 10 days before such sale or other disposition. The
         Debtor shall remain liable for any deficiency if the proceeds of any
         sale or other disposition of the Collateral are insufficient to pay the
         Obligations and the fees and disbursements of any attorneys employed by
         the Secured Party to collect such deficiency.

                  (e) Right of Setoff. In addition to the security interest and
         Lien herein described, Debtor expressly recognizes and grants Secured
         Party upon the occurrence of an Event of Default the right of setoff
         with respect to any money, checks, certificates of deposit or
         instruments deposited with Secured Party, whether in general or special
         deposits, which right may be exercised concurrently with or separately
         from any and all other rights of Secured Party against Debtor.

SECTION 10. LIMITATIONS ON SECURED PARTY'S DUTIES AND OBLIGATIONS

                  (a) Limitations on Secured Party's Obligations Under Accounts
         and Contracts. The Secured Party shall not have any obligation or
         liability under any Account (or any agreement giving rise thereto) or
         Contract by reason of or arising out of

                                       14
<PAGE>

         this Security Agreement or the receipt by the Secured Party of any
         payment relating to such Account or Contract pursuant hereto, nor shall
         the Secured Party be obligated, in any manner to perform any of the
         obligations of the Debtor thereof under or pursuant to any Account (or
         any agreement giving rise thereto) or under or pursuant to any
         Contract, to make any payment, to make any inquiry as to the nature or
         the sufficiency of any payment received by it or as to the sufficiency
         of any performance by any party under any Account (or any agreement
         giving rise thereto) or under any Contract, to present or file any
         claim, to take any action to enforce any performance or to collect the
         payment of any amounts which may have been assigned to it or to which
         it may be entitled at any time or times.

                  (b) Limitation on Duties Regarding Preservation of Collateral.
         The Secured Party's sole duty with respect to the custody, safekeeping
         and physical preservation of the Collateral in its possession, under
         Section 9-207 of the UCC or otherwise, shall be to deal with it in the
         same manner as the Secured Party deals with similar property for its
         own account. Neither the Secured Party nor any of its directors,
         officers, employees or agents shall be liable for failure to demand,
         collect or realize upon all or any part of the Collateral or for any
         delay in doing so or shall be under any obligation to sell or otherwise
         dispose of any Collateral upon the request of the Debtor or otherwise.

                  (c) No Duty on the Part of Secured Party. The powers conferred
         on the Secured Party under this Security Agreement are solely to
         protect the interests of the Secured Party in the Collateral and shall
         not impose any duty upon the Secured Party to exercise any such powers.
         The Secured Party shall be accountable only for amounts that it
         actually receives as a result of the exercise of such powers, and
         neither it nor any of its officers, directors, employees or agents
         shall be responsible to the Debtor or its officers, directors,
         employees, stockholders or agents for any act or failure to act
         hereunder, except for its own gross negligence or willful misconduct.

SECTION 11. GENERAL PROVISIONS

                  (a) Powers Coupled with an Interest. All authorizations and
         agencies herein contained with respect to the Collateral are
         irrevocable and powers coupled with an interest.

                  (b) Severability. Any provision of this Security Agreement
         which is prohibited or unenforceable in any jurisdiction shall, as to
         such jurisdiction, be ineffective to the extent of such prohibition or
         unenforceability without invalidating the remaining provisions hereof,
         and any such prohibition or unenforceability in any jurisdiction shall
         not invalidate or render unenforceable such provision in any other
         jurisdiction.

                  (c) Additional Definitions. The term "Debtor" as used in this
         Security Agreement is to be construed as singular or plural to
         correspond with the number of persons executing this instrument as
         Debtor. The pronouns used in this instrument are in the masculine
         gender but shall be construed as feminine or neuter as occasion may
         require. "Secured Party" and "Debtor" as used in this instrument
         include the heirs,

                                       15
<PAGE>

         executors or administrators, successors, representatives, receivers,
         trustees, custodians, and assigns of those parties.

                  (d) Captions. The section and paragraph headings appearing in
         this instrument were inserted for convenience only and are not to be
         given any substantive meaning or significance in construing this
         Security Agreement.

                  (e) Waivers and Amendments; Successors and Assigns. None of
         the terms or provision of this Security Agreement may be waived,
         amended, supplemented or otherwise modified except by a written
         instrument executed by the Debtor and the Secured Party, provided that
         any provision of this Security Agreement may be waived by the Secured
         Party in a written letter or agreement executed by the Secured Party or
         by telex or facsimile transmission from the Secured Party. This
         Security Agreement shall be binding upon the permitted successors and
         assigns of the Debtor and shall inure to the benefit of the Secured
         Party and its successors and assigns.

                  (f) No Waiver; Cumulative Remedies. The Secured Party shall
         not by any act (except by a written instrument pursuant to Section
         11(e) hereof), delay, indulgence, omission or otherwise be deemed to
         have waived any right or remedy hereunder or to have acquiesced in any
         Event of Default or in any breach of any of the terms and conditions
         hereof. No failure to exercise, nor any delay in exercising, on the
         part of the Secured Party, any right, power or privilege hereunder
         shall operate as a waiver thereof. No single or partial exercise of any
         right, power or privilege hereunder shall preclude any other or further
         exercise thereof or the exercise of any other right, power or
         privilege. A waiver by the Secured Party of any right or remedy
         hereunder on any one occasion shall not be construed as a bar to any
         right or remedy which the Secured Party would otherwise have on any
         future occasion. The rights and remedies herein provided are
         cumulative, may be exercised singly or concurrently and are not
         exclusive of any rights or remedies provided by law.

                  (g) GOVERNING LAW. THE LAW GOVERNING THIS SECURED TRANSACTION
         SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
         STATE OF TEXAS; PROVIDED, HOWEVER, THAT THE RIGHTS OF THE PARTIES
         HERETO WITH RESPECT TO ANY OF THE COLLATERAL SITUATED IN ANY OTHER
         STATE MAY BE GOVERNED BY THE LAWS OF SUCH OTHER STATE.

                  (h) Renewal, Extension or Rearrangement. All provisions of
         this Security Agreement and of any other Loan Paper relating to the
         Notes or other Obligations shall apply with equal force and effect to
         each and all promissory notes hereafter executed which in whole or in
         part represent a renewal, extension for any period, increase or
         rearrangement of any part of the Obligations originally represented by
         the Notes or any part of such other Obligations.

                  (i) Assignment. Secured Party may from time to time assign
         this Security Agreement, Secured Party's rights under this Security
         Agreement, or all or any of the Obligations. In any such case, the
         assignee will be entitled to all rights, privileges, and

                                       16
<PAGE>

         remedies granted in this Security Agreement to Secured Party, and
         Debtor will not assert against the assignee any claims or defenses
         Debtor may have against Secured Party (except those granted in this
         Security Agreement).

                  (j) Notices. Notices hereunder may be given by mail, by telex
         or by facsimile transmission, addressed or transmitted to the person to
         which it is being given at such person's address or transmission number
         set forth in the Loan Agreement and shall be effective (a) in the case
         of mail, two days after deposit in the postal system, first class
         postage prepaid and (b) in the case of telex or facsimile notices, when
         sent. The Debtor may change its address and transmission number by
         written notice to the Secured Party, and the Secured Party may change
         its address and transmission number by written notice to the Debtor.

         EXECUTED the date first above written, in Midland, Texas.

                                   SECURED PARTY

                                   WESTERN NATIONAL BANK

                                   By:
                                      -----------------------------------------
                                      Scott A. Lovett, Executive Vice President

                                   DEBTOR

                                   NATURAL GAS SERVICES GROUP, INC.

                                   By:
                                       ----------------------------------------

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

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

                                       17
<PAGE>

                               GUARANTY AGREEMENT

         This GUARANTY AGREEMENT (this "Guaranty"), dated as of September ____,
1999, is made by ____________________________, a Texas _________________ (the
"Company Guarantor"), for the benefit of WESTERN NATIONAL BANK, a national
banking association ("Lender").

                                   WITNESSETH:

         WHEREAS, Lender has entered into a Loan Agreement (as the same may
hereafter be amended, restated or otherwise modified from time to time, the
"Loan Agreement"), dated of even date herewith, with Natural Gas Services Group,
Inc, a Texas corporation ("Borrower"), pursuant to which Borrower has executed
that certain Term Promissory Note in the original principal amount of
$1,500,000.00 and that certain Revolving Line of Credit Promissory Note in the
original principal amount of $750,000.00 (together with all renewals,
refinancings, modifications, increases and extensions thereof, the "Notes")
under which Borrower has become indebted, and may from time to time be further
indebted, to Lender with respect to loans (the "Loans") which are further
evidenced, secured or governed by other instruments and security documents
executed in connection with the Loans (collectively, the "Security Documents");
and

         WHEREAS, Lender is not willing to make the Loans, or otherwise extend
credit, to Borrower unless Company Guarantor guarantees payment to Lender of the
Guaranteed Debt (as herein defined) pursuant to the following terms; and

         WHEREAS, Company Guarantor will directly benefit from Lender's making
the Loan to Borrower.

         NOW, THEREFORE, as a material inducement to Lender to enter into the
Loan Agreement and to make the Loan to Borrower thereunder, and to extend such
additional credit as Lender may from time to time agree to extend thereunder,
and for other good and valuable consideration, the receipt and legal sufficiency
of which are hereby acknowledged, the parties do hereby agree as follows:

                                   ARTICLE 1.
                          NATURE AND SCOPE OF GUARANTY

         1.01 Definition of Guaranteed Debt. As used herein, the term
"Guaranteed Debt" means all of the following:

                  (a) all principal, interest, attorneys' fees, liabilities for
         costs and expenses and other indebtedness, obligations- and liabilities
         of Borrower to Lender at any time created or arising in connection with
         the Loans, or any amendment thereto or substitution therefor,
         including, but not limited to, all indebtedness, obligations and
         liabilities of Borrower to Lender arising under the Notes, or under any
         renewals, modifications,

<PAGE>

         increases and extensions of the Notes, or under the Loan Agreement and
         the Security Documents;

                  (b) all liabilities of Borrower for future advances,
         extensions of credit or other value at any time given or made by Lender
         to Borrower arising under the Loan Agreement and the Security
         Documents;

                  (c) any and all other indebtedness, liabilities, obligations
         and duties of every kind and character of Borrower to Lender arising
         under the Loan Agreement and the Security Documents, whether now or
         hereafter existing or arising, regardless of whether such present or
         future indebtedness, liabilities, obligations or duties be direct or
         indirect, related or unrelated, liquidated or unliquidated, primary or
         secondary, joint, several, or joint and several, or fixed or
         contingent;

                  (d) any and all post-petition interest and expenses (including
         attorneys' fees) whether or not allowed under any bankruptcy,
         insolvency, or other similar law; and

                  (e) all costs, expenses and fees, including, but not limited
         to, court costs and attorneys' fees, arising in connection with the
         collection of any or all amounts, indebtedness, obligations and
         liabilities of Borrower to Lender described in items (a) through (d) of
         this Section 1.01.

         1.02 Guaranty of Obligation. Company Guarantor hereby irrevocably and
unconditionally guarantees to Lender and its successors and assigns the payment
and performance of the Guaranteed Debt as and when the same shall be due and
payable, whether by lapse of time, by acceleration of maturity or otherwise.
Company Guarantor hereby irrevocably and unconditionally covenants and agrees
that it is liable for the Guaranteed Debt as a primary obligor.

         1.03 Nature of Guaranty. This Guaranty is an irrevocable, absolute,
continuing guaranty of payment and performance and not a guaranty of collection.
This Guaranty may not be revoked by Company Guarantor and shall continue to be
effective with respect to any Guaranteed Debt arising or created after any
attempted revocation by Company Guarantor and after such Company Guarantor's
dissolution (in which event this Guaranty shall be binding upon such Company
Guarantor's successors and assigns). This Guaranty may be enforced by Lender and
any subsequent holder of the Guaranteed Debt and shall not be discharged by the
assignment or negotiation of all or part of the Guaranteed Debt.

         1.04 Guaranteed Debt Not Reduced by Offset. The Guaranteed Debt and the
liabilities and obligations of Company Guarantor to Lender hereunder, shall not
be reduced, discharged or released because or by reason of any existing or
future offset, claim or defense of Borrower, or any other party, against Lender
or against payment of the Guaranteed Debt, whether such offset, claim or defense
arises in connection with the Guaranteed Debt (or the transactions creating the
Guaranteed Debt) or otherwise. Without limiting the foregoing or Company
Guarantor's liability hereunder, to the extent that Lender advances funds
pursuant to the Notes and does not receive payments or benefits thereon in the
amounts and at the times required or provided in the

                                       2
<PAGE>

Notes, Company Guarantor is absolutely liable to make such payments to (and
confer such benefits on) Lender, on a timely basis.

         1.05 Payment by Comfy Guarantor. If all or any part of the Guaranteed
Debt shall not be punctually paid when due, whether at maturity or earlier by
acceleration or otherwise, Company Guarantor shall, immediately upon demand by
Lender, and without presentment, protest, notice of protest, notice of
non-payment, notice of intention to accelerate the maturity, notice of
acceleration of the maturity, or any other notice whatsoever, pay in lawful
money of the United States of America, the amount due on the Guaranteed Debt to
Lender at Lender's address as set forth herein. Such demand(s) may be made at
any time coincident with or after the time for payment of all or part of the
Guaranteed Debt, and may be made from time to time with respect to the same or
different items of Guaranteed Debt. Such demand shall be deemed made, given and
received in accordance with the notice provisions hereof.

         1.06 No Duty to Pursue Others. It shall not be necessary for Lender
(and Company Guarantor hereby waives any rights which such Company Guarantor may
have to require Lender), in order to enforce such payment by Company Guarantor,
first to (i) institute suit or exhaust its remedies against Borrower or others
liable on the Guaranteed Debt or any other person, (ii) enforce Lender's rights
against any collateral which shall ever have been given to secure the Guaranteed
Debt, (iii) join Borrower or any others liable on the Guaranteed Debt in any
action seeking to enforce this Guaranty, (iv) exhaust any remedies available to
Lender against any collateral which shall ever have been given to secure the
Guaranteed Debt, or (v) resort to any other means of obtaining payment of the
Guaranteed Debt. Lender shall not be required to mitigate damages or take any
other action to reduce, collect or enforce the Guaranteed Debt.

         1.07 Waivers. Company Guarantor agrees to the provisions of the Loan
Agreement and the Security Documents, and hereby waives (a) all rights of
Company Guarantor under Rule 31, Texas Rules of Civil Procedure, or Chapter 34
of the Texas Business and Commerce Code, or Section 17.001 of the Texas Civil
Practice and Remedies Code; (b) to the extent Company Guarantor is subject to
the Texas Revised Partnership Act ("TRPA"), compliance by Lender with Section
3.05(d) of TRPA and(c) notice of (i) any loans or advances made by Lender to
Borrower, (ii) acceptance of this Guaranty, (iii) any amendment or extension of
the Notes, the Loan Agreement or of any other Security Documents, (iv) the
execution and delivery by Borrower and Lender of any other loan or credit
agreement or of Borrower's execution and delivery of any promissory notes or
other documents arising under the Loan Agreement, the Security Documents or in
connection with the Collateral (as defined in the Loan Agreement or Security
Documents), (v) the occurrence of any breach by Borrower or Event of Default (as
defined in the Loan Agreement), (vi) Lender's transfer or disposition of the
Guaranteed Debt, or any part thereof, (vii) sale or foreclosure (or posting or
advertising for sale or foreclosure) of any collateral for the Guaranteed Debt,
(viii) protest, proof of non-payment or default by Borrower, or (ix) any other
action at any time taken or omitted by Lender, and, generally, all demands and
notices of every kind in connection with this Guaranty, the Loan Agreement, the
Security Documents, or any other documents or agreements evidencing, securing or
relating to any of the Guaranteed Debt and the obligations hereby guaranteed.
The parties intend that Company Guarantor shall not be considered a "debtor" as
defined in Tex. Bus. & Com. Code Ann. Section 9.105 (and any successor statute
thereto).

                                       3
<PAGE>

         If any part of the Guaranteed Debt is secured by an interest in real
property ("Real Property"), and such interest is foreclosed upon pursuant to a
judicial or nonjudicial foreclosure sale, Company Guarantor agrees that
notwithstanding the provisions of Section 51.003, 51.004, and 51.005 of the
Texas Property Code (as amended from time to time), and to the extent permitted
bylaw, Lender may seek a deficiency judgment from Company Guarantor and any
other party obligated on the Guaranteed Debt equal to the difference between the
amount owing on the Guaranteed Debt and the amount for which the Real Property
was sold at judicial or nonjudicial foreclosure sale.

         1.08 Payment of Expenses. If Company Guarantor breaches or fails to
timely perform any provisions of this Guaranty, Company Guarantor shall,
immediately upon demand by Lender, pay Lender all costs and expenses (including
court costs and reasonable attorneys' fees) incurred by Lender in the
enforcement hereof or the preservation of Lender's rights hereunder. The
covenant contained in this Section 1.08 shall survive the payment of the
Guaranteed Debt.

         1.09 Effect of Bankruptcy. If, pursuant to any insolvency, bankruptcy,
reorganization, receivership or other debtor relief law, or any judgment, order
or decision thereunder, Lender must rescind or restore any payment, or any part
thereof, received by Lender in satisfaction of the Guaranteed Debt, as set forth
herein, any prior release or discharge from the terms of this Guaranty given to
Company Guarantor by Lender shall be without effect, and this Guaranty shall
remain in full force and effect. It is the intention of Borrower and Company
Guarantor that Company Guarantor's obligations hereunder shall not be discharged
except by Company Guarantor's performance of such obligations and then only to
the extent of such performance.

         1.10 Waiver of Subrogation, Reimbursement and Contribution. Not
withstanding anything to the contrary contained in this Guaranty, from and after
the date hereof until payment to Lender in full of the Guaranteed Debt, Company
Guarantor shall not, and shall not attempt to, enforce, collect or exercise any
rights Company Guarantor may now or hereafter have under any agreement, at law
or in equity (including, without limitation, any law subrogating the Company
Guarantor to the rights of Lender) to assert any claim against or seek
contribution, indemnification or any other form of reimbursement from Borrower
or any other party liable for payment of any or all of the Guaranteed Debt for
any payment made by Company Guarantor under or in connection with this Guaranty
or otherwise. After payment to Lender in full of the Guaranteed Debt, Lender
shall not contest the subrogation of Company Guarantor to the rights of Lender
under the Security Documents, it being expressly agreed that Company Guarantor's
rights under such subrogation shall be and remain subordinate and inferior to
the rights of Lender under the Security Documents until and unless all amounts
due Lender by Borrower under the Security Documents shall be paid in full.

         1.11 Borrower. The term "Borrower" as used herein shall include any new
or successor corporation, association, partnership (general or limited), joint
venture, trust or other individual or organization formed as a result of any
merger, consolidation, reorganization, amalgamation, sale, transfer or gift of
Borrower or any interest in Borrower.

                                       4
<PAGE>

                                   ARTICLE 2.
                      EVENTS AND CIRCUMSTANCES NOT REDUCING
                 OR DISCHARGING COMPANY GUARANTOR'S OBLIGATIONS

         Company Guarantor hereby consents and agrees to each of the following,
and agrees that Company Guarantor's obligations under this Guaranty shall not be
released, diminished, impaired, reduced or adversely affected by any of the
following, and waives any common law, equitable, statutory or other rights
(including, without limitation, rights to notice) which Company Guarantor might
otherwise have as a result of or in connection with any of the following:

         2.01 Modifications. Any renewal, refinancing, extension, increase,
modification, alteration or rearrangement of all or any part of the Guaranteed
Debt, the Notes, the Loan Agreement, the Security Documents, or any other
document, instrument, contract or understanding between Borrower and Lender, or
any other parties, pertaining to the Guaranteed Debt or any failure of Lender to
notify Company Guarantor of any such action.

         2.02 Adjustment. Any adjustment, indulgence, forbearance or compromise
that might be granted or given by Lender to Borrower or Company Guarantor.

         2.03 Condition of Borrower or Company Guarantor. The insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation, disability,
death, dissolution or lack of power of Borrower, Company Guarantor or any other
party at any time liable for the payment of all or part of the Guaranteed Debt;
or any changes in the shareholder, partners or members of Borrower or Company
Guarantor; or any reorganization of Borrower or Company Guarantor.

         2.04 Invalidity of Guaranteed Debt. The invalidity, illegality or
unenforceability of all or any part of the Guaranteed Debt, or any document or
agreement executed in connection with the Guaranteed Debt, for any reason
whatsoever, including, without limitation, the fact that (i) the Guaranteed
Debt, or any part thereof, exceeds the amount permitted by law, (ii) the act of
creating the Guaranteed Debt or any part thereof is ultra vires, (iii) the
officers or representatives executing the Notes, the Loan Agreement or the other
Security Documents or otherwise creating the Guaranteed Debt acted in excess of
their authority, (iv) the Guaranteed Debt violates applicable usury laws, (v)
the Borrower has valid defenses, claims or offsets (whether at law, in equity or
by agreement) which render the Guaranteed Debt wholly or partially uncollectible
from Borrower, (vi) the creation, performance or repayment of the Guaranteed
Debt (or the execution, delivery and performance of any document or instrument
representing part of the Guaranteed Debt or executed in connection with the
Guaranteed Debt, or given to secure the repayment of the Guaranteed Debt) is
illegal, uncollectible or unenforceable, or (vii) the Notes, the Loan Agreement
or any of the other Security Documents have been forged or otherwise are
irregular or not genuine or authentic, it being agreed that Company Guarantor
shall remain liable hereon regardless of whether Borrower or any other person be
found not liable on the Guaranteed Debt or any part thereof for any reason.

         2.05 Release of Obligors. Any full or partial release of the liability
of Borrower on the Guaranteed Debt, or any part thereof, or any other person or
entity now or hereafter liable, whether directly or indirectly, jointly,
severally, or jointly and severally, to pay, perform,

                                       5
<PAGE>

guarantee or assure the payment of the Guaranteed Debt, or any part thereof, it
being recognized, acknowledged and agreed by Company Guarantor that Company
Guarantor may be required to pay the Guaranteed Debt without assistance or
support of any other party, and Company Guarantor has not been induced to enter
into this Guaranty on the basis of a contemplation, belief, understanding or
agreement that other parties will be liable to pay or perform the Guaranteed
Debt, or that Lender will look to other parties to pay or perform the Guaranteed
Debt.

         2.06 Other Collateral. The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any part of
the Guaranteed Debt.

         2.07 Release of Collateral. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including, without
limitation, negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, property or security, at any time existing in connection with, or
assuring or securing payment of, all or any part of the Guaranteed Debt.

         2.08 Care and Diligence. The failure of Lender or any other party to
exercise diligence or reasonable care in the preservation, protection,
enforcement, sale or other handling or treatment of all or any part of such
collateral, property or security, including, but not limited to, any neglect,
delay, omission, failure or refusal of Lender (i) to take or prosecute any
action for the collection of any of the Guaranteed Debt or (ii) to foreclose, or
initiate any action to foreclose, or, once commenced, prosecute to completion
any action to foreclose upon any security therefor, or (iii) to take or
prosecute any action in connection with any instrument or agreement evidencing
or securing all or any part of the Guaranteed Debt.

         2.09 Unenforceability. The fact that any collateral, security, security
interest or lien contemplated or intended to be given, created or granted as
security for the repayment of the Guaranteed Debt, or any part thereof, shall
not be properly perfected or created, or shall prove to be unenforceable or
subordinate to any other security interest or lien, it being recognized and
agreed by Company Guarantor that it is not entering into this Guaranty in
reliance on, or in contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the collateral for the
Guaranteed Debt.

         2.10 Offset. The Notes, the Guaranteed Debt and the liabilities and
obligations of Company Guarantor to Lender hereunder shall not be reduced,
discharged or released because of or by reason of any existing or future right
of offset, claim or defense of Borrower against Lender, or any other party, or
against payment of the Guaranteed Debt, whether such right of offset, claim or
defense of Borrower against Lender, or any other party, or against payment of
the Guaranteed Debt, whether such right of offset, claim or defense arises in
connection with the Guaranteed Debt (or the transactions creating the Guaranteed
Debt) or otherwise.

         2.11 Merger. The reorganization, conversion, merger, amalgamation or
consolidation of Borrower into or with any other corporation or entity.

                                       6
<PAGE>

         2.12 Preference. Any payment by Borrower to Lender is held to
constitute a preference under bankruptcy laws, or for any reason Lender is
required to refund such payment or pay such amount to Borrower or someone else.

         2.13 Other Actions Taken or Omitted. Any other action taken or omitted
to be taken with respect to the Loan Agreement, the Security Documents, the
Guaranteed Debt, or the security and collateral therefor, whether or not such
action or omission prejudices Company Guarantor or increases the likelihood that
Company Guarantor-will be required to pay the Guaranteed Debt pursuant to the
terms hereof, it being the unambiguous and unequivocal intention of Company
Guarantor that it shall be obligated to pay the Guaranteed Debt when due,
notwithstanding any occurrence, circumstance, event, action, or omission
whatsoever, whether contemplated or uncontemplated, and whether or not otherwise
or particularly described herein, which obligation shall be deemed satisfied
only upon the full and final payment and satisfaction of the Guaranteed Debt.

                                   ARTICLE 3.
                         REPRESENTATIONS AND WARRANTIES

         As material inducements to Lender to enter into the Loan Agreement and
the Security Documents and extend credit to Borrower, Company Guarantor
represents and warrants to Lender as follows:

         3.01 Benefit. Company Guarantor is the owner of a direct or indirect
interest in Borrower, or has received, or will receive, direct or indirect
benefit from the making of this Guaranty with respect to the Guaranteed Debt.

         3.02 Familiarity and Reliance. Company Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial condition
of the Borrower and is familiar with the value of any and all collateral
intended to be created as security for the payment of the Notes or Guaranteed
Debt; provided, however, Company Guarantor is not relying on such financial
condition or the collateral as an inducement to enter into this Guaranty.

         3.03 No Representation by Lender. Neither Lender nor any other party
has made any representation, warranty or statement to Company Guarantor in order
to induce the Company Guarantor to execute this Guaranty.

         3.04 Company Guarantor's Financial Condition. As of the date hereof,
and after giving effect to this Guaranty and the contingent obligation evidenced
hereby, Company Guarantor is, and will be, solvent, and has and will have assets
which, fairly valued, exceed Company Guarantor's obligations, liabilities
(including contingent liabilities) and debts, and has and will have property and
assets sufficient to satisfy and repay its-obligations and liabilities.

         3.05 Legality. All action on Company Guarantor's part requisite for the
due execution, delivery and performance of this Guaranty and the other Security
Documents to which Company Guarantor is a party has been duly and effectively
taken. The execution, delivery and performance by Company Guarantor of this
Guaranty and the consummation of the transactions contemplated hereunder do not,
and will not, contravene or conflict with any law, statute or regulation
whatsoever to which Company Guarantor is subject or constitute a default (or an
event

                                       7
<PAGE>

which with notice or lapse of time or both would constitute a default) under, or
result in the breach of, any indenture, mortgage, deed of trust, charge, lien,
or any contract, agreement or other instrument to which Company Guarantor is a
party or which may be applicable to Company Guarantor. This Guaranty is a legal
and binding obligation of Company Guarantor and is enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency or other laws of
general application relating to the enforcement of creditors' rights.

         3.06 Financial Statements. Each financial statement of Company
Guarantor delivered heretofore, concurrently herewith or hereafter to Lender
completely and accurately discloses the financial condition of Company Guarantor
(including all contingent liabilities) as of the date thereof and for the period
covered thereby, and there has been no material adverse change in Company
Guarantor's financial condition subsequent to the date of the most recent
financial statement of Company Guarantor delivered to Lender, except as
disclosed therein.

         3.07 Litigation. Company Guarantor is not involved in, nor is Company
Guarantor aware of the threat of, any litigation, nor are there any outstanding
or unpaid judgments against Company Guarantor and there is no litigation that
could, collectively or individually, create a material adverse change if
determined, adversely against Company Guarantor.

         3.08 Taxes. All tax returns required to be filed by the Company
Guarantor with all governmental authorities have been filed, and all taxes,
assessments, fees and other governmental charges upon Company Guarantor or upon
any of Company Guarantor's property, income or franchises which are due and
payable, have been paid (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings); and no tax
lien has been filed and, to the knowledge of Company Guarantor, no claim is
being asserted with respect to any such tax, fee or other charge.

         3.09 Survival. All representations and warranties made by Company
Guarantor herein shall survive the execution hereof.

                                   ARTICLE 4.
                      SUBORDINATION OF CERTAIN INDEBTEDNESS

         4.01 Subordination of All Company Guarantor Claims. As used herein, the
term "Company Guarantor's Claims" shall mean all debts and liabilities of
Borrower to Company Guarantor, whether such debts and liabilities now exist or
are hereafter incurred or arise; or whether the obligations of Borrower thereon
be direct, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or liabilities be evidenced by
note, contract, open account, or otherwise, and irrespective of the person or
persons in whose favor such debts or liabilities may, at their inception, have
been, or may hereafter be created, or the manner in which they have been or may
hereafter be acquired by Company Guarantor. The Company Guarantor's Claims shall
include, without limitation, all rights and claims of Company Guarantor against
Borrower (arising as a result of subrogation or otherwise) as a result of
Company Guarantor's payment of all or a portion of the Guaranteed Debt. Upon the
occurrence of an Event of Default (as defined in the Loan Agreement) or the
occurrence of an event which would, with the giving of notice or the passage of
time, or both, constitute an Event of Default,

                                       8
<PAGE>

Company Guarantor shall not receive or collect, directly or indirectly, from
Borrower or any other party any amount upon the Company Guarantor's Claims.

         4.02 Claims in Bankruptcy. In the event of, receivership, bankruptcy,
reorganization, arrangement, debtor's relief, or other insolvency proceedings
involving Company Guarantor as debtor, Lender shall have the right to prove its
claim in any such proceeding so as to establish its rights hereunder and receive
directly from the receiver, trustee or other court custodian dividends and
payments which would otherwise be payable upon Company Guarantor's Claims.
Company Guarantor hereby assigns such dividends and payments to Lender. Should
Lender receive, for application upon the Guaranteed Debt, any such dividend or
payment which is otherwise payable to Company Guarantor, and which, as between
Borrower and Company Guarantor, shall constitute a credit upon the Company
Guarantor's Claims, then upon payment to Lender in full of the Guaranteed Debt,
Company Guarantor shall become subrogated to the rights of Lender to the extent
that such payments to Lender on the Company Guarantor's Claims have contributed
toward the liquidation of the Guaranteed Debt, and such subrogation shall be
with respect to the proportion of the Guaranteed Debt which would have been
unpaid if Lender had not received dividends or payments upon the Company
Guarantor's Claims.

         4.03 Payments Held in Trust. If, notwithstanding anything to the
contrary in this Guaranty, Company Guarantor should receive any funds, payment,
claim or distribution which is prohibited by this Guaranty, Company Guarantor
agrees to hold in trust for Lender an amount equal to the amount of all funds,
payments, claims or distributions so received, and agrees that it shall have
absolutely no dominion over the amount of such funds, payments, claims or
distributions so received except to pay them promptly to Lender, and Company
Guarantor covenants promptly to pay the same to Lender.

         4.04 Liens Subordinate. Company Guarantor agrees that any liens,
security interests, judgment liens, charges or other encumbrances upon
Borrower's assets securing payment of the Company Guarantor's Claims shall be
and shall remain inferior and subordinate to any liens, security interests,
judgment liens, charges or other encumbrances upon Borrower's assets securing
payment of the Guaranteed Debt, regardless of whether such encumbrances in favor
of Company Guarantor or Lender presently exist or are hereafter created or
attach. Without the prior written consent of Lender, Company Guarantor shall not
(i) exercise or enforce any creditor's right it may have against Borrower, or
(ii) foreclose, repossess, sequester or otherwise take steps or institute any
action or proceedings judicial or otherwise, including without limitation the
commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor's relief or insolvency proceeding) to enforce any liens, mortgages, deeds
of trust, security interests, collateral rights, judgments or other encumbrances
on assets of Borrower held by Company Guarantor.

                                   ARTICLE 5.
                               FINANCIAL COVENANTS

         5.01 Financial Information. As soon as available and in any event
within 45 days after the fling thereof with the Internal Revenue Service,
Company Guarantor shall deliver to Lender a complete and correct copy of its
federal income tax return.

                                       9
<PAGE>

         5.02 Other Information. Company Guarantor shall furnish such other and
additional information regarding the business activities and financial condition
of Company Guarantor as Lender shall request from time to time.

                                   ARTICLE 6.
                                  MISCELLANEOUS

         6.01 Waiver. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. The rights of Lender hereunder shall
be in addition to all other rights provided bylaw. No modification or waiver of
any provision of this Guaranty, nor consent to departure therefrom, shall be
effective unless in writing and no such consent or waiver shall extend beyond
the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.

         6.02 Notices. Any notices or other communications required or permitted
to be given by this Guaranty must be given in writing and either (i) mailed by
prepaid certified or registered mail, return receipt requested, addressed to the
party at the address herein provided, (ii) by delivery to a third party
commercial delivery service with evidence of delivery to the office of the
addressee, or (iii) by personal delivery to the addressee. The addresses of the
parties hereto are as follows:

                  Company Guarantor:

                  Lender        Western National Bank
                                500 West Texas, Suite 100
                                Midland, Texas 79701
                                Attention: Scott A. Lovett

Any such notice or other communication shall be deemed to have been given
(whether actually received or not) on the day it is delivered to the U.S. Post
Office or third party delivery service as aforesaid or if delivered by other
means, then upon actual receipt by the addressee. Any party may change its
address for purposes of this Guaranty by giving notice of such change to the
other party pursuant to this Section.

          6.03 Governing Law. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN
INCIDENT TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN
MIDLAND COUNTY, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS. Any action or proceeding against Company
Guarantor under or in connection with this Guaranty shall be brought in any
state or federal court in Midland County, Texas. Company Guarantor

                                       10
<PAGE>

hereby irrevocably (i) submits to the nonexclusive jurisdiction of such courts,
and (ii) waives any objection it may now or hereafter have as to the venue of
any such action or proceeding brought in such court or that such court is an
inconvenient forum. Company Guarantor agrees that service of process upon it may
be made by certified or registered mail, return receipt requested, at its
address specified herein. Nothing herein shall affect the right of Lender to
serve process in any other matter permitted by law or shall limit the right of
Lender to bring any action or proceeding against Company Guarantor or with
respect to any of Company Guarantor's property in courts in other jurisdictions.
Any action or proceeding by Company Guarantor against Lender shall be brought
only in a court located in Midland County, Texas.

         6.04 Invalid Provisions. If any provision of this Guaranty is held to
be illegal, invalid, or unenforceable under present or future laws effective
during the term of this Guaranty, such provision shall be fully severable and
this Guaranty shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Guaranty, and the
remaining provisions of this Guaranty shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Guaranty, unless such continued effectiveness of this
Guaranty, as modified, would be contrary to the basic understandings and
intentions of the parties as expressed herein.

         6.05 Amendments. This Guaranty may be amended only by an instrument in
writing executed by the party or an authorized representative of the party
against whom such amendment is sought to be enforced.

         6.06 Parties Bound; Assignment. This Guaranty shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns and legal representatives; provided, however, that Company Guarantor may
not, without the prior written consent of Lender, assign any of its rights,
powers, duties or obligations hereunder.

         6.07 Headings. Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Guaranty.

         6.08 Recitals. The recital and introductory paragraphs hereof are a
part hereof, form a basis for this Guaranty and shall be considered prima facie
evidence of the facts and documents referred to therein.

         6.09 Counterparts. To facilitate execution, this Guaranty may be
executed in as many counterparts as may be convenient or required. It shall not
be necessary that the signature or acknowledgment of, or on behalf of, each
party, or that the signature of all persons required to bind any party, or the
acknowledgment of such party, appear on each counterpart. All counterparts shall
collectively constitute a single instrument. It shall not be necessary in making
proof of this Guaranty to produce or account for more than a single counterpart
containing the respective signatures of, or on behalf of, and the respective
acknowledgments of, each of the parties hereto. Any signature or acknowledgment
page to any counterpart may be detached from such counterpart without impairing
the legal effect of the signatures or acknowledgments thereon and thereafter
attached to another counterpart identical thereto except having attached to it
additional signature or acknowledgment pages.

                                       11
<PAGE>

         6.10 Rights and Remedies. If Company Guarantor becomes liable for any
indebtedness owing by Borrower to Lender, by endorsement or otherwise, other
than under this Guaranty, such liability shall not be in any manner impaired or
affected hereby and the rights of Lender hereunder shall be cumulative of any
and all other rights that Lender may ever have against Company Guarantor. The
exercise by Lender of any right or remedy hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.

         6.11 ENTIRETY. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF
COMPANY GUARANTOR AND LENDER WITH RESPECT TO COMPANY GUARANTOR'S GUARANTY OF THE
GUARANTEED DEBT AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY COMPANY GUARANTOR AND LENDER
AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE
OF DEALING BETWEEN COMPANY GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO
TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE
USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY
AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN COMPANY GUARANTOR AND LENDER.

         6.12 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. COURTS WITHIN THE STATE OF TEXAS SHALL HAVE
JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN COMPANY GUARANTOR AND LENDER,
WHETHER IN LAW OR EQUITY, INCLUDING, BUT NOT LIMITED TO, ANY AND ALL DISPUTES
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT; AND
VENUE IN ANY SUCH DISPUTE, WHETHER IN FEDERAL OR STATE COURT, SHALL BE LAID IN
MIDLAND COUNTY, TEXAS.

         DATED to be effective from and as of the day and year first above
written.

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

                                      By:
                                          --------------------------------------

                                      WESTERN NATIONAL BANK

                                      By:
                                          --------------------------------------

                                       12
<PAGE>

STATE OF TEXAS        )
                      )
COUNTY OF MIDLAND     )

         The foregoing instrument was acknowledged before me on this ____ day of
_______________, 1999, by ______________________________ of WESTERN NATIONAL
BANK, a national banking association, on behalf of said association.

                                                   -----------------------------
                                                   Notary Public, State of Texas

STATE OF TEXAS         )
                       )
COUNTY OF MIDLAND      )

         The foregoing instrument was acknowledged before me this ____ day of
September, 1999, by ___________________________,
________________________________ of __________________________, a Texas
_____________________, for and on behalf of said
______________________________________.

                                                   -----------------------------
                                                   Notary Public, State of Texas

                                       13
<PAGE>

                           LIMITED GUARANTY AGREEMENT

         This LIMITED GUARANTY AGREEMENT (this "Guaranty"), dated as of
September ____, 1999, is made by ______________________ ("Guarantor"), for the
benefit of WESTERN NATIONAL BANK, a national banking association ("Lender").

                                   WITNESSETH:

         WHEREAS, Lender has entered into a Loan Agreement (as the same may
hereafter be amended, restated or otherwise modified from time to time, the
"Loan Agreement"), dated of even date herewith, with Natural Gas Services Group,
Inc., a Texas corporation ("Borrower"), pursuant to which Borrower has executed
that certain Term Promissory Note in the original principal amount of
$1,500,000.00 and that certain Revolving Line of Credit Promissory Note in the
original principal amount of $750,000.00 (together with all renewals,
refinancings, modifications, increases and extensions thereof, the "Notes")
under which Borrower has become indebted, and may from time to time be further
indebted, to Lender with respect to loans (the "Loans") which are further
evidenced, secured or governed by other instruments and security documents
executed in connection with the Loans (collectively, the "Security Documents");
and

         WHEREAS, Lender is not willing to make the Loans, or otherwise extend
credit, to Borrower unless Guarantor guarantees payment to Lender of the
Guaranteed Debt (as herein defined) pursuant to the following terms; and

         WHEREAS, Guarantor will directly benefit from Lender's making the Loans
to Borrower.

         NOW, THEREFORE, as a material inducement to Lender to enter into the
Loan Agreement and to make the Loans to Borrower thereunder, and to extend such
additional credit as Lender may from time to time agree to extend thereunder,
and for other good and valuable consideration, the receipt and legal sufficiency
of which are hereby acknowledged, the parties do hereby agree as follows:

                                   ARTICLE 1.
                          NATURE AND SCOPE OF GUARANTY

         1.1 Definition of Guaranteed Debt. As used herein, the term "Guaranteed
Debt" means all of the following:

                  (a) all principal, interest, attorneys' fees, liabilities for
         costs and expenses and other indebtedness, obligations and liabilities
         of Borrower to Lender at any time created or arising in connection with
         the Loans, or any amendment thereto or substitution therefore,
         including, but not limited to, all indebtedness, obligations and
         liabilities of Borrower to Lender arising under the Notes, or under any
         renewals, modifications, increases and extensions of the Notes, or
         under the Loan Agreement and the Security Documents;

<PAGE>

                  (b) all liabilities of Borrower for future advances,
         extensions of credit or other value at any time given or made by Lender
         to Borrower arising under the Loan Agreement and the Security
         Documents;

                  (c) any and all other indebtedness, liabilities, obligations
         and duties of every kind and character of Borrower to Lender arising
         under the Loan Agreement and the Security Documents, whether now or
         hereafter existing or arising, regardless of whether such present or
         future indebtedness, liabilities, obligations or duties be direct or
         indirect, related or unrelated, liquidated or unliquidated, primary or
         secondary, joint, several, or joint and several, or fixed or
         contingent;

                  (d) any and all post-petition interest and expenses (including
         attorneys' fees) whether or not allowed under any bankruptcy,
         insolvency, or other similar law; and

                  (e) all costs, expenses and fees, including, but not limited
         to, court costs and attorneys' fees arising in connection with the
         collection of any or all amounts, indebtedness, obligations and
         liabilities of Borrower to Lender described in items (a) through (d) of
         this Section 1.1.

         1.2 Guaranty of Obligation. Subject to Section 1.12 below, Guarantor
hereby irrevocably and unconditionally guarantees to Lender and its successors
and assigns the payment and performance of the Guaranteed Debt as and when the
same shall be due and payable, whether by lapse of time, by acceleration of
maturity or otherwise. Guarantor hereby irrevocably and unconditionally
covenants and agrees that Guarantor is liable for the Guaranteed Debt as a
primary obligor.

         1.3 Nature of Guaranty. This Guaranty is an irrevocable, absolute,
continuing guaranty of payment and performance and not a guaranty of collection.
This Guaranty may not be revoked by Guarantor and shall continue to be effective
with respect to any Guaranteed Debt arising or created after any attempted
revocation by Guarantor and after (if Guarantor is a natural person) such
Guarantor's death (in which event this Guaranty shall be binding upon such
Guarantor's estate and Guarantor's legal representative and heirs). This
Guaranty may be enforced by Lender and any subsequent holder of the Guaranteed
Debt and shall not be discharged by the assignment or negotiation of all or part
of the Guaranteed Debt.

         1.4 Guaranteed Debt Not Reduced by Offset. The Guaranteed Debt and the
liabilities and obligations of Guarantor to Lender hereunder, shall not be
reduced, discharged or released because or by reason of any existing or future
offset, claim or defense of Borrower, or any other party, against Lender or
against payment of the Guaranteed Debt, whether such offset, claim or defense
arises in connection with the Guaranteed Debt (or the transactions creating the
Guaranteed Debt) or otherwise. Without limiting the foregoing or Guarantor's
liability hereunder, to the extent that Lender advances funds pursuant to the
Notes and does not receive payments or benefits thereon in the amounts and at
the times required or provided in the Notes, Guarantor is absolutely liable to
make such payments to (and confer such benefits on) Lender, on a timely basis.

                                       2
<PAGE>

         1.5 Payment bar Guarantor. If all or any part of the Guaranteed Debt
shall not be punctually paid when due, whether at maturity or earlier by
acceleration or otherwise, Guarantor shall, immediately upon demand by Lender,
and without presentment, protest, notice of protest, notice of non-payment,
notice of intention to accelerate the maturity, notice of acceleration of the
maturity, or any other notice whatsoever, pay in lawful money of the United
States of America, the amount due on the Guaranteed Debt to Lender at Lender's
address as set forth herein. Such demand(s) may be made at any time coincident
with or after the time for payment of all or part of the Guaranteed Debt, and
may be made from time to time with respect to the same or different items of
Guaranteed Debt. Such demand shall be deemed made, given and received in
accordance with the notice provisions hereof.

         1.6 No Duty to Pursue Others. It shall not be necessary for Lender (and
Guarantor hereby waives any rights which such Guarantor may have to require
Lender), in order to enforce such payment by Guarantor, first to (i) institute
suit or exhaust its remedies against Borrower or others liable on the Guaranteed
Debt or any other person, (ii) enforce Lender's rights against any collateral
which shall ever have been given to secure the Guaranteed Debt, (iii) join
Borrower or any others liable on the Guaranteed Debt in any action seeking to
enforce this Guaranty, (iv) exhaust any remedies available to Lender against any
collateral which shall ever have been given to secure the Guaranteed Debt, or
(v) resort to any other means of obtaining payment of the Guaranteed Debt.
Lender shall not be required to mitigate damages or take any other action to
reduce, collect or enforce the Guaranteed Debt.

         1.7 Waivers. Guarantor agrees to the provisions of the Loan Agreement
and the Security Documents, and hereby waives (a) all rights of Guarantor under
Rule 31, Texas Rules of Civil Procedure, or Chapter 34 of the Texas Business and
Commerce Code, or Section 17.001 of the Texas Civil Practice and Remedies Code;
(b) to the extent Guarantor is subject to the Texas Revised Partnership Act
("TRPA"), compliance by Lender with Section 3.05(d) of TRPA and (c) notice of
(i) any loans or advances made by Lender to Borrower, (ii) acceptance of this
Guaranty, (iii) any amendment or extension of the Notes, the Loan Agreement or
of any other Security Documents, (iv) the execution and delivery by Borrower and
Lender of any other loan or credit agreement or of Borrower's execution and
delivery of any promissory notes or other documents arising under the Loan
Agreement, the Security Documents or in connection with the Collateral (as
defined in the Loan Agreement or Security Documents), (v) the occurrence of any
breach by Borrower or Event of Default (as defined in the Loan Agreement), (vi)
Lender's transfer or disposition of the Guaranteed Debt, or any part thereof,
(vii) sale or foreclosure (or posting or advertising for sale or foreclosure) of
any collateral for the Guaranteed Debt, (viii) protest, proof of non-payment or
default by Borrower, or (ix) any other action at any time taken or omitted by
Lender, and, generally, all demands and notices of every kind in connection with
this Guaranty, the Loan Agreement, the Security Documents, or any other
documents or agreements evidencing, securing or relating to any of the
Guaranteed Debt and the obligations hereby guaranteed. The parties intend that
Guarantor shall not be considered a "debtor" as defined in Tex. Bus. & Com. Code
Ann. Section 9.105 (and any successor statute thereto).

                                       3
<PAGE>

         1.8 Payment of Expenses. If Guarantor breaches or fails to timely
perform any provisions of this Guaranty, Guarantor shall, immediately upon
demand by Lender, pay Lender all costs and expenses (including court costs and
reasonable attorneys' fees) incurred by Lender in the enforcement hereof or the
preservation of Lender's rights hereunder. The covenant contained in this
Section 1.8 shall survive the payment of the Guaranteed Debt.

         1.9 Effect of Bankruptcy. If, pursuant to any insolvency, bankruptcy,
reorganization, receivership or other debtor relief law, or any judgment, order
or decision thereunder, Lender must rescind or restore any payment, or any part
thereof, received by Lender in satisfaction of the Guaranteed Debt, as set forth
herein, any prior release or discharge from the terms of this Guaranty given to
Guarantor by Lender shall be without effect, and this Guaranty shall remain in
full force and effect. It is the intention of Borrower and Guarantor that
Guarantor's obligations hereunder shall not be discharged except by Guarantor's
performance of such obligations and then only to the extent of such performance.

         1.10 Waiver of Subrogation, Reimbursement and Contribution.
Notwithstanding anything to the contrary contained in this Guaranty, from and
after the date hereof until payment to Lender in full of the Guaranteed Debt,
Guarantor shall not, and shall not attempt to, enforce, collect or exercise any
rights Guarantor may now or hereafter have under any agreement, at law or in
equity (including, without limitation, any law subrogating the Guarantor to the
rights of Lender) to assert any claim against or seek contribution,
indemnification or any other form of reimbursement from Borrower or any other
party liable for payment of any or all of the Guaranteed Debt for any payment
made by Guarantor under or in connection with this Guaranty or otherwise. After
payment to Lender in full of the Guaranteed Debt, Lender shall not contest the
subrogation of Guarantor to the rights of Lender under the Security Documents,
it being expressly agreed that Guarantor's rights under such subrogation shall
be and remain subordinate and inferior to the rights of Lender under the
Security Documents until and unless all amounts due Lender by Borrower under the
Security Documents shall be paid in full.

         1.11 Borrower. The term "Borrower" as used herein shall include any new
or successor corporation, association, partnership (general or limited), joint
venture, trust or other individual or organization formed as a result of any
merger, consolidation, reorganization, amalgamation, sale, transfer or gift of
Borrower or any interest in Borrower.

         1.12 Limitation of Liability. Notwithstanding anything in this Guaranty
to the contrary, Guarantor's liability for payment to Lender of the Guaranteed
Debt is expressly limited to ____% of the Guaranteed Debt.

                                   ARTICLE 2.
                      EVENTS AND CIRCUMSTANCES NOT REDUCING
                     OR DISCHARGING GUARANTOR'S OBLIGATIONS

         Guarantor hereby consents and agrees to each of the following, and
agrees that Guarantor's obligations under this Guaranty shall not be released,
diminished, impaired, reduced or adversely affected by any of the following, and
waives any common law, equitable, statutory or other rights (including, without
limitation, rights to notice) which Guarantor might otherwise have as a result
of or in connection with any of the following:

                                       4
<PAGE>

         2.1 Modifications. Any renewal, refinancing, extension, increase,
modification, alteration or rearrangement of all or any part of the Guaranteed
Debt, the Notes, the Loan Agreement, the Security Documents, or any other
document, instrument, contract or understanding between Borrower and Lender, or
any other parties, pertaining to the Guaranteed Debt or any failure of Lender to
notify Guarantor of any such action.

         2.2 Adjustment. Any adjustment, indulgence, forbearance or compromise
that might be granted or given by Lender to Borrower or Guarantor.

         2.3 Condition of Borrower or Guarantor. The insolvency, bankruptcy,
arrangement, adjustment, composition, liquidation, disability, death,
dissolution or lack of power of Borrower, Guarantor or any other party at any
time liable for the payment of all or part of the Guaranteed Debt; or any
changes in the shareholders, partners or members of Borrower or Guarantor; or
any reorganization of Borrower or Guarantor.

         2.4 Invalidity of Guaranteed Debt. The invalidity, illegality or
unenforceability of all or any part of the Guaranteed Debt, or any document or
agreement executed in connection with the Guaranteed Debt, for any reason
whatsoever, including, without limitation, the fact that (i) the Guaranteed
Debt, or any part thereof, exceeds the amount permitted by law, (ii) the act of
creating the Guaranteed Debt or any part thereof is ultra vires, (iii) the
officers or representatives executing the Notes, the Loan Agreement or the other
Security Documents or otherwise creating the Guaranteed Debt acted in excess of
their authority, (iv) the Guaranteed Debt violates applicable usury laws, (v)
the Borrower has valid defenses, claims or offsets (whether at law, in equity or
by agreement) which render the Guaranteed Debt wholly or partially uncollectible
from Borrower, (vi) the creation, performance or repayment of the Guaranteed
Debt (or the execution, delivery and performance of any document or instrument
representing part of the Guaranteed Debt or executed in connection with the
Guaranteed Debt, or given to secure the repayment of the Guaranteed Debt) is
illegal, uncollectible or unenforceable, or (vii) the Notes, the Loan Agreement
or any of the other Security Documents have been forged or otherwise are
irregular or not genuine or authentic, it being agreed that Guarantor shall
remain liable hereon regardless of whether Borrower or any other person be found
not liable on the Guaranteed Debt or any part thereof for any reason.

         2.5 Release of Obligors. Any full or partial release of the liability
of Borrower on the Guaranteed Debt, or any part thereof, or any other person or
entity now or hereafter liable, whether directly or indirectly, jointly,
severally, or jointly and severally, to pay, perform, guarantee or assure the
payment of the Guaranteed Debt, or any part thereof, it being recognized,
acknowledged and agreed by Guarantor that Guarantor may be required to pay the
Guaranteed Debt without assistance or support of any other party, and Guarantor
has not been induced to enter into this Guaranty on the basis of a
contemplation, belief, understanding or agreement that other parties will be
liable to pay or perform the Guaranteed Debt, or that Lender will look to other
parties to pay or perform the Guaranteed Debt.

         2.6 Other Collateral. The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any part of
the Guaranteed Debt.

                                       5
<PAGE>

         2.7 Release of Collateral. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including, without
limitation, negligent, willful, unreasonable or unjustifiable impairment) of any
collateral, property or security, at any time existing in connection with, or
assuring or securing payment of, all or any part of the Guaranteed Debt.

         2.8 Care and Diligence. The failure of Lender or any other party to
exercise diligence or reasonable care in the preservation, protection,
enforcement, sale or other handling or treatment of all or any part of such
collateral, property or security, including, but not limited to, any neglect,
delay, omission, failure or refusal of Lender (i) to take or prosecute any
action for the collection of any of the Guaranteed Debt or (ii) to foreclose, or
initiate any action to foreclose, or, once commenced, prosecute to completion
any action to foreclose upon any security therefor, or (iii) to take or
prosecute any action in connection with any instrument or agreement evidencing
or securing all or any part of the Guaranteed Debt.

         2.9 Unenforceability. The fact that any collateral, security, security
interest or lien contemplated or intended to be dive n, created or granted as
security for the repayment of the Guaranteed Debt, or any part thereof, shall
not be properly perfected or created, or shall prove to be unenforceable or
subordinate to any other security interest or lien, it being recognized and
agreed by Guarantor that it is not entering into this Guaranty in reliance on,
or in contemplation of the benefits of, the validity, enforceability,
collectibility or value of any of the collateral for the Guaranteed Debt.

         2.10 Offset. The Notes, the Guaranteed Debt and the liabilities and
obligations of Guarantor to Lender hereunder shall not be reduced, discharged or
released because of or by reason of any existing or future right of offset,
claim or defense of Borrower against Lender, or any other party, or against
payment of the Guaranteed Debt, whether such right of offset, claim or defense
of Borrower against Lender, or any other party, or against payment of the
Guaranteed Debt, whether such right of offset, claim or defense arises in
connection with the Guaranteed Debt (or the transactions creating the Guaranteed
Debt) or otherwise.

         2.11 Merger. The reorganization, conversion, merger, amalgamation or
consolidation of Borrower into or with any other corporation or entity.

         2.12 Preference. Any payment by Borrower to Lender is held to
constitute a preference under bankruptcy laws, or for any reason Lender is
required to refund such payment or pay such amount to Borrower or someone else.

         2.13 Other Actions Taken or Omitted. Any other action taken or omitted
to be taken with respect to the Loan Agreement, the Security Documents, the
Guaranteed Debt, or the security and collateral therefor, whether or not such
action or omission prejudices Guarantor or increases the likelihood that
Guarantor will be required to pay the Guaranteed Debt pursuant to the terms
hereof, it being the unambiguous and unequivocal intention of Guarantor that it
shall be obligated to pay the Guaranteed Debt when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not otherwise or particularly
described herein, which obligation shall be deemed satisfied only upon the full
And final payment and satisfaction of the Guaranteed Debt.

                                       6
<PAGE>

                                   ARTICLE 3.
                         REPRESENTATIONS AND WARRANTIES

         As material inducements to Lender to enter into the Loan Agreement and
the Security Documents and extend credit to Borrower, Guarantor represents and
warrants to Lender as follows:

         3.1 Benefit. Guarantor is the owner of a direct or indirect interest in
Borrower, or has received, or will receive, direct or indirect benefit from the
making of this Guaranty with respect to the Guaranteed Debt.

         3.2 Familiarity and Reliance. Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial. condition of
the Borrower and is familiar with the value of any and all collateral intended
to be created as security for the payment of the Notes or Guaranteed Debt;
provided, however, Guarantor is not relying on such financial condition or the
collateral as an inducement to enter into this Guaranty.

         3.3 No Representation by Lender. Neither Lender nor any other party has
made any representation, warranty or statement to Guarantor in order to induce
the Guarantor to execute this Guaranty.

         3.4 Guarantor's Financial Condition. As of the date hereof, and after
giving effect to this Guaranty and the contingent obligation evidenced hereby,
Guarantor is, and will be, solvent, and has and will have assets which, fairly
valued, exceed Guarantor's obligations, liabilities (including contingent
liabilities) and debts, and has and will have property and assets sufficient to
satisfy and repay Guarantor's obligations and liabilities.

         3.5 Legality. All action on Guarantor's part requisite for the due
execution, delivery and performance of this Guaranty and the other Security
Documents to which Guarantor is a party has been duly and effectively taken. The
execution, delivery and performance by Guarantor of this Guaranty and the
consummation of the transactions contemplated hereunder do not, and will not,
contravene or conflict with any law, statute or regulation whatsoever to which
Guarantor is subject or constitute a default (or an event which with notice or
lapse of time or both would constitute a default) under, or result in the breach
of, any indenture, mortgage, deed of trust, charge, lien, or any contract,
agreement or other instrument to which Guarantor is a party or which may be
applicable to Guarantor. This Guaranty is a legal and binding obligation of
Guarantor and is enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to the
enforcement of creditors' rights.

         3.6 Financial Statements. Each financial statement of Guarantor
delivered heretofore, concurrently herewith or hereafter to Lender completely
and accurately discloses the financial condition of Guarantor (including all
contingent liabilities) as of the date thereof and for the period covered
thereby, and there has been no material adverse change in Guarantor's financial
condition subsequent to the date of the most recent financial statement of
Guarantor delivered to Lender, except as disclosed therein.

                                       7
<PAGE>

         3.7 Litigation. Guarantor is not involved in, nor is Guarantor aware of
the threat of, any litigation, nor are there any outstanding or unpaid judgments
against Guarantor and there is no litigation that could, collectively or
individually, create a material adverse change if determined adversely against
Guarantor.

         3.8 Taxes. All tax returns required to be filed by the Guarantor with
all governmental authorities have been filed, and all taxes, assessments, fees
and other governmental charges upon Guarantor or upon any of Guarantor's
property, income or franchises which are due and payable, have been paid (other
than any the amount or validity of which are currently being contested in good
faith by appropriate proceedings); and no tax lien has been filed and, to the
knowledge of Guarantor, no claim is being asserted with respect to any such tax,
fee or other charge.

         3.9 Survival. All representations and warranties made by Guarantor
herein shall survive the execution hereof.

                                   ARTICLE 4.
                      SUBORDINATION OF CERTAIN INDEBTEDNESS

         4.1 Subordination of All Guarantor Claims. As used herein, the term
"Guarantor's Claims" shall mean all debts and liabilities of Borrower to
Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise; or whether the obligations of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by Guarantor. The Guarantor's Claims shall include, without
limitation, all rights and claims of Guarantor against Borrower (arising as a
result of subrogation or otherwise) as a result of Guarantor's payment of all or
a portion of the Guaranteed Debt. Upon the occurrence of an Event of Default (as
defined in the Loan Agreement) or the occurrence of an event which would, with
the giving of notice or the passage of time, or both, constitute an Event of
Default, Guarantor shall not receive or collect, directly or indirectly, from
Borrower or any other party any amount upon the Guarantor's Claims.

         4.2 Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor's relief, or other insolvency proceedings
involving Guarantor as debtor, Lender shall have the right to prove its claim in
any such proceeding so as to establish its rights hereunder and receive directly
from the receiver, trustee or other court custodian dividends and payments which
would otherwise be payable upon Guarantor's Claims. Guarantor hereby assigns
such dividends and payments to Lender. Should Lender receive, for application
upon the Guaranteed Debt, any such dividend or payment which is otherwise
payable to Guarantor, and which, as between Borrower and Guarantor, shall
constitute a credit upon the Guarantor's Claims, then upon payment to Lender in
full of the Guaranteed Debt, Guarantor shall become subrogated to the rights of
Lender to the extent that such payments to Lender on the Guarantor's Claims have
contributed toward the liquidation of the Guaranteed Debt, and such subrogation
shall be with respect to the proportion of the Guaranteed Debt which would have
been unpaid if Lender had not received dividends or payments upon the
Guarantor's Claims.

                                       8
<PAGE>

         4.3 Payments Held in Trust. If, notwithstanding anything to the
contrary in this Guaranty, Guarantor should receive any funds, payment, claim or
distribution which is prohibited by this Guaranty, Guarantor agrees to hold in
trust for Lender an amount equal to the amount of all funds, payments, claims or
distributions so received, and agrees that it shall have absolutely no dominion
over the amount of such funds, payments, claims or distributions so received
except to pay them promptly to Lender, and Guarantor covenants promptly to pay
the same to Lender.

         4.4 Liens Subordinate. Guarantor agrees that any liens, security
interests, judgment hens, charges or other encumbrances upon Borrower's assets
securing payment of the Guarantor's Claims shall be and shall remain inferior
and subordinate to any liens, security interests, judgment liens, charges or
other encumbrances upon Borrower's assets securing payment of the Guaranteed
Debt, regardless of whether such encumbrances in favor of Guarantor or Lender
presently exist or are hereafter created or attach. Without the prior written
consent of Lender, Guarantor shall not (i) exercise or enforce any creditor's
right it may have against Borrower, or (ii) foreclose, repossess, sequester or
otherwise take steps or institute any action or proceedings (judicial or
otherwise, including without limitation the commencement of, or joinder in, any
liquidation, bankruptcy, rearrangement, debtor's relief or insolvency
proceeding) to enforce any liens, mortgages, deeds of trust, security interests,
collateral rights, judgments or other encumbrances on assets of Borrower held by
Guarantor.

                                   ARTICLE 5.
                              AFFIRMATIVE COVENANTS

         5.1 Financial Information. As soon as available and in any event within
90 days after the end of each fiscal year of Guarantor, Guarantor shall deliver
or cause to be delivered Guarantor's (i) unaudited balance sheet, and (ii)
related unaudited statement of profit and loss of Guarantor for such year, in
each case with all supporting schedules. As soon as available and in any event
within 45 days after the filing thereof with the Internal Revenue Service,
Guarantor shall deliver to Lender a complete and correct copy of Guarantor's
federal income tax return.

         5.2 Other Information. Guarantor shall furnish such other and
additional information regarding the business activities and financial condition
of Guarantor as Lender shall request from time to time.

                                   ARTICLE 6.
                                  MISCELLANEOUS

         6.1 Waiver. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. The rights of Lender hereunder shall
be in addition to all other rights provided bylaw. No modification or waiver of
any provision of this Guaranty, nor consent to departure therefrom, shall be
effective unless in writing and no such consent or waiver shall extend beyond
the particular case and purpose involved. No notice or demand given in any case
shall constitute a waiver of the right to take other action in the same, similar
or other instances without such notice or demand.

                                       9
<PAGE>

         6.2 Notices. Any notices or other communications required or permitted
to be given by this Guaranty must be given in wring and either (i) mailed by
prepaid certified or registered mail, return receipt requested, addressed to the
party at the address herein provided, (ii) by delivery to a third party
commercial delivery service with evidence of delivery to the office of the
addressee, or (iii) by personal delivery to the addressee. The addresses of the
parties hereto are as follows:

                  Guarantor:

                  Lender:     Western National Bank
                              500 West Texas, Suite 100
                              Midland, Texas 79701
                              Attention: Scott A. Lovett

Any such notice or other communication shall be deemed to have been given
(whether actually received or not) on the day it is delivered to the U.S. Post
Office or third party delivery service as aforesaid or if delivered by other
means, then upon actual receipt by the addressee. Any party may change its
address for purposes of this Guaranty by giving notice of such change to the
other party pursuant to this Section.

         6.3 Governing Law. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN
INCIDENT TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN
MIDLAND COUNTY, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS. Any action or proceeding against Guarantor under
or in connection with this Guaranty shall be brought in any state or federal
court in Midland County, Texas. Guarantor hereby irrevocably (i) submits to the
nonexclusive jurisdiction of such courts, and (ii) waives any objection it may
now or hereafter have as to the venue of any such action or proceeding brought
in such court or that such court is an inconvenient forum. Guarantor agrees that
service of process upon it may be made by certified or registered mail, return
receipt requested, at its address specified herein. Nothing herein shall affect
the right of Lender to serve process in any other matter permitted by law or
shall limit the right of Lender to bring any action or proceeding against
Guarantor or with respect to any of Guarantor's property in courts in other
jurisdictions. Any action or proceeding by Guarantor against Lender shall be
brought only in a court located in Midland County, Texas.

         6.4 Invalid Provisions. If any provision of this Guaranty is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Guaranty, such provision shall be fully severable and this
Guaranty shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Guaranty, and the
remaining provisions of this Guaranty shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Guaranty, unless such continued effectiveness of this
Guaranty, as modified, would be contrary to the basic understandings and
intentions of the parties as expressed herein.

                                       10
<PAGE>

         6.5 Amendments. This Guaranty may be amended only by an instrument in
writing executed by the party or an authorized representative of the party
against whom such amendment is sought to be enforced.

         6.6 Parties Bound; Assignment. This Guaranty shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns and legal representatives; provided, however, that Guarantor may not,
without the prior written consent of Lender, assign any of its rights, powers,
duties or obligations hereunder.

         6.7 Headings. Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Guaranty.

         6.8 Recitals. The recital and introductory paragraphs hereof are a part
hereof, form a basis for this Guaranty and shall be considered prima facie
evidence of the facts and documents referred to therein.

         6.9 Counterparts. To facilitate execution, this Guaranty may be
executed in as many counterparts as may be convenient or required. It shall not
be necessary that the signature or acknowledgment of, or on behalf of, each
party, or that the signature of all persons required to bind any party, or the
acknowledgment of such party, appear on each counterpart. All counterparts shall
collectively constitute a single instrument. It shall not be necessary in making
proof of this Guaranty to produce or account for more than a single counterpart
containing the respective signatures of, or on behalf of, and the respective
acknowledgments of, each of the parties hereto. Any signature or acknowledgment
page to any counterpart may be detached from such counterpart without impairing
the legal effect of the signatures or acknowledgments thereon and thereafter
attached to another counterpart identical thereto except having attached to it
additional signature or acknowledgment pages.

         6.10 Rights and Remedies. If Guarantor becomes liable for any
indebtedness owing by Borrower to Lender, by endorsement or otherwise, other
than under this Guaranty, such liability shall not be in any manner impaired or
affected hereby and the rights of Lender hereunder shall be cumulative of any
and all other rights that Lender may ever have against Guarantor. The exercise
by Lender of any right or remedy hereunder or under any other instrument, or at
law or in equity, shall not preclude the concurrent or subsequent exercise of
any other right or remedy.

         6.11 ENTIRETY. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF
GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE GUARANTEED DEBT
AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF.
THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A FINAL AND COMPLETE
EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN
GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY,

                                       11
<PAGE>

SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY AGREEMENT. THERE ARE NO ORAL
AGREEMENTS BETWEEN GUARANTOR AND LENDER.

         6.12 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. COURTS WITHIN THE STATE OF TEXAS SHALL HAVE
JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN BORROWER AND LENDER, WHETHER IN
LAW OR EQUITY, INCLUDING, BUT NOT LIMITED TO, ANY AND ALL DISPUTES ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT; AND VENUE IN ANY
SUCH DISPUTE, WHETHER IN FEDERAL OR STATE COURT, SHALL BE LAID IN MIDLAND
COUNTY, TEXAS.

         DATED to be effective from and as of the day and year first above
written.

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

                                       12
<PAGE>

THE STATE OF TEXAS     )
                       )
COUNTY OF MIDLAND      )

         This instrument was acknowledged before me on ________________________
by ________________________.

                                               ---------------------------------
                                               Notary Public, State of Texas

                                               WESTERN NATIONAL BANK

                                               By:
                                                  ------------------------------

THE STATE OF TEXAS         )
                           )
COUNTY OF MIDLAND          )

         The foregoing instrument was acknowledged before me on this ____day of
______________________, 1999, by _________________________________ of WESTERN
NATIONAL BANK, a national banking association, on behalf of said association.

                                                 -------------------------------
                                                 Notary Public, State of Texas

                                       13

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