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<SEC-DOCUMENT>0001144204-05-010951.txt : 20050408
<SEC-HEADER>0001144204-05-010951.hdr.sgml : 20050408
<ACCEPTANCE-DATETIME>20050408171940
ACCESSION NUMBER:		0001144204-05-010951
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		8
CONFORMED PERIOD OF REPORT:	20050404
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Unregistered Sales of Equity Securities
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20050408
DATE AS OF CHANGE:		20050408

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NATURAL GAS SYSTEMS INC/NEW
		CENTRAL INDEX KEY:			0001006655
		STANDARD INDUSTRIAL CLASSIFICATION:	OIL AND GAS FIELD EXPLORATION SERVICES [1382]
		IRS NUMBER:				411781991
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-27862
		FILM NUMBER:		05742239

	BUSINESS ADDRESS:	
		STREET 1:		820 GESSNER
		STREET 2:		SUITE 1340
		CITY:			HOUSTON
		STATE:			TX
		ZIP:			77024
		BUSINESS PHONE:		713-935-0122

	MAIL ADDRESS:	
		STREET 1:		820 GESSNER
		STREET 2:		SUITE 1340
		CITY:			HOUSTON
		STATE:			TX
		ZIP:			77024

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NATURAL GAS SYSTEMS, INC.
		DATE OF NAME CHANGE:	20040810

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	REALITY INTERACTIVE INC
		DATE OF NAME CHANGE:	19960301
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v16031_8k.txt
<TEXT>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 8-K

                Current Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934


                          Date of Report: April 8, 2005
                 Date of Earliest Event Reported: April 4, 2005


                            NATURAL GAS SYSTEMS, INC.
             (Exact Name of Registrant as Specified in its Charter)


                                     Nevada
                 (State or Other Jurisdiction of Incorporation)


                  0-27862                                80-0028196
- ----------------------------------------   -------------------------------------
         (Commission File Number)           (I.R.S. Employer Identification No.)


 820 Gessner, Suite 1340, Houston, Texas                    77024
- ----------------------------------------   -------------------------------------
 (Address of Principal Executive Offices)                (Zip Code)


                                 (713) 935-0122
              (Registrant's Telephone Number, Including Area Code)

                                       N/A
          (Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

|_|   Written communications pursuant to Rule 425 under the Securities Act (17
      CFR 230.425).

|_|   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12).

|_|   Pre-commencement communications pursuant to Rule 14d-2(b) under the
      Exchange Act (17 CFR 240.14d-2(b)).

|_|   Pre-commencement communications pursuant to Rule 13e-4(c) under the
      Exchange Act (17 CFR 240.13e-4(c)).


                                       1
<PAGE>

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Executive Employment Agreement: Robert S. Herlin

On September 23, 2003, Natural Gas Systems, Inc., a Delaware corporation ("Old
NGS"), a subsidiary of Natural Gas Systems, a Nevada corporation (the
"Company"), entered into an Executive Employment Contract (the "Original Herlin
Employment Contract") with Robert S. Herlin for Mr. Herlin to serve as President
and Chief Executive Officer of the Company. Pursuant to the Original Herlin
Employment Contract, Mr. Herlin was granted a stock option to purchase 250,000
shares of Old NGS common stock with an exercise price equal to $0.001 that vests
over four years, that were to be cancelled when the Company granted warrants to
Tatum CFO Partners, LLP, a provider of contract CFO's and other executive level
executives ("Tatum"), in connection with Herlin's status as a partner of Tatum
and certain other services to be provided by Tatum. In addition, under the
Original Herlin Employment Contract Mr. Herlin received an annual salary of
$180,000, an annual discretionary bonus of up to $180,000, a six month severance
package, and purchased founders' stock of 1,000,000 shares of common stock of
Old NGS, with Old NGS having a repurchase right under a reverse vesting
arrangement over 27 months (the "Stock Purchase Agreement"). The Original Herlin
Employment Contract and Stock Purchase Agreement were assumed by the Company
when a subsidiary of the Company merged with Old NGS in May 2004. In addition,
the stock options were exchanged in the merger for stock options exercisable for
shares of Company common stock.

         On April 4, 2005, the Company made effective an Executive Employment
Contract (the "New Herlin Employment Contract") with Mr. Herlin. The New Herlin
Employment Contract supersedes the Original Herlin Employment Contract. Pursuant
to the New Herlin Employment Contract, Mr. Herlin will continue to serve as
President and Chief Executive Officer of the Company. He will receive $180,000
annual salary, which shall increase to $210,000 at the end of one year, and a
one year severance package. Mr. Herlin is also eligible to receive an annual
discretionary bonus equal to 100% of his annual salary. As a bonus for fiscal
2004, Mr. Herlin will retain the 250,000 stock options granted to him under the
Original Employment Agreement. The Company has entered into a new agreement with
Tatum, which supercedes the original agreement with Tatum and provides for the
Company to grant Tatum a warrant to purchase 250,000 shares of Company common
stock, exercisable at $0.001 exercisable for five years. We refer you to
"Restated and Amended Agreement with Tatum Partners".

         In addition, on April 4, 2005, the Company made effective a grant to
Mr. Herlin for a stock option to purchase 500,000 shares of Company common
stock, with an exercise price equal to $1.80 that vests over four years ("Herlin
Stock Option Agreement"), as well as an additional grant of a warrant to
purchase 287,500 shares of Company common stock, with an exercise price equal to
$1.80 that vests over four years ("Herlin Warrant Agreement"). A copy of the New
Herlin Employment Contract, Herlin Stock Option Agreement, and Herlin Warrant
Agreement are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and
are incorporated herein by reference to this Item 1.01. The foregoing summary
does not purport to be complete and is qualified in its entirety by reference to
the New Herlin Employment Contract, Herlin Stock Option Agreement, and Herlin
Warrant Agreement.


                                      -2-
<PAGE>

Restated and Amended Agreement with Tatum Partners.

         On or about September 23, 2003, Old NGS entered into a Resources
Agreement with Tatum CFO Partners, LLP (the "Original Tatum Contract"). The
Original Tatum Contract provided for Tatum to provide the services of its
partner, Robert S. Herlin to Old NGS and provide access to various Tatum
resources in exchange for sharing of Mr. Herlin's compensation from Old NGS. The
Original Tatum Contract was assumed by the Company when a subsidiary of the
Company merged with Old NGS in May 2004.

         On April 4, 2005, the Company made effective an Amended and Restated
Resources Agreement (the "Amended and Restated Tatum Contract") with Tatum.
Pursuant to the Amended and Restated Tatum Contract, Tatum will receive $12,000
per year for access to its services. In addition, the Company granted a warrant
to purchase 250,000 shares of Company common stock, exercisable at $0.001 per
share and exercisable for a period of five years, under the terms of the Tatum
Warrant Agreement (the "Tatum Warrant Agreement").

         A copy of the Amended and Restated Tatum Contract and the Tatum Warrant
Agreement is attached hereto as Exhibits 10.5 and 10.5, respectively, and is
incorporated herein by reference to this Item 1.01. The foregoing summary does
not purport to be complete and is qualified in its entirety by reference to the
Amended and Restated Tatum Contract and Tatum Warrant Agreement.

Executive Employment Agreement: Sterling H. McDonald

         On November 10, 2003, Old NGS entered into an Executive Employment
Contract with Sterling H. McDonald for Mr. McDonald to serve as Chief Financial
Officer of the Company (the "Original McDonald Employment Contract"). The
Original McDonald Employment Contract provided for a grant of a stock option to
purchase 250,000 shares of common stock of Old NGS, with an exercise price of
$0.25 that vests over fifty months. In addition, under the Original McDonald
Employment Contract Mr. McDonald received an annual salary of $120,000, an
annual discretionary bonus, and a maximum six month severance package. The
Original McDonald Employment Contract was assumed by the Company when a
subsidiary of the Company merged with Old NGS in May 2004. In addition, the
stock options were exchanged in the merger for stock options exercisable for
shares of Company common stock.

         On April 4, 2005, the Company made effective an Executive Employment
Contract (the "New McDonald Employment Contract") with Mr. McDonald. The New
McDonald Employment Contract supersedes the Original McDonald Employment
Contract, with the exception the Mr. McDonald shall retain the stock options
under the terms previously granted. Pursuant to the New McDonald Employment
Contract, Mr. McDonald will continue to serve as the Chief Financial Officer of
the Company. In addition, Mr. McDonald will receive $150,000 annual salary. Mr.
McDonald is also eligible to receive an annual discretionary bonus equal to 75%
of his annual salary, and a six month severance package which may be increased
to one year under conditions related to a change of control. In addition, on
April 4, 2005, Mr. McDonald was granted a stock option to purchase 350,000
shares of Company common stock, with an exercise price equal to $1.80 that vests
over four years ("McDonald Stock Option Agreement").


                                      -3-
<PAGE>

A copy of the New McDonald Employment Contract and McDonald Stock Option
Agreement are attached hereto as Exhibits 10.6 and 10.7, respectively and are
incorporated herein by reference to this Item 1.01. The foregoing summary does
not purport to be complete and is qualified in its entirety by reference to the
New McDonald Employment Contract and McDonald Stock Option Agreement.

ITEM 1.02   TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.

         The New Herlin Employment Contract supersedes the Original Herlin
Employment Contract in its entirety. To the extent applicable, the discussion
above regarding the supersession of the Original Herlin Employment Contract by
the New Herlin Employment Contract is incorporated herein by reference to this
Item 1.02.

         The New McDonald Employment Contract supersedes the Original McDonald
Employment Contract in its entirety. To the extent applicable, the discussion
above regarding the supersession of the Original McDonald Employment Contract by
the New McDonald Employment Contract is incorporated herein by reference to this
Item 1.02.

ITEM 3.02   UNREGISTERED SALE OF EQUITY SECURITIES

         On April 4, 2005, the Company made effective a grant to Tatum a warrant
to purchase 250,000 shares of Company common stock. In addition, the Company
made effective a grant to Mr. Herlin a stock option to purchase 500,000 shares
of Company common stock and a warrant to purchase 287,500 shares of Company
common stock. The Company also made effective a grant to Mr. McDonald a stock
option to purchase 350,000 shares of Company common stock. The Company granted
the foregoing securities pursuant to certain exemptions from registration
provided by Rule 506 of Regulation D and Section 4(2) and Section 4(6) of the
Securities Act of 1933, as amended.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

         Exhibits.

         The following exhibit is filed as an exhibit to this Current Report on
Form 8-K:

EXHIBIT NO.   DESCRIPTION
- ----------    -----------

10.1          Executive Employment Agreement, Robert S. Herlin, dated April 4,
              2005.

10.2          Herlin Stock Option Agreement, dated April 4, 2005

10.3          Herlin Warrant Agreement, dated April 4, 2005

10.4          Amended and Restated Tatum Resources Agreement, dated April 4,
              2005

10.5          Tatum Warrant Agreement, dated April 4, 2005

10.6          Executive Employment Agreement, Sterling H. McDonald, dated
              April 4, 2005.

10.7          McDonald Stock Option Agreement, dated April 4, 2005


                                       -4-

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


                                      NATURAL GAS SYSTEMS, INC.


Date:  April 8, 2005                  By: /s/ Robert Herlin
                                          -----------------
                                          Robert Herlin, Chief Executive Officer



                                       -5-

<PAGE>

                                  EXHIBIT INDEX

EXHIBIT NO.   DESCRIPTION
- ----------    -----------

10.1          Executive Employment Agreement, Robert S. Herlin, dated April 4,
              2005.

10.2          Herlin Stock Option Agreement, dated April 4, 2005

10.3          Herlin Warrant Agreement, dated April 4, 2005

10.4          Amended and Restated Tatum Resources Agreement, dated April 4,
              2005

10.5          Tatum Warrant Agreement, dated April 4, 2005

10.6          Executive Employment Agreement, Sterling H. McDonald, dated
              April 4, 2005.

10.7          McDonald Stock Option Agreement, dated April 4, 2005


                                      -6-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>v16031_ex10-1.txt
<TEXT>

                            NATURAL GAS SYSTEMS, INC.

                              EMPLOYMENT AGREEMENT

                                ROBERT S. HERLIN

         THIS AGREEMENT ("AGREEMENT") is entered into as of April 4, 2005 (the
"EFFECTIVE DATE"), by and between ROBERT S. HERLIN (the "EXECUTIVE") and NATURAL
GAS SYSTEMS, INC., a Nevada corporation (the "COMPANY"). The Agreement
supercedes any and all prior agreements, written or oral, including but not
limited to the Executive's prior employment agreement with the Company and its
predecessor in interest, Natural Gas Systems, a Delaware corporation, other than
stock options granted under the Company's 2003 Stock Option Plan of Natural Gas
Systems, Delaware, which was assumed by the Company, as referenced herein.

                  1. DUTIES AND SCOPE OF EMPLOYMENT.

                           (a) POSITION. For the term of his employment under
         this Agreement (the "Employment"), the Company agrees to employ the
         Executive in the position of President and Chief Executive Officer. The
         Executive shall report to the Company's Board of Directors. Executive
         shall not be obligated to relocate away from Houston, Texas.

                           (b) OBLIGATIONS TO THE COMPANY. During the term of
         Employment under this Agreement, Executive shall devote his/her full
         business efforts and time to the Company. The foregoing shall not
         preclude the Executive from engaging in appropriate civic, charitable
         or religious activities or from devoting a reasonable amount of time to
         private investments or from serving on the boards of directors of other
         entities, as long as such activities and/or services do not interfere
         or conflict with his/her responsibilities to the Company. The Executive
         shall comply with the Company's policies and rules, as they may be in
         effect from time to time during his Employment.

                           For purposes of this paragraph 1(b), the Company
         hereby consents and approves of the activities described in EXHIBIT A
         hereto.

                           (c) NO CONFLICTING OBLIGATIONS. The Executive
         represents and warrants to the Company that he is under no obligations
         or commitments, whether contractual or otherwise, that are inconsistent
         with his obligations under this Agreement.

                           (d) COMMENCEMENT DATE. This Agreement shall take
         effect upon the Effective date.

                  2.       CASH AND INCENTIVE COMPENSATION.

                  For clarification, it is understood by all parties that other
than as specified herein, the Company is not obligated to award any future
grants of stock options or other form of equity compensation to Executive during
Executive's Employment with the Company.


                                    1 of 11
<PAGE>

                           (a) SALARY. The Company shall pay the Executive as
         compensation for his services an initial base salary at a gross annual
         rate of $180,000.00, increasing to a $210,000.00 after one year from
         the Effective Date, with possible additional increases on an annual
         basis as determined by the Board of directors in their sole discretion.
         Such salary shall be payable in accordance with the Company's standard
         payroll procedures. The annual compensation specified in this
         Subsection (a), together with any increases in such compensation that
         the Company may grant from time to time, is referred to in this
         Agreement as "BASE SALARY."

                           (b) INCENTIVE BONUSES. The Executive shall be
         eligible to receive an annual incentive bonus of up to 100% of Base
         Salary based on reasonable criteria (with input from Executive)
         established by the Company's Board of Directors (the "BOARD") or the
         Compensation Committee of the Board, payable in cash or the fair value
         of securities equivalent to such cash amount. The determinations of the
         Board or its Compensation Committee with respect to the award of such
         bonus shall be final and binding. The Executive shall not be entitled
         to an incentive bonus if he has resigned or been terminated for Cause
         (as defined below) by the Company before the date when such bonus is
         payable.

                           (c) STOCK OPTIONS. Subject to the approval of the
         Board or the Compensation Committee of the Board, the Company shall
         grant the Executive stock options aggregating Five Hundred Thousand
         (500,000) shares of the Company's Common Stock. Such options shall be
         granted as soon as reasonably practicable after the date of this
         Agreement. The term of such option shall be 10 years, subject to
         earlier expiration in the event of the termination of the Executive's
         Employment. The Executive shall vest over a four year period, on an
         installment basis determined by the Board or the Compensation
         Committee. The grant(s) of such options shall be subject to the other
         terms and conditions set forth in the Company's 2004 Stock Plan and
         Stock Option Agreement, attached hereto as EXHIBITS B AND C,
         respectively.

                           (d) WARRANTS. Subject to the approval of the Board of
         the Compensation Committee of the Board, the Company shall grant the
         Executive warrants aggregating Two Hundred Eighty Seven Thousand Five
         Hundred (287,500) shares of the Company's Common Stock. The grant of
         such warrants shall be subject to the terms and conditions set forth in
         the Warrant Agreement, attached hereto as EXHIBIT D.


                                    2 of 11
<PAGE>

                           (d) BONUS FOR PRIOR YEAR. In lieu of the cash bonus
         provided for in the prior employment contract between the Company and
         Executive, and subject to applicable security laws and approval of the
         Board or the Compensation Committee, the Company agrees to issue
         250,000 warrants to Tatum Partners to satisfy Executive's and Company's
         obligation to Tatum Partners under the Resource Agreement, dated on or
         about September 2003, without reducing any amount of the 250,000 stock
         options previously granted to Executive under the 2003 Stock Option
         Plan.

                  3.       VACATION AND EMPLOYEE BENEFITS.

                           Executive shall be entitled to fifteen (15) days of
         vacation and five (5) personal days per year, to be taken in such
         amounts and at such times as shall be mutually convenient for Executive
         and the Company. Any vacation days exceeding five (5) days not taken by
         Executive in one year shall be forfeited and not carried forward to
         subsequent years. During his Employment, the Executive shall be
         eligible to participate in the employee benefit plans maintained by the
         Company, subject in each case to the generally applicable terms and
         conditions of the plan in question and to the determinations of any
         person or committee administering such plan.

4.       BUSINESS EXPENSES.

                           During his Employment, the Executive shall be
         authorized to incur necessary and reasonable travel, entertainment and
         other business expenses in connection with his duties hereunder. The
         Company shall reimburse the Executive for such expenses upon
         presentation of an itemized account and appropriate supporting
         documentation, all in accordance with the Company's generally
         applicable policies.

                  5.       TERMINATION OF EMPLOYMENT.

                           (a) TERMINATION OF EMPLOYMENT. The Company may
         terminate the Executive's Employment at any time and for any reason (or
         no reason), and with or without Cause, by giving the Executive ten
         day's notice in writing. The Executive may terminate his Employment by
         giving the Company ten days' advance notice in writing. The Executive's
         Employment shall terminate automatically in the event of his death. The
         termination of the Executive's Employment shall not limit or otherwise
         affect his obligations under Section 7.

                           (b) EMPLOYMENT AT WILL. The Executive's Employment
         with the Company shall be "at will," meaning that either the Executive
         or the Company shall be entitled to terminate the Executive's
         Employment at any time and for any reason, with or without Cause. Any
         contrary representations that may have been made to the Executive shall
         be superseded by this Agreement. This Agreement shall constitute the
         full and complete agreement between the Executive and the Company on
         the "at will" nature of the Executive's Employment, which may only be
         changed in an express written agreement signed by the Executive and a
         duly authorized officer of the Company.

                           (c) RIGHTS UPON TERMINATION. Except as expressly
         provided in Section 6, upon the termination of the Executive's
         Employment, the Executive shall only be entitled to the compensation,
         benefits and expense reimbursements that the Executive has earned or
         accrued under this Agreement before the effective date of the
         termination. Termination payments pursuant to Section 6 shall fully
         discharge all responsibilities of Company to Executive except for the
         Company's responsibilities listed in Sections 2, 3, 4, 5, 8, 9, 10 and
         Exhibits B, C and D herein.


                                    3 of 11
<PAGE>

                           (d) CONSTRUCTIVE TERMINATION. The term "CONSTRUCTIVE
         TERMINATION" shall mean any of the following: (i) any breach by the
         Company of any material provision of this Agreement, including, without
         limitation, the assignment to the Executive of duties inconsistent with
         his position specified in Section 1(a) hereof or any breach by the
         Company of such Section, which is not cured within 60 days after
         written notice of same by Executive (except that such cure period shall
         be fifteen days with respect to D&O Insurance described in Section
         10(h) hereof, unless such breach is due to the actions or inactions of
         the Executive), describing in detail the breach asserted and stating
         that it constitutes notice pursuant to this Section 5(d); or (ii)
         relocation of Executive's offices in excess of 20 miles from its
         current location; or (iii) a substantial reduction of the
         responsibilities, authority or scope of work of Executive.

                  6.       TERMINATION BENEFITS.

                           (a) GENERAL RELEASE. Any other provision of this
         Agreement notwithstanding, Subsection (b) below shall not apply unless
         the Executive: (i) has executed a general release fully discharging all
         responsibilities of the Company to the Executive for all claims except
         for those noted in 5 (c) above (in a form prescribed by the Company),
         and (ii) has returned all property of the Company in the Executive's
         possession, and (iii) is in material compliance with the restrictive
         covenants in Section 7 hereof .

                           (b) SEVERANCE PAY. If the Company terminates the
         Executive's Employment other than for Cause or Permanent Disability, or
         if the Executive is subject to a Constructive Termination, then the
         Company shall pay the Executive his Base Salary ("SEVERANCE PAY") for a
         period of one year following the termination of his Employment (the
         "CONTINUATION PERIOD"). Such Severance Pay shall be paid at the rate in
         effect at the time of the termination of Employment and in accordance
         with the Company's standard payroll procedures. In the event that (i)
         Executive is paid Severance Pay and Executive, AND (ii) Executive
         enters into similar employment prior to the end of the Continuation
         Period, then the Company may elect, at the Company's sole option and
         discretion, to terminate all Restrictive Covenant obligations of
         Executive under subsections 7(b) and 7(c) below in return for a
         reduction of fifty percent (50%) of the remaining Severance Pay
         obligations to Executive.

                           (c) DEFINITION  OF "CAUSE." For all purposes  under
         this Agreement, "CAUSE" shall mean:

                           (i) A material breach by the Executive of any written
         agreement between the Executive and the Company, provided that the
         Company has given written notice of such breach which notice describes
         in detail the breach asserted and stating that it constitutes notice
         pursuant to this Section 6(c) and which breach, if capable of being
         cured, has not been cured within thirty (30) days after such notice;

                            (ii) The Executive's conviction of, or plea of
         "guilty" or "no contest" to, a felony under the laws of the United
         States or any state thereof;


                                    4 of 11
<PAGE>

                           (iii) A material failure by the Executive to comply
         with the Company's lawful written policies or rules which causes
         material harm to the Company, provided that the Company has given
         written notice of such breach which notice describes in detail the
         breach asserted and stating that it constitutes notice pursuant to this
         Section 6(c) and which breach, if capable of being cured, has not been
         cured within thirty (30) days after such notice;

                           (iii) The Executive's fraud, gross negligence or
         willful misconduct; or

                           (iv) A continued failure by the Executive to perform
         his lawful and reasonable assigned duties, provided that the Company
         has given written notice of such breach which notice describes in
         detail the breach asserted and stating that it constitutes notice
         pursuant to this Section 6(c) and which breach, if capable of being
         cured, has not been cured within thirty (30) days after such notice.

                           (d) DEFINITION OF "PERMANENT DISABILITY." For all
         purposes under this Agreement, "PERMANENT DISABILITY" shall mean the
         Executive's inability to perform the essential functions of the
         Executive's position, with or without reasonable accommodation, for a
         period of at least 90 consecutive days because of a physical or mental
         impairment.

7.       RESTRICTIVE COVENANTS.

                           (A) CONFIDENTIAL INFORMATION

                           (i) During Executive's Employment and at all times
         thereafter, Executive shall not, without the prior express written
         consent of the Board (except as may be required in connection with any
         judicial or administrative proceeding or inquiry or by law ) disclose
         to any person, other than an officer or director of the Company or a
         person to whom disclosure is reasonably necessary or appropriate in
         connection with the performance by Executive of his duties as CEO and
         President, any Confidential Information (defined below) with respect to
         the business and affairs of the Company or any of its subsidiaries,
         unless such disclosure is subject to a confidentiality agreement or the
         confidential information has been previously disclosed through no fault
         of Executive.

                           (ii) Executive acknowledges that he has and will have
         access to proprietary information, trade secrets, and confidential
         material (including lists of key personnel, customers, clients,
         vendors, suppliers, distributors or consultants) of the Company (the
         "CONFIDENTIAL Information"). Executive agrees, without limitation in
         time or until such information shall become public other than by the
         Executive's unauthorized disclosure, to maintain the confidentiality of
         the Confidential Information and refrain from divulging, disclosing, or
         otherwise using in any respect the Confidential Information to the
         detriment of the Company and any of its subsidiaries, affiliates,
         successors or assigns, or for any other purpose or no purpose, unless
         such disclosure is subject to a confidentiality agreement or such
         Confidential Information is previously disclosed through no fault of
         Executive.

                           (B) NO SOLICITATION. For a period of one (1) year
         after he ceases to be employed by the Company, Executive agrees that he


                                    5 of 11
<PAGE>

         will not, directly or indirectly, for his benefit or for the benefit of
         any other person, firm or entity, do any of the following:

                           (i) solicit from any client doing business with the
         Company as of Executive's termination, business of the same or of a
         similar nature to the business of the Company with such client, if such
         business is expected to directly compete with the Company;

                           (ii) solicit from any known potential client of the
         Company business of the same or of a similar nature to that which has
         been the subject of a known written or oral bid, offer or proposal by
         the Company, or of substantial preparation with a view to making such a
         bid, proposal or offer, within six (6) months prior to Executive's
         termination, if such business is expected to directly compete with the
         Company;

                           (iii) solicit the employment or services of, or hire,
         any person who was known to be employed by the Company upon termination
         of Executive's Employment, or within six (6) months prior thereto,
         other than Executive's personal secretary; or

                           (iv) otherwise knowingly interfere with the business
         or accounts of the Company.

                           For the purposes of (b)(i) through (iv) above and (c)
         below, "compete" is defined to mean engagement in the same or
         essentially similar activities as the Company within the same field,
         parish or county as the Company.

                           (C) COVENANT NOT TO COMPETE. During the term hereof
         and for a period of one (1) year following the termination of this
         Agreement, Executive shall not directly or indirectly engage in, or own
         any interest in any business which engages in, (i) the business of the
         Company or any of its subsidiaries as of the date of this Agreement
         that is expected to directly compete with the Company or (ii) any other
         business which the Company or any of its subsidiaries shall have
         acquired by purchase, merger or otherwise prior to the date of
         termination in which the Company or any of its subsidiaries does
         business that is expected to compete to with the Company provided,
         however, that this sentence shall not prohibit Executive's ownership of
         not more than five (5) percent of the voting stock of any publicly held
         corporation. For clarification, Executive can work in the same line of
         business as the Company and its subsidiaries, including working in the
         same state, provided that Executive does not directly complete with the
         Company.

                           (D) SURVIVAL. The covenants contained in this Section
         7 shall survive any termination of Executive's Employment.

                  8.       SUCCESSORS.

                           (a) COMPANY'S SUCCESSORS. This Agreement shall be
         binding upon any successor (whether direct or indirect and whether by
         purchase, lease, merger, consolidation, liquidation or otherwise) to
         all or substantially all of the Company's business and/or assets. For
         all purposes under this Agreement, the term "Company" shall include any
         successor to the Company's business and/or assets that becomes bound by
         this Agreement.


                                    6 of 11
<PAGE>

                           (e) EXECUTIVE'S SUCCESSORS. This Agreement and all
         rights of the Executive hereunder shall inure to the benefit of, and be
         enforceable by, the Executive's personal or legal representatives,
         executors, administrators, successors, heirs, distributees, devisees
         and legatees.

                  9. ARBITRATION.

                           (a) SCOPE OF ARBITRATION REQUIREMENT. The parties
         hereby waive their rights to a trial before a judge or jury and agree
         to arbitrate before a neutral arbitrator any and all claims or disputes
         arising out of this Agreement and any and all claims arising from or
         relating to the Executive's Employment, including (but not limited to)
         claims against any current or former employee, director or agent of the
         Company, claims of wrongful termination, retaliation, discrimination,
         harassment, breach of contract, breach of the covenant of good faith
         and fair dealing, defamation, invasion of privacy, fraud,
         misrepresentation, constructive discharge or failure to provide a leave
         of absence, or claims regarding commissions, stock options or bonuses,
         infliction of emotional distress or unfair business practices.

                           (b) PROCEDURE. The arbitrator's decision shall be
         written and shall include the findings of fact and law that support the
         decision. The arbitrator's decision shall be final and binding on both
         parties, except to the extent applicable law allows for judicial review
         of arbitration awards. The arbitrator may award any remedies that would
         otherwise be available to the parties if they were to bring the dispute
         in court. The arbitration shall be conducted in accordance with the
         National Rules for the Resolution of Employment Disputes of the
         American Arbitration Association. The arbitration shall take place in
         Houston, Texas.

                           (c) COSTS. The parties shall share the costs of
         arbitration equally. Both the Company and the Executive shall be
         responsible for their own attorneys' fees. Notwithstanding the
         forgoing, the non-prevailing party shall reimburse the prevailing party
         for arbitration costs and reasonable attorney's fees, to the extent
         allowable under applicable law.

                           (d) APPLICABILITY. This Section 9 shall not apply to
         (i) workers' compensation or unemployment insurance claims or (ii)
         claims concerning the validity, infringement or enforceability of any
         trade secret, patent right, copyright or any other trade secret or
         intellectual property held or sought by either the Executive or the
         Company (whether or not arising under the restrictive covenants of
         Section 7 hereof).


                                    7 of 11
<PAGE>

                  10.      MISCELLANEOUS PROVISIONS

                            (a) NOTICE. Notices and all other communications
         contemplated by this Agreement shall be in writing and shall be deemed
         to have been duly given when personally delivered or when mailed by
         U.S. registered or certified mail, return receipt requested and postage
         prepaid. In the case of the Executive, mailed notices shall be
         addressed to him at the home address that he most recently communicated
         to the Company in writing. In the case of the Company, mailed notices
         shall be addressed to its corporate headquarters, and all notices shall
         be directed to the attention of its Secretary.

                           (b) MODIFICATIONS AND WAIVERS. No provision of this
         Agreement shall be modified, waived or discharged unless the
         modification, waiver or discharge is agreed to in writing and signed by
         the Executive and by an authorized officer of the Company (other than
         the Executive). No waiver by either party of any breach of, or of
         compliance with, any condition or provision of this Agreement by the
         other party shall be considered a waiver of any other condition or
         provision or of the same condition or provision at another time.

                           (c) WHOLE AGREEMENT. This Agreement supersedes any
         previous offer letter or employment agreement. No other agreements,
         representations or understandings (whether oral or written and whether
         express or implied) which are not expressly set forth in this Agreement
         have been made or entered into by either party with respect to the
         subject matter hereof. This Agreement and the Exhibits and agreements
         referenced herein contain the entire understanding of the parties with
         respect to the subject matter hereof.

                           (d) WITHHOLDING TAXES. All payments made under this
         Agreement shall be subject to reduction to reflect taxes or other
         charges required to be withheld by law.

                           (e) CHOICE OF LAW AND SEVERABILITY. This Agreement
         shall be interpreted in accordance with the laws of the State of Texas
         (except their provisions governing the choice of law). If any provision
         of this Agreement becomes or is deemed invalid, illegal or
         unenforceable in any applicable jurisdiction by reason of the scope,
         extent or duration of its coverage, then such provision shall be deemed
         amended to the minimum extent necessary to conform to applicable law so
         as to be valid and enforceable or, if such provision cannot be so
         amended without materially altering the intention of the parties, then
         such provision shall be stricken and the remainder of this Agreement
         shall continue in full force and effect. If any provision of this
         Agreement is rendered illegal by any present or future statute, law,
         ordinance or regulation (collectively the "LAW"), then such provision
         shall be curtailed or limited only to the minimum extent necessary to
         bring such provision into compliance with the Law. All the other terms
         and provisions of this Agreement shall continue in full force and
         effect without impairment or limitation.

                           (f) NO ASSIGNMENT. This Agreement and all rights and
         obligations of the Executive hereunder are personal to the Executive
         and may not be transferred or assigned by the Executive at any time.
         The Company may assign its rights under this Agreement to any entity


                                    8 of 11
<PAGE>

         that assumes the Company's obligations hereunder in connection with any
         sale or transfer of all or a substantial portion of the Company's
         assets to such entity.

                           (g) COUNTERPARTS. This Agreement may be executed in
         two or more counterparts, each of which shall be deemed an original,
         but all of which together shall constitute one and the same instrument.

                           (h) INDEMNIFICATION. As an officer of the Company,
         Executive will be protected by the indemnification provisions of
         Article VIII of the Company's Certificate of Incorporation. In
         addition, the Company has purchased and currently maintains insurance
         protecting its officers and directors against certain losses arising
         out of actual or threatened actions, suits or proceedings to which such
         persons may be made or threatened or be made parties ("D&O INSURANCE").
         The Company covenants to continue D&O Insurance coverage at current
         levels for the duration of Executive's service and for two (2) years
         thereafter. .

         IN WITNESS WHEREOF, each of the parties has executed this employment
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year first above written.


                                    ----------------------------
                                    Robert S. Herlin, Executive


                                    NATURAL GAS SYSTEMS, INC.


                                    ------------------------------
                                    By: Laird Cagan
                                    Title: Chairman



                                    9 of 11

<PAGE>

                                    EXHIBIT A
                                 OTHER INTERESTS

         In accordance with Section 1 (b) of the Employment Agreement dated as
of March __, 2005, (the "Agreement"), the Company hereby consents and approves
of the following business interests conducted by Executive that are not directly
related to Company matters:

Executive serves the board of directors of Boots and Coots Group, Inc., a
publicly owned well service company that is not in direct or indirect
competition with the Company. The Company recognizes that it may benefit from
such activities, in that they broaden Executive's corporate governance
experience and extends Executive's exposure to industry. Executive currently
devotes a minimal amount of time per month on such activities and does not
believe that such service materially and adversely impacts his ability to
perform under the Agreement.

Executive is a partner with Tatum CFO Partners, a provider of contract CFO's and
other C level executives to industry and Tatum provides ongoing services to the
Company pursuant to a Services Agreement. Executive was introduced to the
Company through Tatum CFO Partners and intends to maintain that relationship,
however, Executive has not in the past, during his Employment with the Company,
and does not intend during the term of the Agreement to expend any material
business time or effort to such relationship, including the provision of
services to other companies. The Tatum CFO Partner services are valuable to the
Company by providing immediate resources in the areas of finance, accounting,
information services, management issues, human resources and other issues.

Executive currently owns direct minor oil and gas interests through a family
entity, none of which are directly or indirectly competitive with the Company's
interests. Executive agrees to advise the Company of any contemplated
investments that might be construed to be competitive with Company's interests,
prior to making such additional investments. Such ownership does not utilize a
material amount of Executive's time and none of Executive's business time or
efforts.


                                    10 of 11

<PAGE>

                                    EXHIBIT B
                             2004 STOCK OPTION PLAN

                                    EXHIBIT C
                           2004 STOCK OPTION AGREEMENT

                                    EXHIBIT D

                             STOCK OPTION AGREEMENT



                                    11 of 11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>v16031_ex10-2.txt
<TEXT>

                            NATURAL GAS SYSTEMS, INC.
                                 2004 STOCK PLAN

                             STOCK OPTION AGREEMENT


Name of Optionee:                   Robert S. Herlin

Optioned Shares:                    500,000 shares of common stock, $0.001 par
                                    value, of Natural Gas Systems, Inc.

Type of Option:                     INCENTIVE STOCK OPTION

Exercise Price Per Share:           $1.80

Option Grant Date:                  April 4, 2005

Vesting Commencement Date           April 4, 2005

Date Option Becomes Exercisable:    This Option may be exercised with respect to
                                    an 1/16TH of the total Optioned Shares
                                    subject to this option when the Optionee
                                    completes each three months of continuous
                                    employment starting from the Vesting
                                    Commencement Date. This option may become
                                    exercisable on an accelerated basis under
                                    Section 8 of this Stock Option Agreement.

Expiration Date of Option:          April 4, 2015 This Option expires earlier if
                                    the Optionee's employment terminates
                                    earlier, as provided in Section 11 of the
                                    Plan.

<PAGE>

         This Stock Option Agreement (this "Agreement") is executed and
delivered as of April 4, 2005 by and between Natural Gas Systems, Inc., a Nevada
corporation (the "Company") and the Robert S. Herlin. The Optionee and the
Company hereby agree as follows:

1.       The Company, pursuant to the Natural Gas Systems, Inc. 2004 Stock Plan
         (the "Plan"), which is incorporated herein by reference, and subject to
         the terms and conditions thereof, hereby grants to the Optionee an
         option to purchase the Optioned Shares at the Exercise Price Per Share.

2.       The option granted hereby ("Option") shall be treated as an incentive
         stock option under the Internal Revenue Code.

3.       The Option granted hereby shall terminate, subject to the provisions of
         the Plan, no later than at the close of business on the Expiration
         Date.

4.       The Optionee shall comply with and be bound by all the terms and
         conditions contained in the Plan, as incorporated by reference herein.

5.       Options granted hereby shall not be transferable except by will or the
         laws of descent and distribution. During the lifetime of the Optionee,
         the Option may be exercised only by the Optionee, the guardian or legal
         representative of the Optionee.

6.       The obligation of the Company to sell and deliver any stock under this
         Option is specifically subject to all provisions of the Plan and all
         applicable laws, rules, regulations and governmental and stockholder
         approvals.

7.       Any notice by the Optionee to the Company hereunder shall be in writing
         and shall be deemed duly given only upon receipt thereof by the Company
         at its principal offices. Any notice by the Company to the Optionee
         shall be in writing and shall be deemed duly given if mailed to the
         Optionee at the address last specified to the Company by the Optionee.

8.       In addition to the change of control provisions specified under Section
         14(e) of the Plan and the other conditions set forth in this Agreement,
         the Company hereby agrees that all or part of this Option may be
         exercised prior to its expiration at the time or times set forth below:

                  (a) If the Company is subject to a Change in Control (as
         defined in below in this Agreement and not as defined in the Plan)
         before the Optionee's employment terminates, this Option shall become
         exercisable in full if and only if (i) this Option does not remain
         outstanding following the Change in Control; (ii) this Option is not
         assumed by the surviving corporation or its parent; (iii) the surviving
         corporation or its parent does not substitute an option with
         substantially the same terms for this Option; OR (iv) the full value of
         the vested shares under this Option is not settled in cash or cash
         equivalents.

                  (b) If the Option is not exercisable in full under Paragraph
         (a) above, AND if the Optionee is subject to an Involuntary Termination
         (defined below) within 12 months after the Change in Control, then this
         Option shall become exercisable in full. However, in the case of an

                                      -1-
<PAGE>

         employee incentive stock option described in Section 422(b) of the
         Code, the acceleration of exercisability shall not occur without the
         Optionee's written consent.

                  (c) If the Option is not exercisable in full under Paragraph
         (a) above, AND if the Company is subject to a Change of Control, then
         fifty percent (50%) of the remaining options shall become exercisable
         in full, and the remaining options shall become exercisable at the rate
         set forth herein, reduced by the accelerated Optioned Shares. All other
         terms and conditions shall remain unchanged.

                  (d) Definitions

                           (i) "Change in Control" shall mean: (1)The
                  consummation of a merger or consolidation of the Company with
                  or into another entity or any other corporate reorganization,
                  if persons who were not controlling stockholders of the
                  Company immediately prior to such merger, consolidation or
                  other reorganization own immediately after such merger,
                  consolidation or other reorganization 50% or more of the
                  voting power of the outstanding securities of each of (A) the
                  continuing or surviving entity and (B) any direct or indirect
                  parent corporation of such continuing or surviving entity; OR
                  (2) The sale, transfer or other disposition of all or
                  substantially all of the Company's assets.

                  A transaction shall not constitute a Change in Control if its
                  sole purpose is to change the state of the Company's
                  incorporation or to create a holding company that will be
                  owned in substantially the same proportions by the persons who
                  held the Company's securities immediately before such
                  transaction.

                           (ii) "Involuntary Termination" shall mean the
         termination of the Optionee's employment by reason of: (1) The
         involuntary discharge of the Optionee by the Company for reasons other
         than Cause (as defined in Optionee's employment agreement with the
         Company, of even date herewith); or (2) The voluntary resignation of
         the Optionee following a reduction in the Optionee's base salary or
         receipt of notice that the Optionee's principal workplace will be
         relocated more than 30 miles.

9. The validity and construction of this Agreement shall be governed by the laws
of the State of Nevada.

THIS AGREEMENT IS MADE UNDER AND SUBJECT TO THE PROVISIONS OF THE PLAN, AND ALL
OF THE PROVISIONS OF THE PLAN ARE ALSO PROVISIONS OF THIS AGREEMENT. IF THERE IS
A DIFFERENCE OR CONFLICT BETWEEN THE PROVISIONS OF THIS AGREEMENT AND THE
PROVISIONS OF THE PLAN, THE PROVISIONS OF THE PLAN WILL GOVERN; PROVIDED,
HOWEVER, THE THE ACCELERATION OF THE OPTIONED SHARES DESCRIBED IN SECTION 8
ABOVE SHALL GOVERN IN THE EVENT OF ANY CONFLICT WITH THE PLAN. . BY SIGNING THIS
AGREEMENT, THE OPTIONEE ACCEPTS AND AGREES TO ALL OF THE FOREGOING TERMS AND
PROVISIONS AND TO ALL OF THE TERMS AND PROVISIONS OF THE PLAN INCORPORATED
HEREIN BY REFERENCE AND CONFIRMS THAT HE OR SHE HAS RECEIVED A COPY OF THE PLAN.


                                      -2-
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized representative and the Optionee has hereunto set
his hand as of the date here above first written.

                                           NATURAL GAS SYSTEMS, INC.:


                                           By:
                                               -----------------------------
                                                Name:  Laird Q. Cagan
                                                Title: Chairman of the Board


                                           ---------------------------------
                                           Optionee:   Robert S. Herlin


                                      -3-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>v16031_ex10-3.txt
<TEXT>
                           REVOCABLE WARRANT AGREEMENT

                            NATURAL GAS SYSTEMS, INC.

      THIS REVOCABLE  WARRANT  AGREEMENT (this  "Agreement") is made and entered
into  as of  April  4,  2005,  between  Natural  Gas  Systems,  Inc.,  a  Nevada
corporation (the "Company"), and Robert S. Herlin ("Holder").  Terms not defined
herein  shall have the meaning  defined in the Stock Option  Agreement  (defined
below).

                                 R E C I T A L S

      WHEREAS,  the Company proposes to issue to Holder a maximum of TWO HUNDRED
EIGHTY SEVEN THOUSAND FIVE HUNDRED (287,500)  revocable warrants (the "Revocable
Warrants"),  each  such  Revocable  Warrant  entitling  the  holder  thereof  to
purchase,  under certain conditions,  one share of common stock, .001 par value,
of the Company (the "Shares" or the "Common Stock");

      WHEREAS,  the Revocable  Warrants  which are the subject of this Agreement
will be issued by the Company to Holder in connection  with Holder's  employment
with the Company pursuant to the Employment Agreement  ("Employment  Agreement")
and the  Stock  Option  Agreement  ("Stock  Option  Agreement"),  of  even  date
herewith, and attached hereto as EXHIBITS B and C, respectively; and

      WHEREAS,  the  Revocable  Warrants  shall be subject to  revocation by the
Company  without  any  further  consideration  under the  terms  and  conditions
detailed herein.

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:

                                A G R E E M E N T

      1.  Revocable  Warrant  Certificates.   The  warrant  certificates  to  be
delivered  pursuant to this Agreement  (the  "REVOCABLE  WARRANT  CERTIFICATES")
shall be in the form set forth in  EXHIBIT  A,  attached  hereto and made a part
hereof,  with such appropriate  insertions,  omissions,  substitutions and other
variations as are required or permitted by this Revocable Warrant Agreement.

      2. Right to Exercise  Revocable  Warrants.  Each Revocable  Warrant may be
exercised,  in whole or in part, after those Revocable Warrants are fully vested
and no longer  Restricted  Warrants  (as defined in Section 3 below) until 11:59
P.M.  (Eastern  Standard Time) on the date that is ten (10) years after the date
of this Agreement (the "EXPIRATION  DATE"). Each Revocable Warrant not exercised
or revoked on or before the Expiration Date shall expire.

      Other than as specified in Section 3 herein,  each Revocable Warrant shall
entitle its holder to purchase  from the Company one share of Common Stock (each
an "EXERCISE SHARE") at an exercise price of One Dollar and Eighty Cents ($1.80)
per share, subject to adjustment as set forth below ("EXERCISE PRICE").

      The Company  shall not be required  to issue  fractional  shares of Common
Stock upon the  exercise  of this  Revocable  Warrant  or to  deliver  Revocable
Warrant  Certificates which evidence  fractional shares of capital stock. In the
event that a fraction of an Exercise  Share would,  except for the provisions of
this paragraph 2, be issuable upon the exercise of this Revocable  Warrant,  the
Company shall pay to the Holder  exercising  the Revocable  Warrant an amount in

<PAGE>

cash  equal to such  fraction  multiplied  by the  current  market  value of the
Exercise Share. For purposes of this paragraph 2, the current market value shall
be determined as follows:

            (a) if the Shares are traded in the over-the-counter  market and not
on any national  securities exchange and not in the NASDAQ Reporting System, the
average of the mean between the last bid and asked prices per share, as reported
by the National  Quotation  Bureau,  Inc., or an equivalent  generally  accepted
reporting  service,  for the last  business  day  prior to the date on which the
Revocable  Warrant is  exercised,  or, if not so  reported,  the  average of the
closing  bid and asked  prices for a Share as  furnished  to the  Company by any
member of the National Association of Securities Dealers,  Inc., selected by the
Company and Holder for that purpose.

            (b) if the  Shares  are  listed or traded on a  national  securities
exchange or in the NASDAQ Reporting  System,  the closing price on the principal
national  securities  exchange  on which  they are so listed or traded or in the
NASDAQ Reporting  System,  as the case may be, on the last business day prior to
the date of the exercise of the Revocable Warrant. The closing price referred to
in this  Clause (b) shall be the last  reported  sales price or, in case no such
reported  sale takes place on such day, the average of the reported  closing bid
and asked prices on such day, in either case on the national securities exchange
on which the Shares are then listed or in the NASDAQ Reporting System; or

            (c) if no such  closing  price or closing  bid and asked  prices are
available,  as  determined  by the  Holder  and the  Board of  Directors  of the
Company.

      3. Revocation of the Revocable Warrants.  Notwithstanding  anything to the
contrary, all Revocable Warrants granted by the Company to the Holder under this
Agreement shall be subject to forfeiture,  revocation and  cancellation  without
any  further  or  additional  consideration  due or owed to Holder as  specified
herein (the "RIGHT OF REVOCATION").

            (a) Scope of Revocation Right.  Until the Revocable Warrants vest in
accordance with Subsection (b) below, the Revocable Warrants shall be restricted
warrants and not exercisable  under Section 2 hereof and shall be subject to the
Company's  Right of  Revocation  (the  "RESTRICTED  WARRANTS").  The Company may
exercise its Right of Revocation only during the period of 180 consecutive  days
commencing on the date the Holder's Service terminates for any reason, including
(without limitation) death or disability (the "REVOCATION PERIOD"). The Right of
Revocation may be exercised automatically under Subsection (e) below.

            (b) Lapse of Revocation  Right.  Initially,  all Revocable  Warrants
granted  under  this  Agreement  shall be  Restricted  Warrants  subject  to the
Company's Right of Revocation.  The Right of Revocation shall lapse with respect
to the first 1/16th of the Revocable  Warrants when the Holder  completes  three
months of continuous  employment after the date of this Agreement.  The Right of
Revocation  shall  lapse  with  respect  to an  additional  1/16th  of the total
Revocable Warrants when the Holder completes each month of continuous employment
thereafter.

            (c)  Acceleration.  In addition to the other conditions set forth in
this  Agreement,  the  Company's  Right of  Revocation  with respect to unvested
Restricted Warrants shall lapse prior to the vesting period specified in Section
3(b) above at the time or times set forth below:

            (i) If the  Company is subject to a Change in Control (as defined in
      below) before the Holder's employment terminates,  the Right of Revocation
      shall  lapse in full if and only if (1) this  Revocable  Warrant  does not
      remain  outstanding  following the Change in Control;  (2) this  Revocable
      Warrant is not assumed by the surviving corporation or its parent; (3) the


                                       2
<PAGE>

      surviving  corporation  or its parent does not  substitute  an option with
      substantially the same terms for this Revocable Warrant;  OR (iv) the full
      value of the vested Revocable Warrants under this Agreement is not settled
      in cash or cash equivalents.

            (ii) If the Right of Revocation has not lapsed pursuant to Paragraph
      (i) above,  AND if the Holder is  subject  to an  Involuntary  Termination
      (defined  below)  within 12 months after the Change in Control,  then this
      Revocable  Warrant  shall  become  no  longer  be  subject  to a Right  of
      Revocation.

            (iii)  If the  Right  of  Revocation  has  not  lapsed  pursuant  to
      Paragraph (i) above, AND if the Company is subject to a Change of Control,
      then fifty  percent (50%) of the remaining  Restricted  Warrants  shall no
      longer be subject to a Right of Revocation,  and the remaining  Restricted
      Warrants  shall vest at the rate set forth in Section 3(b) above,  reduced
      pro rata by the amount of Restricted Warrants no longer subject to a Right
      of  Revocation  pursuant to this Section.  All other terms and  conditions
      shall remain unchanged.


            (iv) Definitions:

                  (1) "CHANGE IN CONTROL" shall mean: (A) The  consummation of a
            merger or  consolidation  of the Company with or into another entity
            or any  other  corporate  reorganization,  if  persons  who were not
            controlling  stockholders of the Company  immediately  prior to such
            merger,  consolidation or other reorganization own immediately after
            such merger,  consolidation or other  reorganization  50% or more of
            the  voting  power  of the  outstanding  securities  of  each of the
            continuing  or  surviving  entity and any direct or indirect  parent
            corporation of such continuing or surviving entity; OR (B) The sale,
            transfer or other  disposition  of all or  substantially  all of the
            Company's  assets.  A transaction  shall not  constitute a Change in
            Control if its sole purpose is to change the state of the  Company's
            incorporation  or to create a holding  company that will be owned in
            substantially  the  same  proportions  by the  persons  who held the
            Company's securities immediately before such transaction.

                  (2)  "INVOLUNTARY  TERMINATION"  shall mean the termination of
            the  Optionee's   employment  by  reason  of:  (A)  The  involuntary
            discharge of the Holder by the Company for reasons  other than Cause
            (as defined in Holder's  Employment  Agreement with the Company,  of
            even date herewith);  or (B) The voluntary resignation of the Holder
            following a reduction in the Holder's base salary or assigned duties
            or receipt of notice that the Holder's  principal  workplace will be
            relocated more than 30 miles.

                  (d) Escrow.  Upon issuance,  the certificate(s) for Restricted
Warrants  shall be deposited in escrow with the Company to be held in accordance
with the provisions of this Agreement. Any additional or exchanged securities or
other  property  described in Section 9 below shall  immediately be delivered to
the Company to be held in escrow.  All ordinary  cash  dividends  on  Restricted
Warrants (or on other  securities  held in escrow) shall be paid directly to the
Holder and shall not be held in escrow.  Restricted Warrants,  together with any
other assets held in escrow under this  Agreement,  shall be (i)  surrendered to
the Company for  repurchase  upon  exercise of the Right of  Revocation  or (ii)
released to the Holder upon his or her request to the extent that the  Revocable
Warrants  have ceased to be  Restricted  Warrants.  In any event,  all Revocable
Warrants  that have ceased to be  Restricted  Warrants,  together with any other
vested assets held in escrow under this  Agreement,  shall be released within 10
days after the termination of the Holder's employment.

                  (e) Exercise of Revocation  Right. The Company shall be deemed
to have  exercised  its Right of  Revocation  automatically  for all  Restricted


                                       3
<PAGE>

Warrants as of the  commencement  of the Revocation  Period,  unless the Company
during the  Revocation  Period  notifies the holder of the  Restricted  Warrants
pursuant to Section 12 that it will not  exercise  its Right of  Revocation  for
some or all of the Restricted  Warrants.  The  certificate(s)  representing  the
Restricted Warrants being repurchased shall be delivered to the Company properly
endorsed for transfer.

                  (e)  Termination  of  Rights as  Stockholder.  If the Right of
Revocation is exercised in accordance with this Section 3, then the Holder shall
no  longer  have  any  rights  as a  holder  of the  Restricted  Warrants.  Such
Restricted  Warrants  shall be  deemed  to have been  revoked  pursuant  to this
Section 3, whether or not the certificate(s)  for such Restricted  Warrants have
been delivered to the Company.

                  (f)  Transfer  of  Warrants.  The Holder  shall not  transfer,
assign,  encumber or otherwise  dispose of any Restricted  Warrants  without the
Company's  written consent,  except as provided in the following  sentence.  The
Revocable  Warrants  granted hereby shall not be transferable  except by will or
the laws of descent and  distribution.  During the  lifetime of the Holder,  the
Revocable  Warrant may be  exercised  only by the Holder,  the guardian or legal
representative of the Holder.


      4. Mutilated or Missing Revocable Warrant Certificates. In case any of the
Revocable  Warrant  Certificates  shall be mutilated,  lost, stolen or destroyed
prior to the Expiration  Date, the Company shall issue and deliver,  in exchange
and substitution for and upon  cancellation of the mutilated  Revocable  Warrant
Certificate,  or in  lieu  of and in  substitution  for  the  Revocable  Warrant
Certificate  lost, stolen or destroyed,  a new Revocable Warrant  Certificate of
like tenor and representing an equivalent right or interest.

      5.  Reservation of Shares.  The Company will at all times reserve and keep
available,  free from preemptive  rights, out of the aggregate of its authorized
but unissued Shares or its authorized and issued Shares held in its treasury for
the purpose of enabling it to satisfy its  obligation to issue  Exercise  Shares
upon  exercise  of  Revocable  Warrants,  the full  number  of  Exercise  Shares
deliverable upon the exercise of all outstanding Revocable Warrants.

      The Company  covenants  that all Exercise  Shares which may be issued upon
exercise  of  Revocable  Warrants  will  be  validly  issued,   fully  paid  and
non-assessable outstanding Shares of the Company.

      6. Rights of Holder. The Holder shall not, by virtue of anything contained
in this  Revocable  Warrant  Agreement or  otherwise,  prior to exercise of this
Revocable Warrant, be entitled to any right whatsoever, either in law or equity,
of a stockholder  of the Company,  including  without  limitation,  the right to
receive dividends or to vote or to consent or to receive notice as a stockholder
in respect of the meetings of  stockholders  or the election of directors of the
Company of any other matter.

      7. Investment Intent;  Accredited Investor. Holder represents and warrants
to the Company that Holder is acquiring  the Revocable  Warrants for  investment
purposes and with no present  intention of  distributing or reselling any of the
Revocable Warrants. Holder represents that it is an "accredited investor" within
the meaning of Rule 501 of  Regulation D under the  Securities  Act of 1933,  as
amended (the "Act").

      8. Certificates to Bear Legend. The Revocable Warrants and the certificate
or certificates  therefore shall bear the following  legend by which each holder
shall be bound:


                                       4
<PAGE>

      "THE  SECURITIES  REPRESENTED BY THIS  INSTRUMENT HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED
      OR OTHERWISE  TRANSFERRED WITHOUT AN EFFECTIVE  REGISTRATION THEREOF UNDER
      SUCH ACT OR  PURSUANT  TO RULE 144 OR AN  OPINION OF  COUNSEL,  REASONABLY
      SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS
      NOT REQUIRED. THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE SUBJECT TO
      TRANSFER  RESTRICTIONS,  VESTING  AND  REVOCATION  UNDER  THE TERMS OF THE
      REVOCABLE WARRANT AGREEMENT, DATED APRIL 1, 2005"

                  The  Exercise  Shares  and  the  certificate  or  certificates
evidencing any such Exercise Shares shall bear the following legend:

      "THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER  THE  SECURITIES  ACT  OF  1933.  THE  SHARES  MAY  NOT BE  SOLD  OR
      TRANSFERRED IN THE ABSENCE OF SUCH  REGISTRATION  OR AN OPINION OF COUNSEL
      ACCEPTABLE TO THE COMPANY THAT AN EXEMPTION FROM  REGISTRATION  UNDER SUCH
      ACT IS AVAILABLE."

      Certificates for Revocable  Warrants or Exercise  Shares,  as the case may
be, without such legend shall be issued if such  Revocable  Warrants or Exercise
Shares are sold pursuant to an effective registration statement under the Act or
if the Company has received an opinion from counsel  reasonably  satisfactory to
counsel for the Company that such legend is no longer required under the Act.

      9. Adjustment of Number of Shares and Class of Capital Stock  Purchasable.
The number of Exercise Shares and class of capital stock  purchasable under this
Revocable  Warrant are subject to  adjustment  from time to time as set forth in
this Section 9.

      (a)   Adjustment for Change in Capital Stock. If the Company:

            (i)   pays a dividend or makes a  distribution  on its Common Stock,
                  in each case, in shares of its Common Stock;

            (ii)  subdivides  its  outstanding  shares  of Common  Stock  into a
                  greater number of shares;

            (iii) combines its outstanding shares of Common Stock into a smaller
                  number of shares; or

            (iv)  makes a  distribution  on its  Common  Stock in  shares of its
                  capital stock other than Common Stock

then the number and classes of Exercise Shares purchasable upon exercise of each
Revocable Warrant in effect immediately prior to such action shall be adjusted
so that the holder of any Revocable Warrant thereafter exercised may receive the
number and classes of shares of capital stock of the Company which such holder
would have owned immediately following such action if such holder had exercised
the Revocable Warrant immediately prior to such action.

                  For a dividend or  distribution  the  adjustment  shall become
effective  immediately  after the record date for the dividend or  distribution.
For a subdivision, combination or reclassification,  the adjustment shall become
effective  immediately after the effective date of the subdivision,  combination
or reclassification.


                                       5
<PAGE>

                  If after an adjustment the holder of a Revocable  Warrant upon
exercise of it may receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company shall in good faith determine the
allocation  of the  adjusted  Exercise  Price  between  or among the  classes of
capital  stock.  After  such  allocation,  that  portion of the  Exercise  Price
applicable to each share of each such class of capital stock shall thereafter be
subject to  adjustment on terms  comparable to those  applicable to the Exercise
Shares in this Agreement.

                  (b)  Consolidation,  Merger  or  Sale of the  Company.  If the
Company is a party to a consolidation,  merger,  transfer of assets or any other
business combination which reclassifies or changes its outstanding Common Stock,
the successor corporation (or corporation  controlling the successor corporation
or the  Company,  as the  case may be)  shall by  operation  of law  assume  the
Company's   obligations   under  this  Agreement.   Upon  consummation  of  such
transaction,  the Revocable Warrants shall automatically  become exercisable for
the kind and amount of  securities,  cash or other  assets which the holder of a
Revocable Warrant would have owned immediately after the consolidation,  merger,
transfer or business  combination  if the holder had exercised the vested amount
of  the  Revocable  Warrant  immediately  before  the  effective  date  of  such
transaction.  The Company  shall  arrange for the person or entity  obligated to
issue  securities or deliver cash or other assets upon exercise of the Revocable
Warrant to,  concurrently with the consummation of such transaction,  assume the
Company's  obligations  hereunder by executing an  instrument  so providing  and
further  providing for adjustments which shall be as nearly equivalent as may be
practical to the  adjustments  provided for in this Section 9. The provisions of
this  Section  9(b)  shall  similarly  apply  to  successive  reclassifications,
reorganizations, consolidations, mergers or other business combinations.

      10.  Successors.  All the covenants and provisions of this Agreement by or
for the benefit of the Company or Holder  shall bind and inure to the benefit of
their respective successor and assigns hereunder.

      11.  Counterparts.  This  Agreement  may  be  executed  in any  number  of
counterparts and each of such  counterparts  shall for all proposes be deemed to
be an original,  and such counterparts shall together  constitute by one and the
same instrument.

      12.  Notices.  All notices or other  communications  under this  Agreement
shall be in writing and shall be deemed to have been given if  delivered by hand
or  mailed  by  certified  mail,  postage  prepaid,  return  receipt  requested,
addressed as follows: if to the Company: Natural Gas Systems, Inc., Two Memorial
City Plaza,  820  Gessner,  Suite 1340.  Houston,  TX 77024 ,  Attention:  Legal
Counsel,  and to the Holder: at the address of the Holder appearing on the books
of the Company or the Company's transfer agent, if any.

      Either the  Company or the Holder may from time to time change the address
to which notices to it are to be mailed  hereunder by notice in accordance  with
the provisions of this Paragraph 12.

      13.  Supplements  and  Amendments.  The  Company  may  from  time  to time
supplement or amend this  Agreement  without the approval of the Holder in order
to cure any  ambiguity or to be correct or supplement  any  provision  contained
herein which may be defective or inconsistent  with any other  provision,  or to
make any other  provisions  in regard to matters  or  questions  herein  arising
hereunder  which the Company may deem necessary or desirable and which shall not
materially  adversely affect the interest of the Holder.  Except as set forth in
the immediately  preceding  sentence,  this Agreement may not be amended without
the prior written consent of the Holder.


                                       6
<PAGE>

      14.  Severability.  If for any reason any provision,  paragraph or term of
this  Agreement  is  held  to be  invalid  or  unenforceable,  all  other  valid
provisions  herein  shall  remain  in full  force  and  effect  and  all  terms,
provisions and paragraphs of this Agreement shall be deemed to be severable.

      15.  Governing Law. This  Agreement  shall be deemed to be a contract made
under the laws of the State of Nevada and for all purposes shall be governed and
construed in accordance with the laws of said State.

      16.  Headings.  Paragraphs  and  subparagraph  headings,  used  herein are
included  herein  for  convenience  of  reference  only and shall not affect the
construction  of this  Agreement nor constitute a part of this Agreement for any
other purpose.

      17. Taxes.  The  acquisition  of the Revocable  Warrants (and common stock
issuable  thereunder) may result in adverse tax consequences to the Holder.  The
Holder  understands  that he may suffer adverse tax  consequences as a result of
his  acquisition  or  disposition  of the  Revocable  Warrants (and common stock
issuable   thereunder).   Holder  represents  that  he  has  consulted  any  tax
consultants  Holder  deems  advisable  in  connection  with the  acquisition  or
disposition of the Revocable Warrants (and common stock issuable thereunder) and
that Holder is not relying on the  Company for any tax advice.  Acquisitions  or
dispositions  of cash or equity  made  under  this  Agreement  may be subject to
reduction to reflect taxes or other charges required to be withheld by law.

      18.  Registration  Rights.  Upon exercise of this Revocable  Warrant , the
Holder shall have and be entitled to exercise,  together  with all other holders
of registrable securities possessing "piggy back" registration rights under that
certain Registration Rights Agreement, of even date herewith and attached hereto
as  EXHIBIT D,  between  the  Company  and the  parties  who have  executed  the
counterpart  signature  pages  thereto  or  are  otherwise  bound  thereby  (the
"Registration  Rights Agreement"),  the rights of registration granted under the
Registration  Rights  Agreement  (with  respect  to the  Shares of Common  Stock
issuable  upon  exercise  of this  Revocable  Warrant ). By its  receipt of this
Revocable  Warrant  ,  Holder  agrees  to be  bound by the  Registration  Rights
Agreement.  Notwithstanding  the foregoing,  however,  the Company,  at its sole
discretion,  may elect to cancel the registration  rights agreement and register
the Exercise Shares, upon exercise of this Revocable Warrant, under Form S-8.

      IN WITNESS  WHEREOF,  the parties  hereto have caused this Agreement to be
duly executed, as of the date and year first above written.

 COMPANY                                       HOLDER:
 NATURAL GAS SYSTEMS, INC.                     ROBERT S. HERLIN


 By: _________________________________         By: __________________________
 Name: Robert S. Herlin, CEO


                                       7
<PAGE>

                                    EXHIBIT A


THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT
TO RULE 144 OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

                                    REVOCABLE WARRANT TO PURCHASE SHARES
                                    OF COMMON STOCK OF NATURAL GAS SYSTEMS, INC


Initial Number of Shares:         287,500
Exercise Price:                   $1.80 per share
Date of Grant:                    April 1, 2005
Expiration Date:                  April 1, 2015

THIS CERTIFIES THAT, Robert S. Herlin ("Holder") is entitled to purchase the
above number (as adjusted pursuant to Section 4 hereof) of fully paid and
non-assessable shares of the Common Stock (the "Shares") of Natural Gas Systems,
Inc., a Nevada corporation (the "Company), having an Exercise Price as set forth
above, subject to the provisions and upon the terms and conditions set forth
herein and in the Revocable Warrant Agreement dated April 1, 2005 ("Revocable
Warrant Agreement"). The exercise price, as adjusted from time to time as
provided herein, is referred to as the "Exercise Price."

NOTWITHSTANDING ANYTING TO THE CONTRARY, THIS REVOCABLE WARRANT IS SUBJECT TO
VESTING AND REVOCATION WITHOUT CONSIDERATION BY THE COMPANY UNDER CERTAIN
CONDITIONS DEFINED IN THE REVOCABLE WARRANT AGREEMENT.

      1. Term. Subject to the revocation  provisions of of the Revocable Warrant
Agreement,   the  purchase  right  represented  by  this  Revocable  Warrant  is
exercisable,  in whole or in part,  at any time  commencing on the April 1, 2005
and ending on the Expiration Date, after which time the Revocable  Warrant shall
be void.

      2. Method of Exercise; Payment; Issuance of New Revocable Warrant. Subject
to Section 1 hereof,  the right to purchase Shares represented by this Revocable
Warrant may be exercised by Holder, in whole or in part, for the total number of
Shares  remaining  available  for exercise by the  surrender  of this  Revocable
Warrant  (with the notice of  exercise  form  attached  hereto as Exhibit A duly
executed)  at the  principal  office of the  Company  and by the  payment to the
Company,  by check made payable to the Company drawn on a United States bank and
for  United  States  funds,  or by  delivery  to  the  Company  of  evidence  of
cancellation of  indebtedness of the Company to such Holder,  of an amount equal
to the then  applicable  Exercise  Price per share  multiplied  by the number of
Shares then being purchased or by net exercise  pursuant to Section 6 hereof. In
the event of any exercise of the purchase  right  represented  by this Revocable
Warrant, certificates for the Shares so purchased shall be promptly delivered to
Holder  and,  unless this  Revocable  Warrant  has been fully  exercised  or has
expired, a new Revocable Warrant representing the portion of the Shares, if any,
with respect to which this Revocable  Warrant shall not then have been exercised
shall also be promptly delivered to Holder.

      3. Exercise Price. The Exercise Price at which this Revocable  Warrant may
be exercised shall be the Exercise Price, as adjusted from time to time pursuant
to Section 4 hereof.

<PAGE>

      4.  Adjustment  of Number of Shares.  The number of shares and/or class of
capital stock purchasable upon exercise of this Revocable Warrant are subject to
adjustment as provided in Section 9 of the Revocable Warrant Agreement.

      5. Transferability and Negotiability of Revocable Warrant.  This Revocable
Warrant  may  not be  transferred  or  assigned  in  whole  or in  part  without
compliance with applicable  federal and state  securities laws by the transferor
and the transferee  (including,  without limitation,  the delivery of investment
representation  letters  and  legal  opinions  reasonably  satisfactory  to  the
Company, if reasonably requested by the Company).  Further, the Holder shall not
transfer,  assign,  encumber or  otherwise  dispose of any  Restricted  Warrants
without the  Company's  written  consent,  except as  provided in the  following
sentence. The Revocable Warrants granted hereby shall not be transferable except
by will or the laws of descent  and  distribution.  During the  lifetime  of the
Holder,  the Revocable Warrant may be exercised only by the Holder, the guardian
or legal representative of the Holder.

      6. Net Exercise.  In lieu of exercising  this Revocable  Warrant for cash,
the Holder may elect to exchange this Revocable  Warrant for Shares equal to the
value of this Revocable Warrant by surrender of this Revocable Warrant, together
with notice of such election,  at the principal office of the Company,  in which
event the Company  shall issue to the holder a number of Shares  computed  using
the following formula:

                                                                 X = Y (A-B)
                                                                      A
         Where:

                X= the number of Shares to be issued to the holder.
                Y= the number of Shares to be purchased under this
                   Revocable Warrant.
                A= value per share of one Share determined in accordance
                   with Section 2 of the Revocable Warrant Agreement.
                B= the Exercise Price (as adjusted).

      7. Miscellaneous.  The Company covenants that it will at all times reserve
and keep available,  solely for the purpose of issue upon the exercise hereof, a
sufficient  number of Shares to permit the exercise hereof in full. Such Shares,
when issued in compliance with the provisions of this Revocable  Warrant and the
Company's Certificate of Incorporation, will be duly authorized, validly issued,
fully paid and  non-assessable.  No Holder of this Revocable  Warrant,  as such,
shall, prior to the exercise of this Revocable  Warrant,  be entitled to vote or
receive  dividends  or be  deemed to be a  stockholder  of the  Company  for any
purpose,  nor shall anything contained in this Revocable Warrant be construed to
confer upon Holder,  as such,  any rights of a stockholder of the Company or any
right to vote, give or withhold consent to any corporate action,  receive notice
of meetings,  receive  dividends or  subscription  rights,  or  otherwise.  Upon
receipt of evidence  reasonably  satisfactory to the Company of the loss, theft,
destruction or mutilation of this Revocable Warrant and, in the case of any such
loss, theft or destruction,  upon delivery of an indemnity agreement  reasonably
satisfactory  in form and  amount  to the  Company  or,  in the case of any such
mutilation,  upon  surrender and  cancellation  of such Revocable  Warrant,  the
Company  at its  expense  will  execute  and  deliver,  in lieu  thereof,  a new
Revocable  Warrant  of like date and  tenor.  The terms and  provisions  of this
Revocable  Warrant  shall  inure to the  benefit  of, and be binding  upon,  the
Company and the Holder hereof and their respective  successors and assigns. This
Revocable Warrant shall be governed by and construed under the laws of the State
of Nevada.


                                       2
<PAGE>

      IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date and year first written above.

Holder:                                Company:
________________________________       Natural Gas Systems, a Nevada Corporation


By: _____________________________      By: _____________________________
Robert S. Herlin                       Laird Q. Cagan, Chairman


                                       3
<PAGE>

                               NOTICE OF EXERCISE

TO:     NATURAL GAS SYSTEMS, INC.


      1. The  undersigned  hereby  elects to  purchase  _________  shares of the
Common Stock of NATURAL GAS SYSTEMS,  INC. pursuant to the terms of the attached
Revocable  Warrant,  and tenders  herewith payment of the purchase price of such
shares in full, together with all applicable transfer taxes, if any.

      2. The  undersigned  hereby  elects to purchase  __________  shares of the
Common Stock of NATURAL GAS SYSTEMS,  INC. pursuant to the terms of the attached
Revocable Warrant on a net exercise basis in accordance with Section 6.

      3. Please issue a certificate or certificates  representing said shares of
the  Common  Stock in the name of the  undersigned  or in such  other name as is
specified below:




                                    Name:_______________________________

                                    Tax ID:___________________


                                    Address:____________________________

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

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

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

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





                                    Signed:_____________________________




                                    Date:___________________



                                       4


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>v16031_ex10-4.txt
<TEXT>
                 AMENDED AND RESTATED TATUM RESOURCES AGREEMENT


      This Amended and Restated Agreement ("Agreement") is made effective as of
January 1, 2005, between Natural Gas Systems, Inc. a Nevada corporation (the
"COMPANY"), and Tatum CFO Partners, LLP ("TATUM"). This Agreement shall be
effective as of the date written above.

      WHEREAS, the Company, through its predecessor in interest and wholly owned
subsidiary Natural Gas Systems, Inc., a Delaware corporation, entered into an
agreement to provide compensation of cash and equity in exchange for certain
resources offered by Tatum under the Resource Agreement (the "ORIGINAL
AGREEMENT"), dated September 18, 2003, a copy of which is attached hereto as
EXHIBIT A;

      WHEREAS, the parties desire to memorialize their understanding of any and
all payment obligations of the Company to Tatum;

      WHEREAS, the parties hereto desire to amend and restate the terms of the
Original Agreement so as to accelerate the vesting of certain warrants and
limiting further compensation;

      NOW, THEREFORE, in consideration of the mutual obligations in this
Agreement and the ancillary agreements referenced herein, the parties to this
Agreement agree as follows:

THE ORIGINAL AGREEMENT IS HEREBY AMENDED AND RESTATED TO READ IN ITS ENTIRETY AS
FOLLOWS:

1.    Tatum Resources

      The parties understand that the Company desires to maintain the employment
of Robert S. Herlin ("HERLIN" or the "EMPLOYEE"), one of Tatum's partners, as
Chief Executive Officer of the Company (the "EMPLOYEE") pursuant to Herlin's
employment agreement with the Company; and the parties acknowledge that the
Employee is and will remain a partner in Tatum. Tatum will provide certain
resources to the Company to be accessible by Herlin for the Company's use. These
resources (the "RESOURCES") include a platform for knowledge sharing, e.g.,
database access, specialized software and patent-pending processes, specialized
work product and training, and virtual access to other Tatum partners through
Tatum's proprietary internet portal (the "TATUM PORTAL").

      This Agreement sets forth the rights of the Company, through the Employee,
to use such resources for the benefit of the Company, and for the payment of
compensation for such Resources under Section 2 hereof (the "COMPENSATION").
Since the Employee will be under the control and direct management of the
Company, and not Tatum, Tatum cannot assume the same risks as if Tatum itself
served as part of the Company's management team. Tatum's obligations to the
Company are exclusively those set forth in this Agreement. SCHEDULE A sets forth
provisions dealing with the limitation of Tatum's liability and other terms and
conditions, which allow Tatum to provide this unique relationship. This offers
both the value of a traditional employment relationship, through separate
employment directly with the Employee, and the resources and benefits of a
national firm through the provision of Resources pursuant to this Agreement.
Herlin shall participate in the benefits plan of the Company in lieu of
participating in the Tatum group plan.

<PAGE>

2.    Compensation

      A. SERVICE FEES. The Company shall pay Tatum a monthly service and license
fee of $1,000.00 for the period of January 2005 through December 2005 (the
"SERVICE FEES"). The $12,000 of Service Fees for all 2005 shall be prepaid in
advance no later than April 15, 2005. After December 31, 2005, Service Fees
shall be payable at $1,000 per month on a monthly basis if this Agreement has
not been terminated.

      B. WARRANTS. In partial consideration of Tatum's agreement to provide the
Resources, the Company shall issue Tatum warrants ("WARRANTS") to purchase
262,500 shares of the Company's common stock at $0.001 per share under the terms
and conditions of a certain Warrant Agreement being executed concurrently with
this Agreement.

      Other than the Service Fees and the one time issuance of Warrants
described above, no further Compensation shall be due or payable by the Company
to Tatum. For clarification, Tatum hereby acknowledges and agrees that the
Compensation referenced above satisfies any and all past and future payment
obligations of any kind owed by the Company to Tatum in connection with the
subject matter of this Agreement. At the end of the Term, only the monthly
Service Fees as described above shall be required to keep this agreement in full
force and effect.

3.    Miscellaneous Provisions.

      The initial term of this Agreement ("INITIAL TERM") is from the effective
date until December 31, 2005. Following the Initial Term, this Agreement shall
be automatically renewed for succeeding terms of one month each (a "RENEWAL
TERM"), unless either party shall give written notice to the other of its
intention not to renew this Agreement at least five days prior to the
commencement of the next succeeding Renewal Term.

      In addition this Agreement will terminate immediately upon the effective
date of termination or expiration of Herlin's employment with the Company or
upon Herlin ceasing to be a partner of Tatum.

      In the event that either party commits a breach of this Agreement and
fails to cure the same within ten (10) days following delivery by the
non-breaching party of written notice specifying the nature of the breach, the
non-breaching party will have the right to terminate this Agreement immediately
effective upon written notice of such termination.

      This Agreement contains the entire agreement between the Parties hereto
with respect to the subject matter hereof, superseding any prior oral or written
statements or agreements, including the Original Agreement; provided, however,
that nothing herein shall limit the Company's ability to modify, amend or
terminate the Company's employment relationship with Employee as provided in his
employment agreement.

      Neither the Company nor Tatum will be deemed to have waived any rights or
remedies accruing under this Agreement unless such waiver is in writing and
signed by the party electing to waive the right or remedy. This Agreement binds
and benefits the successors of Tatum and the Company.


                                      -2-
<PAGE>

      Neither party will be liable for any delay or failure to perform under
this Agreement (other than with respect to payment obligations) if and to the
extent such delay or failure is a result of an act of God, war, earthquake,
civil disobedience, court order, labor dispute, or other cause beyond such
party's reasonable control.

      The terms of this Agreement are severable and may not be amended except in
a writing signed by Tatum and the Company. If any portion of this Agreement is
found to be unenforceable, the rest of the Agreement will be enforceable except
to the extent that the severed provision deprives either party of a substantial
portion of its bargain.

      The provisions in this Agreement concerning payment of the Tatum
Compensation, limitation of liability, reimbursement of costs and expenses,
directors' and officers' insurance, and arbitration will survive any termination
or expiration of this Agreement.

      Noting in this Agreement shall confer any rights upon any person or entity
other than the parties hereto and their respective successors and permitted
assigns and Herlin.

      This Agreement will be governed by and construed in all respects in
accordance with the laws of the State of Texas without giving effect to
conflicts-of-laws principles.

      Each person signing below is authorized to sign on behalf of the party
indicated, and in each case such signature is the only one necessary.

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the date and year first above written.



         TATUM CFO PARTNERS, LLP                   NATURAL GAS SYSTEMS


         By:____________________________           By: ________________________
         Name:  Robert L. Litschi                  Name:  Robert S. Herlin

         Title: Area Managing Partner              Title: President and CEO


                                      -3-
<PAGE>

                                   SCHEDULE A


                          DISCLAIMERS AND RELATED TERMS

DISCLAIMERS & LIMITATIONS OF LIABILITY
It is to be understood that Tatum does not have a contractual obligation to the
Company other than to make the Employee available to serve the Company and to
make its resources available to the Company through the Employee. Tatum
Compensation will be for the resources provided and not as compensation as an
employee or partner of or in a joint venture with the Company or as an employer
of the Employee, and Tatum will have no control or management over the Employee.
Tatum's obligation under this Agreement is to make Tatum's resources available
to the Employee for the benefit of the Company under the terms and conditions of
this Agreement.

The Company acknowledges that any Resources will be provided by Tatum to the
Employee as a tool to be used in the discretion of the Employee. Tatum makes no
representation or warranty as to the accuracy or reliability of reports,
projections, forecasts, or any other information derived from use of the
Resources, and Tatum will not be liable for any claims of reliance on such
reports, projections, forecasts, or information. Tatum disclaims all warranties,
either express or implied, including, but not limited to, implied warranties of
merchantability and fitness for a particular purpose, with regard to all
information and applications that may be provided by the Resources or the Tatum
Portal. Tatum will not be liable for any non-compliance of reports, projections,
forecasts, or information or services with federal, state, or local laws or
regulations.

The Company agrees that, with respect to any claims the Company may assert
against Tatum in connection with this Agreement or the relationship arising
hereunder, Tatum's total liability will not exceed two months of Service Fees.

As a condition for recovery of any liability, the Company must give Tatum
written notice of the alleged basis for liability within thirty (30) days of
discovering the circumstances giving rise thereto, provided that the failure of
the Company to give such notice will only affect the rights of the Company to
the extent that Tatum is actually prejudiced by such failure. In any event, the
Company must assert any claim against Tatum within six (6) months after
discovery or thirty (30) days after the termination or expiration of this
Agreement, whichever is earlier.

Tatum will not be liable in any event for incidental, consequential, punitive,
or special damages, including without limitation, any interruption of business
or loss of business, profit, or goodwill.

ARBITRATION
If the parties are unable to resolve any dispute arising out of or in connection
with this Agreement, either party may refer the dispute to arbitration by a
single arbitrator selected by the parties according to the rules of the American
Arbitration Association ("AAA"), and the decision of the arbitrator will be
final and binding on both parties. Such arbitration will be conducted by the
Houston, Texas office of the AAA and governed by Texas law. In the event that
the parties fail to agree on the selection of the arbitrator within thirty (30)
days after either party's request for arbitration under this paragraph, the
arbitrator will be chosen by AAA. The arbitrator may in his discretion order
documentary discovery, but in no event may depositions be taken. The arbitrator
will have no authority to award punitive damages. Judgment on the award of the
arbitrator may be entered in and enforced by any court of competent
jurisdiction. The arbitrator will have no authority to award damages in excess
or in contravention of this Schedule A and may not amend or disregard any
provision of this Schedule A. Notwithstanding the foregoing, no issue related to
the ownership of intellectual property will be subject to arbitration but will
instead be subject to determination by a court of competent jurisdiction.

DIRECTOR AND OFFICER INSURANCE
To the extent the Company has directors' and officers' liability insurance in
effect, the Company will provide such insurance coverage for the Employee, along
with written evidence to Tatum or the Employee that the Employee is covered by
such insurance.


                                      -4-
<PAGE>

SUBPOENAS
In the event that any partner of Tatum (including without limitation the
Employee to the extent not otherwise entitled in his or her capacity as an
officer of the Company) is subpoenaed or otherwise required to appear as a
witness or Tatum or such partner is required to provide evidence, in either case
in connection with any action, suit, or other proceeding initiated by a third
party against the Company or by the Company against a third party, then the
Company shall reimburse Tatum for the costs and expenses (including reasonable
attorneys' fees) actually incurred by Tatum or such partner and provide Tatum
with compensation at Tatum's customary rate for the time incurred.

MISCELLANEOUS
Tatum represents to the Company that Tatum has conducted its standard screening
and investigation procedures with respect to the Employee becoming a partner in
Tatum, and the results of the same were satisfactory to Tatum. Except as
provided in the immediately preceding sentence, Tatum does not make any
representations or warranties concerning the Employee's qualifications or
services.

Tatum shall be entitled to receive all reasonable costs and expenses incidental
to the collection of overdue amounts under this Agreement, including but not
limited to attorneys' fees actually incurred.


                                      -5-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>v16031_ex10-5.txt
<TEXT>
                                WARRANT AGREEMENT

      THIS WARRANT AGREEMENT (this  "Agreement") is made effective as of January
1, 2005 between Natural Gas Systems, Inc., a Nevada corporation (the "Company"),
and Tatum CFO Partners, LLP, a Georgia limited liability partnership ("Holder").

                                 R E C I T A L S

      WHEREAS,  the Company and Holder have entered  into a certain  Amended and
Restated  Tatum  Resources   Agreement,   of  even  date  herewith   ("Resources
Agreement"),  where the Holder has agreed to provide  certain  resources  to the
Company; and

      WHEREAS,  as  partial   consideration  for  Holder's  commitments  in  the
Resources Agreement, the Company proposes to issue to Holder a warrant entitling
the holder thereof to purchase up to TWO HUNDRED SIXTY-TWO THOUSAND FIVE HUNDRED
(262,500)  shares of common stock, no par value, of the Company (the "Shares" or
the "Common Stock");

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:

                                A G R E E M E N T

      1. Form of Warrant. The warrant to be delivered pursuant to this Agreement
(the "Warrant")  shall be in the form set forth in Exhibit A attached hereto and
made a part hereof.

      2. Right to Exercise  Warrant.  The Warrant may be exercised from the date
of this Agreement until 11:59 P.M.  (Eastern  Standard Time) on the date that is
five (5) years after the date of this Agreement (the "Expiration  Date"). To the
extent the Warrant has not been exercised on or before the  Expiration  Date, it
shall expire.

      The Warrant  shall  entitle its holder to purchase from the Company one or
more Shares,  up to an aggregate of 262,500  (each an "Exercise  Share"),  at an
exercise  price of $0.001 per Share,  subject to  adjustment  as set forth below
("Exercise Price").

      The Company  shall not be required  to issue  fractional  shares of Common
Stock  upon the  exercise  of the  Warrant or to  deliver a  substitute  Warrant
following a partial exercise which evidences fractional shares of capital stock.
In the  event  that a  fraction  of an  Exercise  Share  would,  except  for the
provisions  of this  paragraph 2, be issuable  upon the exercise of the Warrant,
the  Company  shall pay to the Holder  exercising  the Warrant an amount in cash
equal to such fraction  multiplied  by the current  market value of the Exercise
Share.  For  purposes of this  paragraph  2, the current  market  value shall be
determined as follows:

            (a) if the Shares are traded in the over-the-counter  market and not
on any national  securities exchange and not in the NASDAQ Reporting System, the
average of the mean between the last bid and asked prices per share, as reported
by the National  Quotation  Bureau,  Inc., or an equivalent  generally  accepted
reporting  service,  for the last  business  day  prior to the date on which the
Warrant is exercised, or, if not so reported, the average of the closing bid and
asked  prices  for a Share as  furnished  to the  Company  by any  member of the
National  Association of Securities  Dealers,  Inc., selected by the Company for
that purpose;

            (b) if the  Shares  are  listed or traded on a  national  securities
exchange or in the NASDAQ Reporting  System,  the closing price on the principal
national  securities  exchange  on which  they are so listed or traded or in the
NASDAQ Reporting  System,  as the case may be, on the last business day prior to


                                     1 of 4
<PAGE>

the date of the exercise of the Warrant.  The closing price  referred to in this
Clause (b) shall be the last  reported  sales price or, in case no such reported
sale takes place on such day, the average of the reported  closing bid and asked
prices, in either case on the national  securities  exchange on which the Shares
are then listed on in the NASDAQ Reporting System; or

            (c) if no such  closing  price or closing  bid and asked  prices are
available,  as determined in any  reasonable  manner as may be prescribed by the
Board of Directors of the Company.

      3. Mutilated or Missing Warrant Certificates. In case the Warrant shall be
mutilated,  lost,  stolen or destroyed prior to the Expiration Date, the Company
shall issue and deliver,  in exchange and substitution for and upon cancellation
of the  mutilated  Warrant,  or in lieu of and in  substitution  for the Warrant
lost,  stolen or  destroyed,  a new  Warrant of like tenor and  representing  an
equivalent right or interest.

      4.  Reservation of Shares.  The Company will at all times reserve and keep
available,  free from preemptive  rights, out of the aggregate of its authorized
but unissued Shares or its authorized and issued Shares held in its treasury for
the purpose of enabling it to satisfy its  obligation to issue  Exercise  Shares
upon  exercise of the Warrant,  the full number of Exercise  Shares  deliverable
upon the exercise of the Warrant in full.

      The Company  covenants  that all Exercise  Shares which may be issued upon
exercise of the Warrant will be validly  issued,  fully paid and  non-assessable
outstanding Shares of the Company.

      5. Rights of Holder. The Holder shall not, by virtue of anything contained
in this Warrant  Agreement or  otherwise,  prior to exercise of the Warrant,  be
entitled to any right  whatsoever,  either in law or equity, of a stockholder of
the Company,  including without limitation, the right to receive dividends or to
vote or to  consent  or to  receive  notice as a  stockholder  in respect of the
meetings of  stockholders  or the  election of  directors  of the Company of any
other matter.

      6. Investment Intent;  Accredited Investor. Holder represents and warrants
to the Company that Holder is acquiring the Warrant for investment  purposes and
with no present  intention  of  distributing  or  reselling  any  portion of the
Warrant.  Holder  represents  that it is an  "accredited  investor"  within  the
meaning of Rule 501 of Regulation D under the Securities Act (the "Act") and has
executed and delivered the Investment  Representation Statement that accompanies
this Agreement.

      7.  Certificates  to Bear  Legend.  The Warrant  shall bear the  following
legend by which each holder shall be bound:

      "THE  SECURITIES  REPRESENTED BY THIS  INSTRUMENT HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED
      OR OTHERWISE  TRANSFERRED WITHOUT AN EFFECTIVE  REGISTRATION THEREOF UNDER
      SUCH ACT OR  PURSUANT  TO RULE 144 OR AN  OPINION OF  COUNSEL,  REASONABLY
      SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS
      NOT REQUIRED."

      The Exercise  Shares and the  certificate or  certificates  evidencing any
such Exercise Shares shall bear the following legend:

      "THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER  THE  SECURITIES  ACT  OF  1933.  THE  SHARES  MAY  NOT BE  SOLD  OR
      TRANSFERRED IN THE ABSENCE OF SUCH  REGISTRATION  OR AN OPINION OF COUNSEL
      THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE."


                                     2 of 4
<PAGE>

      The Warrant or Exercise  Shares,  as the case may be,  without such legend
shall be issued if such  Warrant  or  Exercise  Shares are sold  pursuant  to an
effective registration statement under the Act or if the Company has received an
opinion from  counsel  reasonably  satisfactory  to counsel for the Company that
such legend is no longer required under the Act.

      8. Adjustment of Number of Shares and Class of Capital Stock  Purchasable.
The number of Exercise Shares and class of capital stock  purchasable  under the
Warrant are subject to adjustment from time to time as set forth in this Section
8.

      (a)   Adjustment for Change in Capital Stock. If the Company:

            (i)   pays a dividend or makes a  distribution  on its Common Stock,
                  in each case, in shares of its Common Stock;

            (ii)  subdivides  its  outstanding  shares  of Common  Stock  into a
                  greater number of shares;

            (iii) combines its outstanding shares of Common Stock into a smaller
                  number of shares; or

            (iv)  makes a  distribution  on its  Common  Stock in  shares of its
                  capital stock other than Common Stock;

then the number and classes of Exercise Shares  purchasable upon exercise of the
Warrant in effect immediately prior to such action shall be adjusted so that the
holder of the Warrant thereafter exercised may receive the number and classes of
shares of  capital  stock of the  Company  which  such  holder  would have owned
immediately  following  such  action if such  holder had  exercised  the Warrant
immediately prior to such action.

            For a dividend or distribution the adjustment shall become effective
immediately  after the  record  date for the  dividend  or  distribution.  For a
subdivision,  combination  or  reclassification,  the  adjustment  shall  become
effective  immediately after the effective date of the subdivision,  combination
or reclassification.

            If after an adjustment the holder of the Warrant upon exercise of it
may receive  shares of two or more classes of capital stock of the Company,  the
Board of Directors of the Company shall in good faith  determine the  allocation
of the adjusted  Exercise  Price between or among the classes of capital  stock.
After such  allocation,  that portion of the Exercise  Price  applicable to each
share of each such  class of  capital  stock  shall  thereafter  be  subject  to
adjustment  on terms  comparable to those  applicable to the Exercise  Shares in
this Agreement.  Notwithstanding the allocation of the Exercise Price between or
among shares of capital stock as provided by this Section 8(a),  the Warrant may
only be exercised in full by payment of the entire  Exercise  Price in effect at
the time of such exercise.

            (b) Consolidation,  Merger or Sale of the Company. If the Company is
a party to a consolidation,  merger or transfer of assets which  reclassifies or
changes its outstanding Common Stock, the successor  corporation (or corporation
controlling the successor  corporation or the Company, as the case may be) shall
by operation of law assume the Company's obligations under this Agreement.  Upon
consummation  of  such  transaction,  the  Warrant  shall  automatically  become
exercisable  for the kind and amount of  securities,  cash or other assets which
the holder of the Warrant would have owned immediately after the  consolidation,
merger or transfer if the holder had  exercised the Warrant  immediately  before
the effective date of such  transaction.  As a condition to the  consummation of
such  transaction,  the Company shall arrange for the person or entity obligated
to issue securities or deliver cash or other assets upon exercise of the Warrant
to, concurrently with the consummation of such transaction, assume the Company's


                                     3 of 4
<PAGE>

obligations  hereunder  by  executing an  instrument  so  providing  and further
providing  for  adjustments  which  shall  be as  nearly  equivalent  as  may be
practical to the adjustments provided for in this Section 8.

      9.  Successors.  All the covenants and  provisions of this Agreement by or
for the benefit of the Company or Holder  shall bind and inure to the benefit of
their respective successor and assigns hereunder.

      10.  Counterparts.  This  Agreement  may  be  executed  in any  number  of
counterparts and each of such  counterparts  shall for all proposes be deemed to
be an original,  and such counterparts shall together  constitute by one and the
same instrument.

      11.  Notices.  All notices or other  communications  under this  Agreement
shall be in writing and shall be deemed to have been given if  delivered by hand
or  mailed  by  certified  mail,  postage  prepaid,  return  receipt  requested,
addressed as follows: if to the Company: Natural Gas Systems, Inc., Two Memorial
City Plaza,  820  Gessner,  Suite 1340.  Houston,  TX 77024 ,  Attention:  Chief
Executive  Officer,  and to the Holder: at 4501 Circle 75 Parkway,  Ste. A-1164,
Atlanta, Georgia 30339, Attn: Mr. Jerry Lucas.

      Either the  Company or the Holder may from time to time change the address
to which notices to it are to be mailed  hereunder by notice in accordance  with
the provisions of this Paragraph 11.

      12.  Severability.  If for any reason any provision,  paragraph or term of
this  Agreement  is  held  to be  invalid  or  unenforceable,  all  other  valid
provisions  herein  shall  remain  in full  force  and  effect  and  all  terms,
provisions and paragraphs of this Agreement shall be deemed to be severable.

      13.  Governing  Law and  Venue.  This  Agreement  shall be  deemed to be a
contract made under the laws of the State of Texas and for all purposes shall be
governed and construed in accordance with the laws of said State,  except to the
extent that the corporation  law of the State of Nevada  applies,  in which case
the law of Nevada shall govern to that extent. Any proceeding arising under this
Agreement  shall be  instituted  in the courts  (federal  or state) in  Houston,
Texas.

      14.  Headings.  Paragraphs  and  subparagraph  headings,  used  herein are
included  herein  for  convenience  of  reference  only and shall not affect the
construction  of this  Agreement nor constitute a part of this Agreement for any
other purpose.

      IN WITNESS  WHEREOF,  the parties  hereto have caused this Agreement to be
duly executed, as of the date and year first above written.

 COMPANY                                     HOLDER:
 NATURAL GAS SYSTEMS, INC.                   TATUM CFO PARTNERS, LLP


 By: _________________________________       By: ______________________________
        Robert S. Herlin, President          Name: ____________________________
                                                      Title:___________________
                                             Tax ID: __________________________


                                     4 of 4
<PAGE>

                                    EXHIBIT A

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT
TO RULE 144 OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

                           WARRANT TO PURCHASE SHARES
                               OF COMMON STOCK OF
                            NATURAL GAS SYSTEMS, INC


Initial Number of Shares:      262,500
Exercise Price:                $0.001 per share
Date of Grant:                 January 1, 2005
Expiration Date:               January 1, 2010

THIS CERTIFIES  THAT,  TATUM CFO PARTNERS,  LLP, or any person or entity to whom
the interest in this Warrant is lawfully  transferred  ("Holder") is entitled to
purchase the above  number (as  adjusted  pursuant to Section 4 hereof) of fully
paid and non-assessable shares of the Common Stock (the "Shares") of Natural Gas
Systems, Inc., a Nevada corporation (the "Company),  having an Exercise Price as
set forth above, subject to the provisions and upon the terms and conditions set
forth herein and in the Warrant  Agreement  dated January 1, 2005.  The exercise
price, as adjusted from time to time as provided  herein,  is referred to as the
"Exercise Price."

      1. Term. The purchase right represented by this Warrant is exercisable, in
whole or in part, at any time  commencing on the Date of Grant and ending on the
Expiration Date, after which time the Warrant shall be void.

      2.  Method of  Exercise;  Payment;  Issuance  of New  Warrant.  Subject to
Section 1 hereof,  the right to purchase Shares  represented by this Warrant may
be  exercised  by Holder,  in whole or in part,  for the total  number of Shares
remaining  available  for exercise by the  surrender  of this Warrant  (with the
notice of  exercise  form  attached  hereto as Exhibit A duly  executed)  at the
principal office of the Company and by the payment to the Company, by check made
payable to the  Company  drawn on a United  States  bank and for  United  States
funds, or by delivery to the Company of evidence of cancellation of indebtedness
of the  Company  to such  Holder,  of an  amount  equal to the  then  applicable
Exercise Price per share multiplied by the number of Shares then being purchased
or by net exercise pursuant to Section 6 hereof. In the event of any exercise of
the purchase right  represented by this Warrant,  certificates for the Shares so
purchased  shall be promptly  delivered  to Holder and,  unless this Warrant has
been fully exercised or has expired,  a new Warrant  representing the portion of
the Shares,  if any, with respect to which this Warrant shall not then have been
exercised shall also be promptly delivered to Holder.

      3.  Exercise  Price.  The  Exercise  Price at which  this  Warrant  may be
exercised shall be the Exercise Price, as adjusted from time to time pursuant to
Section 4 hereof.

      4. Reclassification,  Reorganization, Consolidation or Merger. In the case
of any  reclassification of the Shares, or any reorganization,  consolidation or
merger of the Company with or into another  corporation  (other than a merger or
reorganization  with respect to which the Company is the continuing  corporation
and which does not result in any  reclassification of the Shares),  the Company,
or such successor  corporation,  as the case may be, shall execute a new warrant


                                     1 of 6
<PAGE>

providing  that the Holder shall have the right to exercise such new warrant and
upon such exercise to receive,  in lieu of each Share theretofore  issuable upon
exercise of this Warrant, the number and kind of securities,  money and property
receivable upon such reclassification,  reorganization,  consolidation or merger
by a holder of  Shares  for each  Share.  Such new  warrant  shall  provide  for
adjustments  which shall be as nearly  equivalent as may be  practicable  to the
adjustments  provided  for in this  Section  4  including,  without  limitation,
adjustments  to the  Exercise  Price and to the number of Shares  issuable  upon
exercise of this Warrant. The provisions of this Section 4 shall similarly apply
to successive reclassifications, reorganizations, consolidations or mergers.

      5.  Transferability and Negotiability of Warrant.  This Warrant may not be
transferred or assigned in whole or in part without  compliance  with applicable
federal  and  state  securities  laws  by  the  transferor  and  the  transferee
(including,  without  limitation,  the  delivery  of  investment  representation
letters and legal opinions reasonably satisfactory to the Company, if reasonably
requested by the Company). Subject to the provisions of this Section 5, title to
this Warrant may be  transferred  in the same manner as a negotiable  instrument
transferable by endorsement and delivery.

      6. Net Exercise.  In lieu of exercising  this Warrant for cash, the Holder
may elect to exchange this Warrant for Shares equal to the value of this Warrant
by surrender of this  Warrant,  together  with notice of such  election,  at the
principal  office of the Company,  in which event the Company shall issue to the
holder a number of Shares computed using the following formula:

                                             X = Y (A-B)
                                                  A
         Where  :

                X= the number of Shares to be issued to the holder.
                Y= the number of Shares purchasable under this Warrant.
                A= value per share of one Share determined in accordance with
                   Section 2 of the Warrant Agreement.
                B= the Exercise Price (as adjusted).

      7.  Warrant  Agreement.  This  warrant is being  issued  pursuant  to that
certain Warrant  Agreement of even date herewith  between the initial Holder and
the Company,  and the terms of that Warrant  Agreement  are hereby  incorporated
herein by reference.  To the extent the terms of this Warrant  conflict with the
terms provided for the same in the Warrant  Agreement,  the terms of the Warrant
Agreement shall govern.


                                     2 of 6
<PAGE>

      8. Miscellaneous.  The Company covenants that it will at all times reserve
and keep available,  solely for the purpose of issue upon the exercise hereof, a
sufficient  number of Shares to permit the exercise hereof in full. Such Shares,
when issued in compliance  with the provisions of this Warrant and the Company's
Certificate of  Incorporation,  will be duly authorized,  validly issued,  fully
paid and non-assessable. No Holder of this Warrant, as such, shall, prior to the
exercise of this Warrant,  be entitled to vote or receive dividends or be deemed
to be a stockholder of the Company for any purpose, nor shall anything contained
in this Warrant be construed  to confer upon  Holder,  as such,  any rights of a
stockholder of the Company or any right to vote, give or withhold consent to any
corporate action, receive notice of meetings,  receive dividends or subscription
rights, or otherwise.  Upon receipt of evidence  reasonably  satisfactory to the
Company of the loss,  theft,  destruction  or mutilation of this Warrant and, in
the case of any such loss,  theft or destruction,  upon delivery of an indemnity
agreement  reasonably  satisfactory in form and amount to the Company or, in the
case of any such  mutilation,  upon surrender and  cancellation of such Warrant,
the Company at its expense  will  execute and deliver,  in lieu  thereof,  a new
Warrant of like date and tenor.  The terms and  provisions of this Warrant shall
inure to the benefit of, and be binding upon,  the Company and the Holder hereof
and their respective  successors and assigns.  This Warrant shall be governed by
and  construed  under the laws of the State of Texas,  except to the extent that
the corporation law of the State of Nevada would apply, in which case the law of
the State of Nevada shall apply to such extent.

HOLDER:                           COMPANY:
TATUM CFO PARTNERS, LLP           NATURAL GAS SYSTEMS, INC. A NEVADA CORPORATION

By: __________________________    By: _____________________________

Name: ________________________    Robert S. Herlin, President
Title:________________________


                                     3 of 6
<PAGE>

                               NOTICE OF EXERCISE

TO:     NATURAL GAS SYSTEMS, INC.


      1. The  undersigned  hereby  elects to  purchase  _________  shares of the
Common Stock of NATURAL GAS SYSTEMS,  INC. pursuant to the terms of the attached
Warrant,  and tenders  herewith  payment of the purchase price of such shares in
full, together with all applicable transfer taxes, if any.

      2. The  undersigned  hereby  elects to purchase  __________  shares of the
Common Stock of NATURAL GAS SYSTEMS,  INC. pursuant to the terms of the attached
Warrant on a net exercise basis in accordance with Section 6.

      3. Please issue a certificate or certificates  representing said shares of
the  Common  Stock in the name of the  undersigned  or in such  other name as is
specified  below and,  if this  Notice of  Exercise is for fewer than all shares
that may be purchased under the attached Warrant,  please issue a new Warrant on
the same terms for the unexercised balance in the name of the undersigned.



                                    Name:___________________________________

                                    Tax ID:___________________


                                    Address:________________________________

                                            ________________________________

                                            ________________________________

                                            ________________________________

                                            ________________________________

                                    Signed:__________________________________




                                    Date:___________________


                                     4 of 6
<PAGE>

                       INVESTMENT REPRESENTATION STATEMENT

PURCHASER :  TATUM CFO PARTNERS, LLP
COMPANY   :  NATURAL GAS SYSTEMS, INC.
SECURITY  :  COMMON STOCK
AMOUNT    :  262,500 SHARES
DATE      :  January 1, 2005

      In connection  with the purchase of the  above-listed  Securities,  I, the
Purchaser, represent to the Company the following:

      (a) I am aware of the Company's business affairs and financial  condition,
and have acquired sufficient  information about the Company to reach an informed
and  knowledgeable  decision to acquire the  Securities.  I am purchasing  these
Securities for my own account for  investment  purposes only and not with a view
to,  or for the  resale in  connection  with,  any  "distribution"  thereof  for
purposes of the Securities Act of 1933, as amended ("Securities Act").

      (b) I understand that the Securities  have not been  registered  under the
Securities Act in reliance upon a specific exemption therefrom,  which exemption
depends upon, among other things,  the bona fide nature of my investment  intent
as expressed herein.

      (c) I further  understand  that the Securities  must be held  indefinitely
unless  subsequently  registered under the Securities Act or unless an exemption
from  registration is otherwise  available.  In addition,  I understand that the
certificate  evidencing  the  Securities  will be imprinted  with a legend which
prohibits  the transfer of the  Securities  unless they are  registered  or such
registration  is not  required  in the  opinion  of  counsel  for the  Purchaser
satisfactory to the Company or receipt of a no-action letter from the Securities
and Exchange Commission.

      (d) I am  aware of the  provisions  of Rule  144,  promulgated  under  the
Securities  Act,   which,  in  substance,   permits  limited  public  resale  of
"restricted  securities"  acquired,  directly  or  indirectly,  from the  issuer
thereof (or from an affiliate of such issuer),  in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things:  the availability of certain public  information about the Company;  the
resale  occurring  not less than one year after the party has purchased and paid
for the  securities  to be sold;  the sale  being  made  through  a broker in an
unsolicited  "broker's  transaction" or in  transactions  directly with a market
maker (as said term is defined  under the  Securities  Exchange Act of 1934,  as
amended);  and the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein.

      (e) I further  understand  that at the time I wish to sell the  Securities
there may be no public market upon which to make such a sale, and that,  even if
such a public market then exists,  the Company may not be satisfying the current
public  information  requirements of Rule 144, and that, in such event, I may be
precluded  from  selling  the  Securities  under  Rule 144 even if the  one-year
minimum holding period had been satisfied.

      (f) I further understand that in the event all of the requirements of Rule
144 are not satisfied,  registration  under the Securities Act,  compliance with
Regulation A, or some other registration  exemption will be required;  and that,
notwithstanding  the fact that Rule 144 is not  exclusive,  the Staff of the SEC
has  expressed  its opinion  that persons  proposing  to sell private  placement
securities  other than in a registered  offering and otherwise  than pursuant to
Rule 144 will  have a  substantial  burden  of  proof  in  establishing  that an
exemption from registration is available for such offers or sales, and that such
persons and their respective  brokers who participate in such transactions do so
at their own risk.

Date:  January 1, 2005            TATUM CFO PARTNERS, LLP



                                  By:
                                     ------------------------------------------
                                      Name:
                                           ------------------------------------
                                      Title:
                                            -----------------------------------


                                     5 of 6
<PAGE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>7
<FILENAME>v16031_ex10-6.txt
<TEXT>
                            NATURAL GAS SYSTEMS, INC.

                              EMPLOYMENT AGREEMENT


      THIS AGREEMENT  ("Agreement")  is entered into as of April 4, 2005, by and
between STERLING  MCDONALD (the  "Executive")  and NATURAL GAS SYSTEMS,  INC., a
Nevada corporation (the "Company").  The Agreement  supercedes any and all prior
agreements,  written or oral, including but not limited to the Executive's prior
employment  agreement with the Company and its predecessor in interest,  Natural
Gas Systems, a Delaware corporation,  other than the stock options granted under
the Company's 2003 Stock Option Plan of Natural Gas Systems, Delaware, which was
assumed by the Company.

            1.    DUTIES AND SCOPE OF EMPLOYMENT.

            (a) POSITION.  For the term of his  employment  under this Agreement
      (the  "Employment"),  the Company  agrees to employ the  Executive  in the
      position of Chief  Financial  Officer.  The Executive  shall report to the
      Company's  CEO and  Board of  Directors,  or to such  other  person as the
      Company subsequently may determine.

            (b) OBLIGATIONS TO THE COMPANY.  During the term of employment under
      this Agreement,  Executive shall devote his/her full business  efforts and
      time to the Company.  The foregoing  shall not preclude the Executive from
      engaging in appropriate civic,  charitable or religious activities or from
      devoting  a  reasonable  amount  of time to  private  investments  or from
      serving  on the boards of  directors  of other  entities,  as long as such
      activities  and/or  services do not  interfere  or conflict  with  his/her
      responsibilities  to the Company.  Executive may provide material work for
      companies  or third  parties,  if and only if such  work is  disclosed  in
      writing  and  Executive  receives  consent  from the Board at a  duly-held
      meeting  of the  Board of  Directors  of the  Company  or if such  work is
      described  in  Exhibit D  hereto.  The  Executive  shall  comply  with the
      Company's  policies and rules,  as they may be in effect from time to time
      during his Employment.

            (c)  NO  CONFLICTING  OBLIGATIONS.   The  Executive  represents  and
      warrants to the Company that he is under no  obligations  or  commitments,
      whether   contractual  or  otherwise,   that  are  inconsistent  with  his
      obligations under this Agreement.

            2.  CASH  AND  INCENTIVE  COMPENSATION.  For  clarification,  it  is
understood  by all parties that other than as specified  herein,  the Company is
not  obligated  to award any  future  grants of stock  options  or other form of
equity compensation to Executive during Executive's employment with the Company.

            (a) SALARY.  The Company shall pay the Executive as compensation for
      his  services  a base  salary  at a  gross  annual  rate  of  $150,000.00,
      effective January 1, 2005, which may be increased annually at the election
      and sole  discretion  of the  board of  directors.  Such  salary  shall be
      payable in accordance with the Company's standard payroll procedures.  The
      annual  compensation  specified in this Subsection (a),  together with any
      increases  in such  compensation  that the  Company may grant from time to
      time, is referred to in this Agreement as "Base Salary.")

            (b)  INCENTIVE  BONUSES.  The  Executive  shall  be  eligible  to be
      considered for an annual incentive bonus of up to 75% of base salary based
      on objective or subjective criteria  established by the Company's Board of
      Directors (the "Board") or the  Compensation  Committee of the Board.  The
      determinations of the Board or its Compensation  Committee with respect to
      such bonus, if any, shall be final and binding. The Executive shall not be
      entitled to an incentive bonus if he is not employed by the Company on the
      date when such bonus is payable.


                                     1 of 8
<PAGE>

            (c)  STOCK  OPTIONS.  In  addition  to  the  250,000  stock  options
      previously  granted to the Executive under the Company's 2003 Stock Option
      Plan,  an  subject  to the  approval  of  the  Board  or the  Compensation
      Committee  of the Board,  the Company  shall  grant the  Executive a stock
      option  covering an  additional  Three Hundred  Fifty  Thousand  (350,000)
      shares of the Company's Common Stock. Such option shall be granted as soon
      as reasonably  practicable after the date of this Agreement.  The exercise
      price of such option shall be equal to the fair market value of such stock
      on the date of grant or this  agreement.  The term of such option shall be
      10 years, subject to earlier expiration in the event of the termination of
      the Executive's Employment.  The Executive shall vest in the option shares
      in equal  quarterly  installments of 1/16th per quarter over the next four
      years of continuous service.  The grant of such option shall be subject to
      the other terms and  conditions set forth in the Company's 2004 Stock Plan
      and in the Stock Option  Agreement,  attached  hereto as EXHIBITS A AND B,
      respectively.

            3. VACATION AND EXECUTIVE  BENEFITS.  Executive shall be entitled to
fifteen (15) days of vacation and five (5) personal  days per year,  to be taken
in such amounts and at such times as shall be mutually  convenient for Executive
and the  Company.  Any  vacation  days  exceeding  five (5)  days  not  taken by
Executive in one year shall be forfeited  and not carried  forward to subsequent
years. During his Employment,  the Executive shall be eligible to participate in
the employee  benefit plans  maintained by the Company,  subject in each case to
the generally applicable terms and conditions of the plan in question and to the
determinations of any person or committee administering such plan.

            4. BUSINESS EXPENSES. During his Employment,  the Executive shall be
authorized to incur  necessary and reasonable  travel,  entertainment  and other
business  expenses in connection  with his duties  hereunder.  The Company shall
reimburse  the Executive  for such  expenses  upon  presentation  of an itemized
account and  appropriate  supporting  documentation,  all in accordance with the
Company's generally applicable policies.

            5. TERM OF EMPLOYMENT.

            (a)  TERMINATION  OF  EMPLOYMENT.  The  Company  may  terminate  the
      Executive's  Employment at any time and for any reason (or no reason), and
      with or  without  Cause,  by giving  the  Executive  ten  day's  notice in
      writing.  The Executive may terminate his Employment by giving the Company
      ten days' advance  notice in writing.  The  Executive's  Employment  shall
      terminate  automatically in the event of his death. The termination of the
      Executive's Employment shall not limit or otherwise affect his obligations
      under Section 7.

            (b) EMPLOYMENT AT WILL. The Executive's  Employment with the Company
      shall be "at will," meaning that either the Executive or the Company shall
      be entitled to terminate  the  Executive's  Employment at any time and for
      any reason, with or without Cause. Any contrary  representations  that may
      have been made to the Executive  shall be  superseded  by this  Agreement.
      This Agreement shall  constitute the full and complete  agreement  between
      the Executive  and the Company on the "at will" nature of the  Executive's
      Employment,  which may only be  changed in an  express  written  agreement
      signed by the Executive and a duly authorized officer of the Company.

            (c) CONSTRUCTIVE  TERMINATION.  The term "CONSTRUCTIVE  TERMINATION"
      shall  mean any of the  following:  (i) any  breach by the  Company of any
      material provision of this Agreement,  including,  without limitation, the
      assignment  to the  Executive  of duties  inconsistent  with his  position


                                     2 of 8
<PAGE>

      specified  in Section  1(a)  hereof or any  breach by the  Company of such
      Section, which is not cured within 45 days after written notice of same by
      Executive (except that such cure period shall be fifteen days with respect
      to any breach of Section  10(h)  hereof  unless  such breach is due to the
      actions or inactions of the  Executive),  describing  in detail the breach
      asserted and stating that it constitutes  notice  pursuant to this Section
      5(c); or (ii) relocation of Executive's offices in excess of 20 miles from
      its  current   location;   or  (iii)  a   substantial   reduction  of  the
      responsibilities, authority or scope of work of Executive.

            (d) RIGHTS UPON TERMINATION. Except as expressly provided in Section
      6, upon the termination of the Executive's Employment, the Executive shall
      only be entitled to the compensation,  benefits and expense reimbursements
      that the  Executive has earned under this  Agreement  before the effective
      date of the  termination.  The payments under this  Agreement  shall fully
      discharge all responsibilities of the Company to the Executive.

            6. TERMINATION BENEFITS.

            (a)  GENERAL   RELEASE.   Any  other  provision  of  this  Agreement
      notwithstanding,  Subsections (b) and (c) below shall not apply unless the
      Executive  (i) has  executed  a general  release  of all claims (in a form
      prescribed  by the  Company)  and (ii) has  returned  all  property of the
      Company in the Executive's possession.

            (b)  SEVERANCE  PAY.  If  the  Company  terminates  the  Executive's
      Employment for any reason other than Cause or Permanent Disability,  or if
      the  Executive  subject to a  Constructive  Termination,  then the Company
      shall pay the  Executive  his Base Salary and maintain and pay his medical
      benefit and long-term  disability  coverage for a period of six (6) months
      following the termination of his Employment (the  "Continuation  Period").
      Such  Base  Salary  shall be paid at the rate in effect at the time of the
      termination  of Employment and in accordance  with the Company's  standard
      payroll procedures.

            (c)  DEFINITION OF "CAUSE." For all purposes  under this  Agreement,
      "Cause" shall mean:

            (i) An  unauthorized  use or  disclosure  by  the  Executive  of the
      Company's  confidential   information  or  trade  secrets,  which  use  or
      disclosure causes material harm to the Company;

            (ii) A material breach by the Executive of any agreement between the
      Executive and the Company;

            (iii) A  material  failure  by the  Executive  to  comply  with  the
      Company's written policies or rules;

            (iv) The  Executive's  conviction  of,  or plea of  "guilty"  or "no
      contest"  to, a felony  under the laws of the  United  States or any state
      thereof;

            (v) The Executive's gross negligence or willful misconduct; or

            (vi) A continued failure by the Executive to perform assigned duties
      after  receiving  written  notification  of such failure from the Board of
      Directors.

            (d)  DEFINITION OF "PERMANENT  DISABILITY."  For all purposes  under
      this  Agreement,   "Permanent   Disability"  shall  mean  the  Executive's


                                     3 of 8
<PAGE>

      inability to perform the essential functions of the Executive's  position,
      with or  without  reasonable  accommodation,  for a period  of at least 90
      consecutive days because of a physical or mental impairment.

            (e) CHANGE IN CONTROL.  In the event that a Change in Control of the
      Company  occurs as a result of a sale or  merger  of the  Company  and the
      Executive is terminated or is subject to a Constructive Termination within
      one  year  following  such  event,  then  the  Executive  shall be paid an
      additional  severance payment equal to six months of Base Salary,  paid in
      monthly  increments,  (the "CHANGE IN CONTROL PAYMENT"),  provided that if
      the Executive obtains similar employment before the end of the six months,
      then the remaining amount of the Change in Control Payment will be reduced
      by half.  "Change in Control" shall mean: (1) The consummation of a merger
      or  consolidation  of the Company with or into another entity or any other
      corporate reorganization, if persons who were not controlling stockholders
      of the Company  immediately  prior to such merger,  consolidation or other
      reorganization  own immediately after such merger,  consolidation or other
      reorganization  50%  or  more  of the  voting  power  of  the  outstanding
      securities of each of (A) the  continuing or surviving  entity and (B) any
      direct or indirect  parent  corporation  of such  continuing  or surviving
      entity;  OR  (2)The  sale,   transfer  or  other  disposition  of  all  or
      substantially  all of the Company's  assets. A Change in Control shall not
      occur  if its  sole  purpose  is to  change  the  state  of the  Company's
      incorporation  or to  create  a  holding  company  that  will be  owned in
      substantially  the same  proportions by the persons who held the Company's
      securities immediately before such transaction.

            7. NON-SOLICITATION AND CONFIDENTIAL INFORMATION.

            (a)  NON-SOLICITATION.  During the period  commencing on the date of
      this Agreement and continuing until the first anniversary of the date when
      the Executive's  Employment terminated for any reason, the Executive shall
      not  directly or  indirectly,  personally  or through  others,  solicit or
      attempt  to  solicit  (on the  Executive's  own behalf or on behalf of any
      other  person or entity)  either (i) the  employment  of any  employee  or
      consultant of the Company or any of the  Company's  affiliates or (ii) the
      business of any current or recent  customer  or working  interest  partner
      with whom the  Company is engaged in one or more  documented  projects  or
      relationships.

            (b) CONFIDENTIAL  INFORMATION.  During Executive's Employment and at
      all times  thereafter,  Executive  shall not,  without  the prior  express
      written consent of the Board (except as may be required in connection with
      any  judicial or  administrative  proceeding  or inquiry)  disclose to any
      person,  other than an officer or  director  of the Company or a person to
      whom disclosure is reasonably  necessary or appropriate in connection with
      the  performance  by  Executive  of his  duties as CFO,  any  Confidential
      Information  (defined  below) with  respect to the business and affairs of
      the Company or any of its subsidiaries,  unless such disclosure is subject
      to a  confidentiality  agreement or the confidential  information has been
      previously disclosed through no fault of Executive. Executive acknowledges
      that he has  and  will  have  access  to  proprietary  information,  trade
      secrets,  and  confidential  material  (including  lists of key personnel,
      customers,  clients, vendors,  suppliers,  distributors or consultants) of
      the Company (the "CONFIDENTIAL  INFORMATION").  Executive agrees,  without
      limitation  in time or until such  information  shall become  public other
      than  by  the  Executive's  unauthorized   disclosure,   to  maintain  the
      confidentiality   of  the   Confidential   Information  and  refrain  from
      divulging,  disclosing, or otherwise using in any respect the Confidential
      Information  to the detriment of the Company and any of its  subsidiaries,
      affiliates, successors or assigns, or for any other purpose or no purpose,
      unless such disclosure is subject to a  confidentiality  agreement or such
      Confidential  Information  is  previously  disclosed  through  no fault of
      Executive  or unless  such  Confidential  Information  is  required  to be
      released by law.


                                     4 of 8
<PAGE>

            8. SUCCESSORS.

            (a) COMPANY'S  SUCCESSORS.  This Agreement shall be binding upon any
      successor  (whether  direct or indirect  and whether by  purchase,  lease,
      merger,  consolidation,  liquidation or otherwise) to all or substantially
      all of the Company's  business and/or assets.  For all purposes under this
      Agreement, the term "Company" shall include any successor to the Company's
      business and/or assets that becomes bound by this Agreement.

            (e)  EXECUTIVE'S  SUCCESSORS.  This  Agreement and all rights of the
      Executive  hereunder shall inure to the benefit of, and be enforceable by,
      the   Executive's   personal   or   legal   representatives,    executors,
      administrators, successors, heirs, distributees, devisees and legatees.

            9. ARBITRATION.

            (a) SCOPE OF ARBITRATION REQUIREMENT. The parties hereby waive their
      rights to a trial before a judge or jury and agree to  arbitrate  before a
      neutral  arbitrator  any and all claims or  disputes  arising  out of this
      Agreement  and  any  and  all  claims  arising  from  or  relating  to the
      Executive's Employment,  including (but not limited to) claims against any
      current or former  employee,  director or agent of the Company,  claims of
      wrongful termination, retaliation,  discrimination,  harassment, breach of
      contract,  breach  of  the  covenant  of  good  faith  and  fair  dealing,
      defamation,  invasion of privacy, fraud,  misrepresentation,  constructive
      discharge  or failure to provide a leave of absence,  or claims  regarding
      commissions, stock options or bonuses, infliction of emotional distress or
      unfair business practices.

            (b) PROCEDURE.  The arbitrator's decision shall be written and shall
      include  the  findings  of fact and law that  support  the  decision.  The
      arbitrator's  decision shall be final and binding on both parties,  except
      to the extent  applicable  law allows for judicial  review of  arbitration
      awards.  The  arbitrator  may award any remedies  that would  otherwise be
      available  to the parties if they were to bring the dispute in court.  The
      arbitration  shall be conducted in accordance  with the National Rules for
      the  Resolution  of  Employment  Disputes  of  the  American   Arbitration
      Association. The arbitration shall take place in Houston, Texas.

            (c) COSTS. The parties shall share the costs of arbitration equally.
      Both the  Company and the  Executive  shall be  responsible  for their own
      attorneys' fees.  Notwithstanding the forgoing,  the non-prevailing  party
      shall reimburse the prevailing party for arbitration  costs and reasonable
      attorney's fees.

            (d)  APPLICABILITY.  This  Section 9 shall not apply to (i) workers'
      compensation or unemployment  insurance  claims or (ii) claims  concerning
      the validity,  infringement or enforceability of any trade secret,  patent
      right,  copyright  or any other trade secret or  Confidential  Information
      held or sought by either the Executive or the Company.


                                     5 of 8
<PAGE>

            10. MISCELLANEOUS PROVISIONS.

            (a) NOTICE.  Notices and all other  communications  contemplated  by
      this  Agreement  shall be in writing and shall be deemed to have been duly
      given when  personally  delivered  or when  mailed by U.S.  registered  or
      certified mail, return receipt requested and postage prepaid.  In the case
      of the  Executive,  mailed  notices  shall be addressed to him at the home
      address that he most recently  communicated to the Company in writing.  In
      the  case  of the  Company,  mailed  notices  shall  be  addressed  to its
      corporate headquarters, and all notices shall be directed to the attention
      of its Secretary.


            (b) MODIFICATIONS AND WAIVERS.  No provision of this Agreement shall
      be  modified,  waived or  discharged  unless the  modification,  waiver or
      discharge  is agreed to in writing and signed by the  Executive  and by an
      authorized officer of the Company (other than the Executive). No waiver by
      either party of any breach of, or of  compliance  with,  any  condition or
      provision  of this  Agreement  by the other  party shall be  considered  a
      waiver of any other  condition or  provision  or of the same  condition or
      provision at another time.

            (c) WHOLE  AGREEMENT.  This Agreement  supersedes any previous offer
      letter or employment  agreement.  No other agreements,  representations or
      understandings  (whether  oral or written and whether  express or implied)
      which  are not  expressly  set forth in this  Agreement  have been made or
      entered into by either party with  respect to the subject  matter  hereof.
      This Agreement and the exhibits and agreements  referenced  herein contain
      the entire understanding of the parties with respect to the subject matter
      hereof.

            (d) WITHHOLDING  TAXES. All payments made under this Agreement shall
      be subject to reduction to reflect taxes or other  charges  required to be
      withheld by law.

            (e)  CHOICE  OF  LAW  AND  SEVERABILITY.  This  Agreement  shall  be
      interpreted  in  accordance  with the laws of the  State of Texas  (except
      their  provisions  governing  the choice of law). If any provision of this
      Agreement  becomes or is deemed invalid,  illegal or  unenforceable in any
      applicable  jurisdiction by reason of the scope, extent or duration of its
      coverage,  then such  provision  shall be deemed  amended  to the  minimum
      extent  necessary  to  conform  to  applicable  law so as to be valid  and
      enforceable or, if such provision cannot be so amended without  materially
      altering  the  intention  of the  parties,  then such  provision  shall be
      stricken and the remainder of this Agreement  shall continue in full force
      and effect.  If any provision of this Agreement is rendered illegal by any
      present or future statute, law, ordinance or regulation  (collectively the
      "Law"),  then such  provision  shall be  curtailed  or limited only to the
      minimum extent  necessary to bring such provision into compliance with the
      Law. All the other terms and provisions of this  Agreement  shall continue
      in full force and effect without impairment or limitation.

            (f) NO ASSIGNMENT.  This Agreement and all rights and obligations of
      the  Executive  hereunder  are  personal to the  Executive  and may not be
      transferred  or assigned  by the  Executive  at any time.  The Company may
      assign its rights  under this  Agreement  to any entity  that  assumes the
      Company's obligations hereunder in connection with any sale or transfer of
      all or a substantial portion of the Company's assets to such entity.

            (g)  COUNTERPARTS.  This  Agreement  may be  executed in two or more
      counterparts,  each of which shall be deemed an original, but all of which
      together shall constitute one and the same instrument.


                                     6 of 8
<PAGE>

            (h) INDEMNIFICATION. As an officer of the Company, Executive will be
      protected  by  the  indemnification  provisions  of  Article  VIII  of the
      Company's  Certificate  of  Incorporation.  In  addition,  the Company has
      purchased and currently  maintains  insurance  protecting its officers and
      directors  against  certain  losses  arising  out of actual or  threatened
      actions,  suits  or  proceedings  to  which  such  persons  may be made or
      threatened or be made parties ("D&O INSURANCE").  The Company covenants to
      continue  D&O  Insurance  coverage at current  levels for the  duration of
      Executive's service and for two (2) years thereafter.

      IN WITNESS  WHEREOF,  each of the parties  has  executed  this  employment
Agreement,  in the case of the Company by its duly authorized officer, as of the
day and year first above written.



                                    ----------------------------
                                    Sterling H. McDonald



                                    NATURAL GAS SYSTEMS, INC.



                                    ------------------------------
                                    By  Robert S. Herlin
                                    Title: CEO and President


                                     7 of 8
<PAGE>

                                    EXHIBIT A
                                STOCK OPTION PLAN





                                    EXHIBIT B
                             STOCK OPTION AGREEMENT


                                     8 of 8
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>8
<FILENAME>v16031_ex10-7.txt
<TEXT>

                            NATURAL GAS SYSTEMS, INC.
                                 2004 STOCK PLAN

                             STOCK OPTION AGREEMENT


Name of Optionee:                   Sterling H. McDonald

Optioned Shares:                    350,000 shares of common stock, $0.001 par
                                    value, of Natural Gas Systems, Inc.

Type of Option:                     INCENTIVE STOCK OPTION

Exercise Price Per Share:           $1.80

Option Grant Date:                  April 4, 2005

Vesting Commencement Date           April 4, 2005

Date Option Becomes Exercisable:    This Option may be exercised with respect to
                                    an 1/16TH of the total Optioned Shares
                                    subject to this option when the Optionee
                                    completes each three months of continuous
                                    employment starting from the Vesting
                                    Commencement Date. This option may become
                                    exercisable on an accelerated basis under
                                    Section 8 of this Stock Option Agreement.

Expiration Date of Option:          April 4, 2015 This Option expires earlier if
                                    the Optionee's employment terminates
                                    earlier, as provided in Section 11 of the
                                    Plan.

<PAGE>

         This Stock Option Agreement (this "Agreement") is executed and
delivered as of April 4, 2005 by and between Natural Gas Systems, Inc., a Nevada
corporation (the "Company") and the Sterling H. McDonald. The Optionee and the
Company hereby agree as follows:

1.       The Company, pursuant to the Natural Gas Systems, Inc. 2004 Stock Plan
         (the "Plan"), which is incorporated herein by reference, and subject to
         the terms and conditions thereof, hereby grants to the Optionee an
         option to purchase the Optioned Shares at the Exercise Price Per Share.

2.       The option granted hereby ("Option") shall be treated as an incentive
         stock option under the Internal Revenue Code.

3.       The Option granted hereby shall terminate, subject to the provisions of
         the Plan, no later than at the close of business on the Expiration
         Date.

4.       The Optionee shall comply with and be bound by all the terms and
         conditions contained in the Plan, as incorporated by reference herein.

5.       Options granted hereby shall not be transferable except by will or the
         laws of descent and distribution. During the lifetime of the Optionee,
         the Option may be exercised only by the Optionee, the guardian or legal
         representative of the Optionee.

6.       The obligation of the Company to sell and deliver any stock under this
         Option is specifically subject to all provisions of the Plan and all
         applicable laws, rules, regulations and governmental and stockholder
         approvals.

7.       Any notice by the Optionee to the Company hereunder shall be in writing
         and shall be deemed duly given only upon receipt thereof by the Company
         at its principal offices. Any notice by the Company to the Optionee
         shall be in writing and shall be deemed duly given if mailed to the
         Optionee at the address last specified to the Company by the Optionee.

8.       In addition to the change of control provisions specified under Section
         14(e) of the Plan and the other conditions set forth in this Agreement,
         the Company hereby agrees that all or part of this Option may be
         exercised prior to its expiration at the time or times set forth below:

                  (a) If the Company is subject to a Change in Control (as
         defined in below in this Agreement and not as defined in the Plan)
         before the Optionee's employment terminates, this Option shall become
         exercisable in full if and only if (i) this Option does not remain
         outstanding following the Change in Control; (ii) this Option is not
         assumed by the surviving corporation or its parent; (iii) the surviving
         corporation or its parent does not substitute an option with
         substantially the same terms for this Option; OR (iv) the full value of
         the vested shares under this Option is not settled in cash or cash
         equivalents.

                  (b) If the Option is not exercisable in full under Paragraph
         (a) above, AND if the Optionee is subject to an Involuntary Termination
         (defined below) within 12 months after the Change in Control, then this
         Option shall become exercisable in full. However, in the case of an

                                      -1-
<PAGE>

         employee incentive stock option described in Section 422(b) of the
         Code, the acceleration of exercisability shall not occur without the
         Optionee's written consent.

                  (c) If the Option is not exercisable in full under Paragraph
         (a) above, AND if the Company is subject to a Change of Control, then
         fifty percent (50%) of the remaining options shall become exercisable
         in full, and the remaining options shall become exercisable at the rate
         set forth herein, reduced by the accelerated Optioned Shares. All other
         terms and conditions shall remain unchanged.

                  (d) Definitions:

                           (i) "Change in Control" shall mean: (1)The
                  consummation of a merger or consolidation of the Company with
                  or into another entity or any other corporate reorganization,
                  if persons who were not controlling stockholders of the
                  Company immediately prior to such merger, consolidation or
                  other reorganization own immediately after such merger,
                  consolidation or other reorganization 50% or more of the
                  voting power of the outstanding securities of each of (A) the
                  continuing or surviving entity and (B) any direct or indirect
                  parent corporation of such continuing or surviving entity; OR
                  (2) The sale, transfer or other disposition of all or
                  substantially all of the Company's assets.

                  A transaction shall not constitute a Change in Control if its
                  sole purpose is to change the state of the Company's
                  incorporation or to create a holding company that will be
                  owned in substantially the same proportions by the persons who
                  held the Company's securities immediately before such
                  transaction.

                           (ii) "Involuntary Termination" shall mean the
         termination of the Optionee's employment by reason of: (1) The
         involuntary discharge of the Optionee by the Company for reasons other
         than Cause (as defined in Optionee's employment agreement with the
         Company, of even date herewith); or (2) The voluntary resignation of
         the Optionee following a reduction in the Optionee's base salary, a
         substantial reduction of the responsibilities, authority or scope of
         work of Executive, or receipt of notice that the Optionee's principal
         workplace will be relocated more than 20 miles.

9. The validity and construction of this Agreement shall be governed by the laws
of the State of Nevada.

THIS AGREEMENT IS MADE UNDER AND SUBJECT TO THE PROVISIONS OF THE PLAN, AND ALL
OF THE PROVISIONS OF THE PLAN ARE ALSO PROVISIONS OF THIS AGREEMENT. IF THERE IS
A DIFFERENCE OR CONFLICT BETWEEN THE PROVISIONS OF THIS AGREEMENT AND THE
PROVISIONS OF THE PLAN, THE PROVISIONS OF THE PLAN WILL GOVERN; PROVIDED,
HOWEVER, THE THE ACCELERATION OF THE OPTIONED SHARES DESCRIBED IN SECTION 8
ABOVE SHALL GOVERN IN THE EVENT OF ANY CONFLICT WITH THE PLAN. BY SIGNING THIS
AGREEMENT, THE OPTIONEE ACCEPTS AND AGREES TO ALL OF THE FOREGOING TERMS AND
PROVISIONS AND TO ALL OF THE TERMS AND PROVISIONS OF THE PLAN INCORPORATED
HEREIN BY REFERENCE AND CONFIRMS THAT HE OR SHE HAS RECEIVED A COPY OF THE PLAN.


                                      -2-

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized representative and the Optionee has hereunto set
his hand as of the date here above first written.

                                             NATURAL GAS SYSTEMS, INC.:


                                             By:
                                                 -----------------------------
                                                  Name:   Robert S. Herlin
                                                  Title:  President


                                             ---------------------------------
                                             Optionee:    Sterling H. McDonald


                                      -3-
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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