Exhibit 10.71
SECURITY AGREEMENT
dated as of November 19, 2007
of
Rio Vista Penny LLC, each other Grantor listed on the signature pages hereof and
each other
Grantor that otherwise may become a party hereto
in favor of
TCW Asset Management Company, as Administrative Agent
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TABLE OF CONTENTS

              Page          
ARTICLE I Definitions and References
    1  
Section 1.1. Definitions in Note Purchase Agreement
    1  
Section 1.2. Definitions in the UCC, etc.
    1  
Section 1.3. Definitions in this Agreement
    2  
Section 1.4. Rules of Construction; References and Titles
    3    
ARTICLE II Security Interest
    4  
Section 2.1. Grant of Security Interest
    4  
Section 2.2. Secured Obligations Secured
    5    
ARTICLE III Representations and Warranties
    6  
Section 3.1. Representations and Warranties
    6    
ARTICLE IV Covenants
    9  
Section 4.1. General Covenants Applicable to Collateral
    9  
Section 4.2. Covenants for Specified Types of Collateral
    10    
ARTICLE V Voting and Distribution Rights in Respect Of Pledged Equity
    12  
Section 5.1. Voting Rights
    12  
Section 5.2. Dividend Rights While No Event of Default Exists
    12  
Section 5.3. Actions by Secured Party
    13  
Section 5.4. Rights While an Event of Default Exists
    13    
ARTICLE VI Remedies, Powers and Authorizations
    13  
Section 6.1. Normal Provisions Concerning the Collateral
    13  
Section 6.2. Event of Default Remedies
    15  
Section 6.3. Application of Proceeds
    17  
Section 6.4. Deficiency
    18  
Section 6.5. Private Sales of Investment Property and Other Pledged Equity
    18  
Section 6.6. Indemnity and Expenses
    19  
Section 6.7. Non-Judicial Remedies
    19  
Section 6.8. Limitation on Duty of the Secured Party in Respect of Collateral
    19  
Section 6.9. Appointment of Other Agents
    20    
ARTICLE VII Miscellaneous
    20  
Section 7.1. Notices
    20  

 

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              Page          
Section 7.2. Amendments and Waivers
    20  
Section 7.3. Additional Grantors
    20  
Section 7.4. Preservation of Rights
    21  
Section 7.5. Severability
    21  
Section 7.6. Survival
    21  
Section 7.7. Binding Effect and Assignment
    21  
Section 7.8. Release of Collateral; Termination
    21  
Section 7.9. Limitation on Interest
    22  
Section 7.10. Governing Law
    22  
Section 7.11. Final Agreement
    22  
Section 7.12. Counterparts; Facsimile
    22  
Section 7.13. Acceptance by the Secured Party
    22  
Section 7.14. Jurisdiction, Etc.
    23  
Section 7.15. Restatement
    23  

     
Schedules
   
Schedule 1
  Address for Notices and Jurisdiction of Organization
Schedule 2
  Scheduled Collateral
 
   
Exhibits
   
Exhibit A
  Form of Grantor Accession Agreement

 

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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this “Agreement”) is made as of November 19, 2007, by
Rio Vista Penny LLC and each other Grantor listed on the signature pages hereof
and that may become parties hereto pursuant to Section 7.3 in favor of TCW Asset
Management Company, as administrative agent under the Note Purchase Agreement
described below (the “Secured Party”), for the benefit of the Beneficiaries.
RECITALS
A. Company, the Secured Party, and certain holders (collectively, the “Holders”)
are parties to that certain Note Purchase Agreement dated as of November 19,
2007 (as heretofore or hereafter amended, supplemented or restated from time to
time, the “Note Purchase Agreement”).
B. Pursuant to the Note Purchase Agreement, the Holders have agreed to make
senior secured term loans to Company.
C. In order to induce the Beneficiaries to extend such credit, each Grantor has
agreed to grant to the Secured Party, for the benefit of the Beneficiaries, a
security interest in the Collateral.
NOW, THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt and sufficiency of which the parties acknowledge,
each Grantor agrees as follows:
ARTICLE I
Definitions and References
Section 1.1. Definitions in Note Purchase Agreement. Capitalized terms used
herein and not otherwise defined have the respective meanings specified in the
Note Purchase Agreement.
Section 1.2. Definitions in the UCC, etc. The following terms have the meanings
specified in the UCC:
(a) Account.
(b) Chattel Paper.
(c) Commercial Tort Claim.
(d) Deposit Account.
(e) Document.
(f) Electronic Chattel Paper
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(g) Equipment.
(h) General Intangible.
(i) Instrument.
(j) Inventory.
(k) Investment Property.
(l) Letter of Credit Right.
(m) Payment Intangible.
(n) Proceeds.
(o) Securities Account.
(p) Security.
(q) Uncertificated Security.
Other terms used in this Agreement that are defined in the UCC and not otherwise
defined herein or in the Note Purchase Agreement have the meanings specified in
the UCC, unless the context otherwise requires.
Section 1.3. Definitions in this Agreement. The following terms have the
following meanings:
“Beneficiaries” means the Secured Party, the Holders, and any other Person to
which any Secured Obligation is owed.
“Collateral” means, with respect to any Grantor, all property described in
Section 2.1 in which such Grantor has any right, title or interest. References
to Collateral herein with respect to a Grantor are intended to refer to
Collateral in which such Grantor has any right, title or interest and not to
Collateral in which any other Grantor has any right, title or interest.
“Grantor” means each Person granting a security interest in any Collateral
pursuant to this Agreement. References to “Grantor” in this Agreement are
intended to refer to each such Person as if such Person were the only grantor
pursuant to this Agreement, except:
(a) that references to “any Grantor” are meant to refer to each Person that is a
Grantor,
(b) that references to “the Grantors” are meant to refer to collectively to all
Persons that are Grantors and
(c) as otherwise may be specifically set forth herein.
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“Holders” has the meaning specified in Recital A.
“Note Purchase Agreement” has the meaning specified in Recital A.
“Pledged Debt” means all Investment Property and General Intangibles
constituting or pertaining to Indebtedness owing by any Person to Grantor.
“Pledged Equity” means all Investment Property and General Intangibles
constituting or pertaining to Equity in Persons.
“Secured Obligations” means all Obligations of all Restricted Persons now or
hereafter arising under the Note Documents.
“Secured Party” has the meaning specified in the preamble.
“Securities Act” means the Securities Act of 1933.
“UCC” means the Uniform Commercial Code in effect in the State of New York from
time to time; provided that, if perfection or the effect of perfection or
non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, “UCC” means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the provisions
hereof relating to such perfection, effect of perfection or non-perfection or
priority.
Section 1.4. Rules of Construction; References and Titles. The definitions of
terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be construed to have the same meaning and
effect as the word “shall.” Unless the context requires otherwise:
(a) Any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or
other document as from time to time amended, restated, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein).
(b) Unless otherwise specified, any reference herein to any Person shall be
construed to include such Person’s successors and assigns.
(c) The words “herein,” “hereof” and “hereunder,” and words of similar import,
shall be construed to refer to this Agreement in its entirety and not to any
particular provision hereof.
(d) All references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement.
(e) Any reference to any Law herein shall, unless otherwise specified, refer to
such law as amended, modified or supplemented from time to time.
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(f) The words “asset” and “property” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.
(g) Except as specified otherwise, references to any document, instrument, or
agreement shall include:
(i) all exhibits, schedules, and other attachments thereto, and
(ii) all documents, instruments, or agreements issued or executed in replacement
thereof.
(h) A title appearing at the beginning of any subdivision is for convenience
only, does not constitute any part of such subdivision and shall be disregarded
in construing the language contained in such subdivision.
(i) The phrases “this Section” and “this subsection” and similar phrases refer
only to the section or subsection hereof in which such phrases occur.
(j) The word “or” is not exclusive, and the word “including” (in all of its
grammatical variations) means “including without limitation”.
ARTICLE II
Security Interest
Section 2.1. Grant of Security Interest. As collateral security for the payment
and performance of all Secured Obligations, Grantor pledges, collaterally
assigns and grants to the Secured Party for the benefit of the Beneficiaries a
continuing security interest in all right, title and interest of Grantor in and
to all of the following property, whether now owned or existing or hereafter
acquired or arising, regardless of where located and howsoever Grantor’s
interests therein arise, whether by ownership, security interest, claim or
otherwise:
(a) Accounts.
(b) All Equity listed on Schedule 2, whether constituting General Intangibles or
Investment Property.
(c) General Intangibles, including all Payment Intangibles.
(d) Documents.
(e) Instruments.
(f) Inventory.
(g) Equipment, including, all parts thereof, all accessions thereto, and all
replacements therefor.
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(h) Deposit Accounts, including all Deposit Accounts listed on Schedule 2.
(i) Investment Property, and all dividends, distributions, return of capital,
interest, distributions, value, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any investment property and all subscription warrants, rights or
options issued thereon or with respect thereto, including Pledged Debt.
(j) Commercial Tort Claims that are listed opposite Grantor’s name on
Schedule 2, as in effect on the date hereof or as hereafter modified pursuant to
Section 4.2.
(k) Letter of Credit Rights.
(1) Chattel Paper.
(m) Books and records (including customer lists, marketing information, credit
files, price lists, operating records, vendor and supplier price lists, land and
title records, geological and geophysical records and data, reserve engineering
records and data, computer software, computer hardware, computer disks and tapes
and other storage media, printouts and other materials and records) pertaining
to any Collateral or to any oil, gas or mineral properties and interests.
(n) Money and property of any kind from time to time in the possession or under
the control of any Beneficiary.
(o) Proceeds of the foregoing.
Notwithstanding the foregoing, this Section 2.1 does not grant a security
interest in any property to the extent that such grant is prohibited under any
agreement relating to such property and the violation of such prohibition would
cause Grantor to lose its interest in or rights with respect to such property,
except to the extent that Part 5 of Article 9 of the UCC would render such
prohibition ineffective.
Section 2.2. Secured Obligations Secured.
(a) The security interest created hereby in the Collateral secures the payment
and performance of all Secured Obligations.
(b) Without limiting the generality of the foregoing, this Agreement secures, as
to Grantor, the payment of all amounts that constitute part of the Secured
Obligations and would be owed by any Restricted Person to any Beneficiary under
the Note Documents but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving a Restricted Person.
(c) Notwithstanding any other provision of this Agreement, with respect to any
Grantor, the liability of such Grantor hereunder and under each other Note
Document to which it is a party shall be limited to the maximum liability that
such Grantor may incur without rendering this Agreement and such other Note
Documents subject to avoidance under Section 548 of the United States Bankruptcy
Code or any comparable provision of any applicable state or federal law. This
subsection (c) shall not apply to Company, or Rio Vista ECO LLC.
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ARTICLE III
Representations and Warranties
Section 3.1. Representations and Warranties. Grantor represents and warrants to
the Beneficiaries as follows:
(a) If Grantor is not Company, each representation and warranty made by Company
with respect to Grantor in any other Note Document is correct.
(b) Grantor has and will have at all times the right, power and authority to
grant to the Secured Party as provided herein a security interest in the
Collateral, free and clear of any Lien. This Agreement creates a valid and
binding security interest in favor of the Secured Party in the Collateral,
securing the Secured Obligations.
(c) None of the Collateral in which Grantor has granted a security interest that
constitutes goods:
(i) is covered by any Document, except for Documents that are subject hereto and
have been delivered to the Secured Party;
(ii) is subject to any landlord’s lien or similar Lien, except for Permitted
Liens; or
(iii) is in the possession of any Person other than Grantor or the Secured
Party, except for Collateral being transported in the ordinary course of
business and Collateral subject to a joint operating agreement that is in the
possession of the operator under the agreement.
(d) With respect to Pledged Equity:
(i) All units and other securities constituting Pledged Equity have been duly
authorized and validly issued, are fully paid and non-assessable, and were not
issued in violation of the preemptive rights of any Person or of any agreement
by which Grantor or any issuer of Pledged Equity is bound.
(ii) The Pledged Equity listed on Schedule 2 constitutes all equity interests
owned by Grantor in its Subsidiaries. All endorsements, deliveries,
notifications, and other actions required by Section 4.2(d)(i) and (ii) have
been taken with respect to such Pledged Equity and all other Pledged Equity.
(iii) All documentary, stamp or other taxes or fees owing in connection with the
issuance, transfer or pledge of any Pledged Equity (or rights in respect
thereof) have been paid.
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(iv) No restriction or condition exists with respect to the transfer, voting or
capital of any Pledged Equity.
(v) Except as disclosed on Schedule 2, no Grantor or issuer of Pledged Equity
has any outstanding subscription agreement, option, warrant or convertible
security outstanding or any other right outstanding pursuant to which any Person
would be entitled to have issued to it units of ownership interest in any issuer
of Pledged Equity.
(vi) Grantor has taken or concurrently herewith is taking all actions necessary
to perfect the Secured Party’s security interest in Pledged Equity, including
any registration, filing or notice that may be necessary or advisable under
Article 8 of the Uniform Commercial Code as in effect in the jurisdiction in
which any issuer of such Pledged Equity was organized, and no other Person has
any such registration, filing or notice in effect.
(vii) Schedule 2 correctly and completely reflects all Pledged Equity owned by
Grantor as of the date hereof, and Schedule 2 accurately sets forth the
percentage of each class or series of Equity issued by the issuer of such
Pledged Equity that is held by Grantor.
(viii) Schedule 2 sets forth all agreements, including all operating,
management, voting and shareholder agreements to which Grantor is a party or by
which it is bound and that relate to Pledged Equity and a correct and complete
copy of each such Agreement has been delivered to counsel for the Secured Party.
(ix) No issuer of Pledged Equity has made any call for capital that has not been
fully paid by Grantor and each other holder of Equity of such issuer.
(x) Neither Grantor nor any other holder of equity issued by any issuer of
Pledged Equity is in default under any agreement relating to Pledged Equity.
(xi) Neither the execution, delivery or performance of this Agreement nor the
exercise of any right or remedy of the Secured Party hereunder will cause a
default under any agreement in respect of Pledged Equity or otherwise adversely
affect or diminish any Pledged Equity.
(xii) Grantor’s rights under any agreement in respect of Pledged Equity are
enforceable in accordance with their terms, except as such enforcement may be
limited by bankruptcy, insolvency or similar laws of general application
relating to the enforcement of creditors’ rights.
(e) To the full extent requested by the Secured Party, Grantor has delivered to
the Secured Party all Instruments and other writings evidencing Pledged Debt in
existence on the date hereof, in suitable form for transfer by delivery with any
necessary endorsement or accompanied by fully executed instruments of transfer
or assignment in blank.
(f) Grantor has no Deposit Account as of the date hereof other than those listed
on Schedule 2.
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(g) Grantor has no Securities Account as of the date hereof.
(h) Grantor is the beneficiary of no Letter of Credit Right as of the date
hereof other than those listed on Schedule 2.
(i) Grantor is not aware of any Commercial Tort Claim that it may have other
than those listed on Schedule 2.
(j) Grantor is an entity of the type specified on Schedule 1 (or Schedule 1 to
any security agreement supplement delivered by it pursuant to Section 7.3)
opposite its name and is organized under the laws of the jurisdiction specified
in such Schedule opposite its name, which is Grantor’s location pursuant to the
UCC. Grantor has not conducted business under any name except the name in which
it has executed this Agreement, which is the exact name that appears in
Grantor’s Organizational Documents. Grantor’s organizational identification
number, if any, is set forth in Schedule 1.
(k) Grantor has good and marketable title to the Collateral, free and clear of
all Liens, except for the security interest created by this Agreement and any
Permitted Liens. No effective financing statement or other registration or
instrument similar in effect covering any Collateral is on file in any recording
office except any that have been filed in favor of the Secured Party relating to
this Agreement.
(1) There is no condition precedent to the effectiveness of this Agreement that
has not been satisfied or waived.
(m) Grantor, if other than Company, has, independently and without reliance upon
any Beneficiary and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Note Document to which it is or is to be a party, and
Grantor, if other than Company, has established adequate means of obtaining from
each other Restricted Person on a continuing basis information pertaining to,
and is now and on a continuing basis will be completely familiar with, the
business, condition (financial or otherwise), operations, performance,
properties and prospects of each other Restricted Person.
(n) The direct or indirect value of the consideration received and to be
received by Grantor in connection herewith is reasonably worth at least as much
as the liability of Grantor hereunder and under each other Note Document to
which Grantor is a party, and the incurrence of such liability in return for
such consideration may reasonably be expected to benefit Grantor, directly or
indirectly. Grantor is not “insolvent” on the date hereof (that is, the sum of
Grantor’s absolute and contingent liabilities, including its Obligations
hereunder and under each other Note Document to which Grantor is a party, does
not exceed the fair market value of Grantor’s assets). Grantor’s capital is
adequate for the businesses in which Grantor is engaged and intends to be
engaged. Grantor has not incurred (whether hereby or otherwise), nor does
Grantor intend to incur or believe that it will incur, debts that will be beyond
its ability to pay as such debts mature.
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All balance sheets, earning statements, financial data and other information
concerning Grantor that have been furnished to Agent and each Holder to induce
it to accept this Agreement (or otherwise furnished to Agent and each Holder in
connection with the transactions contemplated hereby or associated herewith)
fairly represent the financial condition of Grantor as of the dates and the
results of Grantor’s operations for the periods for which the same are
furnished. None of such balance sheets, earnings and cash flow statements,
financial data and other information contains any untrue statement of a material
fact or omits to state any material fact that is necessary to make any
statements contained therein not misleading.
ARTICLE IV
Covenants
Section 4.1. General Covenants Applicable to Collateral. Grantor will at all
times perform and observe the covenants contained in the Note Purchase Agreement
that are applicable to Grantor (whether made by Grantor or made by Company with
respect to Grantor) for so long as any Secured Obligation is outstanding. In
addition, Grantor will, so long as this Agreement shall be in effect, perform
and observe the following:
(a) Without limitation of any other covenant herein, Grantor shall not cause or
permit any change in its name, identity or organizational structure, or any
change to its jurisdiction of organization, unless Grantor shall have first:
(i) notified the Secured Party of such change at least 30 days prior to the
effective date of such change (or such shorter notice as the Secured Party may
approve),
(ii) taken all action requested by the Secured Party (under the following
subsection (b) or otherwise) for the purpose of further confirming and
protecting the Secured Party’s security interest and rights under this Agreement
and the perfection and priority thereof, and
(iii) if requested by the Secured Party, provided to the Secured Party a legal
opinion to the Secured Party’s satisfaction confirming that such change shall
not adversely affect the Secured Party’s security interest and rights under this
Agreement or the perfection or priority of such security interest.
In any notice delivered pursuant to this subsection, Grantor will expressly
state that the notice is required by this Agreement and contains facts that may
require additional filings of financing statements or other notices for the
purposes of continuing perfection of the Secured Party’s security interest in
the Collateral.
(b) Grantor will, at its expense and as from time to time requested by the
Secured Party, promptly execute and deliver all further instruments, agreements,
filings and registrations, and take all further action, in order:
(i) to confirm and validate this Agreement and the Secured Party’s rights and
remedies hereunder;
(ii) to correct any error or omission in the description herein of the Secured
Obligations or the Collateral or in any other provision hereof;
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(iii) to perfect, register and protect the security interest and rights created
or purported to be created hereby or to maintain or upgrade in rank the priority
of such security interests and rights;
(iv) to enable the Secured Party to exercise and enforce its rights and remedies
hereunder; or
(v) otherwise to give the Secured Party the full benefits of the rights and
remedies described in or granted under this Agreement.
In connection with the foregoing, Grantor will, whenever requested by the
Secured Party:
(A) execute and file any financing statement, continuation statement or other
filing or registration relating to the Secured Party’s security interest and
rights hereunder, and any amendment thereto,
(B) mark its books and records relating to any Collateral to reflect that such
Collateral is subject to this Agreement and the security interests hereunder,
and
(C) whenever requested by Secured Party from time to time, Grantor will obtain
from any account debtor or other obligor in respect of any property included in
the Collateral an acknowledgment by such account debtor or obligor that such
property is subject to this Agreement.
(c) Grantor shall not take any action that would, or fail to take any action if
such failure would, impair the enforceability, perfection or priority of the
Secured Party’s security interest in any Collateral.
Section 4.2. Covenants for Specified Types of Collateral. For so long as any
Secured Obligation is outstanding:
(a) Grantor will, promptly upon request by the Secured Party, deliver to the
Secured Party all Documents and Instruments included in the Collateral. All such
Documents and Instruments shall be held by or on behalf of the Secured Party
pursuant hereto and shall be delivered in suitable form for transfer by delivery
with any necessary endorsement or shall be accompanied by fully executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Secured Party.
(b) If at any time there exists Collateral in which a security interest may be
perfected by a notation on the certificate of title or similar evidence of
ownership of such Collateral, Grantor will, promptly upon request by the Secured
Party, deliver to the Secured Party all certificates of title and similar
evidences of ownership, all applications therefor, and all other documents that
are necessary or appropriate in order to register the Secured Party’s security
interest in such Collateral on such certificate of title or other evidence of
ownership or in otherwise perfecting the Secured Party’s security interest in
such Collateral.
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(c) For each Deposit Account that Grantor at any time maintains, Grantor will,
pursuant to an agreement in form and substance satisfactory to the Secured
Party, at the Secured Party’s option, cause the depository bank that maintains
such Deposit Account to agree to comply at any time with instructions from the
Secured Party to such depository bank directing the disposition of funds from
time to time credited to such Deposit Account, without further consent of
Grantor, or take such other action as the Secured Party may approve in order to
perfect the Secured Party’s security interest in such Deposit Account. This
subsection shall not apply to any Deposit Account:
(i) for which the Secured Party is the depository bank, or
(ii) that is specially and exclusively used for payroll, payroll taxes, and
other employee wage and benefit payments to or for the benefit of Grantor’s
salaried employees.
(d) (i) If Grantor shall at any time hold or acquire any certificated security,
Grantor will forthwith endorse, assign, and deliver the same to the Secured
Party, accompanied by such instruments of transfer or assignment duly executed
in blank as the Secured Party may from time to time specify.
(ii) If any security now or hereafter acquired by Grantor is uncertificated and
is issued to Grantor or its nominee directly by the issuer thereof, Grantor will
immediately notify the Secured Party of such issuance and, pursuant to an
agreement in form and substance satisfactory to the Secured Party, cause the
issuer thereof to agree to comply with instructions from the Secured Party as to
such security, without further consent of Grantor or such nominee, or take such
other action as the Secured Party may approve in order to perfect the Secured
Party’s security interest in such security.
(iii) Grantor shall not permit any Pledged Equity to be held by a securities
intermediary or held in a Securities Account. Grantor shall not permit any
Pledged Equity that is an equity interest in a limited liability company or a
limited partnership and that is a General Intangible to become Investment
Property.
(iv) Grantor shall not:
(A) adjust, settle, compromise, amend or modify any right in respect of any
Pledged Equity or any agreement relating thereto;
(B) permit the creation of any additional equity interest in any issuer of
Pledged Equity, unless immediately upon creation the same is pledged to the
Secured Party pursuant hereto to the extent necessary to give the Secured Party
a first-priority security interest in such Pledged Equity after such creation
that is in the aggregate at least the same percentage of such Pledged Equity as
was subject hereto before such issue, whether such additional interest is
presently vested or will vest upon the payment of money or the occurrence or
nonoccurrence of any other condition; or
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(C) enter into any agreement, other than the Note Documents, creating, or
otherwise permit to exist, any restriction or condition upon the transfer or
exercise of any rights in respect of any Pledged Equity, including any
restriction or condition upon the transfer, voting or control of any Pledged
Equity.
(e) If Grantor is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Grantor, Grantor shall promptly notify the Secured
Party thereof and, at the request and option of the Secured Party, pursuant to
an agreement in form and substance satisfactory to the Secured Party, either:
(i) arrange for the issuer and any confirmer of such letter of credit to consent
to an assignment to the Secured Party of the proceeds of any drawing under such
letter of credit; or
(ii) arrange for the Secured Party to become the transferee beneficiary of such
letter of credit.
(f) If Grantor shall at any time after the date hereof have a Commercial Tort
Claim, Grantor shall promptly notify the Secured Party in writing of the details
thereof and execute and deliver to the Secured Party a supplement to Schedule 2
listing such Commercial Tort Claim, which supplement shall take effect without
further action on the part of any party hereto or beneficiary hereof and shall
make such Commercial Tort Claim collateral security subject to this Agreement.
ARTICLE V
Voting and Distribution Rights in Respect Of Pledged Equity
Section 5.1. Voting Rights. Grantor shall be entitled to exercise all voting and
other consensual rights pertaining to the Pledged Equity or any part thereof for
any purpose; provided that Grantor shall not exercise or refrain from exercising
any such right if such action would have a material adverse effect on the value
of any Pledged Equity or on the Secured Party’s security interest or the value
thereof.
Section 5.2. Dividend Rights While No Event of Default Exists. Grantor shall be
entitled to receive and retain all dividends, interest and other distributions
paid in respect of the Pledged Equity if and to the extent that the payment
thereof is not otherwise prohibited by the Note Documents; provided that:
(a) all dividends, interest and other distributions paid or payable other than
in cash in respect of, and instruments and other property received, receivable
or otherwise distributed in respect of, or in exchange for, any Pledged Equity;
(b) all dividends and other distributions paid or payable in cash in respect of
any Pledged Equity in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid in surplus; and
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(c) all cash paid, payable or otherwise distributed in respect of principal of,
or in redemption of, or in exchange for, any Pledged Equity,
shall be, and shall be forthwith delivered to the Secured Party to hold as,
Collateral and shall, if received by Grantor, be received in trust for the
benefit of the Secured Party, be segregated from the other property or funds of
Grantor and be forthwith delivered to the Secured Party as Pledged Equity in the
same form as so received (with any necessary indorsement).
Section 5.3. Actions by Secured Party. The Secured Party will execute and
deliver (or cause to be executed and delivered) to Grantor all such instruments
as Grantor may reasonably request for the purpose of enabling Grantor to receive
the benefits Section 5.1 above and to receive the dividends or interest payments
that it is authorized to receive and retain pursuant to Section 5.2 above.
Section 5.4. Rights While an Event of Default Exists. Upon the occurrence and
during the continuance of an Event of Default:
(a) All rights of Grantor to receive the dividends, interest and other
distributions that it would otherwise be authorized to receive and retain
pursuant to Section 5.2 shall automatically cease, and all such rights shall
thereupon become vested in the Secured Party, which shall thereupon have the
sole right to receive and hold as Pledged Equity such dividends, interest and
other distributions.
(b) All dividends, interest and other distributions that are received by Grantor
contrary to subsection (a) above shall be received in trust for the benefit of
the Secured Party, shall be segregated from other funds of Grantor, and shall be
forthwith paid over to the Secured Party as Pledged Equity in the same form as
so received (with any necessary indorsement).
ARTICLE VI
Remedies, Powers and Authorizations
Section 6.1. Normal Provisions Concerning the Collateral.
(a) Grantor irrevocably authorizes the Secured Party at any time and from time
to time to file, without the signature of Grantor, in any jurisdiction any
amendments to existing financing statements and any initial financing statements
and amendments thereto that:
(i) indicate the Collateral as being:
(A) “all assets of Grantor and all proceeds thereof, and all rights and
privileges with respect thereto” or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within the scope
of Article 9 of the UCC or the granting clause of this Agreement; or
(B) of an equal or lesser scope or with greater detail;
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(ii) contain any other information required for the sufficiency or filing office
acceptance of any financing statement or amendment, including whether Grantor is
an organization, the type of organization and any organization identification
number issued to Grantor; and
(iii) properly effectuate the transactions described in the Note Documents, as
determined by the Secured Party in its discretion.
Grantor will furnish any such information to the Secured Party promptly upon
request. A carbon, photographic or other reproduction of this Agreement or any
financing statement describing any Collateral is sufficient as a financing
statement and may be filed in any jurisdiction by the Secured Party. Grantor
ratifies and approves all financing statements heretofore filed by or on behalf
of the Secured Party in any jurisdiction in connection with the transactions
contemplated hereby.
(b) Grantor appoints the Secured Party as Grantor’s attorney in fact and proxy,
with full authority in the place and stead of Grantor and in the name of Grantor
or otherwise, from time to time in the Secured Party’s discretion, to take any
action and to execute any instrument that the Secured Party may deem necessary
or advisable to accomplish the purposes of this Agreement including any action
or instrument:
(i) to obtain and adjust any insurance required to be paid to the Secured Party
pursuant hereto;
(ii) to ask for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any Collateral;
(iii) to receive, indorse and collect any drafts or other Instruments or
Documents;
(iv) to enforce any obligations included in the Collateral; and
(v) to file any claims or take any action or institute any proceedings that the
Secured Party may deem necessary or desirable for the collection of any
Collateral or otherwise to enforce the rights of Grantor or the Secured Party
with respect to any Collateral.
Such power of attorney and proxy are coupled with an interest, are irrevocable,
and are to be used by the Secured Party for the sole benefit of the
Beneficiaries.
(c) If Grantor fails to perform any agreement or obligation contained herein,
the Secured Party may, but shall have no obligation to, itself perform, or cause
performance of, such agreement or obligation, and the expenses of the Secured
Party incurred in connection therewith shall be payable by Grantor under
Section 6.6.
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(d) If any Collateral in which Grantor has granted a security interest hereunder
is at any time in the possession or control of any warehouseman, bailee or any
of Grantor’s agents, Grantor shall, upon the request of the Secured Party,
notify such warehouseman, bailee or agent of the Secured Party’s rights
hereunder and instruct such Person to hold all such Collateral for the Secured
Party’s account subject to the Secured Party’s instructions. No such request by
the Secured Party shall be deemed a waiver of any provision hereof that was
otherwise violated by such Collateral being held by such Person prior to such
instructions by Grantor.
(e) The Secured Party shall have the right, at any time in its discretion and
without notice to Grantor, to transfer to or to register in the name of the
Secured Party or any of its nominees any Investment Property or other Pledged
Equity, subject only to the voting rights retained pursuant to Section 5.1.
(f) Anything herein to the contrary notwithstanding:
(i) Grantor shall remain liable to perform all duties and obligations under the
agreements included in the Collateral to the same extent as if this Agreement
had not been executed.
(ii) The exercise by the Secured Party of any right hereunder shall not release
Grantor from any duty or obligation under any agreement included in the
Collateral.
(iii) No Beneficiary shall have any obligation or liability under the agreements
included in the Collateral by reason of this Agreement or any other Note
Document, nor shall any Beneficiary be obligated to perform any duty or
obligation of Grantor thereunder or take any action to collect or enforce any
claim for payment assigned hereunder.
Section 6.2. Event of Default Remedies. If an Event of Default shall have
occurred and be continuing, the Secured Party may from time to time in its
discretion, without limitation and without notice except as expressly provided
below:
(a) Exercise in respect of the Collateral, in addition to any other right and
remedy provided for herein, under the other Note Documents, or otherwise
available to it, all the rights and remedies of a secured party on default under
the UCC (whether or not the UCC applies to the affected Collateral) and any
other applicable law.
(b) Require Grantor to, and Grantor will at its expense and upon request of the
Secured Party forthwith, assemble all or part of the Collateral as directed by
the Secured Party and make it (together with all books, records and information
of Grantor relating thereto) available to the Secured Party at a place to be
designated by the Secured Party that is reasonably convenient to both parties.
(c) Prior to the disposition of any Collateral:
(i) to the extent permitted by applicable Law, enter, with or without process of
law and without breach of the peace, any premises where any Collateral is or may
be located, and without charge or liability to the Secured Party seize and
remove such Collateral from such premises;
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(ii) have access to and use Company’s books, records, and information relating
to the Collateral; and
(iii) store or transfer any Collateral without charge in or by means of any
storage or transportation facility owned or leased by Grantor, process, repair
or recondition any Collateral or otherwise prepare it for disposition in any
manner and to the extent the Secured Party deems appropriate and, in connection
with such preparation and disposition, use without charge any copyright,
trademark, trade name, patent or technical process used by Grantor.
(d) Reduce its claim to judgment or foreclose or otherwise enforce, in whole or
in part, the security interest created hereby by any available judicial
procedure.
(e) Dispose of, at its office, on the premises of Grantor or elsewhere, any
Collateral, as a unit or in parcels, by public or private proceedings, and by
way of one or more contracts (but that the sale of any Collateral shall not
exhaust the Secured Party’s power of sale, and sales may be made from time to
time, and at any time, until all of the Collateral has been sold or until the
Secured Obligations have been paid and performed in full), and at any such sale
it shall not be necessary to exhibit any Collateral.
(f) Buy (or allow any Beneficiary to buy) Collateral, or any part thereof, at
any public sale.
(g) Buy (or allow any Beneficiary to buy) Collateral, or any part thereof, at
any private sale if any Collateral is of a type customarily sold in a recognized
market or is of a type that is the subject of widely distributed standard price
quotations.
(h) Apply by appropriate judicial proceedings for appointment of a receiver for
the Collateral, or any part thereof, and Grantor consents to any such
appointment.
(i) Comply with any applicable state or federal Law requirement in connection
with a disposition of Collateral and such compliance shall not be considered to
affect adversely the commercial reasonableness of any sale of Collateral.
(j) Sell Collateral without giving any warranty, with respect to title or any
other matter.
(k) Notify (or to require Grantor to notify) any and all obligors under any
Account, Payment Intangible, Instrument or other right to payment included in
the Collateral of the assignment thereof to the Secured Party under this
Agreement and to direct such obligors to make payment of all amounts due or to
become due to Grantor thereunder directly to the Secured Party and, upon such
notification and at the expense of Grantor and to the extent permitted by law,
to enforce collection of any such Account, Payment Intangible, Instrument or
other right to payment and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as Grantor could have done.
After Grantor receives notice that the Secured Party has given (or after the
Secured Party has required Grantor to give) any notice referred to above in this
subsection:
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(i) all amounts and proceeds (including instruments and writings) received by
Grantor in respect of any Account, Payment Intangible, Instrument or other right
to payment included in the Collateral shall be received in trust for the benefit
of the Secured Party hereunder, shall be segregated from other funds of Grantor
and shall be forthwith paid over to the Secured Party in the same form as so
received (with any necessary indorsement) to be, at the Secured Party’s
discretion, either:
(A) held as cash collateral and released to Grantor upon the remedy of all
Defaults and Events of Default, or
(B) while an Event of Default is continuing, applied as specified in Section
6.3, and
(ii) Grantor shall not adjust, settle or compromise the amount or payment of any
Account, Payment Intangible, Instrument, or other right to payment included in
the Collateral or release wholly or partly any account debtor or obligor thereon
or allow any credit or discount thereon.
(l) Give any entitlement order, instruction or direction in respect of any of
Investment Property to any issuer, securities intermediary, or commodity
intermediary, and to withhold its consent to the exercise of any withdrawal
rights or dealing rights by Grantor.
(m) Give an instruction to any depository bank that maintains a Deposit Account
for Grantor with respect to the disposition of funds credited thereto or
restrict the ability of Grantor to withdraw funds credited thereto, except as
authorized in any other Note Document.
To the extent notice of sale shall be required by law with respect to
Collateral, at least 10-days’ notice to Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification; provided that, if the Secured Party fails in
any respect to give such notice, its liability for such failure shall be limited
to the liability (if any) imposed on it by law under the UCC. The Secured Party
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned.
Section 6.3. Application of Proceeds. If an Event of Default shall have occurred
and be continuing, any cash held by or on behalf of the Secured Party and all
cash proceeds received by or on behalf of the Secured Party in respect of any
sale of, collection from, or other realization upon any Collateral may, in the
discretion of the Secured Party, be held by the Secured Party as collateral for,
and/or then or at any time thereafter applied in whole or in part by the Secured
Party for the benefit of the Beneficiaries against, any Secured Obligation, in
the following manner:
(a) First, paid to the Secured Party for any amounts then owing to the Secured
Party pursuant to the Note Purchase Agreement or otherwise under the Note
Documents or that has otherwise been incurred by the Secured Party in connection
with the payment or other satisfaction of any Lien, encumbrance or adverse claim
upon or against any Collateral or any other action that the Secured Party
determines is reasonably appropriate in connection with the preservation or
maintenance of the Collateral.
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(b) Second, paid to the Beneficiaries in payment of the Secured Obligations,
ratably in accordance with the respective amounts thereof then owing to the
Beneficiaries or as otherwise provided in the Note Purchase Agreement.
(c) Third, any surplus of such cash or cash proceeds held by or on the behalf of
the Secured Party and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Grantor or to whatever Person
may be lawfully entitled to receive such surplus.
Section 6.4. Deficiency. If the proceeds of any sale, collection or realization
of or upon the Collateral of the Grantors by the Secured Party are insufficient
to pay all Secured Obligations and all other amounts to which the Secured Party
is entitled, Grantor shall be liable for the deficiency, together with interest
thereon as provided in the Note Documents or (if no interest is so provided) at
such other rate as shall be fixed by applicable law, together with the costs of
collection and the reasonable fees of any attorneys employed by the Secured
Party and/or the other Beneficiaries to collect such deficiency. Collateral may
be sold at a loss to Grantor, and the Secured Party shall have no liability or
responsibility to Grantor for such loss. Grantor acknowledges that a private
sale may result in less proceeds than a public sale.
Section 6.5. Private Sales of Investment Property and Other Pledged Equity. The
Beneficiaries may deem it impracticable to effect a public sale of any
Investment Property or other Pledged Equity and may determine to make one or
more private sales of such Investment Property or other Pledged Equity to a
restricted group of purchasers that will be obligated to agree, among other
things, to acquire the same for their own account, for investment and not with a
view to the distribution or resale thereof. Any such private sale may be at a
price and on other terms less favorable to the seller than the price and other
terms that might have been obtained at a public sale. Any such private sale
nevertheless shall be deemed to have been made in a commercially reasonable
manner, and neither the Secured Party nor any other Beneficiary shall have any
obligation to delay sale of any such Investment Property or other Pledged Equity
for the period of time necessary to permit their registration for public sale
under the Securities Act. Any offer to sell any such Collateral that has been:
(i) publicly advertised on a bona-fide basis in a newspaper or other publication
of general circulation in the financial community of Oklahoma City, Oklahoma or
New York, New York (to the extent that such an offer may be so advertised
without prior registration under the Securities Act), or
(ii) made privately in the manner described above to not less than 15 bonafide
offerees,
shall be deemed to involve a “public disposition” under Section 9-610(c) of the
UCC, notwithstanding that such sale may not constitute a “public offering” under
the Securities Act, and any Beneficiary may bid for such Collateral.
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Section 6.6. Indemnity and Expenses. In addition to, but not in qualification or
limitation of, any similar obligations under other Note Documents:
(a) Grantors jointly and severally will indemnify the Secured Party, each other
Beneficiary and any agent appointed pursuant to Section 6.9 from and against all
claims, losses and liabilities growing out of or resulting from this Agreement
(including enforcement of this Agreement), WHETHER OR NOT SUCH CLAIMS, LOSSES
AND LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT CAUSED BY OR ARISING OUT OF SUCH
INDEMNIFIED PARTY’S OWN NEGLIGENCE OR STRICT LIABILITY, except to the extent
such claims, losses or liabilities are proximately caused by such indemnified
party’s individual gross negligence or willful misconduct.
(b) Grantors jointly and severally will upon demand pay to the Secured Party the
amount of all costs and expenses, including the fees and disbursements of the
Secured Party’s counsel and of any experts and agents, that the Secured Party
may incur in connection with:
(i) the transactions that give rise to this Agreement;
(ii) the preparation of this Agreement and the perfection and preservation of
this security interest created under this Agreement;
(iii) the administration of this Agreement;
(iv) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any Collateral;
(v) the exercise or enforcement of any right of the Secured Party hereunder; or
(vi) the failure by any Grantor to perform or observe any of the provisions
hereof.
Section 6.7. Non-Judicial Remedies. In granting to the Secured Party the power
to enforce its rights hereunder without prior judicial process or judicial
hearing, to the extent permitted by applicable Law, Grantor waives, renounces
and knowingly relinquishes any legal right that might otherwise require the
Secured Party to enforce its rights by judicial process and confirms that such
remedies are consistent with the usage of trade, are responsive to commercial
necessity and are the result of a bargain at arm’s length. The Secured Party
may, however, in its discretion, resort to judicial process.
Section 6.8. Limitation on Duty of the Secured Party in Respect of Collateral.
Beyond the exercise of reasonable care in the custody thereof, the Secured Party
shall have no duty as to any Collateral in its possession or control or in the
possession or control of any agent or bailee or as to the preservation of rights
against prior parties or any other rights pertaining thereto. The Secured Party
shall be deemed to have exercised reasonable care in the custody of Collateral
in its possession if such Collateral is accorded treatment substantially equal
to which that it accords its own property, and the Secured Party shall not be
liable or responsible for any loss or damage to any Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Secured Party in good faith.
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Section 6.9. Appointment of Other Agents. At any time, in order to comply with
any legal requirement in any jurisdiction, the Secured Party may appoint any
bank or trust company or one or more other Persons, either to act as co-agent or
co-agents, jointly with the Secured Party, or to act as separate agent or agents
on behalf of the Secured Party, with such power and authority as may be
necessary for the effective operation of the provisions hereof and may be
specified in the instrument of appointment.
ARTICLE VII
Miscellaneous
Section 7.1. Notices. Any notice or communication required or permitted
hereunder shall be given in writing, sent in the manner provided in the Note
Purchase Agreement, if to the Secured Party or to a Grantor that is a party to
the Note Purchase Agreement, to the address set forth in the Note Purchase
Agreement and, for any other Grantor, to the address specified opposite its name
on Schedule 1, or to such other address or to the attention of such other
individual as hereafter shall be designated in writing by the applicable party
sent in accordance herewith. Any such notice or communication shall be deemed to
have been given as provided in the Note Purchase Agreement for notices given
thereunder.
Section 7.2.Amendments and Waivers. Except as provided in Section 4.2(f) or 7.3,
no amendment of this Agreement shall be effective unless it is in writing and
signed by Grantor and the Secured Party, and no waiver of this Agreement or
consent to any departure by Grantor herefrom shall be effective unless it is in
writing and signed by the Secured Party, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for that
given and to the extent specified in such writing. In addition, all such
amendments and waivers shall be effective only if given with the necessary
approvals required in the Note Purchase Agreement. No such amendment shall bind
any Grantor not a party thereto, but no such amendment with respect to any
Grantor shall require the consent of any other Grantor.
Section 7.3.Additional Grantors. Upon the execution and delivery, or
authentication, by any Person of a security agreement supplement in
substantially the form of Exhibit A:
(a) such Person shall become a Grantor hereunder, each reference in this
Agreement and the other Note Documents to “Grantor” shall also mean and be a
reference to such Person, and each reference in this Agreement and the other
Note Documents to “Collateral” shall also mean and be a reference to the
Collateral of such Person, and
(b) Schedule 2 attached to such security agreement supplement shall be
incorporated into and become a part of and supplement Schedule 2 hereto, and the
Secured Party may attach such supplemental schedule to such Schedule; and each
reference to such Schedule shall mean and be a reference to such Schedule as
supplemented pursuant to such supplement.
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Section 7.4. Preservation of Rights. No failure on the part of the Secured Party
or any other Beneficiary to exercise, and no delay in exercising, any right
hereunder or under any other Note Document shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The rights and
remedies of the Secured Party provided herein and in the other Note Documents
are cumulative and are in addition to, and not exclusive of, any rights or
remedies provided by law or otherwise.
Section 7.5. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or invalidity without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
Section 7.6. Survival. Each representation and warranty, covenant and other
obligation of Grantor herein shall survive the execution and delivery of this
Agreement, the execution and delivery of any other Note Document and the
creation of the Secured Obligations.
Section 7.7. Binding Effect and Assignment. This Agreement shall:
(a) be binding on Grantor and its successors, and
(b) inure, together with all rights and remedies of the Secured Party hereunder,
to the benefit of the Secured Party and the other Beneficiaries and their
respective successors, transferees and assigns.
Without limiting the generality of the foregoing, the Secured Party and any
other Beneficiary may (except as otherwise provided in any Note Document)
pledge, assign or otherwise transfer any right under any Note Document to any
other Person, and such other Person shall thereupon become vested with all
benefits in respect thereof granted herein or otherwise. No right or duty of
Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Secured Party.
Section 7.8. Release of Collateral; Termination.
(a) Upon any sale, lease, transfer or other disposition of any Collateral of
Grantor in accordance with the Note Documents (other than sales of Inventory in
the ordinary course of business), the Secured Party will, at Grantor’s expense,
execute and deliver to Grantor such documents as Grantor shall reasonably
request to evidence the release of such Collateral from the assignment and
security interest granted hereby; provided that:
(i) at the time of such request and such release no Default shall have occurred
and be continuing;
(ii) Grantor shall have delivered to the Secured Party, at least 10 Business
Days prior to the date of the proposed release (or by such lesser notice as the
Secured Party may approve), a written request for release describing the item of
Collateral and the terms of the sale, lease, transfer or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Secured Party
and a certificate of Grantor to the effect that the transaction is in compliance
with the Note Documents and such other matters as the Secured Party may request;
and
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(iii) if any Note Document provides for any application of the proceeds of any
such sale, lease, transfer or other disposition, or any payment to be made, in
connection therewith, such proceeds shall have been applied or payment made as
provided therein.
(b) As and when provided in the Note Purchase Agreement, this Agreement and the
security interest created hereby shall terminate, all rights in the Collateral
shall revert to Grantors and the Secured Party, at a Grantor’s request and at
its expense, will:
(i) return to Grantor such of Grantor’s Collateral in the Secured Party’s
possession as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and
(ii) execute and deliver to Grantor such documents as Grantor shall reasonably
request to evidence such termination.
No Grantor is authorized to file any financing statement or amendment or
termination statement with respect to any financing statement originally filed
in connection with this Agreement without the prior written consent of the
Secured Party, subject to Grantors’ rights under Sections 9-509(d)(2) and 9-518
of the UCC. Notwithstanding the foregoing, Sections 6.6, 7.9 and 7.14 shall
survive the termination of this Agreement.
Section 7.9. Limitation on Interest. Section 12.9 of the Note Purchase
Agreement, which limits the interest for which Grantor is obligated, is
incorporated herein by reference.
Section 7.10. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
Section 7.11. Final Agreement. This Agreement and the other Note Documents
represent the final agreement between the parties hereto and may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties hereto. There are no unwritten oral agreements between
the parties hereto.
Section 7.12. Counterparts; Facsimile. This Agreement may be separately executed
in any number of counterparts, all of that when so executed shall be deemed to
constitute one and the same Agreement. This Agreement may be validly delivered
by facsimile or other electronic transmission of an executed counterpart of the
signature page hereof.
Section 7.13. Acceptance by the Secured Party. By its acceptance of the benefits
hereof, the Secured Party and the Beneficiaries shall be deemed to have agreed
to be bound hereby and to perform any obligation on their part set forth herein.
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Section 7.14. Jurisdiction, Etc. this Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to principles of conflicts of laws. Grantor hereby irrevocably
(a) submits itself to the non-exclusive jurisdiction of the state and federal
courts sitting in the State and County of New York, (b) agrees and consents that
service of process may be made upon it and any of its Subsidiaries in any legal
proceeding relating to the Note Documents or the Obligations by any means
allowed under New York or federal law, and (c) waives any objection that it may
now or hereafter have to the venue of any such proceeding being in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. Grantor hereby makes the foregoing submissions,
agreements, consents and waivers on behalf of and with respect to each of its
Subsidiaries.
Section 7.15. Restatement. This Agreement renews and restates that certain
Security Agreement dated as of August 29, 2005, executed by G M Oil Properties,
Inc., an Oklahoma corporation as successor by merger to Steadfast Resources,
Inc. (“GM”), in favor of the Secured Party (as amended, supplemented, restated
or otherwise modified from time to time, the “Original Security Agreement”). The
Original Security Agreement secured certain obligations under that certain Note
Purchase Agreement dated as of August 29, 2006 by and among, Secured Party and
the Holders (as defined therein), which obligations were assumed by Company
pursuant to that certain Assumption Agreement of even date herewith. All of the
terms and provisions of this Agreement shall supersede the terms and provisions
of the Original Security Agreement. This Agreement renews, extends and continues
without interruption all Liens existing by the Original Security Agreement,
although the terms and provisions and conditions of such Liens shall hereafter
be governed in all respects by this Agreement.
[The remainder of this page is intentionally left blank]
[Security Agreement]

 

23

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IN WITNESS WHEREOF, Grantor has executed and delivered this Agreement as of the
date first-above written.

            RIO VISTA PENNY LLC
      By:   /s/ Ian Bothwell          Ian Bothwell        Manager        RIO
VISTA GO LLC
      By:   /s/ Ian Bothwell          Ian Bothwell        Manager        RIO
VISTA ECO LLC
      By:   /s/ Ian Bothwell          Ian Bothwell        Manager        GO, LLC
      By:   /s/ Ian Bothwell          Ian Bothwell        Manager        MV
PIPELINE COMPANY
      By:   /s/ Ian Bothwell          Ian Bothwell        President     

[Signature Page to Security Agreement]

 

 

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SCHEDULE 1
to
SECURITY AGREEMENT
Address for Notices and Jurisdiction of Organization

                      Jurisdiction of     Name of Grantor   Type of Organization
  Organization   Address for Notices
 
           
Rio Vista Penny LLC
  Limited liability company   Oklahoma   2601 Northwest
Expressway #902E
 
           
 
          Oklahoma City,
Oklahoma 73112
 
           
Rio Vista ECO LLC
  Limited liability company   Oklahoma   2601 Northwest
Expressway #902E
 
           
 
          Oklahoma City,
Oklahoma 73112
 
           
Rio Vista GO LLC
  Limited liability company   Oklahoma   2601 Northwest
Expressway #902E
 
           
 
          Oklahoma City,
Oklahoma 73112
 
           
GO, LLC
  Limited liability company   Oklahoma   2601 Northwest
Expressway #902E
 
           
 
          Oklahoma City,
Oklahoma 73112
 
           
MV Pipeline
Company
  Corporation   Oklahoma   2601 Northwest
Expressway #902E
 
           
 
          Oklahoma City,
Oklahoma 73112

[Security Agreement]
Schedule 1

 

 

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SCHEDULE 2
to
SECURITY AGREEMENT
Scheduled Collateral
INDEBTEDNESS
Promissory Note dated November 19, 2007 from Rio Vista GO LLC, as Borrower, to
Rio Vista Penny LLC, as Lender, in the principal amount of $2,200,000, payable
on demand.
DEPOSIT ACCOUNTS
None.
EQUITY AND RELATED MATTERS
50,000 shares of common stock in MV Pipeline Company, which constitutes 100% of
the
issued and outstanding stock in MV Pipeline Company.
LETTER OF CREDIT RIGHTS
None.
COMMERCIAL TORT CLAIMS
None.
[Security Agreement]
Schedule 2

 

 

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EXHIBIT A
to
SECURITY AGREEMENT
FORM OF GRANTOR ACCESSION AGREEMENT
                     __, 20 __
TCW Asset Management Company,
as the Secured Party for the Beneficiaries referred to
in the Security Agreement referred to below

               
 
             
Attn:
       
 
       

Ladies and Gentlemen:
The undersigned refers to:
(i) the Note Purchase Agreement dated as of November 19, 2007 (as heretofore or
hereafter amended, supplemented or restated, the “Note Purchase Agreement”)
among Rio Vista Penny LLC, an Oklahoma limited liability company the Holders
party thereto, and you, as administrative agent, and
(ii) the Security Agreement dated as of November 19, 2007 (the “Security
Agreement”) made by the Grantors from time to time party thereto in your favor
for the benefit of the Beneficiaries.
Terms defined in the Note Purchase Agreement or the Security Agreement and not
otherwise defined herein are used herein as defined in the Note Purchase
Agreement or the Security Agreement.
SECTION 1. Grant of Security. The undersigned grants to you, for the benefit of
the Beneficiaries, a security interest in all of its right, title and interest
in and to all of the Collateral of the undersigned, whether now owned or
hereafter acquired by the undersigned, wherever located and whether now or
hereafter existing or arising, including the property of the undersigned set
forth on the attached supplemental schedules to the Schedules to the Security
Agreement.
SECTION 2. Security for Obligations. The grant of a security interest in, the
Collateral by the undersigned under this Agreement and the Security Agreement
secures the payment of the Secured Obligations. Without limiting the generality
of the foregoing, this Security Agreement Supplement and the Security Agreement
secures the payment of all amounts that constitute part of the Secured
Obligations and that would be owed by any Restricted Person to any Beneficiary
under the Note Documents but for the fact that such Secured Obligations are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Restricted Person.
[Security Agreement]

 

Exhibit A — 1

 

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

 

SECTION 3. Information Relating to the Undersigned. The undersigned is an entity
of the type specified on Schedule 1 and is organized under the laws of the
jurisdiction specified on Schedule 1 and its address for notices is specified on
Schedule 1. Its organizational identification number, if any, is set forth in
Schedule 1.
SECTION 4. Supplement to Security Agreement Schedule 2. The undersigned has
attached hereto a supplemental Schedule 2 to Schedule 2 to the Security
Agreement, and the undersigned certifies, as of the date first-above written,
that such supplemental schedule has been prepared by the undersigned in
substantially the form of Schedule to the Security Agreement and is true and
complete.
SECTION 5. Representations, Warranties, Agreements, Waivers. The undersigned as
of the date hereof makes each representation, warranty, agreement (including
indemnification agreements), waiver, and acknowledgement set forth in the
Security Agreement (as supplemented by the attached supplemental schedules).
SECTION 6. Obligations Under the Security Agreement. As of the date first-above
written, the undersigned hereby joins the Security Agreement as a party thereto
and as a Grantor thereunder and hereby agrees to be bound as a Grantor by all of
the terms and provisions of the Security Agreement. As of the date first-above
written, each reference in the Security Agreement to a “Grantor” shall also mean
and be a reference to the undersigned.
SECTION 7. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the jurisdiction whose laws the Security Agreement
provides will govern such agreement.

            Very truly yours,

[GRANTOR]
      By           Name:           Title:        

          ACCEPTED AND AGREED AS OF THE DATE
FIRST-ABOVE STATED.    
 
        TCW ASSET MANAGEMENT COMPANY, as Secured Party    
 
       
By
       
 
 
 
Name:    
 
  Title:    

[Security Agreement]

 

Exhibit A — 2

 

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

 

SCHEDULE 1
to
SECURITY AGREEMENT SUPPLEMENT
Address for Notices and Jurisdiction of Organization

                      Jurisdiction of     Name of Grantor   Type of Organization
  Organization   Address for Notices
 
           

[Security Agreement]

 

Exhibit A Schedule 1

 

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SCHEDULE 2
to
SECURITY AGREEMENT SUPPLEMENT
Scheduled Collateral
AGREEMENTS
[List]
INDEBTEDNESS
[List]
DEPOSIT ACCOUNTS
[List]
EQUITY AND RELATED MATTERS
[Include descriptions of equity, percentage ownership and any shareholder,
voting,
operating or similar agreements.]
LETTER OF CREDIT RIGHTS
[List]
COMMERCIAL TORT CLAIMS
[List]
[Security Agreement]

 

Exhibit A Schedule 2