EXHIBIT 10.2

SECURITY AGREEMENT

                 THIS SECURITY AGREEMENT dated as of October 30, 2008 (this
"Security Agreement") is by and among REOSTAR ENERGY, CORPORATION, a Nevada
corporation ("Borrower"), each subsidiary of the Borrower signatory hereto
(together with the Borrower, the "Grantors" and individually, each a "Grantor")
and Union Bank of California, N.A. as administrative agent (in such capacity the
"Administrative Agent") under the Credit Agreement (as hereinafter defined), for
its benefit and the benefit of the Secured Parties (as hereinafter defined).

RECITALS

                 A. The Borrower, the lenders party thereto from time to time
(the "Lenders"), Union Bank of California, N.A., as issuing lender (in such
capacity, the "Issuing Lender") and as Administrative Agent for such Lenders,
have entered into that certain Credit Agreement dated of even date herewith (as
it may be amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement").

                 B. In connection with the Credit Agreement, the Borrower or any
of its subsidiaries may from time to time enter into one or more Hedge Contracts
(as defined in the Credit Agreement) with Swap Counterparties (as defined in the
Credit Agreement, such Swap Counterparties, the Administrative Agent, the
Issuing Lender and the Lenders, being collectively referred to herein as the
"Secured Parties").

                 C. It is a condition precedent to the extension of credit to
the Borrower under the Credit Agreement that the Grantors and the Administrative
Agent, on behalf of the Secured Parties, execute and deliver this Security
Agreement.

                 D. Each Grantor (other than the Borrower) is a subsidiary of
the Borrower, and therefore shall derive direct and indirect benefits from the
transactions contemplated by the Credit Agreement.

AGREEMENT

                 NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged and confessed, each Grantor hereby agrees with the Administrative
Agent for its benefit and the benefit of the Secured Parties as follows:

                 Section 1. Definitions; Interpretation. (a) All capitalized
terms not otherwise defined in this Security Agreement that are defined in the
Credit Agreement shall have the meanings assigned to such terms by the Credit
Agreement. Any terms used in this Security Agreement that are defined in the UCC
(as defined below) and not otherwise defined herein or in the Credit Agreement,
shall have the meanings assigned to those terms by the UCC. All meanings to
defined terms, unless otherwise indicated, are to be equally applicable to both
the singular and plural forms of the terms defined. The following terms shall
have the meanings specified below:

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"Accounts" means an "account" as defined in the UCC, including, without
limitation, all of any Grantor's rights to payment for goods sold or leased,
services performed, or otherwise, whether now in existence or arising from time
to time hereafter, including, without limitation, rights arising under any of
the Contracts or evidenced by an account, note, contract, security agreement,
Chattel Paper (including, without limitation, tangible Chattel Paper and
electronic Chattel Paper), or other evidence of indebtedness or security,
together with all of the right, title and interest of any Grantor in and to (i)
all security pledged, assigned, hypothecated or granted to or held by any
Grantor to secure the foregoing, (ii) all of any Grantor's right, title and
interest in and to any goods or services, the sale of which gave rise thereto,
(iii) all guarantees, endorsements and indemnifications on, or of, any of the
foregoing, (iv) all powers of attorney granted to any Grantor for the execution
of any evidence of indebtedness or security or other writing in connection
therewith, (v) all books, correspondence, credit files, records, ledger cards,
invoices, and other papers relating thereto, including without limitation all
similar information stored on a magnetic medium or other similar storage device
and other papers and documents in the possession or under the control of any
Grantor or any computer bureau from time to time acting for any Grantor, (vi)
all evidences of the filing of financing statements and other statements granted
to any Grantor and the registration of other instruments in connection therewith
and amendments thereto, notices to other creditors or secured parties, and
certificates from filing or other registration officers, (vii) all credit
information, reports and memoranda relating thereto, and (viii) all other
writings related in any way to the foregoing.

"Cash Collateral" means all amounts from time to time held in any checking,
savings, deposit or other account of such Grantor, all monies, proceeds or sums
due or to become due therefrom or thereon and all documents (including, but not
limited to passbooks, certificates and receipts) evidencing all funds and
investments held in such accounts.

"Chattel Paper" has the meaning set forth in the UCC.

"Collateral" has the meaning set forth in Section 2 of this Security Agreement.

"Contracts" means all contracts to which any Grantor now is, or hereafter will
be bound, or to which such Grantor is or hereafter will be a party, beneficiary
or assignee, all Insurance Contracts, and all exhibits, schedules and other
attachments to such contracts, as the same may be amended, supplemented or
otherwise modified or replaced from time to time.

"Contract Documents" means all Instruments, Chattel Paper, letters of credit,
bonds, guarantees or similar documents evidencing, representing, arising from or
existing in respect of, relating to, securing or otherwise supporting the
payment of, the Contract Rights.

"Contract Rights" means (i) all (A) of any Grantor's rights to payment under any
Contract or Contract Document and (B) payments due and to become due to any
Grantor under any Contract or Contract Document, in each case whether as
contractual obligations, damages or otherwise; (ii) all of any Grantor's claims,
rights, powers, or privileges and

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remedies under any Contract or Contract Document; and (iii) all of any Grantor's
rights under any Contract or Contract Document to make determinations, to
exercise any election (including, but not limited to, election of remedies) or
option or to give or receive any notice, consent, waiver or approval together
with full power and authority with respect to any Contract or Contract Document
to demand, receive, enforce or collect any of the foregoing rights or any
property which is the subject of any Contract or Contract Document, to enforce
or execute any checks, or other instruments or orders, to file any claims and to
take any action which, in the opinion of the Administrative Agent, may be
necessary or advisable in connection with any of the foregoing.

"Document" means a bill of lading, dock warrant, dock receipt, warehouse receipt
or order for the delivery of goods, and also any other document which in the
regular course of business or financing is treated as adequately evidencing that
the person in possession of it is entitled to receive, hold and dispose of the
document and the goods it covers.

"Equipment" means any equipment now or hereafter owned or leased by any Grantor,
or in which any Grantor holds or acquires any other right, title or interest,
constituting "equipment" under the UCC, including, without limitation, all
surface or subsurface machinery, equipment, facilities, supplies, or other
tangible personal property, including tubing, rods, pumps, pumping units and
engines, pipe, pipelines, meters, apparatus, boilers, compressors, liquid
extractors, connectors, valves, fittings, power plants, poles, lines, cables,
wires, transformers, starters and controllers, machine shops, tools, machinery
and parts, storage yards and equipment stored therein, buildings and camps,
telegraph, telephone, and other communication systems, loading docks, loading
racks, and shipping facilities, and any manuals, instructions, blueprints,
computer software (including software that is imbedded in and part of the
equipment), and similar items which relate to the above, and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located together with all improvements thereon and all attachments, components,
parts, equipment and accessories installed thereon or affixed thereto.

"Fixtures" means any fixtures now or hereafter owned or leased by any Grantor,
or in which any Grantor holds or acquires any other right, title or interest,
constituting "fixtures" under the UCC, including without limitation any and all
additions, substitutions and replacements of any of the foregoing, wherever
located together with all improvements thereon and all attachments, components,
parts, equipment and accessories installed thereon or affixed thereto.

"General Intangibles" means all general intangibles now or hereafter owned by
any Grantor, or in which any Grantor holds or acquires any other right, title or
interest, constituting "general intangibles" or "payment intangibles" under the
UCC, including, but not limited to, all trademarks, trademark applications,
trademark registrations, tradenames, fictitious business names, business names,
company names, business identifiers, prints, labels, trade styles and service
marks (whether or not registered), trade dress, including logos and/or designs,
copyrights, patents, patent applications, goodwill of any Grantor's business
symbolized by any of the foregoing, trade secrets, license

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rights, license agreements, permits, franchises, and any rights to tax refunds
to which any Grantor is now or hereafter may be entitled.

"Hedge Contract" has the meaning set forth in the Credit Agreement.

"Instrument" means an "instrument" as defined in the UCC, including, without
limitation, any Negotiable Instrument, or any other writing which evidences a
right to the payment of money and is not itself a security agreement or lease
and is of a type which is in the ordinary course of business transferred by
delivery with any necessary endorsement or assignment (other than Instruments
constituting Chattel Paper).

"Insurance Contracts" means all contracts and policies of insurance and
re-insurance maintained or required to be maintained by or on behalf of any
Grantor under the Loan Documents.

"Inventory" means all of the inventory of any Grantor, or in which any Grantor
holds or acquires any right, title or interest, of every type or description,
now owned or hereafter acquired and wherever located, whether raw, in process or
finished, and all materials usable in processing the same and all documents of
title covering any inventory, including, without limitation, work in process,
materials used or consumed in any Grantor's business, now owned or hereafter
acquired or manufactured by any Grantor and held for sale in the ordinary course
of its business, all present and future substitutions therefor, parts and
accessories thereof and all additions thereto, all Proceeds thereof and products
of such inventory in any form whatsoever, and any other item constituting
"inventory" under the UCC.

"Investment Property" means "investment property" as defined in the UCC,
including, without limitation, all securities (whether certificated or
uncertificated), security entitlements, securities accounts, commodity
contracts, and commodity accounts.

"Negotiable Instrument" means a "negotiable instrument" as defined in the UCC.

"Proceeds" means all proceeds (as defined in the UCC) of any or all of the
Collateral, including without limitation (i) any and all proceeds of, all claims
for, and all rights of any Grantor to receive the return of any premiums for,
any insurance, indemnity, warranty or guaranty payable from time to time with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of any Governmental Authority), (iii) all proceeds received or receivable
when any or all of the Collateral is sold, exchanged or otherwise disposed,
whether voluntarily, involuntarily, in foreclosure or otherwise, (iv) all claims
of any Grantor for damages arising out of, or for breach of or default under,
any Collateral, (v) all rights of any Grantor to terminate, amend, supplement,
modify or waive performance under any Contracts, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder, and (vi) any
and all other amounts from time to time paid or payable under or in connection
with any of the Collateral.

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"Secured Obligations" means, collectively, all of the following: (i) all
Obligations now or hereafter owed by the Borrower, any Guarantor, or any of
their respective Subsidiaries to the Secured Parties, (ii) all amounts now or
hereafter owed by the Borrower, any Debtor, or any of their respective
Subsidiaries under this Security Agreement or the other Loan Documents to the
Secured Parties, and (iii) any increases, extensions, modifications,
substitutions, amendments and renewals thereof, whether for principal, interest,
fees, expenses, indemnification, or otherwise, including any post-petition
interest in the event of a bankruptcy, to the extent such interest is
enforceable by law. All such obligations shall be referred to in this Security
Agreement as the "Secured Obligations".

"Security Agreement" means this Security Agreement, as the same may be modified,
supplemented or amended from time to time in accordance with its terms.

"UCC" shall mean the Uniform Commercial Code as the same may, from time to time,
be in effect in the State of Texas; provided, however, in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
Texas, the term "UCC" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.

                 (b) All meanings to defined terms, unless otherwise indicated,
are to be equally applicable to both the singular and plural forms of the terms
defined. Article, Section, Schedule, and Exhibit references are to Articles and
Sections of and Schedules and Exhibits to this Security Agreement, unless
otherwise specified. All references to instruments, documents, contracts, and
agreements are references to such instruments, documents, contracts, and
agreements as the same may be amended, supplemented, and otherwise modified from
time to time, unless otherwise specified. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Security Agreement
shall refer to this Security Agreement as a whole and not to any particular
provision of this Security Agreement. As used herein, the term "including" means
"including, without limitation,". Paragraph headings have been inserted in this
Security Agreement as a matter of convenience for reference only and it is
agreed that such paragraph headings are not a part of this Security Agreement
and shall not be used in the interpretation of any provision of this Security
Agreement.

                 Section 2. Assignment, Pledge and Grant of Security Interest.

                 (a) As collateral security for the prompt and complete payment
and performance when due of all Secured Obligations, each Grantor hereby
assigns, pledges, and grants to the Administrative Agent for the benefit of the
Secured Parties a lien on and continuing security interest in all of such
Grantor's right, title and interest in, to and under, all items described in
this Section 2, whether now owned or hereafter acquired by such Grantor and
wherever located and whether now owned or hereafter existing or arising
(collectively, the "Collateral"):

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                                  (i) all Contracts, all Contract Rights,
Contract Documents and Accounts associated with such Contracts and each and
every document granting security to such Grantor under any such Contract;

                                  (ii) all Accounts;

                                  (iii) all Inventory;

                                  (iv) all Equipment;

                                  (v) all General Intangibles;

                                  (vi) all Investment Property;

                                  (vii) all Fixtures;

                                  (viii) all checking, savings, deposit or other
account of such Grantor and all other accounts held in the name of such Grantor
with any Lender;

                                  (ix) all Cash Collateral;

                                  (x) any Legal Requirements now or hereafter
held by such Grantor (except that any Legal Requirement which would by its terms
or under applicable law become void, voidable, terminable or revocable by being
subjected to the Lien of this Security Agreement or in which a Lien is not
permitted to be granted under applicable law, is hereby excluded from such Lien
to the extent necessary so as to avoid such voidness, voidability, terminability
or revocability);

                                  (xi) any right to receive a payment under any
Hedge Contract in connection with a termination thereof;

                                   (xii) (A) all policies of insurance and
Insurance Contracts, now or hereafter held by or on behalf of such Grantor,
including casualty and liability, business interruption, and any title
insurance, (B) all Proceeds of insurance, and (C) all rights, now or hereafter
held by such Grantor to any warranties of any manufacturer or contractor of any
other Person;

                                  (xiii) any and all liens and security
interests (together with the documents evidencing such security interests)
granted to such Grantor by an obligor to secure such obligor's obligations owing
under any Instrument, Chattel Paper, or Contract which is pledged hereunder or
with respect to which a security interest in such Grantor's rights in such
Instrument, Chattel Paper, or Contract is granted hereunder;

                                  (xiv) any and all guaranties given by any
Person for the benefit of such Grantor which guarantees the obligations of an
obligor under any Instrument, Chattel Paper or Contract, which are pledged
hereunder;

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                                  (xv) without limiting the generality of the
foregoing, all other personal property, goods, Instruments, Chattel Paper,
Documents, Fixtures, credits, claims, demands and assets of such Grantor whether
now existing or hereafter acquired from time to time; and

                                  (xvi) any and all additions, accessions and
improvements to, all substitutions and replacements for and all products and
Proceeds of or derived from all of the items described above in this Section 2.

                 (b) Notwithstanding anything contained herein to the contrary,
it is the intention of each Grantor, the Administrative Agent, and the other
Secured Parties that the amount of the Secured Obligation secured by each
Grantor's interests in any of its Property shall be in, but not in excess of,
the maximum amount permitted by fraudulent conveyance, fraudulent transfer and
other similar law, rule or regulation of any Governmental Authority applicable
to such Grantor. Accordingly, notwithstanding anything to the contrary contained
in this Security Agreement in any other agreement or instrument executed in
connection with the payment of any of the Secured Obligations, the amount of the
Secured Obligations secured by each Grantor's interests in any of its Property
pursuant to this Security Agreement shall be limited to an aggregate amount
equal to the largest amount that would not render such Grantor's obligations
hereunder or the liens and security interest granted to the Administrative Agent
hereunder subject to avoidance under Section 548 of the United States Bankruptcy
Code or any comparable provision of any other applicable law.

                 Section 3. Representations and Warranties. Each Grantor hereby
represents and warrants the following to the Administrative Agent and the other
Secured Parties:

                 (a) Records. Such Grantor's sole jurisdiction of formation and
type of organization are as set forth in Schedule 1 attached hereto. All records
concerning the Accounts, General Intangibles, or any other Collateral applicable
to such Grantor are located at the address for such Grantor on such Schedule 1.
None of the Accounts is evidenced by a promissory note or other instrument.

                 (b) Other Liens. Such Grantor is, and will be the record,
legal, and beneficial owner of all of the Collateral pledged by such Grantor
free and clear of any Lien, except for the Permitted Liens. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is, or will be, on file in any recording office, except
such as may be filed in connection with this Security Agreement or in connection
with other Permitted Liens or for which satisfactory releases have been received
by the Administrative Agent.

                 (c) Lien Priority and Perfection.

                                  (i) Subject only to Permitted Liens, this
Security Agreement creates valid and continuing security interests in the
Collateral, securing the payment and performance of all the Secured Obligations.
Upon the filing of financing statements with the jurisdictions listed in
Schedule 1, the security interests granted to the Administrative Agent hereunder
will constitute valid first-priority perfected security interests in all
Collateral with respect to which a security interest can be perfected by the
filing of a financing statement, subject only to Permitted Liens.

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                                  (ii) No consent of any other Person and no
authorization, approval, or other action by, and no notice to or filing with any
Governmental Authority is required (A) for the grant by such Grantor of the
pledge, assignment, and security interest granted hereby or for the execution,
delivery, or performance of this Security Agreement by such Grantor, (B) for the
validity, perfection, or maintenance of the pledge, assignment, lien, and
security interest created hereby (including the first-priority (subject to
Permitted Liens) nature thereof), except for security interests that cannot be
perfected by filing under the UCC, or (C) for the exercise by the Administrative
Agent of the rights provided for in this Security Agreement or the remedies in
respect of the Collateral pursuant to this Security Agreement, except (1) those
consents to assignment of licenses, permits, approvals, and other rights that
are as a matter of law not assignable, (2) those consents, approvals,
authorizations, actions, notices or filings which have been duly obtained or
made and, in the case of the maintenance of perfection, the filing of
continuation statements under the UCC, and (3) those filings and actions
described in Section 3(c)(i).

                 (d) Tax Identification Number and Organizational Number. The
federal tax identification number of such Grantor and the organizational number
of such Grantor are as set forth in Schedule 1.

                 (e) Tradenames; Prior Names. Except as set forth on Schedule 1,
such Grantor has not conducted business under any name other than its current
name during the last five years prior to the date of this Security Agreement.

                 (f) Exclusive Control. Such Grantor has exclusive possession
and control of its respective Equipment and Inventory.

                 Section 4. Covenants.

                 (a) Further Assurances.

                                  (i) Each Grantor agrees that from time to
time, at its expense, such Grantor shall promptly execute and deliver all
instruments and documents, and take all action, that may be reasonably necessary
or desirable, or that the Administrative Agent may reasonably request, in order
to perfect and protect any pledge, assignment, or security interest granted or
intended to be granted hereby or to enable the Administrative Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, each Grantor (A) at the
request of the Administrative Agent, shall execute such instruments,
endorsements or notices, as may be reasonably necessary or desirable or as the
Administrative Agent may reasonably request, in order to perfect and preserve
the assignments and security interests granted or purported to be granted
hereby, (B) shall, at the reasonable request of the Administrative Agent, mark
conspicuously each material document included in the Collateral, each Chattel
Paper included in the Accounts, and each of its records pertaining to the
Collateral with a legend, in form and substance satisfactory to the
Administrative Agent, including that such document, Chattel Paper, or record is
subject to the pledge, assignment, and security interest granted hereby, (C)
shall, if any Collateral shall be evidenced by a promissory note or other
instrument or chattel paper, deliver and pledge to the Administrative Agent
hereunder such note or instrument or chattel paper duly endorsed and accompanied
by duly

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executed instruments of transfer or assignment, all in form and substance
satisfactory to the Administrative Agent, and (D) authorizes the Administrative
Agent to file any financing statements, amendments or continuations without the
signature of such Grantor to the extent permitted by applicable law in order to
perfect or maintain the perfection of any security interest granted under this
Security Agreement (including, without limitation, financing statements using an
"all assets" or "all personal property" collateral description).

                                  (ii) Each Grantor shall pay all filing,
registration and recording fees and all refiling, re-registration and
re-recording fees, and all other reasonable expenses incident to the execution
and acknowledgment of this Security Agreement, any assurance, and all federal,
state, county and municipal stamp taxes and other taxes, duties, imports,
assessments and charges arising out of or in connection with the execution and
delivery of this Security Agreement, any agreement supplemental hereto, any
financing statements, and any instruments of further assurance.

                                  (iii) Each Grantor shall promptly provide to
the Administrative Agent all information and evidence the Administrative Agent
may reasonably request concerning the Collateral to enable the Administrative
Agent to enforce the provisions of this Security Agreement.

                 (b) Change of Name; State of Formation. Each Grantor shall give
the Administrative Agent at least 30 days' prior written notice before it (i) in
the case of any Grantor that is not a "registered organization" (as such term is
defined in Section 9-102 of the UCC), changes the location of its principal
place of business and chief executive office, (ii) changes the location of its
jurisdiction of formation or organization, (iii) changes the location of the
Equipment, Inventory, or original copies of any Chattel Paper evidencing
Accounts, or (iv) uses a trade name other than its current name used on the date
hereof. Other than as permitted by Section 6.11 of the Credit Agreement, no
Grantor shall amend, supplement, modify or restate its articles or certificate
of incorporation, bylaws, limited liability company agreements, or other
equivalent organizational documents, nor amend its name or change its
jurisdiction of incorporation, organization or formation.

                 (c) Right of Inspection. Each Grantor shall hold and preserve,
at its own cost and expense satisfactory and complete records of the Collateral,
including, but not limited to, Instruments, Chattel Paper, Contracts, and
records with respect to the Accounts, and will permit representatives of the
Administrative Agent, upon reasonable advance notice, at any time during normal
business hours to inspect and copy them. Upon the occurrence and during the
continuation of any Event of Default, at the Administrative Agent's request,
each Grantor shall promptly deliver copies of any and all such records to the
Administrative Agent.

                 (d) Liability Under Contracts and Accounts. Notwithstanding
anything in this Security Agreement to the contrary, (i) the execution of this
Security Agreement shall not release any Grantor from its obligations and duties
under any of the Contract Documents, or any other contract or instrument which
are part of the Collateral and Accounts included in the Collateral, (ii) the
exercise by the Administrative Agent of any of its rights hereunder shall not
release any Grantor from any of its duties or obligations under any Contract
Documents, or any other Contract or Instrument which are part of the Collateral
and Accounts included in the Collateral,

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and (iii) the Administrative Agent shall not have any obligation or liability
under any Contract Documents, or any other contract or instrument which are part
of the Collateral and Accounts included in the Collateral by reason of the
execution and delivery of this Security Agreement, nor shall the Administrative
Agent be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.

                 (e) Transfer of Certain Collateral; Release of Certain Security
Interest. Each Grantor agrees that it shall not sell, assign, or otherwise
dispose of any Collateral, except as otherwise permitted under the Credit
Agreement. The Administrative Agent shall promptly, at the Grantors' expense,
execute and deliver all further instruments and documents, and take all further
action that a Grantor may reasonably request in order to release its security
interest in any Collateral which is disposed of in accordance with the terms of
the Credit Agreement.

                 (f) Accounts. Each Grantor agrees that it will use commercially
reasonable efforts to ensure that each Account (i) is and will be, in all
material respects, the genuine, legal, valid, and binding obligations of the
account debtor in respect thereof, representing an unsatisfied obligation of
such account debtor, (ii) is and will be, in all material respects, enforceable
in accordance with its terms, (iii) is not and will not be subject to any
setoffs, defenses, taxes, counterclaims, except in the ordinary course of
business, (iv) is and will be, in all material respects, in compliance with all
applicable laws, whether federal, state, local or foreign, and (v) which if
evidenced by Chattel Paper, will not require the consent of the account debtor
in respect thereof in connection with its assignment hereunder.

                 (g) Negotiable Instrument. If any Grantor shall at any time
hold or acquire any Negotiable Instruments, including promissory notes, such
Grantor shall forthwith endorse, assign and deliver the same to the
Administrative Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Administrative Agent may from time to time
reasonably request.

                 (h) Other Covenants of Grantor. Each Grantor agrees that (i)
any action or proceeding to enforce this Security Agreement may be taken by the
Administrative Agent either in such Grantor's name or in the Administrative
Agent's name, as the Administrative Agent may deem necessary, and (ii) such
Grantor will, until the indefeasible payment in full in cash of the Secured
Obligations (including all Letter of Credit Obligations), the termination or
expiration of all Letters of Credit and the termination of all obligations of
the Issuing Lender and the Lenders in respect of Letters of Credit, the
termination of the Hedge Contracts with the Secured Parties and the termination
or expiration of the Commitments, warrant and defend its title to the Collateral
and the interest of the Administrative Agent in the Collateral against any claim
or demand of any Persons (other than Permitted Liens) which could reasonably be
expected to materially adversely affect such Grantor's title to, or the
Administrative Agent's right or interest in, such Collateral.

                 Section 5. Termination of Security Interest. Upon the
indefeasible payment in full in cash of the Secured Obligations (including all
Letter of Credit Obligations), the termination or expiration of all Letters of
Credit and the termination of all obligations of the Issuing Lender and the
Lenders in respect of Letters of Credit, the termination of all Hedge Contracts
with the Swap

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Counterparties (other than Hedge Contracts with any Swap Counterparty with
respect to which other arrangements satisfactory to the Swap Counterparty and
the Borrower have been made or have been deemed to have to been made under
Section 8.08(b) of the Credit Agreement) and the termination of all obligations
of the Swap Counterparties in respect of such Hedge Contracts, and the
termination or expiration of the Commitments, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
applicable Grantor to the extent such Collateral shall not have been sold or
otherwise applied pursuant to the terms hereof. Upon any such termination, the
Administrative Agent will, at the Grantors' expense, execute and deliver to the
applicable Grantor such documents (including, without limitation, UCC-3
termination statements) as such Grantor shall reasonably request to evidence
such termination.

                 Section 6. Reinstatement. If, at any time after payment in full
of all Secured Obligations and termination of the Administrative Agent's
security interest, any payments on the Secured Obligations previously made must
be disgorged by any Secured Party for any reason whatsoever, including, without
limitation, the insolvency, bankruptcy or reorganization of any Grantor or any
other Person, this Security Agreement and the Administrative Agent's security
interests herein shall be reinstated as to all disgorged payments as though such
payments had not been made, and each Grantor shall sign and deliver to the
Administrative Agent all documents, and shall do such other acts and things, as
may be necessary to reinstate and perfect the Administrative Agent's security
interest. EACH GRANTOR SHALL DEFEND AND INDEMNIFY THE ADMINISTRATIVE AGENT AND
EACH OTHER SECURED PARTY FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY,
COST OR EXPENSE UNDER THIS SECTION 6 (INCLUDING REASONABLE ATTORNEYS' FEES AND
EXPENSES) IN THE DEFENSE OF ANY SUCH ACTION OR SUIT INCLUDING SUCH CLAIM,
DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE ARISING AS A RESULT OF THE INDEMNIFIED
SECURED PARTY'S OWN NEGLIGENCE BUT EXCLUDING SUCH CLAIM, DAMAGE, LOSS,
LIABILITY, COST, OR EXPENSE THAT IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY
A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED SECURED
PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

                 Section 7. Remedies upon Event of Default.

                 (a) If any Event of Default has occurred and is continuing, the
Administrative Agent may (and shall at the written request of the Required
Lenders given in accordance with the Credit Agreement), (i) proceed to protect
and enforce the rights vested in it by this Security Agreement or otherwise
available to it, including but not limited to, the right to cause all revenues
and other moneys pledged hereby as Collateral to be paid directly to it, and to
enforce its rights hereunder to such payments and all other rights hereunder by
such appropriate judicial proceedings as it shall deem most effective to protect
and enforce any of such rights, either at law or in equity or otherwise, whether
for specific enforcement of any covenant or agreement contained in any of the
Contract Documents, or in aid of the exercise of any power therein or herein
granted, or for any foreclosure hereunder and sale under a judgment or decree in
any judicial proceeding, or to enforce any other legal or equitable right vested
in it by this Security Agreement or by law; (ii) cause any action at law or suit
in equity or other proceeding to be instituted and prosecuted and enforce any
rights hereunder or included in the Collateral, subject to the provisions and

11

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requirements thereof; (iii) sell or otherwise dispose of any or all of the
Collateral or cause the Collateral to be sold or otherwise disposed of in one or
more sales or transactions, at such prices and in such manner as may be
commercially reasonable, and for cash or on credit or for future delivery,
without assumption of any credit risk, at public or private sale, without demand
of performance or notice of intention to sell or of time or place of sale
(except such notice as is required by applicable statute and cannot be waived),
it being agreed that the Administrative Agent may be a purchaser on behalf of
the Secured Parties or on its own behalf at any such sale and that the
Administrative Agent, any other Secured Party, or any other Person who may be a
bona fide purchaser for value and without notice of any claims of any or all of
the Collateral so sold shall thereafter hold the same absolutely free from any
claim or right of whatsoever kind, including any equity of redemption of any
Grantor, any such demand, notice or right and equity being hereby expressly
waived and released to the extent permitted by law; (iv) incur expenses,
including attorneys' fees, reasonable consultants' fees, and other costs
appropriate to the exercise of any right or power under this Security Agreement;
(v) perform any obligation of any Grantor hereunder and make payments, purchase,
contest or compromise any encumbrance, charge or lien, and pay taxes and
expenses, without, however, any obligation to do so; (vi) in connection with any
acceleration and foreclosure, take possession of the Collateral and render it
usable and repair and renovate the same, without, however, any obligation to do
so, and enter upon any location where the Collateral may be located for that
purpose, control, manage, operate, rent and lease the Collateral, collect all
rents and income from the Collateral and apply the same to reimburse the Secured
Parties for any cost or expenses incurred hereunder or under any of the Loan
Documents or under any Hedge Contracts with Swap Counterparties and to the
payment or performance of any Grantor's obligations hereunder or under any of
the Loan Documents or any Hedge Contracts with a Swap Counterparties, and apply
the balance to the other Secured Obligations and any remaining excess balance to
whomsoever is legally entitled thereto; (vii) secure the appointment of a
receiver for the Collateral or any part thereof; (viii) require any Grantor to,
and each Grantor hereby agrees that it will at its expense and upon request of
the Administrative Agent forthwith, assemble all or part of the Collateral as
directed by the Administrative Agent and make it available to the Administrative
Agent at a place to be designated by the Administrative Agent which is
reasonably convenient to both parties; (ix) exercise any other or additional
rights or remedies granted to a secured party under the UCC; or (x) occupy any
premises owned or leased by any Grantor where the Collateral or any part thereof
is assembled for a reasonable period in order to effectuate its rights and
remedies hereunder or under law, without obligation to any Grantor in respect of
such occupation. If, pursuant to applicable law, prior notice of sale of the
Collateral under this Section is required to be given to any Grantor, each
Grantor hereby acknowledges that the minimum time required by such applicable
law, or if no minimum time is specified, 10 days, shall be deemed a reasonable
notice period. The Administrative Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. The Administrative
Agent 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.

                 (b) All costs and expenses (including attorneys' fees and
expenses) incurred by the Administrative Agent in connection with any suit or
proceeding in connection with the performance by the Administrative Agent of any
of the agreements contained in any of the Contract Documents, or in connection
with any exercise of its rights or remedies hereunder

12

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pursuant to the terms of this Security Agreement, shall constitute additional
indebtedness secured by this Security Agreement and shall be paid on demand by
the Grantors to the Administrative Agent on behalf of the Secured Parties.

                 Section 8. Remedies Cumulative; Delay Not Waiver.

                 (a) No right, power or remedy herein conferred upon or reserved
to the Administrative Agent is intended to be exclusive of any other right,
power or remedy and every such right, power and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right, power and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder or
otherwise shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy. Resort to any or all security now or hereafter held
by the Administrative Agent may be taken concurrently or successively and in one
or several consolidated or independent judicial actions or lawfully taken
nonjudicial proceedings, or both.

                 (b) No delay or omission of the Administrative Agent to
exercise any right or power accruing upon the occurrence and during the
continuance of any Event of Default as aforesaid shall impair any such right or
power or shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and every power and remedy given by this Security
Agreement may be exercised from time to time, and as often as shall be deemed
expedient, by the Administrative Agent.

                 Section 9. Contract Rights. The Administrative Agent may
exercise any of the Contract Rights and remedies of any Grantor under or in
connection with the Instruments, Chattel Paper, or Contracts which represent
Accounts, the General Intangibles, or which otherwise relate to the Collateral,
including, without limitation, any rights of any Grantor to demand or otherwise
require payment of any amount under, or performance of any provisions of, the
Instruments, Chattel Paper, or Contracts which represent Accounts, or the
General Intangibles.

                 Section 10. Accounts.

                 (a) The Administrative Agent may, or may direct any Grantor to,
take any action the Administrative Agent deems necessary or advisable to enforce
collection of the Accounts, including, without limitation, notifying the account
debtors or obligors under any Accounts of the assignment of such Accounts to the
Administrative Agent and directing such account debtors or obligors to make
payment of all amounts due or to become due directly to the Administrative
Agent. Upon such notification and direction, and at the expense of the Grantors,
the Administrative Agent may enforce collection of any such Accounts, and
adjust, settle, or compromise the amount or payment thereof in the same manner
and to the same extent as any Grantor might have done.

                 (b) After receipt by any Grantor of the notice referred to in
Section 10(a) above that an Event of Default has occurred and is continuing, all
amounts and Proceeds (including instruments) received by such Grantor in respect
of the Accounts shall be received in trust for the benefit of the Administrative
Agent hereunder, shall be segregated from other funds of such

13

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Grantor, and shall promptly be paid over to the Administrative Agent in the same
form as so received (with any necessary indorsement) to be held as Collateral.
No Grantor shall adjust, settle, or compromise the amount or payment of any
Account, nor release wholly or partly any account debtor or obligor thereof, nor
allow any credit or discount thereon other than in the ordinary course of
business and consistent with past practices.

                 Section 11. Application of Collateral. The proceeds of any
sale, or other realization (other than that received from a sale or other
realization permitted by the Credit Agreement) upon all or any part of the
Collateral pledged by any Grantor shall be applied by the Administrative Agent
as set forth in Section 7.06 of the Credit Agreement.

                 Section 12. Administrative Agent as Attorney-in-Fact for
Grantor. Each Grantor hereby constitutes and irrevocably appoints the
Administrative Agent, acting for and on behalf of itself and the Secured Parties
and each successor or assign of the Administrative Agent and the other Secured
Parties, the true and lawful attorney-in-fact of such Grantor, with full power
and authority in the place and stead of such Grantor and in the name of such
Grantor, the Administrative Agent or otherwise to take any action and execute
any instrument at the written direction of the Secured Parties and enforce all
rights, interests and remedies of such Grantor with respect to the Collateral,
including the right:

                 (a) to ask, require, demand, receive and give acquittance for
any and all moneys and claims for moneys due and to become due under or arising
out of any of the other Collateral, including without limitation, any Insurance
Contracts;

                 (b) to elect remedies thereunder and to endorse any checks or
other instruments or orders in connection therewith;

                 (c) to file any claims or take any action or institute any
proceedings in connection therewith which the Administrative Agent may deem to
be necessary or advisable;

                 (d) to pay, settle or compromise all bills and claims which may
be or become liens or security interests against any or all of the Collateral,
or any part thereof, unless a bond or other security satisfactory to the
Administrative Agent has been provided; and

                 (e) upon foreclosure, to do any and every act which any Grantor
may do on its behalf with respect to the Collateral or any part thereof and to
exercise any or all of such Grantor's rights and remedies under any or all of
the Collateral; provided, however, that the Administrative Agent shall not
exercise any such rights except upon the occurrence and continuation of an Event
of Default. This power of attorney is a power coupled with an interest and shall
be irrevocable.

                 Section 13. Administrative Agent May Perform. The
Administrative Agent may from time-to-time perform any act which any Grantor has
agreed hereunder to perform and which such Grantor shall fail to perform after
being requested in writing so to perform (it being understood that no such
request need be given after the occurrence and during the continuance of any
Event of Default and after notice thereof by the Administrative Agent to any
Grantor) and the Administrative Agent may from time-to-time take any other
action which the Administrative

14

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Agent deems necessary for the maintenance, preservation or protection of any of
the Collateral or of its security interest therein, and the expenses of the
Administrative Agent incurred in connection therewith shall be part of the
Secured Obligations and shall be secured hereby.

                 Section 14. Administrative Agent Has No Duty. The powers
conferred on the Administrative Agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty on it to exercise any
such powers. Except for reasonable care of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral or responsibility for taking any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.

                 Section 15. Reasonable Care. The Administrative Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Administrative Agent accords its own
Property.

                 Section 16. Payments Held in Trust. During the continuance of
an Event of Default, all payments received by any Grantor under or in connection
with any Collateral shall be received in trust for the benefit of the
Administrative Agent, and shall be segregated from other funds of such Grantor
and shall be forthwith paid over to the Administrative Agent in the same form as
received (with any necessary endorsement).

                 Section 17. Miscellaneous.

                 (a) Expenses. Each Grantor will upon demand pay to the
Administrative Agent for its benefit and the benefit of the Secured Parties the
amount of any out-of-pocket expenses, including the fees and disbursements of
its counsel and of any experts, which the Administrative Agent and the other
Secured Parties may incur in connection with (i) the custody, preservation, use,
or operation of, or the sale, collection, or other realization of, any of the
Collateral, (ii) the exercise or enforcement of any of the rights of the
Administrative Agent or any other Secured Party hereunder, and (iii) the failure
by any Grantor to perform or observe any of the provisions hereof.

                 (b) Amendments; Etc. No amendment or waiver of any provision of
this Security Agreement nor consent to any departure by any Grantor herefrom
shall be effective unless the same shall be in writing and executed by the
affected Grantor and the Administrative Agent (acting upon the written direction
of the Required Lenders and given in accordance with the Credit Agreement), and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

                 (c) Addresses for Notices. All notices and other communications
provided for hereunder shall be made in the manner and to the addresses set
forth in the Credit Agreement or on the signature page hereto.

                 (d) Continuing Security Interest; Transfer of Interest. This
Security Agreement shall create a continuing security interest in the Collateral
and, unless expressly released by the Administrative Agent, shall (i) remain in
full force and effect until the indefeasible payment in

15

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full in cash of the Secured Obligations (including all Letter of Credit
Obligations), the termination or expiration of all Letters of Credit and the
termination of all obligations of the Issuing Lender and the Lenders in respect
of Letters of Credit, the termination of all Hedge Contracts with the Swap
Counterparties (other than Hedge Contracts with any Swap Counterparty with
respect to which other arrangements satisfactory to the Swap Counterparty and
the Borrower have been made or have been deemed to have to been made under
Section 8.08(b) of the Credit Agreement) and the termination of all obligations
of the Swap Counterparties in respect of such Hedge Contracts, and the
termination or expiration of the Commitments, (ii) be binding upon each Grantor
and its successors, transferees and assigns, and (iii) inure, together with the
rights and remedies of the Administrative Agent hereunder, to the benefit of and
be binding upon, each Secured Party (other than the Swap Counterparties) and
each of its successors, transferees, and assigns, and to the benefit of and be
binding upon, the Swap Counterparties and each successor, transferee, and assign
of the Swap Counterparties to the extent such successor, transferee, and assign
is a Lender or an Affiliate of a Lender. Without limiting the generality of the
foregoing clause, when any Lender assigns or otherwise transfers any interest
held by it under the Credit Agreement or other Loan Document to any other Person
pursuant to the terms of the Credit Agreement or such other Loan Document, that
other Person shall thereupon become vested with all the benefits held by such
Lender under this Security Agreement. Furthermore, when any Swap Counterparty
assigns or otherwise transfers any interest held by it under a Hedge Contract to
any other Person pursuant to the terms of such agreement, that other Person
shall thereupon become vested with all the benefits held by such Secured Party
under this Security Agreement only if such Person is also then a Lender or an
Affiliate of a Lender.

                 (e) Severability. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.

                 (f) Choice of Law. This Security Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Texas,
except to the extent that the validity or perfection of the security interests
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the state of Texas.

                 (g) Counterparts. The parties may execute this Security
Agreement in counterparts, each of which constitutes an original, and all of
which, collectively, constitute only one agreement. Delivery of an executed
counterpart signature page by facsimile is as effective as executing and
delivering this Security Agreement in the presence of the other parties to this
Security Agreement. In proving this Security Agreement, a party must produce or
account only for the executed counterpart of the party to be charged.

(h) Headings. Paragraph headings have been inserted in this Security Agreement
as a matter of convenience for reference only and it is agreed that such
paragraph headings are not a part of this Security Agreement and shall not be
used in the interpretation of any provision of this Security Agreement.

16

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                 (i) Conflicts. In the event of any explicit or implicit
conflict between any provision of this Security Agreement and any provision of
the Credit Agreement, the terms of the Credit Agreement shall be controlling.

                 (j) Additional Grantors. Pursuant to Section 6.16 of the Credit
Agreement, each Subsidiary of the Borrower that was not in existence on the date
of the Credit Agreement is required to enter into this Security Agreement as a
Grantor upon becoming a Subsidiary of the Borrower. Upon execution and delivery
after the date hereof by the Administrative Agent and such Subsidiary of an
instrument in the form of Annex 1, such Subsidiary shall become a Grantor
hereunder with the same force and effect as if originally named as a Grantor
herein. The execution and delivery of any instrument adding an additional
Grantor as a party to this Security Agreement shall not require the consent of
any other Grantor hereunder. The rights and obligations of each Grantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Grantor as a party to this Security Agreement.

                 (k) Entire Agreement. THIS SECURITY AGREEMENT, THE CREDIT
AGREEMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

                 THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO.

[SIGNATURE PAGES FOLLOW]

17

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                 The parties hereto have caused this Security Agreement to be
duly executed as of the date first above written.

  GRANTORS:

REOSTAR ENERGY, CORPORATION

By:     /s/   Mark S. Zouvas                                         
         Mark S. Zouvas
         Chief Executive Officer

REOSTAR GATHERING, INC.

By:     /s/   Mark S. Zouvas                                         
         Mark S. Zouvas
         President

REOSTAR LEASING, INC.

By:     /s/   Mark S. Zouvas                                         
         Mark S. Zouvas
         President

REOSTAR OPERATING INCORPORATED

By:     /s/   Mark S. Zouvas                                          
         Mark S. Zouvas
         President        

Signature Page to Security Agreement

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

  ADMINISTRATIVE AGENT:
UNION BANK OF CALIFORNIA, N.A., as
Administrative Agent

By:   /s/ Randall Osterberg                                          
         Randall Osterberg
         Senior Vice President

       

Signature Page to Security Agreement

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

SCHEDULE 1
to Security Agreement

GRANTOR INFORMATION

Grantor:

Sole Jurisdiction of Formation / Filing:

Type of Organization:

Address where records for Collateral are kept:

Organizational Number:

Federal Tax Identification Number:

Prior Names: ReoStar Energy, Corporation

Nevada

Corporation

3880 Hulen St., Suite 500
Fort Worth, TX 76107

C31758-2004

20-8428738

Goldrange Resources, Inc.

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

Grantor:

Sole Jurisdiction of Formation / Filing:

Type of Organization:

Address where records for Collateral are kept:

Organizational Number:

Federal Tax Identification Number:

Prior Names: ReoStar Gathering, Inc.

Texas

Corporation

5416 Birchman Avenue
Fort Worth, TX 76107
800834771

26-0480775

None Grantor:

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

Grantor:

Sole Jurisdiction of Formation / Filing:

Type of Organization:

Address where records for Collateral are kept:

Organizational Number:

Federal Tax Identification Number:

Prior Names: ReoStar Leasing, Inc.

Texas

Corporation

5416 Birchman Avenue
Fort Worth, TX 76107

800838454

26-0749912

None

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

Schedule 1 to Security Agreement

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

Grantor:

Sole Jurisdiction of Formation / Filing:

Type of Organization:

Address where records for Collateral are kept:

Organizational Number:

Federal Tax Identification Number:

Prior Names: ReoStar Operating Incorporated

Texas

Corporation

5416 Birchman Avenue
Fort Worth, TX 76107

801017988

26-3194507

None

Schedule 1 to Security Agreement

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

Annex 1 to the
Security Agreement

                 SUPPLEMENT NO. [ ] dated as of [ ] (the "Supplement"), to the
Security Agreement dated as of October [___], 2008 (as amended, supplemented or
otherwise modified from time to time, the "Security Agreement"), by and among
REOSTAR ENERGY CORPORATION, a Nevada corporation ("Borrower"), each subsidiary
of Borrower signatory thereto (together with the Borrower, the "Grantors" and
individually, a "Grantor") and Union Bank of California, N.A. as Administrative
Agent under the Credit Agreement (as hereinafter defined) for the benefit of
itself and the Secured Parties (as hereinafter defined).

                 A. Reference is made to the following documents related to
extension of credit to the Borrower or any Subsidiary thereof:

                 (i) that certain Credit Agreement dated as of October 30, 2008
(as it may be amended, restated or otherwise modified from time to time, the
"Credit Agreement") by and among the Borrower, the lenders party thereto from
time to time (the "Lenders"), and Union Bank of California, N.A., as
Administrative Agent for such Lenders;

                 (ii) those Hedge Contracts (as defined in the Credit Agreement)
that the Borrower or any of its Subsidiaries that are Guarantors (as defined in
the Credit Agreement) may from time to time enter into one or more with a Swap
Counterparty (as defined in the Credit Agreement, and such Swap Counterparties,
the Administrative Agent, the Issuing Lender and the Lenders, being collectively
referred to herein as the "Secured Parties").

                 B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Security Agreement
and the Credit Agreement.

                 C. The Grantors have entered into the Security Agreement in
order to induce the Lenders to make loans and the Issuing Lender to issue
letters of credit under the Credit Agreement. Pursuant to Section 6.16 of the
Credit Agreement, each Subsidiary of the Borrower that was not in existence on
the date of the Credit Agreement is required to enter into the Security
Agreement as a Grantor upon becoming a Subsidiary. Section 17(j) of the Security
Agreement provides that additional Subsidiaries of the Borrower may become
Grantors under the Security Agreement by execution and delivery of an instrument
in the form of this Supplement. The undersigned Subsidiary of the Borrower (the
"New Grantor") is executing this Supplement in accordance with the requirements
of the Credit Agreement to become a Grantor under the Security Agreement in
order to induce the Lenders to make additional loans and the Issuing Lender to
issue additional letters of credit and as consideration for loans previously
made and letters of credit previously issued.

                 Accordingly, the Administrative Agent and the New Grantor agree
as follows:

                 SECTION 1. In accordance with Section 17(j) of the Security
Agreement, the New Grantor by its signature below becomes a Grantor under the
Security Agreement with the same force and effect as if originally named therein
as a Grantor and the New Grantor hereby agrees (a) to all the terms and
provisions of the Security Agreement applicable to it as a Grantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a

Annex 1 to Security Agreement

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

Grantor thereunder are true and correct on and as of the date hereof in all
material respects. In furtherance of the foregoing, the New Grantor, as security
for the payment and performance in full of the Secured Obligations (as defined
in the Security Agreement), does hereby create and grant to the Administrative
Agent, its successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a continuing security interest in and lien on all of the
New Grantor's right, title and interest in and to the Collateral (as defined in
the Security Agreement) of the New Grantor. Each reference to a "Grantor" in the
Security Agreement shall be deemed to include the New Grantor. The Security
Agreement is hereby incorporated herein by reference.

                 SECTION 2. The New Grantor represents and warrants to the
Administrative Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms
(subject to applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at law)).

                 SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Supplement shall become effective when
the Administrative Agent shall have received counterparts of this Supplement
that, when taken together, bear the signatures of the New Grantor and the
Administrative Agent. Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.

                 SECTION 4. The New Grantor hereby represents and warrants that
set forth on Schedule 1 attached hereto are (a) its sole jurisdiction of
formation and type of organization, (b) the location of all records concerning
its Accounts, General Intangibles, or any other Collateral, (c) its federal tax
identification number and the organizational number, and (d) all names used by
it during the last five years prior to the date of this Supplement.

                 SECTION 5. Except as expressly supplemented hereby, the
Security Agreement shall remain in full force and effect.

                 SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED
BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.

                 SECTION 7. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, neither party hereto shall be required to comply with such provision
for so long as such provision is held to be invalid, illegal or unenforceable,
but the validity, legality and enforceability of the remaining provisions
contained herein and in the Security Agreement shall not in any way be affected
or impaired. The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or

Annex 1 to Security Agreement

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

unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

                 SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in the Security Agreement. All communications and
notices hereunder to the New Grantor shall be given to it at the address set
forth under its signature hereto.

                 SECTION 9. The New Grantor agrees to reimburse the
Administrative Agent for its out-of-pocket expenses in connection with this
Supplement, including the fees, other charges and disbursements of counsel for
the Administrative Agent.

                 THIS SUPPLEMENT, THE SECURITY AGREEMENT, THE CREDIT AGREEMENT
AND THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.

                 THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO.

                 IN WITNESS WHEREOF, the New Grantor and the Administrative
Agent have duly executed this Supplement to the Security Agreement as of the day
and year first above written.

  [Name of New Grantor],

By:
                                                                                 
Name:
                                                                            
Title:
                                                                              

Address:                                                                        
                                                                                        
 

[ADMINISTRATIVE AGENT]

By:
                                                                                 
Name:
                                                                            
Title:
                                                                              

       

Annex 1 to Security Agreement

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

Schedule 1
Supplement No. ____
to the Security Agreement

New Grantor:

Jurisdiction of Formation / Filing:

Type of Organization:

Address where records for
Collateral are kept:

Organizational Number:

Federal Tax Identification Number:

Prior Names:

[GRANTOR]

[STATE]

[ENTITY TYPE]

[ADDRESS]
[CITY, STATE ZIP]

                                                                            

                                                                            

                                                                            

Annex 1 to Security Agreement

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