SECURITY AGREEMENT
 
THIS SECURITY AGREEMENT (the “Agreement”), is entered into and made effective as
of March 28, 2008, by and among INTREPID TECHNOLOGY AND RESOURCES, INC., an
Idaho corporation with its principal place of business located at 501 West
Broadway - Suite 200 Idaho Falls, Idaho 83402 (the “Company”), and the
undersigned subsidiaries of the Company (each a “Guarantor” and collectively
together with the Company, the “Grantors”), in favor YA GLOBAL INVESTMENTS, L.P.
(the “Secured Party”).
 
WHEREAS, in connection with the Securities Purchase Agreement, of even date
herewith, by and among the Company and the Secured Party (the “Securities
Purchase Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue to the Secured Party
(i) an aggregate original principal amount of Five Hundred Eight Five Thousand
Dollars ($585,000) of secured convertible debentures (the “Convertible
Debentures”), which shall be convertible into shares of the Company’s common
stock, par value $0.0005 per share (“Common Stock”); and (ii) warrants (the
“Warrants”) to be exercisable to acquire additional shares of Common Stock
initially in that number of shares of Common Stock set forth in the Securities
Purchase Agreement;
 
WHEREAS, each of the Guarantors (other than the Company) has executed and
delivered a Guaranty, dated the date hereof (the “Guaranty”), in favor of the
Secured Party with respect to the Company’s obligations under the Transaction
Documents; and
 
WHEREAS, in connection with the financial accommodations to the Company by the
Secured Party under the Convertible Debentures or otherwise, each of the
Guarantors shall receive a direct benefit from the execution of such financial
accommodations as part of the affiliated business operations of the Company and
the Guarantors; and
 
WHEREAS, it is a condition precedent to the Secured Party purchasing the
Convertible Debentures and Warrants pursuant to the Securities Purchase
Agreement that the Grantors shall have executed and delivered to the Secured
Party this Agreement providing for the grant to the Secured Party of a security
interest in all assets and personal property of each Grantor to secure all of
the Grantors’ obligations under the Transaction Documents; 
 
NOW, THEREFORE, in consideration of the promises and the mutual covenants herein
contained, and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows:
 
ARTICLE 1.
 
DEFINITIONS AND INTERPRETATIONS
 
Section 1.1. Recitals. The above recitals are true and correct and are
incorporated herein, in their entirety, by this reference.
 

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Section 1.2. Interpretations. Nothing herein expressed or implied is intended or
shall be construed to confer upon any person other than the Secured Party any
right, remedy or claim under or by reason hereof.
 
Section 1.3. Definitions. 
 
To the extent used in this Agreement and not defined herein, terms defined in
the Code shall have the meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined) ascribed to such terms in
the Code. To the extent the definition of any category or type of “collateral”
or Pledged Property is expanded by any amendment, modification or revision to
the Code, such expanded definition will apply automatically as of the date of
such amendment, modification or revision.
 
As used in this Agreement, the following terms shall have the respective
meanings indicated below (such meanings to be applicable equally to both the
singular and plural forms of such terms):
 
“Code” means the Uniform Commercial Code as in effect from time to time in the
State of New Jersey; provided, however, that if a term is defined in Article 9
of the Uniform Commercial Code differently than in another Article thereof, the
term shall have the meaning set forth in Article 9 of the Code; provided further
that, if by reason of mandatory provisions of law, perfection, or the effect of
perfection or non-perfection, of a security interest in any Pledged Property or
the availability of any remedy hereunder is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New Jersey, “Uniform Commercial
Code” means the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection or availability of such remedy, as the case may be.
 
“Deposit Account” has the meaning set forth in Section 6.15.
 
“Deposit Account Control Agreement” has the meaning set forth in Section 6.15.
 
“Event of Default” shall be deemed to have occurred under this Agreement upon
the failure by the Grantors to perform, observe, or comply with any of the
covenants, agreements, terms or conditions set forth herein or in the other
Transaction Documents.
 
“GAAP” means generally accepted accounting principles in the United States of
America.
 
“Intellectual Property” shall mean all present and future trade secrets,
know-how and other proprietary information; trademarks, trademark applications,
internet domain names, service marks, trade dress, trade names, business names,
designs, logos, slogans (and all translations, adaptations, derivations and
combinations of the foregoing) indicia and other source and/or business
identifiers, and all registrations or applications for registrations which have
heretofore been or may hereafter be issued thereon throughout the world;
copyrights and copyright applications; (including copyrights for computer
programs) and all tangible and intangible property embodying the copyrights,
unpatented inventions (whether or not patentable); patents and patent
applications; industrial design applications and registered industrial designs;
license agreements related to any of the foregoing and income therefrom; books,
records, writings, computer tapes or disks, flow diagrams, specification sheets,
computer software, source codes, object codes, executable code, data, databases
and other physical manifestations, embodiments or incorporations of any of the
foregoing; all other intellectual property; and all common law and other rights
throughout the world in and to all of the foregoing.
 
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“Lien” has the meaning set forth in Section 4.2.
 
“Loan Instruments” has the meaning set forth in Section 6.1.
 
“Material Adverse Effect” has the meaning set forth in Section 6.1.
 
“Obligations” has the meaning set forth in Section 2.1.
 
“Permitted Indebtedness” has the meaning set forth in Section 7.3.
 
“Permitted Liens” has the meaning set forth in Section 4.2
 
“Pledged Property” has the meaning set forth in Section 2.1.
 
“Transaction Documents” means (i) the Convertible Debentures, (ii) the
Securities Purchase Agreement, (iii) the Warrants, (iv) the Loan Instruments and
(v) any other or related documents.
 
ARTICLE 2.
 
PLEDGED PROPERTY
 
Section 2.1.Grant of Security Interest.
 
(a) As collateral security for the payment or performance in full of the
Obligations, each Grantor hereby pledges and assigns to the Secured Party, its
successors and assigns, and grants to the Secured Party, its successors and
assigns, a continuing security interest in and to all assets and personal
property of each Grantor, wherever located and whether now or hereinafter
existing and whether now owned or hereafter acquired, of every kind and
description, tangible or intangible, including without limitation, all Goods,
Inventory, Equipment, Fixtures, Instruments (including promissory notes),
Documents, Accounts (including health-care-insurance receivables, and license
fees), Contracts, Contract Rights, Chattel Paper (whether tangible or
electronic), Deposit Accounts (and in and to any deposits or other sums at any
time credited to each such Deposit Account), Money, Letters of Credit and
Letter-of-Credit Rights (whether or not the letter of credit is evidenced by a
writing), Commercial Tort Claims, Securities and all other Investment Property,
General Intangibles (including payment intangibles and software), Farm Products,
all books and records relating to any of the foregoing, and all Supporting
Obligations, and any and all proceeds and products of any thereof, including
proceeds of insurance covering any or all of the foregoing, wherever located,
whether now owned, or now due, in which a Grantor has an interest or the power
to transfer rights, or hereafter acquired, arising, or to become due, or in
which a Grantor obtains an interest, or the power to transfer rights, and as
more particularly described on Exhibit A attached hereto (collectively, the
“Pledged Property”).
 
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(b) Simultaneously with the execution and delivery of this Agreement, each
Grantor shall make, execute, acknowledge, file, record and deliver to the
Secured Party such documents, instruments, and agreements, including, without
limitation, financing statements, certificates, affidavits and forms as may, in
the Secured Party’s reasonable judgment, be necessary to effectuate, complete or
perfect, or to continue and preserve, the security interest of the Secured Party
in the Pledged Property.
 
Section 2.2 Security for Obligations. The security interest created hereby in
the Pledged Property constitutes continuing collateral security for all of the
following obligations, whether now existing or hereinafter incurred
(collectively, the “Obligations”):
 
(a) (i) the payment by the Company, as and when due and payable (by scheduled
maturity, acceleration, demand or otherwise), of all amounts from time to time
owing by it in respect of the Convertible Debentures, the other Transaction
Documents, or any other amounts owing by it to the Secured Party, or (ii) in the
case of any Guarantor, the payment by such Guarantor, as and when due and
payable of all “Guaranteed Obligations” under (and as defined in) the Guaranty;
and
 
(b) the due performance and observance by each Grantor of all of its other
debts, liabilities, obligations, covenants and duties owing by any Grantor to
the Secured Party, of every nature, type and description, whether liquidated,
unliquidated, primary, secondary, secured, unsecured, direct, indirect,
absolute, or contingent, and whether or not evidenced by a note, guaranty or
other instrument, and any amendments, extensions, renewals or increases thereof,
including, without limitation, all those under the Transaction Documents or any
agreement or document related to the Transaction Documents, including without
limitation, (i) with respect to any conversion or redemption rights of the
Secured Party under the Convertible Debentures; or (ii) any interest accruing
thereon after insolvency, reorganization or like proceeding relating to the
Grantors, whether or not a claim for post petition interest is allowed in such
proceeding, and all costs and expenses of the Secured Party incurred in the
enforcement, collection or otherwise in connection with any of the foregoing,
including, but not limited to, reasonable attorneys’ fees and expenses.
 
ARTICLE 3.
 
ATTORNEY-IN-FACT; PERFORMANCE
 
Section 3.1.Secured Party Appointed Attorney-In-Fact.
 
Each Grantor hereby appoints the Secured Party as its attorney-in-fact, with
full authority in the place and stead of such Grantor and in the name of each
Grantor or otherwise, exercisable after and during the continuance of an Event
of Default, from time to time in the Secured Party’s discretion to take any
action and to execute any instrument which the Secured Party may reasonably deem
necessary to accomplish the purposes of this Agreement, or for the purpose of
perfecting, confirming, continuing , enforcing or protecting the security
interest in the Pledged Property, including, without limitation, to (a) file one
or more financing statements, continuing statements, filings with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office) or other documents; (b) receive and collect all instruments
made payable to the Grantor representing any payments in respect of the Pledged
Property or any part thereof and to give full discharge for the same; (c)
demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
realize on the Pledged Property as and when the Secured Party may determine; and
(d) to facilitate collection, the Secured Party may notify account debtors and
obligors on any Pledged Property to make payments directly to the Secured Party.
The foregoing power of attorney is a power coupled with an interest and shall be
irrevocable until all Obligations are paid and performed in full. The Grantors
agree that the powers conferred on the Secured Party hereunder are solely to
protect the Secured Party’s interests in the Pledged Property and shall not
impose any duty upon the Secured Party to exercise any such powers.
 
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Section 3.2.Secured Party May Perform.
 
If a Grantor fails to perform any agreement contained herein, the Secured Party,
at its option, may itself perform, or cause performance of, such agreement, and
the expenses of the Secured Party incurred in connection therewith shall be
included in the Obligations secured hereby and payable by such Grantor under
Section 8.3.
 
ARTICLE 4.
 
REPRESENTATIONS AND WARRANTIES
 
Section 4.1.Authorization; Enforceability.
 
Each of the parties hereto represents and warrants that it has taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby; and upon execution and delivery, this
Agreement shall constitute a valid and binding obligation of the respective
party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights or by the principles governing the
availability of equitable remedies.
 
Section 4.2.Ownership of Pledged Property; Priority of Security Interest.
 
Each Grantor represents and warrants that it is the legal and beneficial owner
of the Pledged Property free and clear of any lien, security interest, option or
other charge or encumbrance (each, a “Lien”) except for the security interest
created by this Agreement and other Permitted Liens. For purposes of this
Agreement, “Permitted Liens” means: (1) the security interest created by this
Agreement, (2) existing Liens which have been disclosed by the Grantors to the
Secured Party on Schedule 4.2 attached hereto; (3) inchoate Liens for taxes,
assessments or governmental charges or levies not yet due, as to which the grace
period, if any, related thereto has not yet expired, or being contested in good
faith and by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP; (4) Liens of carriers, materialmen,
warehousemen, mechanics and landlords and other similar Liens which secure
amounts which are not yet overdue or which are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP; (5) licenses, sublicenses, leases or subleases granted to
other persons not materially interfering with the conduct of the business of the
Grantors; (6) Liens securing capitalized lease obligations and purchase money
indebtedness incurred solely for the purpose of financing an acquisition or
lease; (7) easements, rights-of-way, restrictions, encroachments, municipal
zoning ordinances and other similar charges or encumbrances, and minor title
deficiencies, in each case not securing debt and not materially interfering with
the conduct of the business of the Grantors and not materially detracting from
the value of the property subject thereto; (8) Liens arising out of the
existence of judgments or awards which judgments or awards do not constitute an
Event of Default; (9) Liens incurred in the ordinary course of business in
connection with workers compensation claims, unemployment insurance, pension
liabilities and social security benefits and Liens securing the performance of
bids, tenders, leases and contracts in the ordinary course of business,
statutory obligations, surety bonds, performance bonds and other obligations of
a like nature (other than appeal bonds) incurred in the ordinary course of
business (exclusive of obligations in respect of the payment for borrowed
money); (10) Liens in favor of a banking institution arising by operation of law
encumbering deposits (including the right of set-off) and contractual set-off
rights held by such banking institution and which are within the general
parameters customary in the banking industry and only burdening deposit accounts
or other funds maintained with a creditor depository institution; (11) usual and
customary set-off rights in leases and other contracts; and (12) escrows in
connection with acquisitions and dispositions.
 
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Section 4.3 Location of Pledged Property.
 
The Pledged Property is or will be kept at the address(es) of each Grantor set
forth on the signature pages hereof, or such other locations as the Grantors
have given the Secured Party written notice prior to the date hereof, and,
unless otherwise provided herein, the Grantors will not remove any Pledged
Property from such locations without the prior written consent of the Secured
Party which consent shall not be unreasonably withheld.
 
Section 4.4 Location, State of Incorporation and Name of Grantors.
 
Each Grantor’s principal place of business, state of incorporation or
organization, organization identification number, and exact legal name is as set
forth on each such Grantor’s signature page to this Agreement.
 
Section 4.5 Priority of Security Interest. 
 
The security interest granted to the Secured Party hereunder shall be a first
priority security interest subject to no other Liens. Except for the Permitted
Liens, no financing statement covering any of the Pledged Property or any
proceeds thereof is on file in any public office.
 
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ARTICLE 5.
 
DEFAULT; REMEDIES
 
Section 5.1Method of Realizing Upon the Pledged Property: Other Remedies.
 
If any Event of Default shall have occurred and be continuing:
 
(a) The Secured Party may exercise in respect of the Pledged Property, in
addition to any other rights and remedies provided for herein or otherwise
available to it, all of the rights and remedies of a secured party upon default
under the Code (whether or not the Code applies to the affected Pledged
Property), and also may (i) take absolute control of the Pledged Property,
including, without limitation, transfer into the Secured Party's name or into
the name of its nominee or nominees (to the extent the Secured Party has not
theretofore done so) and thereafter receive, for the benefit of the Secured
Party, all payments made thereon, give all consents, waivers and ratifications
in respect thereof and otherwise act with respect thereto as though it were the
outright owner thereof, (ii) require each Grantor to assemble all or part of the
Pledged Property as directed by the Secured Party and make it available to the
Secured Party at a place or places to be designated by the Secured Party that is
reasonably convenient to both parties, and the Secured Party may enter into and
occupy any premises owned or leased by a Grantor where the Pledged Property or
any part thereof is located or assembled for a reasonable period in order to
effectuate the Secured Party's rights and remedies hereunder or under law,
without obligation to such Grantor in respect of such occupation, and
(iii) without notice except as specified below and without any obligation to
prepare or process the Pledged Property for sale, (A) sell the Pledged Property
or any part thereof in one or more parcels at public or private sale, at any of
the Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the Secured
Party may deem commercially reasonable and/or (B) lease, license or dispose of
the Pledged Property or any part thereof upon such terms as the Secured Party
may deem commercially reasonable. Each Grantor agrees that, to the extent notice
of sale or any other disposition of the Pledged Property shall be required by
law, at least ten (10) days' notice to such Grantor of the time and place of any
public sale or the time after which any private sale or other disposition of the
Pledged Property is to be made shall constitute reasonable notification. The
Secured Party shall not be obligated to make any sale or other disposition of
any Pledged Property 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. Each Grantor hereby
waives any claims against the Secured Party arising by reason of the fact that
the price at which the Pledged Property may have been sold at a private sale was
less than the price which might have been obtained at a public sale or was less
than the aggregate amount of the Obligations, even if the Secured Party accepts
the first offer received and does not offer such Pledged Property to more than
one offeree, and waives all rights that such Grantor may have to require that
all or any part of such Pledged Property be marshaled upon any sale (public or
private) thereof. Each Grantor hereby acknowledges that (i) any such sale of the
Pledged Property by the Secured Party may be made without warranty, (ii) the
Secured Party may specifically disclaim any warranties of title, possession,
quiet enjoyment or the like, and (iii) such actions set forth in clauses (i) and
(ii) above shall not adversely affect the commercial reasonableness of any such
sale of Pledged Property.
 
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(b) Any cash held by the Secured Party as Pledged Property and all cash proceeds
received by the Secured Party in respect of any sale of or collection from, or
other realization upon, all or any part of the Pledged Property shall be applied
(after payment of any amounts payable to the Secured Party pursuant to Section
8.3 hereof) by the Secured Party against, all or any part of the Obligations in
such order as the Secured Party shall elect, consistent with the provisions of
the Securities Purchase Agreement. Any surplus of such cash or cash proceeds
held by the Secured Party and remaining after the indefeasible payment in full
in cash of all of the Obligations shall be paid over to whomsoever shall be
lawfully entitled to receive the same or as a court of competent jurisdiction
shall direct.
 
(c) In the event that the proceeds of any such sale, collection or realization
are insufficient to pay all amounts to which the Secured Party is legally
entitled, each Grantor shall be liable for the deficiency, together with
interest thereon at the rate specified in the Convertible Debentures for
interest on overdue principal thereof or such other rate as shall be fixed by
applicable law, together with the costs of collection and the reasonable fees,
costs, expenses and other client charges of any attorneys employed by the
Secured Party to collect such deficiency.
 
(d) Each Grantor hereby acknowledges that if the Secured Party complies with any
applicable state, provincial, or federal law requirements in connection with a
disposition of the Pledged Property, such compliance will not adversely affect
the commercial reasonableness of any sale or other disposition of the Pledged
Property.
 
(e) The Secured Party shall not be required to marshal any present or future
collateral security (including, but not limited to, this Agreement and the
Pledged Property) for, or other assurances of payment of, the Obligations or any
of them or to resort to such collateral security or other assurances of payment
in any particular order, and all of the Secured Party's rights hereunder and in
respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or arising. To
the extent that it lawfully may, each Grantor hereby agrees that it will not
invoke any law relating to the marshaling of collateral which might cause delay
in or impede the enforcement of the Secured Party's rights under this Agreement
or under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, each Grantor hereby irrevocably waives the benefits
of all such laws.
 
Section 5.2Duties Regarding Pledged Property.
 
The Secured Party shall have no duty as to the collection or protection of the
Pledged Property or any income thereon or as to the preservation of any rights
pertaining thereto, beyond the safe custody and reasonable care of any of the
Pledged Property actually in the Secured Party’s possession.
 
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ARTICLE 6.
 
AFFIRMATIVE COVENANTS
 
So long as any of the Obligations shall remain outstanding, unless the Secured
Party shall otherwise consent in writing:
 
Section 6.1.Existence, Properties, Etc.
 
(a) Each Grantor shall do, or cause to be done, all things, or proceed with due
diligence with any actions or courses of action, that may be reasonably
necessary (i) to maintain Grantor’s due organization, valid existence and good
standing under the laws of its state of incorporation, and (ii) to preserve and
keep in full force and effect all qualifications, licenses and registrations in
those jurisdictions in which the failure to do so could have a Material Adverse
Effect; and (b) each Grantor shall not do, or cause to be done, any act
impairing the Grantor’s corporate power or authority (i) to carry on such
Grantor’s business as now conducted, and (ii) to execute or deliver this
Agreement or any other agreement or document delivered in connection herewith,
including, without limitation, the Guaranty , any other collateral documents,
any UCC-1 Financing Statements required by the Secured Party (which documents,
instruments, and agreements collectively shall be referred to as the “Loan
Instruments”) to which it is or will be a party, or perform any of its
obligations hereunder or thereunder. For purpose of this Agreement, the term
“Material Adverse Effect” means any material and adverse affect as determined by
Secured Party in its reasonable discretion, whether individually or in the
aggregate, upon (a) the Grantors’ assets, business, operations, properties or
condition, financial or otherwise; (b) the Grantors’ ability to make payment as
and when due of all or any part of the Obligations; or (c) the Pledged Property.
 
Section 6.2.Financial Statements and Reports.
 
Each Grantor shall furnish to the Secured Party within a reasonable time such
financial data as the Secured Party may reasonably request.
 
Section 6.3.Accounts and Reports.
 
Each Grantor shall maintain a standard system of accounting in accordance with
GAAP and provide, at its sole expense, to the Secured Party the following:
 
(a) as soon as available, a copy of any notice or other communication alleging
any nonpayment or other material breach or default, or any foreclosure or other
action respecting any material portion of its assets and properties, received
respecting any of the indebtedness of such Grantor in excess of $500,000 (other
than the Obligations), or any demand or other request for payment under any
guaranty, assumption, purchase agreement or similar agreement or arrangement
respecting the indebtedness or obligations of others in excess of $500,000; and
 
(b) within fifteen (15) days after the making of each submission or filing, a
copy of any report, financial statement, notice or other document, whether
periodic or otherwise, submitted to the shareholders of the Grantors, or
submitted to or filed by the Grantors with any governmental authority involving
or affecting (i) the Grantors that could reasonably be expected to have a
Material Adverse Effect; (ii) the Obligations; (iii) any part of the Pledged
Property; or (iv) any of the transactions contemplated in this Agreement or the
Loan Instruments (except, in each case, to the extent any such submission,
filing, report, financial statement, notice or other document is posted on EDGAR
Online).
 
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Section 6.4.Maintenance of Books and Records; Inspection.
 
Each Grantor shall maintain its books, accounts and records in accordance with
GAAP, and permit the Secured Party, its officers and employees and any
professionals designated by the Secured Party in writing, at any time during
normal business hours and upon reasonable notice to visit and inspect any of its
properties (including but not limited to the collateral security described in
the Transaction Documents and/or the Loan Instruments), corporate books and
financial records, and to discuss its accounts, affairs and finances with any
employee, officer or director thereof (it being agreed that, unless an Event of
Default shall have occurred and be continuing, there shall be no more than two
(2) such visits and inspections in any fiscal year).
 
Section 6.5.Maintenance and Insurance.
 
(a) Each Grantor shall maintain or cause to be maintained, at its own expense,
all of its material assets and properties in good working order and condition,
ordinary wear and tear excepted, making all necessary repairs thereto and
renewals and replacements thereof.
 
(b) The Grantors shall maintain or cause to be maintained, at their own expense,
insurance in form, substance and amounts (including deductibles), which the
Grantors deems reasonably necessary to the Grantors’ business, (i) adequate to
insure all assets and properties of the Grantors of a character usually insured
by persons engaged in the same or similar business against loss or damage
resulting from fire or other risks included in an extended coverage policy;
(ii) against public liability and other tort claims that may be incurred by the
Grantors; (iii) as may be required by the Transaction Documents and/or
applicable law and (iv) as may be reasonably requested by Secured Party, all
with financially sound and reputable insurers.
 
Section 6.6.Contracts and Other Collateral.
 
Each Grantor shall perform all of its obligations under or with respect to each
instrument, receivable, contract and other intangible included in the Pledged
Property to which such Grantor is now or hereafter will be party on a timely
basis and in the manner therein required, including, without limitation, this
Agreement, except to the extent the failure to so perform such obligations would
not reasonably be expected to have a Material Adverse Effect.
 
Section 6.7.Defense of Collateral, Etc.
 
Each Grantor shall defend and enforce its right, title and interest in and to
any part of: (a) the Pledged Property; and (b) if not included within the
Pledged Property, those assets and properties whose loss would reasonably be
expected to have a Material Adverse Effect, each against all manner of claims
and demands on a timely basis to the full extent permitted by applicable law
(other than any such claims and demands by holders of Permitted Liens).
 
Section 6.8.Taxes and Assessments.
 
Each Grantor shall (a) file all material tax returns and appropriate schedules
thereto that are required to be filed under applicable law, prior to the date of
delinquency (taking into account any extensions of the original due date),
(b) pay and discharge all material taxes, assessments and governmental charges
or levies imposed upon a Grantor, upon its income and profits or upon any
properties belonging to it, prior to the date on which penalties attach thereto,
and (c) pay all material taxes, assessments and governmental charges or levies
that, if unpaid, might become a lien or charge upon any of its properties;
provided, however, that the Grantors in good faith may contest any such tax,
assessment, governmental charge or levy described in the foregoing clauses (b)
and (c) so long as appropriate reserves are maintained with respect thereto if
and to the extent required by GAAP.
 
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Section 6.9.Compliance with Law and Other Agreements.
 
Each Grantor shall maintain its business operations and property owned or used
in connection therewith in compliance with (a) all applicable federal, state and
local laws, regulations and ordinances governing such business operations and
the use and ownership of such property, and (b) all agreements, licenses,
franchises, indentures and mortgages to which a Grantor is a party or by which
such Grantor or any of its properties is bound, except where the failure to so
comply would not reasonably be expected to have a Material Adverse Effect.
 
Section 6.10.Notice of Default.
 
The Grantors will immediately notify the Secured Party of any event causing a
substantial loss or diminution in the value of all or any material part of the
Pledged Property and the amount or an estimate of the amount of such loss or
diminution. The Grantors shall promptly notify the Secured Party of any
condition or event which constitutes, or would constitute with the passage of
time or giving of notice or both, an Event of Default, and promptly inform the
Secured Party of any events or changes in the financial condition of any Grantor
occurring since the date of the last financial statement of such Grantor
delivered to the Secured Party, which individually or cumulatively when viewed
in light of prior financial statements, which might reasonably be expected to
have a Material Adverse Effect on the business operations or financial condition
of the Grantors.
 
Section 6.11.Notice of Litigation.
 
Each Grantor shall give notice, in writing, to the Secured Party of (a) any
actions, suits or proceedings wherein the amount at issue is in excess of
$250,000, instituted by any persons against a Grantor, or affecting any of the
assets of such Grantor, and (b) any dispute, not resolved within fifteen (15)
days of the commencement thereof, between a Grantor on the one hand and any
governmental or regulatory body on the other hand, which might reasonably be
expected to have a Material Adverse Effect on the business operations or
financial condition of such Grantor.
 
Section 6.13. Future Subsidiaries.
 
If any Grantor shall hereafter create or acquire any subsidiary, simultaneously
with the creation or acquisition of such subsidiary, such Grantor shall cause
such subsidiary to become a party to this Agreement as an additional "Grantor"
hereunder, and to duly execute and deliver a guaranty of the Obligations in
favor of the Secured Party in form and substance reasonably acceptable to the
Secured Party, and to duly execute and/or deliver such opinions of counsel and
other documents, in form and substance reasonably acceptable to the Secured
Party, as the Secured Party shall reasonably request with respect thereto.
 
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Section 6.14. Changes to Identity.
 
Each Grantor will (a) give the Secured Party at least 30 days' prior written
notice of any change in such Grantor's name, identity or organizational
structure, (b) maintain its jurisdiction of incorporation, organization or
formation as set forth on its respective signature page attached hereto, (c)
immediately notify the Secured Party upon obtaining an organizational
identification number, if on the date hereof such Grantor did not have such
identification number.
 
Section 6.15. Establishment of Deposit Account, Account Control Agreements. 
 
Within ten (10) days of the date hereof, each Grantor, the Secured Party, and
each applicable bank or other depository institution shall enter into a deposit
account control agreement (“Deposit Account Control Agreement”) in the form of
Exhibit B with respect to each of the Grantor’s deposit accounts, including,
without limitation, all savings, passbook, money market or other depository
accounts, and all certificates of deposit, maintained by each Grantor with any
bank, savings and loan association, credit union or other depository institution
maintained or used by each Grantor (the “Deposit Accounts”) providing dominion
and control over such accounts to the Secured Party such that upon notice by the
Secured Party to such bank or other depository institution of the occurrence of
an Event of Default all actions under such account shall be taken solely at the
Secured Party’s direction. Each Grantor’s current Deposit Accounts are set forth
on Schedule 6.15 attached hereto.
 
Each Grantor shall cause all cash, all collections and proceeds from accounts
receivable, all receipts from credit card payments, and all proceeds from the
sale of any Pledged Property to be deposited only into its Deposit Accounts in
the ordinary course of business and consistent with past practices.
 
Each Grantor shall have valid and effective Deposit Account Control Agreements
in place at all times with respect to all of its Deposit Accounts. No Deposit
Account shall be established, used or maintained by a Grantor unless it first
enters into a Deposit Account Control Agreement.
 
With respect to each Deposit Account, from an after the occurrence of an Event
of Default, the Secured Party shall have the right, at any time and from time to
time, to exercise its rights under such Deposit Account Control Agreement,
including, for the avoidance of any doubt, the exclusive right to give
instructions to the financial institution at which such Deposit Account is
maintained as to the disposition of funds or other property on deposit therein
or credited thereto. The Secured Party hereby covenants and agrees that it will
not send any such notice to a financial institution at which any such Deposit
Account is maintained directing the disposition of funds or other property
therein unless and until the occurrence of an Event of Default.
 
In connection with the foregoing, each Grantor hereby authorizes and directs
each bank or other depository institution which maintains any Deposit Account to
pay or deliver to the Secured Party upon the Secured Party’s written demand
thereof made at any time after the occurrence of an Event of Default has
occurred all balances in each Deposit Account with such depository for
application to the Obligations then outstanding.
 
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Section 6.16 Perfection of Security Interests.
 
(a) Financing Statements. The Grantors hereby irrevocably authorize the Secured
Party, at the sole cost and expense of the Grantors, at any time and from time
to time to file in any filing office in any jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Pledged Property (i) as
all assets of Grantors or words of similar effect, regardless of whether any
particular asset comprised in the Pledged Property falls within the scope of
Article 9 of the Code of such jurisdiction, or (ii) as being of an equal or
lesser scope or with greater detail, and (b) contain any other information
required by Part 5 of Article 9 of the Code for the sufficiency or filing office
acceptance of any financing statement or amendment, including (i) whether such
Grantor is an organization, the type of organization and any organization
identification number issued to such Grantor, and (ii) in the case of a
financing statement filed as a fixture filing, a sufficient description of real
property to which the Pledged Property relates. Grantors agree to furnish any
such information to the Secured Party promptly upon request. Grantors also
ratify their authorization for the Secured Party to have filed in any
jurisdiction any initial financing statements or amendments thereto if filed
prior to the date hereof. The Grantors acknowledge that they are not authorized
to file any financing statement or amendment or termination statement with
respect to any financing statement without the prior written consent of the
Secured Party and agree that they will not do so without the prior written
consent of the Secured Party. The Grantors acknowledge and agree that this
Agreement constitutes an authenticated record.
 
(b) Possession. The Grantors (i) shall have possession of the Pledged Property,
except where expressly otherwise provided in this Agreement or where the Secured
Party chooses to perfect its security interest by possession in addition to the
filing of a financing statement; and (ii) will, where Pledged Property is in the
possession of a third party, join with the Secured Party in notifying the third
party of the Secured Party’s security interest and obtaining an acknowledgment
from the third party that it is holding the Pledged Property for the benefit of
the Secured Party.
 
(c) Control. In addition to the provisions set forth in Section 6.15 above, the
Grantors will cooperate with the Secured Party in obtaining control with respect
to the Pledged Property consisting of (i) Investment Property, (ii) Letters of
Credit and Letter-of-Credit Rights and (iii) electronic Chattel Paper.
 
(d) Chattel Paper; Marking of Chattel Paper. The Grantors will not create any
Chattel Paper without placing a legend on the Chattel Paper acceptable to the
Secured Party indicating that the Secured Party has a security interest in the
Chattel Paper.
 
Section 6.17 Notice of Commercial Tort Claims. Attached as Schedule 6.17 is a
list of all Commercial Tort Claims of the Grantors (as such Schedule may be
amended, modified or supplemented from time to time). If any Grantor shall at
any time acquire a Commercial Tort Claim, such Grantor shall immediately notify
the Secured Party in a writing signed by such Grantor which shall (a) provide
brief details of said claim and (b) grant to the Secured Party a security
interest in said claim and in the proceeds thereof, all upon the terms of this
Agreement, in such form and substance satisfactory to the Secured Party.
 
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ARTICLE 7.
 
NEGATIVE COVENANTS
 
So long as any of the Obligations shall remain outstanding, unless the Secured
Party shall otherwise consent in writing each Grantor covenants and agrees that
it shall not:
 
Section 7.1. Transfers, Liens and Encumbrances.
 
(a) Sell, assign (by operation of law or otherwise), lease, license, exchange or
otherwise transfer or dispose of any of the Pledged Property, except Grantors
may (i) sell or dispose of Inventory in the ordinary course of business, and
(ii) sell or dispose of assets the Grantors have determined, in good faith, not
to be useful in the conduct of its business, and (iii) sell or dispose of
accounts in the course of collection in the ordinary course of business
consistent with past practice.
 
(b) Directly or indirectly make, create, incur, assume or permit to exist any
Lien in, to or against any part of the Pledged Property other than Permitted
Liens.
 
Section 7.2. Restriction on Redemption and Cash Dividends
 
Directly or indirectly, redeem, repurchase or declare or pay any cash dividend
or distribution on its capital stock without the prior express written consent
of the Secured Party.
 
Section 7.3. Incurrence of Indebtedness.
 
Directly or indirectly, incur or guarantee, assume or suffer to exist any
indebtedness, other than the indebtedness evidenced by the Convertible
Debentures and other Permitted Indebtedness. “Permitted Indebtedness” means: (i)
indebtedness evidenced by Convertible Debentures; (ii) existing indebtedness
disclosed by each Grantor on Schedule 7.3; (iii) indebtedness incurred solely
for the purpose of financing the acquisition or lease of any equipment by the
Company, including capital lease obligations with no recourse other than to such
equipment; (iv) indebtedness (A) the repayment of which has been subordinated to
the payment of the Obligations on terms and conditions acceptable to the Secured
Party, including with regard to interest payments and repayment of principal,
(B) which does not mature or otherwise require or permit redemption or repayment
prior to or on the 91st day after the maturity date of any Convertible
Debentures then outstanding; and (C) which is not secured by any assets of the
Grantors; (v) indebtedness solely between a Grantor and/or one of its domestic
subsidiaries, on the one hand, and a Grantor and/or one of its domestic
subsidiaries, on the other which indebtedness is not secured by any assets of
the Grantor or any of its subsidiaries, provided that (x) in each case a
majority of the equity of any such domestic subsidiary is directly or indirectly
owned by the Grantor, such domestic subsidiary is controlled by the Grantor and
such domestic subsidiary has executed a security agreement in the form of this
Agreement and (y) any such loan shall be evidenced by an intercompany note that
is pledged by such Grantor or its subsidiary, as applicable, as collateral
pursuant to this Agreement; (vi) reimbursement obligations in respect of letters
of credit issued for the account of the Grantor or any of its subsidiaries for
the purpose of securing performance obligations of such Grantor or its
subsidiaries incurred in the ordinary course of business so long as the
aggregate face amount of all such letters of credit does not exceed $500,000 at
any one time; and (vii) renewals, extensions and refinancing of any indebtedness
described in clause (i) or (iii) of this subsection.
 
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Section 7.4. Places of Business.
 
(i) Change its state of organization or incorporation, or (ii) change the
location of its chief place of business, chief executive office or any place of
business disclosed to the Secured Party, unless such change in location is to a
different location within the United States and such Grantor provides notice to
the Secured Party of new location within 10 days’ of such change in location.
 
ARTICLE 8.
 
MISCELLANEOUS
 
Section 8.1.Notices.
 
All notices or other communications required or permitted to be given pursuant
to this Agreement shall be in writing and shall be considered as duly given on:
(a) the date of delivery, if delivered in person or by nationally recognized
overnight delivery service or (b) five (5) days after mailing if mailed from
within the continental United States by certified mail, return receipt requested
to the party entitled to receive the same:
 
If to the Secured Party:
YA Global Investments, L.P.
 
101 Hudson Street-Suite 3700
 
Jersey City, New Jersey 07302
 
Attention: Mark Angelo
 
Portfolio Manager
 
Telephone: (201) 986-8300
 
Facsimile: (201) 985-8266
   
With a copy to:
David Gonzalez, Esq.
 
101 Hudson Street, Suite 3700
 
Jersey City, NJ 07302
 
Telephone: (201) 985-8300
 
Facsimile: (201) 985-8266

 
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If to the Company:
Intrepid Technology and Resources, Inc.
 
501 West Broadway, Suite 200
 
Idaho Falls, ID 83402
 
Attention: Jacob D. Dustin
 
Telephone: (208) 529-5337
 
Facsimile: (208) 529-1014
   
With a copy to:
Kirkpatrick & Lockhart Preston Gates Ellis LLP
 
200 South Biscayne Boulevard, Suite 2000
 
Miami, Florida 33131
 
Attention: Clayton E. Parker, Esq.
 
Telephone: (305) 539-3306
 
Facsimile: (305) 358-7095
   
If to any other Grantor
To the address listed on the respective signature pages attached hereto

Any party may change its address by giving notice to the other party stating its
new address. Commencing on the tenth (10th) day after the giving of such notice,
such newly designated address shall be such party’s address for the purpose of
all notices or other communications required or permitted to be given pursuant
to this Agreement.
 
Section 8.2.Severability.
 
If any provision of this Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall not
in any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein.
 
Section 8.3.Expenses.
 
In the event of an Event of Default, the Grantors will pay to the Secured Party
the amount of any and all reasonable out-of-pocket expenses, including the
reasonable fees and expenses of its counsel, which the Secured Party may incur
in connection with: (i) the custody or preservation of, or the sale, collection
from, or other realization upon, any of the Pledged Property; (ii) the exercise
or enforcement of any of the rights of the Secured Party hereunder or (iii) the
failure by a Grantor to perform or observe any of the provisions hereof.
 
Section 8.4.Waivers, Amendments, Etc.
 
The Secured Party’s delay or failure at any time or times hereafter to require
strict performance by a Grantor of any undertakings, agreements or covenants
shall not waive, affect, or diminish any right of the Secured Party under this
Agreement to demand strict compliance and performance herewith. Any waiver by
the Secured Party of any Event of Default shall not waive or affect any other
Event of Default, whether such Event of Default is prior or subsequent thereto
and whether of the same or a different type. None of the undertakings,
agreements and covenants of a Grantor contained in this Agreement, and no Event
of Default, shall be deemed to have been waived by the Secured Party, nor may
this Agreement be amended, changed or modified, unless such waiver, amendment,
change or modification is evidenced by an instrument in writing specifying such
waiver, amendment, change or modification and signed by the Secured Party in the
case of any such waiver, and signed by the Secured Party and the Grantors in the
case of any such amendment, change or modification. Further, no such document,
instrument, and/or agreement purported to be executed on behalf of the Secured
Party shall be binding upon the Secured Party unless executed by a duly
authorized representative of the Secured Party.
 
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Section 8.5.Continuing Security Interest.
 
This Agreement shall create a continuing security interest in the Pledged
Property and shall: (i) remain in full force and effect so long as any of the
Obligations shall remain outstanding; (ii) be binding upon each Grantor and its
successors and assigns; and (iii) inure to the benefit of the Secured Party and
its successors and assigns. Upon the payment or satisfaction in full of the
Obligations, this Agreement and the security interest created hereby shall
terminate, and, in connection therewith, each Grantor shall be entitled to the
return, at its expense, of such of the Pledged Property as shall not have been
sold in accordance with Section 5.1 hereof or otherwise applied pursuant to the
terms hereof and the Secured Party shall deliver to the Company such documents
as the Company shall reasonably request to evidence such termination.
 
Section 8.6.Independent Representation.
 
Each party hereto acknowledges and agrees that it has received or has had the
opportunity to receive independent legal counsel of its own choice and that it
has been sufficiently apprised of its rights and responsibilities with regard to
the substance of this Agreement.
 
Section 8.7.Applicable Law: Jurisdiction.
 
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of New Jersey without regard to the principles of conflict of laws.
The parties further agree that any action between them shall be heard in Hudson
County, New Jersey, and expressly consent to the jurisdiction and venue of the
Superior Court of New Jersey, sitting in Hudson County and the United States
District Court for the District of New Jersey sitting in Newark, New Jersey for
the adjudication of any civil action asserted pursuant to this Paragraph,
provided, however, that nothing herein shall prevent the Secured Party from
enforcing its rights and remedies (including, without limitation, by filing a
civil action) with respect to the Pledged Property and/or the Grantors in any
other jurisdiction in which the Pledged Property and/or the Grantors may be
located.
 
Section 8.8.Waiver of Jury Trial.
 
AS A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND
TO MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, EACH GRANTOR HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT
AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION.
 
Section 8.9 Right of Set Off.
 
The Grantors each hereby grant to the Secured Party, a lien, security interest
and right of setoff as security for all liabilities and obligations to the
Secured Party, whether now existing or hereafter arising, upon and against all
deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of the Secured Party or any of its affiliates,
or any entity under the control of the Secured Party, or in transit to any of
them. At any time, without demand or notice, the Secured Party may set off the
same or any part thereof and apply the same to any liability or obligation of
the Grantors even though unmatured and regardless of the adequacy of any other
collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE SECURED
PARTY TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE GRANTORS, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
 
Section 8.10 Security Interest Absolute. All rights of the Secured Party
hereunder, the security interest in the Pledged Property and all obligations of
the Grantors hereunder shall be absolute and unconditional irrespective of (a)
any lack of validity or enforceability of the Transaction Documents, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Transaction Documents or any other agreement or instrument, (c) any exchange,
release or non-perfection of any Lien on other collateral, or any release or
amendment or waiver of or consent under or departure from any guarantee,
securing or guaranteeing all or any of the Obligations, or (d) the existence of
any claim, set-off or other right which any Grantor may have at any time against
any other Grantor or the Secured Party.
 
Section 8.11 Indemnification. The Grantors shall indemnify, defend, and hold the
Secured Party, or any agent, employee, officer, attorney, or representative of
the Secured Party, harmless of and from any claim brought or threatened against
the Secured Party or any such person so indemnified by any Grantor, any other
obligor or endorser of the Obligations or any other person (as well as from
attorneys' fees and expenses in connection therewith) on account of the Secured
Party's relationship with the Grantors, or any other obligor or endorser of the
Obligations.
 
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Section 8.12. Liability of Grantors. Notwithstanding any provision herein or in
any other Loan Instrument, the Grantors, and each of them, are and shall be
jointly and severally liable for any and all Obligations (whether any such
Obligation is specified as an obligation of the Grantors or of any of them).
 
Section 8.13.  Counterparts; Facsimile Signatures. This Agreement may be
executed and delivered by exchange of facsimile signatures of the Secured Party
and the Grantors, and those signatures need not be affixed to the same copy.
This Agreement may be executed in any number of counterparts.
 
Section 8.14 Entire Agreement.
 
This Agreement and the other documents and agreements delivered in connection
herewith constitute the entire understanding among the parties and supersede any
prior agreement or understanding among them with respect to the subject matter
hereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
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IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as
of the date first above written.

       
COMPANY:
INTREPID TECHNOLOGY AND RESOURCES, INC.
 
   
   
  By:   /s/ Jacob D. Dustin  

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

Name: Jacob D. Dustin
 
Title: President
     
Jurisdiction of Incorporation, Organization or
Formation: Idaho
     
Organizational ID: 82-0230842

 
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IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as
of the date first above written.

       
GUARANTOR:
INTREPID TECHNOLOGY AND RESOURCES BIOGAS, LLC
 
   
   
  By:   /s/ Jacob D. Dustin  

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

Name: Jacob D. Dustin
 
Title: Manager
     
Address For Notices:
501 West Broadway, Suite 200
Idaho Falls, ID 83402
Jurisdiction of Incorporation, Organization or
Formation: Idaho
     
Organizational ID: 32-0183568

 
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IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as
of the date first above written.

       
GUARANTOR:
Intrepid Engineering Services, Inc.
 
   
   
  By:   /s/ Jacob D. Dustin  

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

Name: Jacob D. Dustin
 
Title: President
     
Address For Notices:
501 West Broadway, Suite 200
Idaho Falls, ID 83402
     
Jurisdiction of Incorporation, Organization or
Formation: Idaho
     
Organizational ID: 82-0488989

 
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IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as
of the date first above written.

       
GUARANTOR:
Magic Valley Energy Company, LLC
 
   
   
    By:   /s/ Jacob D. Dustin  

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

Name: Jacob D. Dustin
 
Title: Manager
     
Address For Notices:
501 West Broadway, Suite 200
Idaho Falls, ID 83402
     
Jurisdiction of Incorporation, Organization or
Formation: Idaho
     
Organizational ID: 37-1460426

 
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IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as
of the date first above written.

       
GUARANTOR:
Yakima Valley Biogas, LLC
 
   
   
  By:   /s/ Jacob D. Dustin  

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

Name: Jacob D. Dustin
 
Title: Manager
     
Address For Notices:
501 West Broadway, Suite 200
Idaho Falls, ID 83402
     
Jurisdiction of Incorporation, Organization or
Formation: Idaho
     
Organizational ID: 4207011 (no EIN)

 
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IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as
of the date first above written.

       
SECURED PARTY:
YA GLOBAL INVESTMENTS, L.P.
     
By: Yorkville Advisors, LLC
 
Its: Investment Manager
 
   
   
  By:   /s/ Mark Angelo  

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

Name: Mark Angelo
 
Title: Portfolio Manager

 
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EXHIBIT A
 
DEFINITION OF PLEDGED PROPERTY
 
For the purpose of securing prompt and complete payment and performance by the
Grantors of all of the Obligations, the Grantors each unconditionally and
irrevocably hereby grant to the Secured Party a continuing security interest in
and to, and lien upon, the following “Pledged Property” of each Grantor (all
capitalized terms used herein and not defined in the Agreement shall have the
respective meanings ascribed thereto in the Code):
 
All personal property of each Grantor, wherever located and whether now or
hereinafter existing and whether now owned or hereafter acquired, of every kind
and description, tangible or intangible, including without limitation, all:
 
1. Goods;
 
2.  Inventory, including, without limitation, all goods, merchandise and other
personal property now owned or hereafter acquired by a Grantor which are held
for sale or lease, or are furnished or to be furnished under any contract of
service or are raw materials, work-in-process, supplies or materials used or
consumed in such Grantor’s business, and all products thereof, and all
substitutions, replacements, additions or accessions therefor and thereto; and
any cash or non-cash Proceeds of all of the foregoing;
 
3.  Equipment, including, without limitation, all machinery, equipment,
furniture, parts, tools and dies, of every kind and description, of the Grantors
(including automotive equipment and motor vehicles), now owned or hereafter
acquired by the Grantors, and used or acquired for use in the business of the
Grantors, together with all accessions thereto and all substitutions and
replacements thereof and parts therefor and all cash or non-cash Proceeds of the
foregoing;
 
4. Fixtures, including, without limitation, all goods which are so related to
particular real estate that an interest in them arises under real estate law and
all accessions thereto, replacements thereof and substitutions therefor,
including, but not limited to, plumbing, heating and lighting apparatus,
mantels, floor coverings, furniture, furnishings, draperies, screens, storm
windows and doors, awnings, shrubbery, plants, boilers, tanks, machinery,
stoves, gas and electric ranges, wall cabinets, appliances, furnaces, dynamos,
motors, elevators and elevator machinery, radiators, blinds and all laundry,
refrigerating, gas, electric, ventilating, air-refrigerating, air-conditioning,
incinerating and sprinkling and other fire prevention or extinguishing equipment
of whatsoever kind and nature and any replacements, accessions and additions
thereto, Proceeds thereof and substitutions therefor;
 
5. Instruments (including promissory notes);
 
6. Documents;
 
7. Accounts, including, without limitation, all Contract Rights and accounts
receivable, health-care-insurance receivables, and license fees; any other
obligations or indebtedness owed to the Grantors from whatever source arising;
all rights of Grantors to receive any payments in money or kind; all guarantees
of Accounts and security therefor; all cash or non-cash Proceeds of all of the
foregoing; all of the right, title and interest of Grantors in and with respect
to the goods, services or other property which gave rise to or which secure any
of the accounts and insurance policies and proceeds relating thereto, and all of
the rights of the Grantors as an unpaid seller of goods or services, including,
without limitation the rights of stoppage in transit, replevin, reclamation and
resale and all of the foregoing, whether now existing or hereafter created or
acquired;
 
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8.  Contracts and Contract Rights, including, to the extent not included in the
definition of Accounts, all rights to payment or performance under a contract
not yet earned by performance and not evidenced by an Instrument or Chattel
Paper;
 
9.  Chattel Paper (whether tangible or electronic);
 
10. Deposit Accounts (and in and to any deposits or other sums at any time
credited to each such Deposit Account);
 
11. Money, cash and cash equivalents;
 
12. Letters of Credit and Letter-of-Credit Rights (whether or not the Letter of
Credit is evidenced by a writing);
 
13. Commercial Tort Claims (if any);
 
14. Securities Accounts, Security Entitlements, Securities, Financial Assets and
all other Investment Property, including, without limitation, all ownership or
membership interests in any subsidiaries or affiliates (whether or not
controlled by the Grantors);
 
15. General Intangibles, including, without limitation, all Payment Intangibles,
Intellectual Property (to the extent to which the Company is not prohibited from
granting a security interest in and to such Intellectual Property), tax refunds
and other claims of the Grantors against any governmental authority, and all
choses in action, insurance proceeds, goodwill, customer lists, formulae,
licenses, permits, franchises, research and literary rights now owned or
hereafter acquired;
 
16. Farm Products;
 
17. All books and records and information (including all ledger sheets, files,
computer programs, tapes and related data processing software) evidencing an
interest in or relating to any of the foregoing and/or to the operation of the
Grantors’ business, and all rights of access to such books and records, and
information, and all property in which such books and records, and information
are stored, recorded and maintained;
 
18. To the extent not already included above, all Supporting Obligations, and
any and all cash and non-cash Proceeds, products, accessions, and/or
replacements of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing.
 
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EXHIBIT B

FORM OF DEPOSIT ACCOUNT CONTROL AGREEMENT
 
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DISCLOSURE SCHEDULE

Schedule 4.2 - Existing Liens

Leased Idaho Falls office:
KeyCorp Corporate Real Estate
Key Bank National Association
P.O. Box 6367
Cleveland, OH 44101

Leased compressed natural gas vehicle fueling station:
Ardent Properties, LLC
PO Box 1683
Idaho Falls, Idaho 83403-1683

Leased postage meter:
Pitney Bowes
PO Box 856390
Louisville, KY 40285-6390

Leased Toyota Camry:
Toyota Financial Services
P. O. Box 60116
City of Industry, CA 91716-0116

Three leased compressed natural gas tube trailers:
FIBA Canning, Inc.
2651 Markham Road
Scarborough, ON M1X 1M4
CANADA

Leased front-end loader:
Cesco Rentals
2000 E. Overland Rd.
Meridian, ID 83642

Leased Semi-Truck:
Schow's Auto Parts
P. O. Box 94
Rupert, ID 83350

Intrepid Technology and Resources Biogas, LLC assets:
VanKampen
 
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Schedule 6.15 - Deposit Accounts

Intrepid Technology and Resources, Inc. Checking Account:
Zions First National Bank
Idaho Falls Office
1235 S. Utah Avenue
Idaho Falls, ID 83402
Acct: 73007326

Intrepid Technology and Resources, Inc. Checking Account:
Wells Fargo Bank, N.A.
4594 North Eagle Road
Boise, ID 83713
Acct: 3522162027

Intrepid Technology and Resources Biogas, LLC. Checking Account:
Acct:
Wells Fargo Bank, N.A.
4594 North Eagle Road
Boise, ID 83713
Acct: 6001015996
 
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Schedule 6.17 - Commercial Tort Claims

None.
 
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Schedule 7.3 - Existing Indebtedness
 
Schedule 7.3 Existing Indebtedness
As of 2008-03-25
 
Liability
 
Amount
 
Yorkville
 
$
3,419,167.65
 
Cannon Builders
 
$
1,959,243.66
 
Biogas Bond
 
$
7,878,750.00
 
Biogas Accounts Payable
 
$
177,882.52
 
Intrepid Inc. Accounts Payable
 
$
143,990.40
 
Payroll for two weeks ending 2008-03-28
 
$
27,600.00
 
Accrued Payroll Liabilities
 
$
636,676.61
 
Total Existing Indebtedness
 
$
14,243,310.84
 

 
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EXHIBIT B

 
FORM OF DEPOSIT ACCOUNT CONTROL AGREEMENT
 
(____________ Company)
 
This Agreement is entered into as of _______________________, , among
_____________, a _______________ corporation ("Company"),
_________________("Lender"), and __________________ ("Bank") with respect to the
following:
 
A. Bank has agreed to establish and maintain for Company deposit account number
______________ (the "Account").
 
B. Company has assigned to Lender a security interest in the Account and in
checks, wire transfers, ACH, EFT and other payment instructions ("Checks")
deposited in the Account.
 
C. Company, Lender and Bank are entering into this Agreement to evidence
Lender's security interest in the Account and such Checks and to provide for the
disposition of net proceeds of Checks deposited in the Account.
 
Accordingly, Company, Lender and Bank agree as follows:
 
1. 1) This Agreement evidences Lender's control over the Account.
Notwithstanding anything to the contrary in the agreement between Bank and
Company governing the Account, Bank will comply with instructions originated by
Lender as set forth herein directing the disposition of funds in the Account
without further consent of the Company.
 
(b) Company represents and warrants to Lender and Bank that it has not assigned
or granted a security interest in the Account or any Check deposited in the
Account, except to Lender.
 
(c) Company will not permit the Account to become subject to any other pledge,
assignment, lien, charge or encumbrance of any kind, other than Lender's
security interest referred to herein.
 
2. During the Activation Period (as defined below), Bank shall deny any requests
from Company to make any withdrawals from the Account. Prior to the Activation
Period, Company may operate and transact business through the Account in its
normal fashion, including making withdrawals from the Account, but covenants to
Lender it will not close the Account. On the first Business Day following the
commencement of the Activation Period, and continuing on each Business Day
thereafter, Bank shall transfer all collected, good and "available" balances in
the Account to Lender at its account specified in the Notice (as defined below).
The "Activation Period" means the period after Bank's receipt of a written
notice from Lender in the, form of Exhibit A (the "Notice"). A "Business Day" is
each day except Saturdays, Sundays and Bank holidays. Funds are not "available"
if, in the reasonable determination of Bank, they are subject to a hold, dispute
or legal process preventing their withdrawal.
 
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3. Bank agrees it shall not offset charge, deduct or otherwise withdraw funds
from the Account, except as permitted by Section 4, until it has been advised in
writing by Lender that all of Company's obligations that are secured by the
Checks and the Account are paid in full. Lender shall notify Bank promptly in
writing upon payment in full of Company's obligations.
 
4. Bank is permitted to charge the Account:
 
(a) For its normal and customary fees and charges relating to the Account or
associated with this Agreement;
 
(b) in the event any Check deposited into the Account is returned unpaid for any
reason or for any breach of warranty claim; and
 
(c) for any other fees or costs permitted under the Lock Box and Blocked Account
Agreement between mid among the parties (the "Lock Box Agreement'').
 
5. (a) If the balances in the Account are not sufficient to compensate Bank for
any fees or charges due Bank in connection with the Account or this Agreement,
Company agrees to pay Bank on demand the amount due Bank.
 
(b) If the balances in the Account are not sufficient to compensate Bank for any
returned Check, Company agrees to pay Bank on demand the amount due Bank. If
Company fails to so pay Bank immediately upon demand, Lender agrees to pay Bank
any amount received by Lender with respect to such returned Check in accordance
with the Lock Box Agreement. The failure to so pay Bank shall constitute a
breach of this Agreement.
 
(c) Company hereby authorizes Bank, without prior notice, from time to time to
debit any other account Company may have with Bank for the amount or amounts due
Bank under subsection 5(a) or 5(b).
 
6. (a) Bank will make available online or telephonically information to Lender
regarding deposits to the Account.
 
(b) In addition to the original Bank statement provided to Company, Bank will
provide Lender with a duplicate of such statement.
 
7. (a) Bank will not be liable to Company or Lender for any expense, claim,
loss, obligation, liability, damage, or cost ("Damages") arising out of or
relating to its performance under this Agreement other than those Damages which
result directly from its acts or omissions constituting gross negligence or
intentional misconduct.
 
(b) In no event will Bank be liable for any special, indirect, exemplary or
consequential damages, including but not limited to lost profits, or any other
matter disclaimed or excluded in the Lock Box Agreement, including but not
limited to as provided in Section 7 thereof.
 
(c) Notwithstanding anything to the contrary in this Agreement, Bank will be
excused from failing to act or delay in acting, and no such failure or delay
shall constitute a breach of this Agreement or otherwise give rise to any
liability of Bank, if such failure or delay is caused by circumstances beyond
Bank's reasonable control, including but not limited to legal constraint,
emergency conditions, action or inaction of governmental, civil or military
authority, fire, strike, lockout or other labor dispute, war, riot, theft,
flood, earthquake, or other natural disaster, breakdown of public or private or
common carrier communications or transmission facilities, computer virus, worm
or denial of service attack, equipment failure, or negligence or default of
Company.
 
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(d) Bank shall have no duty to inquire or determine whether Company's
obligations to Lender are in default or whether Lender is entitled to provide
the Notice to Bank. Bank may rely on notices and communications it believes in
good faith to be genuine and given by the appropriate party.
 
(e) Notwithstanding any of the other provisions in this Agreement, in the event
of the commencement of a case pursuant to Title 11, United States Code, filed by
or against Company, or in the event of the commencement of any similar case
under then applicable federal or state law providing for the relief of debtors
or the protection of creditors by or against Company, Bank may act as Bank deems
necessary to comply with all applicable provisions of governing statutes and
shall not be in violation of this Agreement as a result.
 
(f) Bank shall be permitted to comply with any writ, levy order or other similar
judicial or regulatory order or process concerning the Account or any Check and
shall not be in violation of this Agreement for so doing.
 
8. Company shall indemnify Bank against, and hold it harmless from, any and all
liabilities, losses, obligations, claims, costs, expenses and damages of any
nature (including but not limited to allocated costs of staff counsel, other
reasonable attorneys fees and any fees and expenses) in any way arising out of
or relating to disputes or legal actions concerning Bank's provision of the
services described in this Agreement. This section does not apply to any cost or
damage attributable to the gross negligence or intentional misconduct of Bank.
Company's obligations under this section shall survive termination of this
Agreement.
 
9. Company shall pay to Bank, upon receipt of Bank's invoice, all costs,
expenses and attorneys' fees (including allocated costs for in-house legal
services) incurred by Bank in connection with the enforcement of this Agreement
and any instrument or agreement required hereunder, including but not limited to
any such costs, expenses and fees arising out of the resolution of any conflict,
dispute, motion regarding entitlement to rights or rights of action, or other
action to enforce Bank's rights in a case arising under Title 11, United States
Code.. Company agrees to pay Bank, upon receipt of Bank's invoice, all costs,
expenses and attorneys' fees (including allocated costs for in-house legal
services) incurred by Bank in the preparation and administration of this
Agreement (including any amendments hereto or instruments or agreements required
hereunder).
 
10. Termination and Assignment of this Agreement shall be as follows:
 
(a) Lender may terminate this Agreement by providing notice to Company and Bank
that all of Company's obligations which are secured by Checks and the Account
are paid in full, Lender may also terminate or it may assign this Agreement upon
30 days' prior written notice to Company and Bank. Bank may terminate this
Agreement upon 30 days' prior written notice to Company and Lender. Company may
not terminate this Agreement except with the written consent of Lender and upon
prior written notice to Bank.
 
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(b) Notwithstanding subsection 10(a), Bank may terminate this Agreement at any
time by written notice to Company and Lender if either Company or Lender
breaches any of the terms of this Agreement, or any other agreement with Bank.
 
11. (a) Each party represents and warrants to the other parties that (i) this
Agreement constitutes its duly authorized, legal, valid, binding and enforceable
obligation; (ii) the performance of its obligations under this Agreement and the
consummation of the transactions contemplated hereunder will not (A) constitute
or result in a breach of its certificate or articles of incorporation, by-laws
or partnership agreement, as applicable, or the provisions of any material
contract to which it is a party or by which it is bound or (B) result in the
violation of any law, regulation, judgment, decree or governmental order
applicable to it; and (iii) all approvals and authorizations required to permit
the execution, delivery, performance and consummation of this Agreement and the
transactions contemplated hereunder have been obtained.
 
(b) The parties each agree that it shall be deemed to make and renew each
representation and warranty in subsection 11(a) on and as of each day on which
Company uses the services set forth in this Agreement.
 
12. (a) This Agreement may be amended only by a writing signed by Company,
Lender and Bank; except that Bank's fees and charges are subject to change by
Bank upon 30 days' prior written notice to Company.
 
(b) This Agreement may be executed in counterparts; all such counterparts shall
constitute but one and the same agreement.
 
(c) This Agreement, together with the Lock Box Agreement, and 1st Century Bank,
N.A. Account Terms and Conditions, constitute the entire, agreement regarding
the subject matter hereof, and supersedes all prior understandings, writings,
proposals, representations and communications, oral or written, of any party
relating to the subject matter hereof.
 
(d) This Agreement shall be interpreted in accordance with California law
without reference to that state's principles of conflicts of law.
 
13. Any written notice or other written communication to be given under this
Agreement shall be addressed to each party at its address set forth on the
signature page of this Agreement or to such other address as a party may specify
in writing. Except as otherwise expressly provided herein, any such notice shall
be effective upon receipt.
 
14. Nothing contained in the Agreement shall create any agency, fiduciary, joint
venture or partnership relationship between Bank and Company or Lender.
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their
duly authorized officers as of the day and year first above written.
 
 

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("Company")
   
Address for Notices:
   

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By:

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Name:

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Title:

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T:

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F:

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("Lender")
   
Address for Notices:
   

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By:

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Name:

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Title:

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Attn:

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T:

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F:

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("Bank")
   
Address for Notices:
            By:    

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Name:    
Attn:

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Title:
   
T:

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F:

 
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EXHIBIT A

DEPOSIT ACCOUNT CONTROL AGREEMENT

[Letterhead of Lender]
 
To: [Bank]
[Address]
 
Re: [Name of Company]
Account No. _______________________________

Ladies and Gentlemen:

Reference is made to the Deposit Account Control Agreement dated (the
"Agreement") among [Company Name], us and you regarding the above-described
account (the "Account"). In accordance with Section 2 of the Agreement, we
hereby give you notice of our exercise of control of the Account and we hereby
instruct you to transfer funds to our account as follows:
 
Bank Name:
 

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ABA No.:
 

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Account Name:
 

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Account No.:
 

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Very truly yours,
           

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as Lender

 

           
   
   
  By:      

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Name:
  Title:

 
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