Exhibit 10.2
SECURITY AGREEMENT
          This SECURITY AGREEMENT (this “Agreement”), dated as of December 13,
2007, among Grantors listed on the signature pages hereof and those additional
entities that hereafter become parties hereto by executing the form of
Supplement attached hereto as Annex 1 (collectively, jointly and severally, the
“Grantors” and each, individually, a “Grantor”), and WELLS FARGO FOOTHILL, LLC,
a Delaware limited liability company, in its capacity as administrative agent
for the Lender Group and the Bank Product Provider (together with its successors
and assigns, the “Agent”).
WITNESSETH:
          WHEREAS, pursuant to that certain Credit Agreement of even date
herewith (as amended, restated, supplemented, renewed, extended, replaced or
otherwise modified from time to time, including all schedules thereto, the
“Credit Agreement”) among FOOTHILLS RESOURCES, INC., a Nevada corporation
(“Foothills or Parent”) each of its Subsidiaries that are signatories thereto
(each Subsidiary together with Parent, are referred to hereinafter each
individually as “Borrower”, and individually and collectively, jointly and
severally as the “Borrowers”), the lenders from time to time party thereto as
“Lenders” (“Lenders”), and Agent, the Lender Group has agreed to make certain
financial accommodations available to Borrowers from time to time pursuant to
the terms and conditions thereof, and
          WHEREAS, Agent has agreed to act as agent for the benefit of the
Lender Group and the Bank Product Provider in connection with the transactions
contemplated by the Credit Agreement and this Agreement, and the other Loan
Documents, and
          WHEREAS, in order to induce the Lender Group to enter into the Credit
Agreement and the other Loan Documents and to induce the Lender Group to make
and extend financial accommodations to Borrowers as provided for in the Credit
Agreement, Grantors have agreed to grant a continuing security interest in and
to the Collateral in order to secure the prompt and complete payment, observance
and performance of, among other things, the Secured Obligations, and
          NOW, THEREFORE, for and in consideration of the recitals made above
and other good and valuable consideration, the receipt, sufficiency and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
          1. Defined Terms. All capitalized terms used herein (including in the
preamble and recitals hereof) without definition shall have the meanings
ascribed thereto in the Credit Agreement. Any terms used in this Agreement that
are defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein or in the Credit Agreement; provided, however,
that if the Code is used to define any term used herein and if such term is
defined differently in different Articles of the Code, the definition of such
term contained in Article 9 of the Code shall govern. In addition to those terms
defined elsewhere in this Agreement, as used in this Agreement, the following
terms shall have the following meanings:
          (a) “Account” means an account (as that term is defined in the Code).

 

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

 

          (b) “Account Debtor” means an account debtor (as that term is defined
in the Code).
          (c) “Books” means books and records (including each Grantor’s Records
indicating, summarizing, or evidencing such Grantor’s assets (including the
Collateral) or liabilities, and each Grantor’s Records relating to such
Grantor’s business operations or financial condition), and each Grantor’s goods
or General Intangibles related to such information).
          (d) “Borrowers” has the meaning specified therefor in the recitals to
this Agreement.
          (e) “Chattel Paper” means chattel paper (as that term is defined in
the Code) and includes tangible chattel paper and electronic chattel paper.
          (f) “Code” means the New York Uniform Commercial Code, as in effect
from time to time; provided, however, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection, priority,
or remedies with respect to Agent’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies.
          (g) “Collateral” has the meaning specified therefor in Section 2.
          (h) “Commercial Tort Claims” means commercial tort claims (as that
term is defined in the Code), and includes those commercial tort claims listed
on Schedule 1 attached hereto (“Commercial Tort Claims”).
          (i) “Copyrights” means works of authorship (whether or not published,
and whether or not copyrightable) and copyrights and copyright registrations,
and also includes (i) the copyright registrations and recordings thereof and all
applications in connection therewith listed on Schedule 2 attached hereto and
made a part hereof, (ii) all reissues, restorations, reversions, continuations,
extensions or renewals thereof, (iii) all income, royalties, damages and
payments now and hereafter due or payable under and with respect thereto,
including payments under all licenses entered into in connection therewith and
damages and payments for past or future infringements or dilutions thereof,
(iv) the right to sue for past, present and future infringements and dilutions
thereof, (v) the goodwill of each Grantor’s business symbolized by the foregoing
or connected therewith, and (vi) all of each Grantor’s rights corresponding
thereto throughout the world.
          (j) “Copyright Security Agreement” means each Copyright Security
Agreement among Grantors, or any of them, and Agent, for the benefit of the
Lender Group and the Bank Product Provider, in substantially the form of
Exhibit A attached hereto.
          (k) “Credit Agreement” has the meaning specified therefor in the
recitals to this Agreement.
          (l) “Deposit Account” means a deposit account (as that term is defined
in the Code).
          (m) “Equipment” means equipment (as that term is defined in the Code).

2

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

 

          (n) “General Intangibles” means general intangibles (as that term is
defined in the Code) and, in any event, includes payment intangibles, contract
rights, rights to payment, rights arising under common law, statutes, or
regulations, choses or things in action, goodwill (including the goodwill
associated with any Trademark), Patents, Trademarks, Copyrights, URLs and domain
names, industrial designs, other industrial or Intellectual Property or rights
therein or applications therefor, whether under license or otherwise, rights in
programs, programming materials, blueprints, drawings, purchase orders, customer
lists, monies due or recoverable from pension funds, route lists, rights to
payment and other rights under any royalty or licensing agreements, including
Intellectual Property Licenses, infringement claims, rights in computer
programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, pension plan refunds, pension plan refund claims,
insurance premium rebates, tax refunds, and tax refund claims, interests in a
partnership or limited liability company which do not constitute a security
under Article 8 of the Code, and any other personal property other than
Commercial Tort Claims, money, Accounts, Chattel Paper, Deposit Accounts, goods,
Investment Related Property, and Negotiable Collateral.
          (o) “Grantor” and “Grantors” have the meanings specified therefor in
the recitals to this Agreement.
          (p) “Intellectual Property” means Patents, Copyrights, Trademarks, the
goodwill associated with such Trademarks, trade secrets and customer lists, and
Intellectual Property Licenses.
          (q) “Intellectual Property Licenses” means rights under or interests
in any Patent, Trademark, Copyright or other Intellectual Property, including
software license agreements with any other party, whether the applicable Grantor
is a licensee or licensor under any such license agreement, including the
license agreements listed on Schedule 3 attached hereto and made a part hereof,
and the right to use the foregoing in connection with the enforcement of the
Lender Group’s rights under the Loan Documents, including the right to prepare
for sale and sell any and all Inventory and Equipment now or hereafter owned by
any Grantor and now or hereafter covered by such licenses.
          (r) “Inventory” means inventory (as that term is defined in the Code).
          (s) “Investment Related Property” means (i) investment property (as
that term is defined in the Code), and (ii) all of the following (regardless of
whether classified as investment property under the Code): all Pledged
Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.
          (t) “Negotiable Collateral” means letters of credit, letter-of-credit
rights, instruments, promissory notes, drafts, and documents (as that term is
defined in the Code) and, in any event, including payment intangibles, contract
rights, rights to payment, rights arising under common law, statutes, or
regulations, choses or things in action and goodwill (including the goodwill
associated with any Trademark, Patent, or Copyright).
          (u) “Patents” means inventions, discoveries and ideas, whether
patentable or not, and all patents, registrations and patent applications
therefor, including (i) the patents and patent applications listed on Schedule 4
attached hereto and made a part hereof and all reissues, continuations,
continuations in part, substitutes, extensions or, (ii) all renewals thereof and
improvements thereon, (iii) all income, royalties, damages and payments now and
hereafter due or payable under and with respect thereto, including payments
under all licenses entered into in connection therewith and damages and payments
for past or future infringements or dilutions thereof, (iv) the right to sue for
past, present and

3

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

 

future infringements and dilutions thereof, and (v) all of each Grantor’s rights
corresponding thereto throughout the world.
          (v) “Patent Security Agreement” means each Patent Security Agreement
among Grantors, or any of them, and Agent, for the benefit of the Lender Group
and the Bank Product Provider, in substantially the form of Exhibit B attached
hereto.
          (w) “Pledged Companies” means each Person listed on Schedule 5 hereto
as a “Pledged Company”, together with each other Person, all or a portion of
whose Stock, is acquired or otherwise owned by a Grantor after the Closing Date.
          (x) “Pledged Interests” means all of each Grantor’s right, title and
interest in and to all of the Stock now or hereafter owned by such Grantor,
regardless of class or designation, including all substitutions therefor and
replacements thereof, all proceeds thereof and all rights relating thereto, also
including any certificates representing the Stock, the right to request after
the occurrence and during the continuation of an Event of Default that such
Stock be registered in the name of Agent or any of its nominees as permitted by
the applicable organization documents for such entity, the right to receive any
certificates representing any of the Stock and the right to require that such
certificates be delivered to Agent together with undated powers or assignments
of investment securities with respect thereto, duly endorsed in blank by such
Grantor, all warrants, options, share appreciation rights and other rights,
contractual or otherwise, in respect thereof, and the right to receive
dividends, distributions of income, profits, surplus, or other compensation by
way of income or liquidating distributions, in cash or in kind, and cash,
instruments, and other property from time to time received, receivable, or
otherwise distributed in respect of or in addition to, in substitution of, on
account of, or in exchange for any or all of the foregoing.
          (y) “Pledged Interests Addendum” means a Pledged Interests Addendum
substantially in the form of Exhibit C to this Agreement.
          (z) “Pledged Note Addendum” means a Pledged Note Addendum
substantially in the form of Exhibit E to this Agreement.
          (aa) “Pledged Notes” has the meaning specified therefore in
Section 5(h).
          (bb) “Pledged Operating Agreements” means all of each Grantor’s
rights, powers, and remedies under the limited liability company operating
agreements of each of the Pledged Companies that are limited liability
companies.
          (cc) “Pledged Partnership Agreements” means all of each Grantor’s
rights, powers, and remedies under the partnership agreements of each of the
Pledged Companies that are partnerships, if any.
          (dd) “Proceeds” has the meaning specified therefor in Section 2.
          (ee) “Real Property” means any estates or interests in real property
now owned or hereafter acquired by any Grantor and the improvements thereto.
          (ff) “Records” means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
          (gg) “Security Interest” has the meaning specified therefor in
Section 2.

4

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

 

          (hh) “Secured Obligations” means each and all of the following:
(a) all of the present and future Obligations of Grantors and (b) any
obligations of any future Guarantor, including, in each case, reasonable
attorney’s fees and expenses and any interest, fees, or expenses that accrue
after the filing of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any Insolvency Proceeding.
          (ii) “Securities Account” means a securities account (as that term is
defined in the Code).
          (jj) “Supporting Obligations” means supporting obligations (as such
term is defined in the Code), ad includes letters of credit and guaranties
issued in support of Accounts, Chattel Paper, documents, General Intangibles,
instruments, or Investment Related Property.
          (kk) “Trademarks” means trademarks, trade names, registered
trademarks, trademark applications, service marks, registered service marks and
service mark applications, brand names, certification marks, collective marks,
d/b/a’s, Internet domain names, logos, symbols, trade dress, assumed names,
fictitious names, and other indicia of origin, and also includes (i) the trade
names, registered trademarks, trademark applications, registered service marks,
and service mark applications listed on Schedule 6 attached hereto and made a
part hereof, and (ii) all extensions, modifications and renewals thereof,
(iii) all income, royalties, damages and payments now and hereafter due or
payable under and with respect thereto, including payments under all licenses
entered into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iv) the right to sue for past, present and
future infringements and dilutions thereof, (v) the goodwill of each Grantor’s
business symbolized by the foregoing or connected therewith, and (v) all of each
Grantor’s rights corresponding thereto throughout the world.
          (ll) “Trademark Security Agreement” means each Trademark Security
Agreement among Grantors, or any of them, and Agent, for the benefit of the
Lender Group and the Bank Product Provider, in substantially the form of
Exhibit D attached hereto, pursuant to which Grantors have granted to Agent, for
the benefit of the Lender Group and the Bank Product Provider, a security
interest in all their respective Trademarks.
          (mm) “URL” means “uniform resource locator,” an internet web address.
          2. Grant of Security.
          (a) Each Grantor hereby unconditionally grants, assigns, and pledges
to Agent, for the benefit of the Revolving Loan Lenders and the Bank Product
Providers, a continuing security interest (herein referred to as the “Security
Interest”) in all such Grantor’s right, title, and interest in and to its
personal property whether now owned or hereafter acquired or arising and
wherever located, including such Grantor’s right, title, and interest in and to
the following, whether now owned or hereafter acquired or arising and wherever
located (the “Collateral”):
          (i) all of such Grantor’s Accounts;
          (ii) all of such Grantor’s Books;
          (iii) all of such Grantor’s Chattel Paper;
          (iv) all of such Grantor’s Deposit Accounts;

5

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

 

          (v) all of such Grantor’s Equipment and fixtures;
          (vi) all of such Grantor’s General Intangibles;
          (vii) all of such Grantor’s Inventory;
          (viii) all of such Grantor’s Investment Related Property;
          (ix) all of such Grantor’s Negotiable Collateral;
          (x) all of such Grantor’s rights in respect of Supporting Obligations;
          (xi) all of such Grantor’s Commercial Tort Claims;
          (xii) all of such Grantor’s money, Cash Equivalents, or other assets
of each such Grantor that now or hereafter come into the possession, custody, or
control of Agent (or its agent or designee) or any other member of the Lender
Group;
          (xiii) all of such Grantor’s Hydrocarbons and Hydrocarbon Interests;
          (xiv) all of such Grantor’s Oil and Gas Properties; and
          (xv) all of the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance or Commercial Tort
Claims covering or relating to any or all of the foregoing, and any and all
Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Related Property, Negotiable Collateral,
Supporting Obligations, money, or other tangible or intangible property
resulting from the sale, lease, license, exchange, collection, or other
disposition of any of the foregoing, the proceeds of any award in condemnation
with respect to any of the foregoing, any rebates or refunds, whether for taxes
or otherwise, and all proceeds of any such proceeds, or any portion thereof or
interest therein, and the proceeds thereof, and all proceeds of any loss of,
damage to, or destruction of the above, whether insured or not insured, and, to
the extent not otherwise included, any indemnity, warranty, or guaranty payable
by reason of loss or damage to, or otherwise with respect to any of the
foregoing (the “Proceeds”). Without limiting the generality of the foregoing,
the term “Proceeds” includes whatever is receivable or received when Investment
Related Property or proceeds are sold, exchanged, collected, or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes
proceeds of any indemnity or guaranty payable to any Grantor or Agent from time
to time with respect to any of the Investment Related Property.
          (b) Each Grantor hereby unconditionally grants, assigns, and pledges
to Agent, for the benefit of the Term Loan Lenders, a continuing Security
Interest in all such Grantor’s Right, title, and interest in and to the
Collateral.
          (c) As set forth in separate granting clauses contained in subsections
(a) and (b) above, it is the intent of the Grantors, the Agent and the Lenders
that this Agreement shall create two separate and distinct Liens, a first senior
Lien in favor of the Agent, for the benefit of the Revolving Loan Lenders, the
Bank Product Providers and the Administrative Agent and a second senior Lien in
favor of the Agent, for the benefit of the Term Loan Lenders and the
Administrative Agent.
          Notwithstanding anything herein to the contrary, the term “Collateral”
shall not include, and no Grantor is pledging, nor granting a security interest
hereunder in, any of such Grantor’s right, title or interest in (A) any license,
contract or agreement to which such Grantor is a party as of the date hereof or

6

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

 

any of its right, title or interest thereunder to the extent, but only to the
extent, that such a grant would, under the express terms of such license,
contract or agreement on the date hereof result in a breach of the terms of, or
constitute a default under, such license, contract, or agreement (other than to
the extent that any such term (i) has been waived or (ii) would be rendered
ineffective pursuant to Sections 9-406, 9-408 or 9-409 of the Code or other
applicable provisions of the Uniform Commercial Code of any relevant
jurisdiction or any other applicable law (including the Bankruptcy Code) or
principles of equity); provided, that (x) immediately upon the ineffectiveness,
lapse or termination of any such provision, the Collateral shall include, and
such Grantor shall be deemed to have granted a security interest in, all such
right, title and interest as if such provision had never been in effect and
(y) the foregoing exclusion shall in no way be construed so as to limit, impair
or otherwise affect Agent’s unconditional continuing security interest in and
liens upon any rights or interest of a Grantor in or to the proceeds of, or any
monies due or to become due under, any such license, contract or agreement or
(B) all intent-to-use Untied States trademark applications for which an
amendment to allege use or statement of use has not been filed under 15 U.S.C. §
1051(c) or 15 U.S.C. § 1051(d), respectively, or if filed, has not been deemed
in conformance with 15 U.S.C. § 1051(a) or examined and accepted, respectively,
by the United States Patent and Trademark Office, provided that, upon such
filing and acceptance, such intent-to-use applications shall be included in the
definition of Collateral.
          Prior to an Event of Default, in the event of any conflict between the
terms of the Mortgages with respect to Collateral other than Deed of Trust
Property described in clauses (a) through (g) of Section 1.01 of the Mortgages
(such Collateral other than such other Deed of Trust Property being the “UCC
Property”) on the one hand and the terms of this Agreement with respect to the
UCC Property on the other hand, the terms of this Agreement shall be controlling
and, after the occurrence of an Event of Default, in the event of any conflict
between the remedies and application of proceeds provisions in the Mortgages and
those in this Agreement, in each case with respect to the UCC Property, the
terms of this Agreement shall be controlling.
          3. Security for Obligations. This Agreement and the Security Interest
created hereby secures the payment and performance of the Secured Obligations
(including the Advances and the Bank Product Obligations), whether now existing
or arising hereafter. Without limiting the generality of the foregoing, this
Agreement secures the payment of all amounts which constitute part of the
Secured Obligations that would be owed by Grantors, or any of them, to Agent,
the Lender Group, the Bank Product Provider or any of them, but for the fact
that they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving any Grantor.
          4. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each of the Grantors shall remain liable under the
contracts and agreements included in the Collateral, including any Pledged
Operating Agreements and any Pledged Partnership Agreements, to perform all of
the duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by Agent or any other member of the
Lender Group of any of the rights hereunder shall not release any Grantor from
any of its duties or obligations under such contracts and agreements included in
the Collateral, and (c) none of the members of the Lender Group shall have any
obligation or liability under such contracts and agreements included in the
Collateral by reason of this Agreement, nor shall any of the members of the
Lender Group be obligated to perform any of the obligations or duties of any
Grantors thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder. Until an Event of Default shall occur and be
continuing, except as otherwise provided in this Agreement, the Credit
Agreement, or other Loan Documents, Grantors shall have the right to possession
and enjoyment of the Collateral for the purpose of conducting the ordinary
course of their respective businesses, subject to and upon the terms hereof and
of the Credit Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, it is the intention of the parties hereto that
record and beneficial

7

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

 

ownership of the Pledged Interests, including all voting, consensual, and
dividend rights, shall remain in the applicable Grantor until the occurrence and
continuance of an Event of Default and until Agent shall notify the applicable
Grantor of Agent’s exercise of voting, consensual, or dividend rights with
respect to the Pledged Interests pursuant to Section 15 hereof.
          5. Representations and Warranties. Each Grantor hereby represents and
warrants as follows:
          (a) The exact legal name of each of the Grantors is set forth on the
signature pages of this Agreement or on a written notice provided to Agent
pursuant to Section 6.5 of the Credit Agreement.
          (b) As of the Closing Date, no Grantor has any interest in, or title
to, any Copyrights, Intellectual Property Licenses, Patents, or Trademarks
except as set forth on Schedules 2, 3, 4, and 6, respectively, attached hereto.
This Agreement is effective to create a valid and continuing Lien on such
Copyrights, Intellectual Property Licenses, Patents and Trademarks and, upon
filing of the Copyright Security Agreement with the United States Copyright
Office and filing of the Patent Security Agreement and the Trademark Security
Agreement with the United State Patent and Trademark Office, and the filing of
appropriate financing statements in the jurisdictions listed on Schedule 8
hereto, all action necessary or desirable to protect and perfect the Security
Interest in and to on each Grantor’s Patents, Trademarks, or Copyrights will
have been taken and such perfected Security Interest will be enforceable as such
as against any and all creditors of and purchasers from any Grantor, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium, or similar laws relating to or
limiting creditors’ rights generally. No Grantor has any interest in any
Copyright that is necessary in connection with the operation of such Grantor’s
business, except for those Copyrights identified on Schedule 2 attached hereto
which have been registered with the United States Copyright Office.
          (c) This Agreement creates a valid security interest in the Collateral
(other than Intellectual Property and other similar Collateral referred to in
Section 5(b)) of each Grantor, to the extent a security interest therein can be
created under the Code, securing the payment of the Secured Obligations. Except
to the extent a security interest in the Collateral cannot be perfected by the
filing of a financing statement under the Code, all filings and other actions
necessary or desirable to perfect and protect such security interest have been
duly taken or will have been taken upon the filing of financing statements
listing each applicable Grantor, as a debtor, and Agent, as secured party, in
the jurisdictions listed next to such Grantor’s name on Schedule 8 attached
hereto. Upon the making of such filings, Agent shall have a first priority
perfected security interest in the Collateral of each Grantor to the extent such
security interest can be perfected by the filing of a financing statement. All
action by any Grantor necessary to protect and perfect such security interest on
each item of Collateral has been duly taken.
          (d) (i) Except for the Security Interest created hereby, each Grantor
is and will at all times be the sole holder of record and the legal and
beneficial owner, free and clear of all Liens other than Permitted Liens, of the
Pledged Interests indicated on Schedule 5 as being owned by such Grantor and,
when acquired by such Grantor, any Pledged Interests acquired after the Closing
Date; (ii) all of the Pledged Interests are duly authorized, validly issued,
fully paid and nonassessable and the Pledged Interests constitute or will
constitute the percentage of the issued and outstanding Stock of the Pledged
Companies of such Grantor identified on Schedule 5 hereto as supplemented or
modified by any Pledged Interests Addendum or any Supplement to this Agreement;
(iii) such Grantor has the right and requisite authority to pledge the
Investment Related Property pledged by such Grantor to Agent as provided herein;
(iv) all actions necessary or desirable to perfect, establish the first priority
of, or

8

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

 

otherwise protect, Agent’s Liens in the Investment Related Property and the
proceeds thereof, have been duly taken, (A) upon the execution and delivery of
this Agreement; (B) upon the taking of possession by Agent (or its agent or
designee) of any certificates constituting the Pledged Interests, to the extent
such Pledged Interests are represented by certificates, together with undated
powers endorsed in blank by the applicable Grantor; (C) upon the filing of
financing statements in the applicable jurisdiction set forth on Schedule 8
attached hereto for such Grantor with respect to the Pledged Interests of such
Grantor that are not represented by certificates, and (D) with respect to any
Securities Accounts, upon the delivery of Control Agreements with respect
thereto; and (v) each Grantor has delivered to and deposited with Agent (or,
with respect to any Pledged Interests created or obtained after the Closing
Date, will deliver and deposit in accordance with Sections 6(a) and 8 hereof)
all certificates representing the Pledged Interests owned by such Grantor to the
extent such Pledged Interests are represented by certificates, and undated
powers endorsed in blank with respect to such certificates. None of the Pledged
Interests owned or held by such Grantor has been issued or transferred in
violation of any securities registration, securities disclosure, or similar laws
of any jurisdiction to which such issuance or transfer may be subject.
          (e) No consent, approval, authorization, or other order or other
action by, and no notice to or filing with, any Governmental Authority or any
other Person is required (i) for the grant of a Security Interest by such
Grantor in and to any Material Contract constituting the Collateral pursuant to
this Agreement or for the execution, delivery, or performance of this Agreement
by such Grantor, or (ii) for the exercise by Agent of the voting or other rights
provided for in this Agreement with respect to the Investment Related Property
or the remedies in respect of the Collateral pursuant to this Agreement, except
as may be required in connection with such disposition of Investment Related
Property by laws affecting the offering and sale of securities generally and
except for consents or approvals that have been obtained and that are still in
force and effect.
          (f) There is no default, breach, violation or event of acceleration
existing under any promissory note (as defined in the Code) constituting
Collateral and pledged hereunder (the “Pledged Notes”) and no event has occurred
or circumstance exists which, with the passage of time or the giving of notice,
or both, would constitute a default, breach, violation or event of acceleration
under the Pledged Notes. Such Grantor, if it is an obligee under a Pledged Note,
has not waived any default, breach, violation or event of acceleration under
such Pledged Notes. The proceeds of the loans evidenced by the Pledged Notes
have been fully disbursed and such Grantor has no obligation to make any future
advances or other disbursements under or in respect of the Pledged Notes. A
true, correct and complete list of the Pledged Notes is set forth on
Schedule 10.
     6. Covenants. Each Grantor, jointly and severally, covenants and agrees
with Agent and the Lender Group that from and after the date of this Agreement
and until the date of termination of this Agreement in accordance with
Section 22 hereof:
          (a) Possession of Collateral. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral,
Investment Related Property, or Chattel Paper, and if and to the extent that
perfection or priority of Agent’s Security Interest is dependent on or enhanced
by possession, the applicable Grantor, immediately upon the request of Agent and
in accordance with Section 8 hereof, shall execute such other documents and
instruments as shall be requested by Agent or, if applicable, endorse and
deliver physical possession of such Negotiable Collateral, Investment Related
Property, or Chattel Paper to Agent, together with such undated powers endorsed
in blank as shall be requested by Agent;

9

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

 

          (b) Chattel Paper.
               (i) Each Grantor shall take all steps reasonably necessary to
grant Agent control of all electronic Chattel Paper in accordance with the Code
and all “transferable records” as that term is defined in Section 16 of the
Uniform Electronic Transaction Act and Section 201 of the federal Electronic
Signatures in Global and National Commerce Act as in effect in any relevant
jurisdiction; and
               (ii) If any Grantor retains possession of any Chattel Paper or
instruments (which retention of possession shall be subject to the extent
permitted hereby and by the Credit Agreement), promptly upon the request of
Agent, such Chattel Paper and instruments shall be marked with the following
legend: “This writing and the obligations evidenced or secured hereby are
subject to the Security Interest of Wells Fargo Foothill, LLC, as Agent for the
benefit of the Lender Group and the Bank Product Provider”;
          (c) Control Agreements.
          (i) Except to the extent otherwise permitted by the Credit Agreement,
each Grantor shall obtain an authenticated Control Agreement, from each bank
maintaining a Deposit Account for such Grantor; and
          (ii) Except to the extent otherwise permitted by the Credit Agreement,
each Grantor shall obtain authenticated Control Agreements, from each issuer of
uncertificated securities, securities intermediary, or commodities intermediary
issuing or holding any financial assets or commodities to or for any Grantor;
          (d) Letter-of-Credit Rights. Each Grantor that is or becomes the
beneficiary of a letter of credit shall promptly (and in any event within 2
Business Days after becoming a beneficiary), notify Agent thereof and, upon the
request by Agent, enter into a tri-party agreement with Agent and the issuer or
confirmation bank with respect to letter-of-credit rights (as that term is
defined in the Code) assigning such letter-of-credit rights to Agent and
directing all payments thereunder to Agent’s Account, all in form and substance
satisfactory to Agent;
          (e) Commercial Tort Claims. Each Grantor shall promptly (and in any
event within 2 Business Days of receipt thereof), notify Agent in writing upon
incurring or otherwise obtaining a Commercial Tort Claim after the date hereof
and, upon request of Agent, promptly amend Schedule 1 to this Agreement to
describe such after-acquired Commercial Tort Claim in a manner that reasonably
identifies such Commercial Tort Claim, and hereby authorizes the filing of
additional financing statements or amendments to existing financing statements
describing such Commercial Tort Claims, and agrees to do such other acts or
things deemed necessary or desirable by Agent to give Agent a first priority,
perfected security interest in any such Commercial Tort Claim;
          (f) Government Contracts. If any Account or Chattel Paper arises out
of a contract or contracts with the United States of America or any department,
agency, or instrumentality thereof, Grantors shall promptly (and in any event
within 5 Business Days of the creation thereof) notify Agent thereof in writing
and execute any instruments or take any steps reasonably required by Agent, to
the extent permitted under, and in accordance with, applicable law, in order
that all moneys due or to become due under such contract or contracts shall be
assigned to Agent, for the benefit of the Lender Group and the Bank Product
Provider, and shall provide written notice thereof under the Assignment of
Claims Act or other applicable law;
          (g) Intellectual Property.

10

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

 

               (i) Upon reasonable request of Agent, in order to facilitate
filings with the United States Patent and Trademark Office and the United States
Copyright Office, each Grantor shall execute and deliver to Agent one or more
Copyright Security Agreements, Trademark Security Agreements, or Patent Security
Agreements to further evidence Agent’s Lien on such Grantor’s Patents,
Trademarks, or Copyrights, and the General Intangibles of such Grantor relating
thereto or represented thereby;
               (ii) Each Grantor shall have the duty, to the extent material or
economically desirable in the operation of such Grantor’s business, to take all
reasonable and necessary action to preserve and maintain all of such Grantor’s
Trademarks, Patents, Copyrights, Intellectual Property Licenses, and its rights
therein, including the filing of applications for renewal, affidavits of use,
affidavits of noncontestability and opposition and interference and cancellation
proceedings. Any expenses incurred in connection with the foregoing shall be
borne by the appropriate Grantor. Each Grantor further agrees not to abandon any
Trademark, Patent, Copyright, or Intellectual Property License that is material
or economically desirable to the operation of such Grantor’s business without
the prior written consent of Agent;
               (iii) Grantors acknowledge and agree that the Lender Group shall
have no duties with respect to the Trademarks, Patents, Copyrights, or
Intellectual Property Licenses. Without limiting the generality of this
Section 6(g), Grantors acknowledge and agree that no member of the Lender Group
shall be under any obligation to take any steps necessary to preserve rights in
the Trademarks, Patents, Copyrights, or Intellectual Property Licenses against
any other Person, but any member of the Lender Group may do so at its option
from and after the occurrence and during the continuance of an Event of Default,
and all expenses incurred in connection therewith (including reasonable fees and
expenses of attorneys and other professionals) shall be for the sole account of
Borrowers and shall be chargeable to the Loan Account;
               (iv) In no event shall any Grantor, either itself or through any
agent, employee, licensee, or designee, file an application for the registration
of any Patent, Trademark, or Copyright with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency without giving Agent prior written notice thereof. Promptly upon any such
filing, each Grantor shall comply with Section 6(g)(i) hereof; and
               (v) With regard to the Intellectual Property rights that are
material to the conduct of Grantors’ businesses, each Grantor agrees to take all
necessary steps to protect each such Intellectual Property right. Each Grantor
hereby agrees to take corresponding steps with respect to each new or acquired
Intellectual Property right to which it or any of its Subsidiaries is now or
later becomes entitled that are material to the conduct of their businesses. Any
expenses incurred in connection with such activities shall be borne solely by
such Grantors.
          (h) Investment Related Property.
               (i) If any Grantor shall receive or become entitled to receive
any Pledged Interests after the Closing Date, it shall promptly (and in any
event within 10 days of receipt thereof) deliver to Agent a duly executed
Pledged Interests Addendum identifying such Pledged Interests;
               (ii) All sums of money and property paid or distributed in
respect of the Investment Related Property which are received by any Grantor
shall be held by such Grantor in trust for the benefit of Agent segregated from
such Grantor’s other property, and such Grantor shall promptly deliver it
forthwith to Agent’s in the exact form received;

11

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

 

               (iii) Each Grantor shall promptly deliver to Agent a copy of each
notice or other communication received by it in respect of any Pledged
Interests, including, without limitation, any proposal to amend the
organizational agreements affecting the Pledged Interests or to dissolve or
liquidate the Pledge Company;
               (iv) No Grantor shall make or consent to any amendment or other
modification or waiver with respect to any Pledged Interests, Pledged Operating
Agreement, or Pledged Partnership Agreement, or enter into any agreement or
permit to exist any restriction with respect to any Pledged Interests other than
pursuant to the Loan Documents;
               (v) Each Grantor agrees that it will cooperate with Agent in
obtaining all necessary approvals and making all necessary filings under
federal, state, local, or foreign law in connection with the Security Interest
on the Investment Related Property or any sale or transfer thereof;
               (vi) As to all limited liability company or partnership
interests, issued under any Pledged Operating Agreement or Pledged Partnership
Agreement, each Grantor hereby represents, warrants and covenants that the
Pledged Interests issued pursuant to such agreement (A) are not now, and shall
not be, dealt in or traded on securities exchanges or in securities markets,
(B) do not and will not constitute investment company securities, and (C) are
not and will not be held by such Grantor in a securities account. In addition,
none of the Pledged Operating Agreements, the Pledged Partnership Agreements, or
any other agreements governing any of the Pledged Interests issued under any
Pledged Operating Agreement or Pledged Partnership Agreement, provide or shall
provide that such Pledged Interests are securities governed by Article 8 of the
Uniform Commercial Code as in effect in any relevant jurisdiction;
          (i) Real Property; Fixtures. Each Grantor covenants and agrees that
upon the acquisition of any fee interest in Real Property it will promptly (and
in any event within 2 Business Days of acquisition) notify Agent of the
acquisition of such Real Property and will grant to Agent, for the benefit of
the Lender Group and the Bank Product Provider, a first priority Mortgage on
each fee interest in Real Property now or hereafter owned by such Grantor,
subject only to the Permitted Liens, or with respect to the Oil and Gas
Properties, a Mortgage on each fee interest in such Oil and Gas Properties now
or hereafter owned by such Grantor, subject only to the Permitted Liens and the
Limited Priority Exception for 20% of TRV, and shall deliver such other
documentation and opinions, in form and substance satisfactory to Agent, in
connection with the grant of such Mortgage as Agent shall request in its
Permitted Discretion, including title insurance policies on any owned (rather
than leased) Real Property, financing statements, fixture filings and copies of
available environmental audits, if any, and such Grantor shall pay all recording
costs, intangible taxes and other fees and costs (including reasonable attorneys
fees and expenses) incurred in connection therewith. Each Grantor acknowledges
and agrees that, to the extent permitted by applicable law, all of the
Collateral shall remain personal property regardless of the manner of its
attachment or affixation to real property;
          (j) Transfers and Other Liens. Grantors shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Collateral, except as expressly permitted by the Credit
Agreement, or (ii) create or permit to exist any Lien upon or with respect to
any of the Collateral of any of Grantors, except for Permitted Liens. The
inclusion of Proceeds in the Collateral shall not be deemed to constitute
Agent’s consent to any sale or other disposition of any of the Collateral except
as expressly permitted in this Agreement or the other Loan Documents;

12

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

 

          (k) Other Actions as to Any and All Collateral. Each Grantor shall
promptly (and in any event within 5 Business Days of acquiring or obtaining such
Collateral) notify Agent in writing upon (i) acquiring or otherwise obtaining
any Collateral after the date hereof consisting of Trademarks, Patents,
Copyrights, Intellectual Property Licenses, Investment Related Property, Chattel
Paper (electronic, tangible or otherwise), documents (as defined in Article 9 of
the Code), promissory notes (as defined in the Code, or instruments (as defined
in the Code) or (ii) any amount payable under or in connection with any of the
Collateral being or becoming evidenced after the date hereof by any Chattel
Paper, documents, promissory notes, or instruments and, in each such case upon
the request of Agent, promptly execute such other documents and instruments, or
if applicable, deliver such Chattel Paper, other documents, promissory notes,
instruments or certificates evidencing any Investment Related Property in
accordance with Section 6 hereof and do such other acts or things deemed
necessary or desirable by Agent to protect Agent’s Security Interest therein;
          (l) Pledged Notes.
               (i) If any Grantor shall receive or become entitled to receive
any Pledged Note after the Closing Date, it shall promptly (and in any event
within 5 Business Days of receipt thereof) deliver to Agent a duly executed
Pledged Note Addendum identifying such Pledged Note;
               (ii) No Grantor will waive or release any obligation of any party
to the Pledged Notes without the prior consent of Agent;
               (iii) No Grantor will take or omit to take any action or suffer
or permit any action to be omitted or taken, the taking or omission of which
would result in any right of offset against sums payable under the Pledged
Notes;
               (iv) Each Grantor shall give Agent copies of all notices
(including notices of default) given or received with respect to the Pledged
Notes promptly after giving or receiving such notice; and
               (v) Without Agent’s prior written consent, each Grantor shall
not, and shall not agree to, assign or surrender its rights and interests under
the Pledged Notes nor terminate, cancel, modify, change, supplement or amend the
Pledged Notes.
          7. Relation to Other Security Documents. The provisions of this
Agreement shall be read and construed with the other Loan Documents referred to
below in the manner so indicated.
     (a) Credit Agreement. In the event of any conflict between any provision in
this Agreement and a provision in the Credit Agreement, such provision of the
Credit Agreement shall control.
     (b) Patent, Trademark, Copyright Security Agreements. The provisions of any
executed Copyright Security Agreements, Trademark Security Agreements, and
Patent Security Agreements are supplemental to the provisions of this Agreement,
and nothing contained in such Copyright Security Agreements, Trademark Security
Agreements, or Patent Security Agreements shall limit any of the rights or
remedies of Agent hereunder.

13

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

 

          8. Further Assurances.
          (a) Each Grantor agrees that from time to time, at its own expense,
such Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or that Agent may
reasonably request, in order to perfect and protect the Security Interest
granted or purported to be granted hereby or to enable Agent to exercise and
enforce its rights and remedies hereunder with respect to any of the Collateral.
          (b) Each Grantor authorizes the filing by Agent of financing or
continuation statements, or amendments thereto, and such Grantor will execute
and deliver to Agent such other instruments or notices, as may be necessary or
as Agent may reasonably request, in order to perfect and preserve the Security
Interest granted or purported to be granted hereby.
          (c) Each Grantor authorizes Agent at any time and from time to time to
file, transmit, or communicate, as applicable, financing statements and
amendments (i) describing the Collateral as “all personal property of debtor” or
“all assets of debtor” or words of similar effect, (ii) describing the
Collateral as being of equal or lesser scope or with greater detail, or
(iii) that contain any information required by part 5 of Article 9 of the Code
for the sufficiency or filing office acceptance. Each Grantor also hereby
ratifies any and all financing statements or amendments previously filed by
Agent in any jurisdiction.
          (d) Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement filed in connection with this Agreement without the prior
written consent of Agent, subject to such Grantor’s rights under
Section 9-509(d)(2) of the Code.
          9. Agent’s Right to Perform Contracts, Exercise Rights, etc. Upon the
occurrence and during the continuance of an Event of Default, Agent (or its
designee) (a) may proceed to perform any and all of the obligations of any
Grantor contained in any contract, lease, or other agreement and exercise any
and all rights of any Grantor therein contained as fully as such Grantor itself
could, (b) shall have the right to use any Grantor’s rights under Intellectual
Property Licenses in connection with the enforcement of the Agent’s rights
hereunder, including the right to prepare for sale and sell any and all
Inventory and Equipment now or hereafter owned by any Grantor and now or
hereafter covered by such licenses, and (c) shall have the right to request that
any Stock that is pledged hereunder be registered in the name of Agent or any of
its nominees.
          10. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably
appoints Agent its attorney-in-fact, with full authority in the place and stead
of such Grantor and in the name of such Grantor or otherwise, effective upon and
during the continuance of an Event of Default under the Credit Agreement, to
take any action and to execute any instrument which Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, including:
          (a) to ask, demand, collect, sue for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with the Accounts or any other Collateral of such Grantor;
          (b) to receive and open all mail addressed to such Grantor and to
notify postal authorities to change the address for the delivery of mail to such
Grantor to that of Agent;
          (c) to receive, indorse, and collect any drafts or other instruments,
documents, Negotiable Collateral or Chattel Paper;

14

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

 

          (d) to file any claims or take any action or institute any proceedings
which Agent may deem necessary or desirable for the collection of any of the
Collateral of such Grantor or otherwise to enforce the rights of Agent with
respect to any of the Collateral;
          (e) to repair, alter, or supply goods, if any, necessary to fulfill in
whole or in part the purchase order of any Person obligated to such Grantor in
respect of any Account of such Grantor;
          (f) to use any labels, Patents, Trademarks, trade names, URLs, domain
names, industrial designs, Copyrights, advertising matter or other industrial or
intellectual property rights, in advertising for sale and selling Inventory and
other Collateral and to collect any amounts due under Accounts, contracts or
Negotiable Collateral of such Grantor; and
          (g) Agent on behalf of the Lender Group shall have the right, but
shall not be obligated, to bring suit in its own name to enforce the Trademarks,
Patents, Copyrights and Intellectual Property Licenses and, if Agent shall
commence any such suit, the appropriate Grantor shall, at the request of Agent,
do any and all lawful acts and execute any and all proper documents reasonably
required by Agent in aid of such enforcement.
          To the extent permitted by law, each Grantor hereby ratifies all that
such attorney-in-fact shall lawfully do or cause to be done by virtue hereof.
This power of attorney is coupled with an interest and shall be irrevocable
until this Agreement is terminated.
          11. Agent May Perform. If any Grantor fails to perform any agreement
contained herein, Agent may itself perform, or cause performance of, such
agreement, and the reasonable expenses of Agent incurred in connection therewith
shall be payable, jointly and severally, by Grantors.
          12. Agent’s Duties. The powers conferred on Agent hereunder are solely
to protect Agent’s interest in the Collateral, for the benefit of the Lender
Group and the Bank Product Provider, and shall not impose any duty upon Agent to
exercise any such powers. Except for the safe custody of any Collateral in its
actual possession and the accounting for moneys actually received by it
hereunder, Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. Agent shall be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in its actual possession
if such Collateral is accorded treatment substantially equal to that which Agent
accords its own property.
          13. Collection of Accounts, General Intangibles and Negotiable
Collateral. At any time upon the occurrence and during the continuation of an
Event of Default, Agent or Agent’s designee may (a) notify Account Debtors of
any Grantor that the Accounts, General Intangibles, Chattel Paper or Negotiable
Collateral have been assigned to Agent, for the benefit of the Lender Group and
the Bank Product Provider, or that Agent has a security interest therein, and
(b) collect the Accounts, General Intangibles and Negotiable Collateral
directly, and any collection costs and expenses shall constitute part of such
Grantor’s Secured Obligations under the Loan Documents.
          14. Disposition of Pledged Interests by Agent. None of the Pledged
Interests existing as of the date of this Agreement are, and none of the Pledged
Interests hereafter acquired on the date of acquisition thereof will be,
registered or qualified under the various federal or state securities laws of
the United States, and Disposition thereof after an Event of Default may be
restricted to one or more private (instead of public) sales in view of the lack
of such registration. Each Grantor understands that in connection with such
disposition, Agent may approach only a restricted number of potential purchasers
and further understands that a sale under such circumstances may yield a lower
price for the Pledged Interests than if the Pledged Interests were registered
and qualified pursuant to federal and state securities

15

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

 

laws and sold on the open market. Each Grantor, therefore, agrees that: (a) if
Agent shall, pursuant to the terms of this Agreement, sell or cause the Pledged
Interests or any portion thereof to be sold at a private sale, Agent shall have
the right to rely upon the advice and opinion of any nationally recognized
brokerage or investment firm (but shall not be obligated to seek such advice and
the failure to do so shall not be considered in determining the commercial
reasonableness of such action) as to the best manner in which to offer the
Pledged Interest or any portion thereof for sale and as to the best price
reasonably obtainable at the private sale thereof; and (b) such reliance shall
be conclusive evidence that Agent has handled the disposition in a commercially
reasonable manner.
          15. Voting Rights.
          (a) Upon the occurrence and during the continuation of an Event of
Default, (i) Agent may, at its option, and in addition to all rights and
remedies available to Agent under any other agreement, at law, in equity, or
otherwise, exercise all voting rights, and all other ownership or consensual
rights in respect of the Pledged Interests owned by such Grantor in respect of
the Pledged Interests issued by a Loan Party and otherwise to the extent
permitted by the governing instruments for such Pledged Instruments but under no
circumstances is Agent obligated by the terms of this Agreement to exercise such
rights, and (ii) if Agent duly exercises its right to vote any of such Pledged
Interests, each Grantor hereby appoints Agent, such Grantor’s true and lawful
attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in any
manner Agent deems advisable for or against all matters submitted or which may
be submitted to a vote of shareholders, partners or members, as the case may be.
The power-of-attorney granted hereby is coupled with an interest and shall be
irrevocable.
          (b) For so long as any Grantor shall have the right to vote the
Pledged Interests owned by it, such Grantor covenants and agrees that it will
not, without the prior written consent of Agent, vote or take any consensual
action with respect to such Pledged Interests which would adversely affect in
any material respect the rights of Agent and the other members of the Lender
Group or the value of the Pledged Interests.
          16. Remedies. Upon the occurrence and during the continuance of an
Event of Default:
          (a) Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein, in the other Loan Documents, or
otherwise available to it, all the rights and remedies of a secured party on
default under the Code or any other applicable law. Without limiting the
generality of the foregoing, each Grantor expressly agrees that, in any such
event, Agent, without demand of performance or other demand, advertisement or
notice of any kind (except a notice specified below of time and place of public
or private sale) to or upon any of Grantors or any other Person (all and each of
which demands, advertisements and notices are hereby expressly waived to the
maximum extent permitted by the Code or any other applicable law), may take
immediate possession of all or any portion of the Collateral and (i) require
Grantors to, and each Grantor hereby agrees that it will at its own expense and
upon request of Agent forthwith, assemble all or part of the Collateral as
directed by Agent and make it available to Agent at one or more locations where
such Grantor regularly maintains Inventory, and (ii) without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of Agent’s offices or elsewhere, for cash, on
credit, and upon such other terms as Agent may deem commercially reasonable.
Each Grantor agrees that, to the extent notice of sale 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 is to be made shall
constitute reasonable notification to such Grantor and specifically such notice
shall constitute a reasonable “authenticated notification of disposition” to
such Grantor within the meaning of Section 9-

16

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

 

611 of the Code. Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. 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) Agent, for the benefit of the Lender Group and the Bank Product
Providers, is hereby granted a license or other right to use, without liability
for royalties or any other charge, each Grantor’s labels, Patents, Copyrights,
rights of use of any name, trade secrets, trade names, Trademarks, service marks
and advertising matter, URLs, domain names, industrial designs, other industrial
or intellectual property or any property of a similar nature, whether owned or
licensable by any of Grantors or with respect to which any of Grantors have
sublicensable rights under license, sublicense, or other agreements as it
pertains to the Collateral (the “Licensed Property”), in preparing for sale,
advertising for sale and selling any Collateral and each Grantor’s rights under
all of its licenses and all franchise agreements shall inure to the benefit of
Agent at such time and in such context.
          (c) Any cash held by Agent as Collateral and all cash proceeds
received by Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied against the
Secured Obligations in the order set forth in the Credit Agreement. In the event
the proceeds of Collateral are insufficient to satisfy all of the Secured
Obligations in full, each Grantor shall remain jointly and severally liable for
any such deficiency.
          (d) Each Grantor hereby acknowledges that the Secured Obligations
arose out of a commercial transaction, and agrees that if an Event of Default
shall occur and be continuing Agent shall have the right to enter onto the
property where any Collateral is located and take possession thereof with or
without judicial process. Agent shall have the right to the appointment of a
receiver for the properties and assets of each of Grantor, and each Grantor
hereby consents to such rights and such appointment and hereby waives any
objection such Grantor may have thereto or the right to have a bond or other
security posted by Agent.
          17. Remedies Cumulative. Each right, power, and remedy of Agent as
provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement or in the other Loan Documents or now
or hereafter existing at law or in equity or by statute or otherwise, and the
exercise or beginning of the exercise by Agent, of any one or more of such
rights, powers, or remedies shall not preclude the simultaneous or later
exercise by Agent of any or all such other rights, powers, or remedies.
          18. Marshaling. Agent shall not be required to marshal any present or
future collateral security (including but not limited to the Collateral) for, or
other assurances of payment of, the Secured Obligations or any of them or to
resort to such collateral security or other assurances of payment in any
particular order, and all of its rights and remedies hereunder and in respect of
such collateral security and other assurances of payment shall be cumulative and
in addition to all other rights and remedies, 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 Agent’s rights and remedies under this Agreement
or under any other instrument creating or evidencing any of the Secured
Obligations or under which any of the Secured Obligations is outstanding or by
which any of the Secured 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.
          19. Indemnity and Expenses.

17

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

 

          (a) Each Grantor agrees to indemnify Agent and the other members of
the Lender Group from and against all claims, lawsuits and liabilities
(including reasonable attorneys fees) growing out of or resulting from this
Agreement (including enforcement of this Agreement) or any other Loan Document
to which such Grantor is a party, except claims, losses or liabilities resulting
from the gross negligence or willful misconduct of the party seeking
indemnification as determined by a final non-appealable order of a court of
competent jurisdiction. This provision shall survive the termination of this
Agreement and the Credit Agreement and the repayment of the Secured Obligations.
If Agent or other member of the Lender Group makes any payment to the Agent or
any other member of the Lender Group with respect to any claims, lawsuits or
liabilities as to which Grantors were required to indemnify such Person
receiving such payment, the Agent or other member of the Lender Group, as
applicable, making such payment is entitled to be indemnified and reimbursed by
the Grantors with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY
SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS, LAWSUITS OR
LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY
NEGLIGENT ACT OR OMISSION OF THE AGENT OR OTHER MEMBER OF THE LENDER GROUP, AS
APPLICABLE, OR OF ANY OTHER PERSON.
          (b) Grantors, jointly and severally, shall, upon demand, pay to Agent
(or Agent, may charge to the Loan Account) all the Lender Group Expenses which
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or, upon an Event of
Default, the sale of, collection from, or other realization upon, any of the
Collateral in accordance with this Agreement and the other Loan Documents,
(iii) the exercise or enforcement of any of the rights of Agent hereunder or
(iv) the failure by any of the Grantors to perform or observe any of the
provisions hereof.
          20. Merger, Amendments; Etc. THIS AGREEMENT, TOGETHER WITH THE OTHER
LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES. No waiver of any provision of this Agreement, and no consent to any
departure by any of Grantors herefrom, shall in any event be effective unless
the same shall be in writing and signed by Agent, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No amendment of any provision of this Agreement shall
be effective unless the same shall be in writing and signed by Agent and each of
Grantors to which such amendment applies.
          21. Addresses for Notices. All notices and other communications
provided for hereunder shall be given in the form and manner and delivered to
Agent at its address specified in the Credit Agreement, and to any of the
Grantors at their respective addresses specified in the Credit Agreement or
guaranty, as applicable, or, as to any party, at such other address as shall be
designated by such party in a written notice to the other party.
          22. Continuing Security Interest: Assignments under Credit Agreement.
This Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the Obligations have been paid
in full in accordance with the provisions of the Credit Agreement and the
Commitments have expired or have been terminated, (b) be binding upon each of
Grantor, and their respective successors and assigns, and (c) inure to the
benefit of, and be enforceable by, Agent, and its successors and permitted
transferees and assigns, except as enforcement may be limited by equitable
principles or bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium, or similar laws relating to or limiting creditors’ rights generally.
Without limiting the generality of the foregoing clause (c), any Lender may, in
accordance with the provisions of the Credit Agreement, assign or otherwise

18

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

 

transfer all or any portion of its rights and obligations under the Credit
Agreement to any other Person permitted under the Credit Agreement, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Lender herein or otherwise. Upon payment in full in cash
of the Obligations in accordance with the provisions of the Credit Agreement and
the expiration or termination of the Commitments, the Security Interest granted
hereby shall terminate and all rights to the Collateral shall revert to Grantors
or any other Person entitled thereto. At such time, Agent will file or authorize
the filing of appropriate termination statements to terminate such Security
Interest. No transfer or renewal, extension, assignment, or termination of this
Agreement or of the Credit Agreement, any other Loan Document, or any other
instrument or document executed and delivered by any Grantor to Agent nor any
additional Advances or other loans made by any Lender to Borrowers, nor the
taking of further security, nor the retaking or re-delivery of the Collateral to
Grantors, or any of them, by Agent, nor any other act of the Lender Group or the
Bank Product Provider, or any of them, shall release any of the Grantors from
any obligation, except a termination, release or discharge executed in writing
by Agent in accordance with the provisions of the Credit Agreement. Agent shall
not by any act, delay, omission or otherwise, be deemed to have waived any of
its rights or remedies hereunder, unless such waiver is in writing and signed by
Agent and then only to the extent therein set forth. A waiver by Agent of any
right or remedy on any occasion shall not be construed as a bar to the exercise
of any such right or remedy which Agent would otherwise have had on any other
occasion.
          23. Governing Law.
          (a) THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION,
AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
          (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. AGENT AND EACH
GRANTOR WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 23(b).
          (c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AGENT AND EACH
GRANTOR HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. AGENT AND
EACH GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION

19

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

 

WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
          24. New Subsidiaries. Pursuant to Section 5.16 of the Credit
Agreement, any new direct or indirect Subsidiary (whether by acquisition or
creation) of Grantor is required to enter into this Agreement by executing and
delivering in favor of Agent a supplement to this Agreement in the form of Annex
1 attached hereto. Upon the execution and delivery of Annex 1 by such new
Subsidiary, 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
Agreement shall not require the consent of any Grantor hereunder. The rights and
obligations of each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor hereunder.
          25. Agent. Each reference herein to any right granted to, benefit
conferred upon or power exercisable by the “Agent” shall be a reference to
Agent, for the benefit of the Lender Group and the Bank Product Provider.
          26. Miscellaneous.
          (a) This Agreement may be executed in any number of counterparts and
by different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Delivery of an
executed counterpart of this Agreement by telefacsimile or other electronic
method of transmission shall be equally as effective as delivery of an original
executed counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by telefacsimile or other electronic method of
transmission also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, and binding effect of this Agreement. The
foregoing shall apply to each other Loan Document mutatis mutandis.
          (b) Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
          (c) Headings used in this Agreement are for convenience only and shall
not be used in connection with the interpretation of any provision hereof.
          (d) The pronouns used herein shall include, when appropriate, either
gender and both singular and plural, and the grammatical construction of
sentences shall conform thereto.
          (e) Unless the context of this Agreement or any other Loan Document
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, and the terms “includes” and
“including” are not limiting and the terms “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or”. The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications,

20

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

 

renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein). Any reference herein
or in any other Loan Document to the satisfaction or repayment in full of the
Obligations shall mean the repayment in full (or cash collateralization in
accordance with the terms hereof) of all Obligations other than unasserted
contingent indemnification Obligations and other than any Bank Product
Obligations that, at such time, are allowed by the applicable Bank Product
Provider to remain outstanding and that are not required by the provisions of
the Credit Agreement to be repaid or cash collateralized. Any reference herein
to any Person shall be construed to include such Person’s successors and
permitted assigns. Any requirement of a writing contained herein or in any other
Loan Document shall be satisfied by the transmission of a Record and any Record
so transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.

21

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

 

          IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement by and through their duly authorized officers, as of the day and year
first above written.

          GRANTORS:   FOOTHILLS RESOURCES, INC.
 
       
 
  By:   /s/ Dennis B. Tower
 
       
 
  Name:   Dennis B. Tower
 
       
 
  Title:   Chief Executive Officer
 
       
 
            FOOTHILLS CALIFORNIA, INC.
 
       
 
  By:   /s/ Dennis B. Tower
 
       
 
  Name:   Dennis B. Tower
 
       
 
  Title:   Chief Executive Officer
 
       
 
            FOOTHILLS TEXAS, INC.
 
       
 
  By:   /s/ Dennis B. Tower
 
       
 
  Name:   Dennis B. Tower
 
       
 
  Title:   Chief Executive Officer
 
       
 
            FOOTHILLS OKLAHOMA, INC.
 
       
 
  By:   /s/ Dennis B. Tower
 
       
 
  Name:   Dennis B. Tower
 
       
 
  Title:   Chief Executive Officer
 
       
 
        AGENT:   WELLS FARGO FOOTHILL, LLC
 
       
 
  By:   /s/ SN Thomas
 
       
 
  Name:   SN Thomas
 
       
 
  Title:   Vice President
 
       

SECURITY AGREEMENT SIGNATURE PAGE

 

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

 

SCHEDULE 1
COMMERCIAL TORT CLAIMS
          To the extent constituting “commercial tort claims” as defined in the
Code, all tort claims arising out of any action or proceeding against Louis W.
Zehil, Strong Branch Ventures IV LP or any affiliate, or McGuireWoods LLP, in
connection with the matters described in the civil action entitled Securities
and Exchange Commission against Louis W. Zehil, Strong Branch Ventures IV LP,
and Chestnut Capital Partners II, LLC (Case No. 07-CV-01439-LAP), and in the
criminal complaint entitled United States of America v. Louis W. Zehil (Case
No. 07-MJ-00305-UA), and in the Information entitled United States of America v.
Louis W. Zehil (Case No. 07-CR-00659-DAB).

 

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

 

SCHEDULE 2
COPYRIGHTS
None.

 

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

 

SCHEDULE 3
INTELLECTUAL PROPERTY LICENSES

1.   Seismic License Agreement dated as of December 1, 1996 by and among King
Ranch Energy, Inc. (successor to King Ranch Oil and Gas, Inc.), TeTra
Exploration, Inc., Texaco Exploration and Production Inc. and Devon Energy
Corporation (Nevada).

2.   Master Geophysical Data-Use License dated as of March 2, 2007 by and
between Seismic Exchange, Inc. and Foothills California, Inc.

3.   Data License and Confidentiality Agreement dated as of August 1, 2007 by
and between Foothills California, Inc. and PacSeis, Inc.

 

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

 

SCHEDULE 4
PATENTS
Patent Registrations/Applications
PATENTS
None.
     PATENT APPLICATIONS
None.

 

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

 

SCHEDULE 5
PLEDGED COMPANIES

                                          Number of       Percentage of  
Certificate Name of Pledgor   Name of Pledged Company   Shares/Units   Class of
Interests   Class Owned   Nos.
Foothills Resources, Inc.
  Foothills California, Inc.     100     Common     100 %     9  
Foothills Resources, Inc.
  Foothills Oklahoma, Inc.     100     Common     100 %     1  
Foothills Resources, Inc.
  Foothills Texas, Inc.     100     Common     100 %     1  

 

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

 

SCHEDULE 6
TRADEMARKS
Trademark Registrations/Applications
None.
Trade Names
None.
Common Law Trademarks
None.
Trademarks Not Currently In Use
None.
Trademark Licenses
None.

 

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

 

SCHEDULE 7
RESERVED

 

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

 

SCHEDULE 8
LIST OF UNIFORM COMMERCIAL CODE FILING JURISDICTIONS

     
Foothills Resources, Inc.
  Nevada
Foothills California, Inc.
  Delaware
Foothills Oklahoma, Inc.
  Delaware
Foothills Texas, Inc.
  Delaware

 

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

 

SCHEDULE 9
RESERVED

 

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

 

SCHEDULE 10
PLEDGED NOTES
Intercompany Note dated as of December 13, 2007, by and among the Borrowers.

 

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

 

ANNEX 1 TO SECURITY AGREEMENT
FORM OF SUPPLEMENT
     Supplement No.                      (this “Supplement”) dated as of
                     ___, 20___, to the Security Agreement dated as of December
___, 2007 (as amended, restated, supplemented or otherwise modified from time to
time, the “Security Agreement”) by each of the parties listed on the signature
pages thereto and those additional entities that thereafter become parties
thereto (collectively, jointly and severally, “Grantors” and each individually
“Grantor”) and WELLS FARGO FOOTHILL, LLC in its capacity as Agent for the Lender
Group and the Bank Product Provider (together with the successors, “Agent”).
W I T N E S S E T H:
     WHEREAS, pursuant to that certain Credit Agreement, dated as of December
___, 2007 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”) among FOOTHILLS RESOURCES, INC., a Nevada
corporation (“Foothills or Parent”) each of its Subsidiaries that are
signatories thereto (each Subsidiary together with Parent, are referred to
hereinafter each individually as “Borrower”, and individually and collectively,
jointly and severally as the “Borrowers”), the lenders from time to time party
thereto as “Lenders” (“Lenders”), and Agent, the Lender Group has agreed to make
certain financial accommodations available to Borrowers from time to time
pursuant to the terms and conditions thereof, and
     WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Security Agreement or the
Credit Agreement; and
     WHEREAS, Grantors have entered into the Security Agreement in order to
induce the Lender Group to make certain financial accommodations to Borrowers;
and
     WHEREAS, pursuant to Section 5.16 of the Credit Agreement, new direct or
indirect Subsidiaries of Borrowers must execute and deliver certain Loan
Documents, including the Security Agreement, and the execution of the Security
Agreement by the undersigned new Grantor or Grantors (collectively, the “New
Grantors”) may be accomplished by the execution of this Supplement in favor of
Agent, for the benefit of the Lender Group and the Bank Product Provider;
     NOW, THEREFORE, for and in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each New Grantor hereby agrees as follows:
     1. In accordance with Section 24 of the Security Agreement, each 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 each New Grantor hereby (a) agrees to all of 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 “Grantor” thereunder are true and correct on and as of the date hereof.
In furtherance of the foregoing, each New Grantor, as security for the payment
and performance in full of the Secured Obligations, does hereby grant, assign,
and pledge to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a continuing security interest in all of such New Grantor’s right,
title, and interest in its assets and personal property, including, all property
of the type described in Section 2 of the Security Agreement to secure the full
and prompt payment of the Secured Obligations. Schedule 1, “Commercial Tort
Claims”, Schedule 2, “Copyrights”, Schedule 3, “Intellectual Property Licenses”,
Schedule 4, “Patents”, Schedule 5, “Pledged Companies”, Schedule 6,
“Trademarks”and Schedule 8, “List of Uniform Commercial Code Filing
Jurisdictions” attached hereto supplement Schedule 1, Schedule 2, Schedule 3,
Schedule 4, Schedule 5, Schedule 6, and Schedule 8, respectively, to the
Security Agreement and shall be deemed a part thereof for all purposes of the
Security Agreement. Each

 

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

 

reference to a “Grantor” in the Security Agreement shall be deemed to include
each New Grantor. The Security Agreement is incorporated herein by reference.
     2. Each New Grantor represents and warrants to Agent, the Lender Group and
the Bank Product Provider that this Supplement has been duly executed and
delivered by such New Grantor and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other similar laws affecting creditors’
rights generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
     3. This Supplement may be executed in multiple counterparts, each of which
shall be deemed to be an original, but all such separate counterparts shall
together constitute but one and the same instrument. Delivery of a counterpart
hereof by facsimile transmission or by e-mail transmission shall be as effective
as delivery of a manually executed counterpart hereof.
     4. Except as expressly supplemented hereby, the Security Agreement shall
remain in full force and effect.
     5. This Supplement shall be construed in accordance with and governed by
the laws of the State of New York, without regard to the conflict of laws
principles thereof.
[Remainder of Page Intentionally Left Blank – Signature Page Follows]

 

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

 

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

                   NEW GRANTORS:   [Name of New Grantor]    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           
 
                [Name of New Grantor]    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           
 
                 AGENT:   WELLS FARGO FOOTHILL, LLC    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

SUPPLEMENT TO SECURITY AGREEMENT SIGNATURE PAGE

 

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

 

EXHIBIT A
COPYRIGHT SECURITY AGREEMENT
          This COPYRIGHT SECURITY AGREEMENT (this “Copyright Security
Agreement”) is made this ___day of                     , 20___, among Grantors
listed on the signature pages hereof ( collectively, jointly and severally,
“Grantors” and each individually “Grantor”), and WELLS FARGO FOOTHILL, LLC, in
its capacity as Agent for the Lender Group and the Bank Product Provider
(together with its successors, the “Agent”).
W I T N E S S E T H
          WHEREAS, pursuant to that certain Credit Agreement, dated as of
December ___, 2007 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”) among FOOTHILLS RESOURCES, INC., a
Nevada corporation (“Foothills or Parent”) each of its Subsidiaries that are
signatories thereto (each Subsidiary together with Parent, are referred to
hereinafter each individually as “Borrower”, and individually and collectively,
jointly and severally as the “Borrowers”), the lenders from time to time party
thereto as “Lenders” (“Lenders”), and Agent, the Lender Group has agreed to make
certain financial accommodations available to Borrowers from time to time
pursuant to the terms and conditions thereof; and
          WHEREAS, the members of the Lender Group are willing to make the
financial accommodations to Borrowers as provided for in the Credit Agreement,
but only upon the condition, among others, that Grantors shall have executed and
delivered to Agent, for the benefit of the Lender Group and the Bank Product
Provider, that certain Security Agreement, dated as of December ___, 2007
(including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the “Security
Agreement”);
          WHEREAS, pursuant to the Security Agreement, Grantors are required to
execute and deliver to Agent, for the benefit of the Lender Group and the Bank
Product Provider, this Copyright Security Agreement;
          NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
          1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement or the Credit
Agreement.
          2. GRANT OF SECURITY INTEREST IN COPYRIGHT COLLATERAL. Each Grantor
hereby grants to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a continuing first priority security interest in all of such Grantor’s
right, title and interest in, to and under the following, whether presently
existing or hereafter created or acquired (collectively, the “Copyright
Collateral”):
          (a) all of such Grantor’s Copyrights and Copyright Intellectual
Property Licenses to which it is a party including those referred to on
Schedule I hereto;
          (b) all reissues, restorations, reversions, continuations or
extensions of the foregoing; and

 

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

 

          (c) all products and proceeds of the foregoing, including any claim by
such Grantor against third parties for past, present or future infringement or
dilution of any Copyright or any Copyright licensed under any Intellectual
Property License.
          3. SECURITY FOR OBLIGATIONS. This Copyright Security Agreement and the
Security Interest created hereby secures the payment and performance of all the
Secured Obligations, whether now existing or arising hereafter. Without limiting
the generality of the foregoing, this Copyright Security Agreement secures the
payment of all amounts which constitute part of the Obligations and would be
owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product
Provider or any of them, whether or not they are unenforceable or not allowable
due to the existence of an Insolvency Proceeding involving any Grantor.
          4. SECURITY AGREEMENT. The security interests granted pursuant to this
Copyright Security Agreement are granted in conjunction with the security
interests granted to Agent, for the benefit of the Lender Group and the Bank
Product Provider, pursuant to the Security Agreement. Each Grantor hereby
acknowledges and affirms that the rights and remedies of Agent with respect to
the security interest in the Copyright Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
          5. AUTHORIZATION TO SUPPLEMENT. Grantors shall give Agent prompt
notice in writing of any additional United States copyright registrations or
applications therefor after the date hereof. Grantors hereby authorize Agent
unilaterally to modify this Agreement by amending Schedule I to include any
future United States registered copyrights or applications therefor of Grantors.
Notwithstanding the foregoing, no failure to so modify this Copyright Security
Agreement or amend Schedule I shall in any way affect, invalidate or detract
from Agent’s continuing security interest in all Collateral, whether or not
listed on Schedule I.
          6. COUNTERPARTS. This Copyright Security Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
all such separate counterparts shall together constitute but one and the same
instrument. In proving this Copyright Security Agreement or any other Loan
Document in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto.
          7. CONSTRUCTION. Unless the context of this Copyright Security
Agreement or any other Loan Document clearly requires otherwise, references to
the plural include the singular, references to the singular include the plural,
the terms “includes” and “including” are not limiting. The words “hereof,”
“herein,” “hereby,” “hereunder,” and similar terms in this Copyright Security
Agreement or any other Loan Document refer to this Copyright Security Agreement
or such other Loan Document, as the case may be, as a whole and not to any
particular provision of this Copyright Security Agreement or such other Loan
Document, as the case may be. Section, subsection, clause, schedule, and exhibit
references herein are to this Copyright Security Agreement unless otherwise
specified. Any reference in this Copyright Security Agreement or in any other
Loan Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Obligations
shall mean the repayment in full (or

3

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

 

cash collateralization in accordance with the terms hereof) of all Obligations
other than unasserted contingent indemnification Obligations and other than any
Bank Product Obligations that, at such time, are allowed by the applicable Bank
Product Provider to remain outstanding and that are not required by the
provisions of the Credit Agreement to be repaid or cash collateralized. Any
reference herein to any Person shall be construed to include such Person’s
successors and permitted assigns. Any requirement of a writing contained herein
or in any other Loan Document shall be satisfied by the transmission of a Record
and any Record so transmitted shall constitute a representation and warranty as
to the accuracy and completeness of the information contained therein.
[signature page follows]

4

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

 

     IN WITNESS WHEREOF, each Grantor has caused this Copyright Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.

                  GRANTORS:    
 
           
 
  [       ]          
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           
 
  [       ]          
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           
 
                ACCEPTED AND ACKNOWLEDGED BY:    
 
                WELLS FARGO FOOTHILL, LLC, as Agent    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

 

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

 

COPYRIGHT SECURITY AGREEMENT
SCHEDULE I
to
COPYRIGHT SECURITY AGREEMENT
Copyright Registrations

                  Grantor   Country   Copyright   Registration No.  
Registration Date                                                              
                                                                               
                                                                               
                             

Copyright Licenses
COPYRIGHT SECURITY AGREEMENT

 

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

 

EXHIBIT B
PATENT SECURITY AGREEMENT
     This PATENT SECURITY AGREEMENT (this “Patent Security Agreement”) is made
this ___day of                     , 20___, among the Grantors listed on the
signature pages hereof (collectively, jointly and severally, “Grantors” and each
individually “Grantor”), and WELLS FARGO FOOTHILL, LLC, in its capacity as Agent
for the Lender Group and the Bank Product Provider (together with its
successors, “Agent”).
W I T N E S S E T H:
     WHEREAS, pursuant to that certain Credit Agreement, dated as of December
___, 2007 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”) among FOOTHILLS RESOURCES, INC., a Nevada
corporation (“Foothills or Parent”) each of its Subsidiaries that are
signatories thereto (each Subsidiary together with Parent, are referred to
hereinafter each individually as “Borrower”, and individually and collectively,
jointly and severally as the “Borrowers”), the lenders from time to time party
thereto as “Lenders” (“Lenders”), and Agent, the Lender Group has agreed to make
certain financial accommodations available to Borrowers from time to time
pursuant to the terms and conditions thereof; and
     WHEREAS, the members of Lender Group are willing to make the financial
accommodations to Borrowers as provided for in the Credit Agreement, but only
upon the condition, among others, that the Grantors shall have executed and
delivered to Agent, for the benefit of the Lender Group and the Bank Product
Provider, that certain Security Agreement, dated as of February 15, 2007
(including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the “Security
Agreement”);
     WHEREAS, pursuant to the Security Agreement, Grantors are required to
execute and deliver to Agent, for the benefit of the Lender Group and the Bank
Product Provider, this Patent Security Agreement;
     NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
     1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement or the Credit
Agreement.
     2. GRANT OF SECURITY INTEREST IN PATENT COLLATERAL. Each Grantor hereby
grants to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a continuing first priority security interest in all of such Grantor’s
right, title and interest in, to and under the following, whether presently
existing or hereafter created or acquired (collectively, the “Patent
Collateral”):
     (a) all of its Patents and Patent Intellectual Property Licenses to which
it is a party including those referred to on Schedule I hereto;
     (b) all reissues, continuations, continuations in part, substitutions,
extensions or renewals of, and improvements on, the foregoing; and

 

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

 

     (c) all products and proceeds of the foregoing, including any claim by such
Grantor against third parties for past, present or future infringement or
dilution of any Patent or any Patent licensed under any Intellectual Property
License.
     3. SECURITY FOR OBLIGATIONS. This Patent Security Agreement and the
Security Interest created hereby secures the payment and performance of all the
Secured Obligations, whether now existing or hereafter arising. Without limiting
the generality of the foregoing, this Patent Security Agreement secures the
payment of all amounts which constitute part of the Obligations and would be
owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product
Provider or any of them, whether or not they are unenforceable or not allowable
due to the existence of an Insolvency Proceeding involving any Grantor.
     4. SECURITY AGREEMENT. The security interests granted pursuant to this
Patent Security Agreement are granted in conjunction with the security interests
granted to Agent, for the benefit of the Lender Group and the Bank Product
Provider, pursuant to the Security Agreement. Each Grantor hereby acknowledges
and affirms that the rights and remedies of Agent with respect to the security
interest in the Patent Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
     5. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any
new patentable inventions or become entitled to the benefit of any patent
application or patent for any reissue, division, or continuation, of any patent,
the provisions of this Patent Security Agreement shall automatically apply
thereto. Grantors shall give prompt notice in writing to Agent with respect to
any such new patent rights. Without limiting Grantors’ obligations under this
Section 5, Grantors hereby authorize Agent unilaterally to modify this Agreement
by amending Schedule I to include any such new patent rights of Grantors.
Notwithstanding the foregoing, no failure to so modify this Patent Security
Agreement or amend Schedule I shall in any way affect, invalidate or detract
from Agent’s continuing security interest in all Collateral, whether or not
listed on Schedule I.
     6. COUNTERPARTS. This Patent Security Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument. In proving this Patent Security Agreement or any other Loan Document
in any judicial proceedings, it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom such enforcement
is sought. Any signatures delivered by a party by facsimile transmission or by
e-mail transmission shall be deemed an original signature hereto.
     7. CONSTRUCTION. Unless the context of this Patent Security Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, and the
terms “includes” and “including” are not limiting. The words “hereof,” “herein,”
“hereby,” “hereunder,” and similar terms in this Patent Security Agreement or
any other Loan Document refer to this Patent Security Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular
provision of this Patent Security Agreement or such other Loan Document, as the
case may be. Section, subsection, clause, schedule, and exhibit references
herein are to this Patent Security Agreement unless otherwise specified. Any
reference in this Patent Security Agreement or in any other Loan Document to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions,

3

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

 

joinders, and supplements set forth herein). Any reference herein or in any
other Loan Document to the satisfaction or repayment in full of the Obligations
shall mean the repayment in full (or cash collateralization in accordance with
the terms hereof) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Bank Product Obligations that, at
such time, are allowed by the applicable Bank Product Provider to remain
outstanding and that are not required by the provisions of the Credit Agreement
to be repaid or cash collateralized. Any reference herein to any Person shall be
construed to include such Person’s successors and permitted assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record and any Record so transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
[signature page follows]

4

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

 

     IN WITNESS WHEREOF, each Grantor has caused this Patent Security Agreement
to be executed and delivered by its duly authorized officer as of the date first
set forth above.

             
GRANTOR:
                     
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           
 
                     
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           
 
                ACCEPTED AND ACKNOWLEDGED BY:    
 
                WELLS FARGO FOOTHILL, LLC, as Agent    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

PATENT SECURITY AGREEMENT

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

 

SCHEDULE 1
to
PATENT SECURITY AGREEMENT
Patent Registrations/Applications
     PATENTS

          U.S Patent No.   Issue Date   Title                                  
     

          International Patent No.   Issue Date   Title                        
               

          PATENT APPLICATIONS

          U.S Patent Appl. No.   Filing Date   Title                            
           

          International Patent Appl. No.   Filing Date   Title                  
                     

PATENT SECURITY AGREEMENT

 

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

 

EXHIBIT C
PLEDGED INTERESTS ADDENDUM
     This Pledged Interests Addendum, dated as of                      ___,
20___, is delivered pursuant to Section 6 of the Security Agreement referred to
below. The undersigned hereby agrees that this Pledged Interests Addendum may be
attached to that certain Security Agreement, dated as of                     ,
2007 (as amended, restated, supplemented or otherwise modified from time to
time, the “Security Agreement”), made by the undersigned, together with the
other Grantors named therein, to Wells Fargo Foothill, LLC, as Agent. Initially
capitalized terms used but not defined herein shall have the meaning ascribed to
such terms in the Security Agreement or the Credit Agreement. The undersigned
hereby agrees that the additional interests listed on this Pledged Interests
Addendum as set forth below shall be and become part of the Pledged Interests
pledged by the undersigned to the Agent in the Security Agreement and any
pledged company set forth on this Pledged Interests Addendum as set forth below
shall be and become a “Pledged Company” under the Security Agreement, each with
the same force and effect as if originally named therein.
     The undersigned hereby certifies that the representations and warranties
set forth in Section 5 of the Security Agreement of the undersigned are true and
correct as to the Pledged Interests listed herein on and as of the date hereof.

                  [                                                            ]
   
 
           
 
  By:        
 
     
 
   
 
                     
 
           
 
  Title        
 
     
 
   

                                      Percentage         Name of Pledged  
Number of   Class of   of Class   Certificate Name of Pledgor   Company  
Shares/Units   Interests   Owned   Nos.                                        
                         

PLEDGED INTERESTS ADDENDUM

 

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

 

EXHIBIT D
TRADEMARK SECURITY AGREEMENT
     This TRADEMARK SECURITY AGREEMENT (this “Trademark Security Agreement”) is
made this ___day of                     , 20___, among Grantors listed on the
signature pages hereof (collectively, jointly and severally, “Grantors” and each
individually “Grantor”), and WELLS FARGO FOOTHILL, LLC, in its capacity as Agent
for the Lender Group and the Bank Product Provider (together with its
successors, “Agent”).
WITNESSETH:
     WHEREAS, pursuant to that certain Credit Agreement, dated as of December
___, 2007 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”) among FOOTHILLS RESOURCES, INC., a Nevada
corporation (“Foothills or Parent”) each of its Subsidiaries that are
signatories thereto (each Subsidiary together with Parent, are referred to
hereinafter each individually as “Borrower”, and individually and collectively,
jointly and severally as the “Borrowers”), the lenders from time to time party
thereto as “Lenders” (“Lenders”), and Agent, the Lender Group has agreed to make
certain financial accommodations available to Borrowers from time to time
pursuant to the terms and conditions thereof; and
     WHEREAS, the members of the Lender Group are willing to make the financial
accommodations to Borrowers as provided for in the Credit Agreement, but only
upon the condition, among others, that Grantors shall have executed and
delivered to Agent, for the benefit of Lender Group and the Bank Product
Provider, that certain Security Agreement, dated as of                     ,
2007 (including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the “Security
Agreement”);
     WHEREAS, pursuant to the Security Agreement, Grantors are required to
execute and deliver to Agent, for the benefit of Lender Group and the Bank
Product Provider, this Trademark Security Agreement;
     NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor hereby agrees as
follows:
     1. DEFINED TERMS. All capitalized terms used but not otherwise defined
herein have the meanings given to them in the Security Agreement or the Credit
Agreement.
     2. GRANT OF SECURITY INTEREST IN TRADEMARK COLLATERAL. Each Grantor hereby
grants to Agent, for the benefit of the Lender Group and the Bank Product
Provider, a continuing first priority security interest in all of such Grantor’s
right, title and interest in, to and under the following, whether presently
existing or hereafter created or acquired (collectively, the “Trademark
Collateral”):
          (a) all of its Trademarks and rights in and to Trademark Intellectual
Property Licenses to which it is a party including those referred to on
Schedule I hereto;
          (b) all goodwill, trade secrets, proprietary or confidential
information, technical information, procedures, formulae, quality control
standards, designs, operating and training manuals, customer lists and other
General Intangibles with respect to the foregoing;

 

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

 

          (c) all reissues, continuations, extensions, modifications or renewals
of the foregoing;
          (d) all post-grant rights, oppositions, cancellation proceedings
related to the foregoing;
          (e) all goodwill of the business connected with the use of, and
symbolized by, each Trademark and each Trademark Intellectual Property License;
and
          (f) all products and proceeds of the foregoing, including any claim by
such Grantor against third parties for past, present or future (i) infringement
or dilution of any Trademark or any Trademark licensed under any Intellectual
Property License or any common law unfair competition rights or (ii) injury to
the goodwill associated with any Trademark or any Trademark licensed under any
Intellectual Property License or any applicable law.
     3. SECURITY FOR OBLIGATIONS. This Trademark Security Agreement and the
Security Interest created hereby secures the payment and performance of all the
Secured Obligations, whether now existing or arising hereafter. Without limiting
the generality of the foregoing, this Trademark Security Agreement secures the
payment of all amounts which constitute part of the Obligations and would be
owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product
Provider or any of them, whether or not they are unenforceable or not allowable
due to the existence of an Insolvency Proceeding involving any Grantor.
     4. SECURITY AGREEMENT. The security interests granted pursuant to this
Trademark Security Agreement are granted in conjunction with the security
interests granted to Agent, for the benefit of the Lender Group and the Bank
Product Provider, pursuant to the Security Agreement. Each Grantor hereby
acknowledges and affirms that the rights and remedies of Agent with respect to
the security interest in the Trademark Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
     5. AUTHORIZATION TO SUPPLEMENT. If any Grantor shall obtain rights to any
new trademarks, the provisions of this Trademark Security Agreement shall
automatically apply thereto. Grantors shall give prompt notice in writing to
Agent with respect to any such new trademarks or renewal or extension of any
trademark registration. Without limiting Grantors’ obligations under this
Section 5, Grantors hereby authorize Agent unilaterally to modify this Agreement
by amending Schedule I to include any such new trademark rights of Grantors.
Notwithstanding the foregoing, no failure to so modify this Trademark Security
Agreement or amend Schedule I shall in any way affect, invalidate or detract
from Agent’s continuing security interest in all Collateral, whether or not
listed on Schedule I.
     6. COUNTERPARTS. This Trademark Security Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument. In proving this Trademark Security Agreement or any other Loan
Document in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile
transmission or by e-mail transmission shall be deemed an original signature
hereto.
     7. CONSTRUCTION. Unless the context of this Trademark Security Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, and the
terms “includes” and “including” are not limiting. The words

2

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

 

“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Trademark
Security Agreement or any other Loan Document refer to this Trademark Security
Agreement or such other Loan Document, as the case may be, as a whole and not to
any particular provision of this Trademark Security Agreement or such other Loan
Document, as the case may be. Section, subsection, clause, schedule, and exhibit
references herein are to this Agreement unless otherwise specified. Any
reference in this Trademark Security Agreement or in any other Loan Document to
any agreement, instrument, or document shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements set forth herein). Any reference herein or in any other Loan
Document to the satisfaction or repayment in full of the Obligations shall mean
the repayment in full (or cash collateralization in accordance with the terms
hereof) of all Obligations other than unasserted contingent indemnification
Obligations and other than any Bank Product Obligations that, at such time, are
allowed by the applicable Bank Product Provider to remain outstanding and that
are not required by the provisions of the Credit Agreement to be repaid or cash
collateralized. Any reference herein to any Person shall be construed to include
such Person’s successors and permitted assigns. Any requirement of a writing
contained herein or in any other Loan Document shall be satisfied by the
transmission of a Record and any Record so transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
[signature page follows]

3

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

 

     IN WITNESS WHEREOF, each Grantor has caused this Trademark Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.

                       
GRANTORS:
           
 
           
 
  By:        
 
     
 
   
 
  Name:        
 
     
 
   
 
  Title:        
 
     
 
   
 
                     
 
           
 
  By:        
 
     
 
   
 
  Name:        
 
     
 
   
 
  Title:        
 
     
 
   
 
                ACCEPTED AND ACKNOWLEDGED BY:    
 
                WELLS FARGO FOOTHILL, LLC, as Agent    
 
           
 
  By:        
 
     
 
   
 
  Name:        
 
     
 
   
 
  Title:        
 
     
 
   

TRADEMARK SECURITY AGREEMENT

 

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

 

SCHEDULE I
to
TRADEMARK SECURITY AGREEMENT
Trademark Registrations/Applications

                              Application/     Grantor   Country   Mark  
Registration No.   App/Reg Date                                                
     

Trade Names
Common Law Trademarks
Trademarks Not Currently In Use
Trademark Licenses
TRADEMARK SECURITY AGREEMENT

 

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

 

EXHIBIT E
PLEDGED NOTE ADDENDUM
     This Pledged Note Addendum, dated as of                      ___, ___, is
delivered pursuant to Section 6 of the Security Agreement referred to below. The
undersigned hereby agrees that this Pledged Note Addendum may be attached to
that certain Security Agreement, dated as of [                    ] (as amended,
restated, supplemented or otherwise modified from time to time, the “Security
Agreement”), made by the undersigned, together with the other Grantors named
therein, to Wells Fargo Foothill, LLC, as Agent. Initially capitalized terms
used but not defined herein shall have the meanings ascribed to such terms in
the Security Agreement and/or the Credit Agreement. The undersigned hereby
agrees that the additional promissory notes listed on this Pledged Note Addendum
as set forth below shall be and become part of the Pledged Notes pledged by the
undersigned to the Agent in the Security Agreement, with the same force and
effect as if originally named therein.
     The undersigned hereby certifies that the representations and warranties
set forth in Section 5 of the Security Agreement of the undersigned are true and
correct as to the Pledged Notes listed herein on and as of the date hereof.

                  [                                                            ]
   
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

                          Original Principal Name of Pledgor   Name of Maker  
Description   Amount