ex1014.htm


    Exhibit 10.14

     

    SECURITY
AGREEMENT

     

    THIS SECURITY AGREEMENT (the
“Agreement”), is entered into and made
effective as of September 24, 2009 by and between ADVENTURE ENERGY, INC., a
Florida corporation with its principal place of business located at 336th Street
South, Suite 600, St Petersburg, FL 33701 (the “Company”), and the
BUYER(S) listed on
Schedule I attached to the Securities Purchase Agreement dated the date
hereof (the “Secured
Party”).

     

    WHEREAS, the Company shall
issue and sell to the Secured Party, as provided in the Debenture Securities
Purchase Agreement of even date herewith between the Company and the Secured
Party (the “Securities
Purchase Agreement”), and the Secured Party shall purchase up to Fifty
Thousand Dollars ($50,000) of secured convertible debentures (the “Convertible
Debentures”), which shall be convertible into shares of the Company’s
common stock, par value $0.001 (the “Common Stock”) (as
converted, the “Conversion Shares”)
in the respective amounts set forth opposite each Buyer(s) name on
Schedule I attached to the Securities Purchase Agreement;

    


    WHEREAS, the Secured Party is
willing to provide such financing on the condition that such financing is
secured hereunder and under the UCC-1 filed in connection with the Debenture
Securities Purchase Agreement;

    


    WHEREAS, to induce the Secured
Party to enter into the transaction contemplated by the Securities Purchase
Agreement, the Convertible Debentures, the Investor Registration Rights
Agreement of even date herewith between the Company and the Secured Party (the
“Investor Registration
Rights Agreement”), the Pledge and Escrow Agreement of even date herewith
among the Company, the Secured Party and the Pledgors (the “Pledge Agreement”),
and the Irrevocable Transfer Agent Instructions among the Company, the Secured
Party and Transfer Agent (the “Transfer Agent
Instructions”) (collectively referred to as the “Transaction
Documents”), the Company hereby grants to the Secured Party a security
interest in and to the pledged property identified on Exhibit A hereto
(collectively referred to as the “Pledged Property”)
until the satisfaction of the Obligations, as defined herein below.

    


    NOW, THEREFORE, in
consideration of the promises and the mutual covenants herein contained, and for
other good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the parties hereto hereby agree as follows:

     

    ARTICLE
1.

     

    DEFINITIONS AND
INTERPRETATIONS

     

    Section 1.1.   Recitals.

     

    The above
recitals are true and correct and are incorporated herein, in their entirety, by
this reference.

     

    Section 1.2.   Interpretations.

     

    Nothing
herein expressed or implied is intended or shall be construed to confer upon any
person other than the Secured Party any right, remedy or claim under or by
reason hereof.

     

    Section 1.3.   Obligations
Secured.

     

    The
obligations secured hereby are any and all obligations of the Company now
existing or hereinafter incurred to the Secured Party, whether oral or written
and whether arising before, on or after the date hereof including, without
limitation, those obligations of the Company to the Secured Party under this
Agreement, the Transaction Documents, the Prior Convertible Debentures, and any
other amounts now or hereafter owed to the Secured Party by the Company
thereunder or hereunder (collectively, the “Obligations”).

     

    
      
        
        

      

      
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    ARTICLE
2.

     

    PLEDGED COLLATERAL,
ADMINISTRATION OF COLLATERAL

    AND TERMINATION OF SECURITY
INTEREST

     

    Section 2.1.   Pledged
Property.

     

    (a)   Company hereby pledges to the Secured
Party, and creates in the Secured Party for its benefit, a security interest for
such time until the Obligations are paid in full, in and to all of the property
of the Company as set forth in Exhibit “A” attached hereto (collectively, the
“Pledged
Property”):

     

    The
Pledged Property, as set forth in Exhibit “A”
attached hereto, and the products thereof and the proceeds of all such items are
hereinafter collectively referred to as the “Pledged
Collateral.”

     

    (b)   Simultaneously with the execution and
delivery of this Agreement, the Company shall make, execute, acknowledge, file,
record and deliver to the Secured Party any documents reasonably requested by
the Secured Party to perfect its security interest in the Pledged Property.
Simultaneously with the execution and delivery of this Agreement, the Company
shall make, execute, acknowledge and deliver to the Secured Party such documents
and instruments, including, without limitation, financing statements,
certificates, affidavits and forms as may, in the Secured Party’s reasonable
judgment, be necessary to effectuate, complete or perfect, or to continue and
preserve, the security interest of the Secured Party in the Pledged Property,
and the Secured Party shall hold such documents and instruments as secured
party, subject to the terms and conditions contained herein.

     

    Section 2.2.   Rights;
Interests; Etc.

     

    (a)   So long as no Event of Default (as
hereinafter defined) shall have occurred and be
continuing:

     

    (i)   the Company shall be entitled to
exercise any and all rights pertaining to the Pledged Property or any part
thereof for any purpose not inconsistent with the terms hereof;
and

     

    (ii)   the Company shall be entitled to
receive and retain any and all payments paid or made in respect of the Pledged
Property.

     

    (b)   Upon the occurrence and during the
continuance of an Event of Default:

     

    (i)All rights of the Company to exercise
the rights which it would otherwise be entitled to exercise pursuant to
Section 2.2(a)(i) hereof and to receive payments which it would
otherwise be authorized to receive and retain pursuant to
Section 2.2(a)(ii) hereof shall be suspended, and all such rights
shall thereupon become vested in the Secured Party who shall thereupon have the
sole right to exercise such rights and to receive and hold as Pledged Collateral
such payments; provided,
however, that if the
Secured Party shall become entitled and shall elect to exercise its right to
realize on the Pledged Collateral pursuant to Article 5 hereof, then all
cash sums received by the Secured Party, or held by Company for the benefit of
the Secured Party and paid over pursuant to Section 2.2(b)(ii) hereof,
shall be applied against any outstanding Obligations; and

     

    
      
        
        

      

      
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    (ii)   All interest, dividends, income and
other payments and distributions which are received by the Company contrary to
the provisions of Section 2.2(b)(i) hereof shall be received in trust
for the benefit of the Secured Party, shall be segregated from other property of
the Company and shall be forthwith paid over to the Secured Party;
or

     

    (iii)    The Secured Party in
its sole discretion shall be authorized to sell any or all of the Pledged
Property at public or private sale in order to recoup all of the outstanding
principal plus accrued interest owed pursuant to the Convertible Debenture as
described herein

     

    (c)   An Event of Default hereunder shall be
deemed to occur upon an Event of Default under the Convertible
Debentures.

     

     

    ARTICLE
3.

     

    ATTORNEY-IN-FACT;
PERFORMANCE

     

    Section 3.1.   Secured
Party Appointed Attorney-In-Fact.

     

    Upon the
occurrence of an Event of Default, the Company hereby appoints the Secured Party
as its attorney-in-fact, with full authority in the place and stead of the
Company and in the name of the Company or otherwise, from time to time in the
Secured Party’s discretion to take any action and to execute any instrument
which the Secured Party may reasonably deem necessary to accomplish the purposes
of this Agreement, including, without limitation, to receive and collect all
instruments made payable to the Company representing any payments in respect of
the Pledged Collateral or any part thereof and to give full discharge for the
same. The Secured Party may demand, collect, receipt for, settle, compromise,
adjust, sue for, foreclose, or realize on the Pledged Property as and when the
Secured Party may determine. To facilitate collection, the Secured Party may
notify account debtors and obligors on any Pledged Property or Pledged
Collateral to make payments directly to the Secured Party.

     

    Section 3.2.   Secured
Party May Perform.

     

    If the
Company fails to perform any agreement contained herein, the Secured Party, at
its option, may itself perform, or cause performance of, such agreement, and the
expenses of the Secured Party incurred in connection therewith shall be included
in the Obligations secured hereby and payable by the Company under
Section 8.3.

     

    ARTICLE
4.

     

    REPRESENTATIONS AND
WARRANTIES

     

    Section 4.1.   Authorization;
Enforceability.

     

    Each of
the parties hereto represents and warrants that it has taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby; and upon execution and delivery, this
Agreement shall constitute a valid and binding obligation of the respective
party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights or by the principles governing the
availability of equitable remedies.

     

    


    


    


    Section 4.2.   Ownership
of Pledged Property.

     

    The
Company warrants and represents that it is the legal and beneficial owner of the
Pledged Property free and clear of any lien, security interest, option or other
charge or encumbrance.

    


    
      
        
        

      

      
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    ARTICLE
5.

     

    DEFAULT; REMEDIES;
SUBSTITUTE COLLATERAL

     

    Section 5.1.   Default and
Remedies.

     

    (a)   If an Event of Default occurs,
then in each such case the Secured Party may declare the Obligations to be due
and payable immediately, by a notice in writing to the Company, and upon any
such declaration, the Obligations shall become immediately due and payable. If
an Event of Default occurs and is continuing for the period set forth therein,
then the Obligations shall automatically become immediately due and payable
without declaration or other act on the part of the Secured
Party.

     

    (b)    Upon the occurrence
of an Event of Default, the Secured Party shall: (i) be entitled to receive
all distributions with respect to the Pledged Collateral, (ii) to cause the
Pledged Property to be transferred into the name of the Secured Party or its
nominee, (iii) to dispose of the Pledged Property, and (iv) to realize
upon any and all rights in the Pledged Property then held by the Secured
Party.

     

    Section 5.2.    Method of
Realizing Upon the Pledged Property: Other Remedies.

     

    Upon the
occurrence of an Event of Default, in addition to any rights and remedies
available at law or in equity, the following provisions shall govern the Secured
Party’s right to realize upon the Pledged Property:

     

    (a)    Any item of the
Pledged Property may be sold for cash or other value in any number of lots at
brokers board, public auction or private sale and may be sold without demand,
advertisement or notice (except that the Secured Party shall give the Company
twenty (20) days’ prior written notice of the time and place or of the
time after which a private sale may be made (the “Sale
Notice”)), which notice
period is hereby agreed to be commercially reasonable. At any sale or sales of
the Pledged Property, the Company may bid for and purchase the whole or any part
of the Pledged Property and, upon compliance with the terms of such sale, may
hold, exploit and dispose of the same without further accountability to the
Secured Party. The Company will execute and deliver, or cause to be executed and
delivered, such instruments, documents, assignments, waivers, certificates, and
affidavits and supply or cause to be supplied such further information and take
such further action as the Secured Party reasonably shall require in connection
with any such sale.

     

    (b)   Any cash being held by the Secured
Party as Pledged Collateral and all cash proceeds received by the Secured Party
in respect of, sale of, collection from, or other realization upon all or any
part of the Pledged Collateral shall be applied as follows:

     

    (i)   to the payment of all amounts due the
Secured Party for the expenses reimbursable to it hereunder or owed to it
pursuant to Section 8.3 hereof;

     

     

    
      
        
        

      

      
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    (ii)    to the payment of the
Obligations then due and unpaid.

     

    (iii)   the balance, if any, to the person or
persons entitled thereto, including, without limitation, the
Company.

     

    (c)   In addition to all of the rights and
remedies which the Secured Party may have pursuant to this Agreement, the
Secured Party shall have all of the rights and remedies provided by law,
including, without limitation, those under the Uniform Commercial
Code.

     

    (i)   If the Company fails to pay such
amounts due upon the occurrence of an Event of Default which is continuing, then
the Secured Party may institute a judicial proceeding for the collection of the
sums so due and unpaid, may prosecute such proceeding to judgment or final
decree and may enforce the same against the Company and collect the monies
adjudged or decreed to be payable in the manner provided by law out of the
property of Company, wherever situated.

     

    (ii)   The Company agrees that it shall be
liable for any reasonable fees, expenses and costs incurred by the Secured Party
in connection with enforcement, collection and preservation of the Transaction
Documents, including, without limitation, reasonable legal fees and expenses,
and such amounts shall be deemed included as Obligations secured hereby and
payable as set forth in Section 8.3 hereof.

     

    Section 5.3.   Proofs of
Claim.

     

    In case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relating to the Company or the property of the Company or of such
other obligor or its creditors, the Secured Party (irrespective of whether the
Obligations shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Secured Party shall have made any
demand on the Company for the payment of the Obligations), subject to the rights
of Previous Security Holders, shall be entitled and empowered, by intervention
in such proceeding or otherwise:

     

    (i)   to file and prove a claim for the whole
amount of the Obligations and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Secured Party
(including any claim for the reasonable legal fees and expenses and other
expenses paid or incurred by the Secured Party permitted hereunder and of the
Secured Party allowed in such judicial proceeding), and

     

    (ii)   to collect and receive any monies or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by the Secured Party to make such payments to the Secured Party and, in the
event that the Secured Party shall consent to the making of such payments
directed to the Secured Party, to pay to the Secured Party any amounts for
expenses due it hereunder.

     

    
      
        
        

      

      
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    Section 5.4.   Duties
Regarding Pledged Collateral.

     

    The
Secured Party shall have no duty as to the collection or protection of the
Pledged Property or any income thereon or as to the preservation of any rights
pertaining thereto, beyond the safe custody and reasonable care of any of the
Pledged Property actually in the Secured Party’s possession.

     

    ARTICLE
6.

     

    AFFIRMATIVE
COVENANTS

     

    The
Company covenants and agrees that, from the date hereof and until the
Obligations have been fully paid and satisfied, unless the Secured Party shall
consent otherwise in writing (as provided in Section 8.4
hereof):

     

    Section 6.1.   Existence,
Properties, Etc.

     

    (a)   The Company shall do, or cause to be
done, all things, or proceed with due diligence with any actions or courses of
action, that may be reasonably necessary (i) to maintain Company’s due
organization, valid existence and good standing under the laws of its state of
incorporation, and (ii) to preserve and keep in full force and effect all
qualifications, licenses and registrations in those jurisdictions in which the
failure to do so could have a Material Adverse Effect (as defined below); and
(b) the Company shall not do, or cause to be done, any act impairing the
Company’s corporate power or authority (i) to carry on the Company’s
business as now conducted, and (ii) to execute or deliver this Agreement or
any other document delivered in connection herewith, including, without
limitation, any UCC-1 Financing Statements required by the Secured Party to
which it is or will be a party, or perform any of its obligations hereunder or
thereunder. For purpose of this Agreement, the term “Material
Adverse Effect” shall mean
any material and adverse affect as determined by Secured Party in its sole
discretion, whether individually or in the aggregate, upon (a) the
Company’s assets, business, operations, properties or condition, financial or
otherwise; (b) the Company’s to make payment as and when due of all or any
part of the Obligations; or (c) the Pledged Property.

     

    Section 6.2.   Financial
Statements and Reports.

     

    The
Company shall furnish to the Secured Party within a reasonable time such
financial data as the Secured Party may reasonably request, including, without
limitation, the following:

     

    (a)   The balance sheet of the Company as of
the close of each fiscal year, the statement of earnings and retained earnings
of the Company as of the close of such fiscal year, and statement of cash flows
for the Company for such fiscal year, all in reasonable detail, prepared in
accordance with generally accepted accounting principles consistently applied,
certified by the chief executive and chief financial officers of the Company as
being true and correct and accompanied by a certificate of the chief executive
and chief financial officers of the Company, stating that the Company has kept,
observed, performed and fulfilled each covenant, term and condition of this
Agreement during such fiscal year and that no Event of Default hereunder has
occurred and is continuing, or if an Event of Default has occurred and is
continuing, specifying the nature of same, the period of existence of same and
the action the Company proposes to take in connection
therewith;

     

    
      
        
        

      

      
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    (b)   A balance sheet of the Company as of
the close of each month, and statement of earnings and retained earnings of the
Company as of the close of such month, all in reasonable detail, and prepared
substantially in accordance with generally accepted accounting principles
consistently applied, certified by the chief executive and chief financial
officers of the Company as being true and correct; and

     

    (c)   Copies of all accountants' reports and
accompanying financial reports submitted to the Company by independent
accountants in connection with each annual examination of the
Company.

     

    Section 6.3.   Accounts
and Reports.

     

    The
Company shall maintain a standard system of accounting in accordance with
generally accepted accounting principles consistently applied and provide, at
its sole expense, to the Secured Party the following:

     

    (a)   as soon as available, a copy of any
notice or other communication alleging any nonpayment or other material breach
or default, or any foreclosure or other action respecting any material portion
of its assets and properties, received respecting any of the indebtedness of the
Company in excess of $50,000 (other than the Obligations), or any demand or
other request for payment under any guaranty, assumption, purchase agreement or
similar agreement or arrangement respecting the indebtedness or obligations of
others in excess of $50,000, including any received from any person acting on
behalf of the Secured Party or beneficiary thereof; and

     

    (b)   within fifteen (15) days after the
making of each submission or filing, a copy of any report, financial statement,
notice or other document, whether periodic or otherwise, submitted to the
shareholders of the Company, or submitted to or filed by the Company with any
governmental authority involving or affecting (i) the Company that could have a
Material Adverse Effect; (ii) the Obligations; (iii) any part of the
Pledged Collateral; or (iv) any of the transactions contemplated in this
Agreement or the Loan Instruments.

     

    Section 6.4.   Maintenance
of Books and Records; Inspection.

     

    The
Company shall maintain its books, accounts and records in accordance with
generally accepted accounting principles consistently applied, and permit the
Secured Party, its officers and employees and any professionals designated by
the Secured Party in writing, at any time to visit and inspect any of its
properties (including but not limited to the collateral security described in
the Transaction Documents and/or the Loan Instruments), corporate books and
financial records, and to discuss its accounts, affairs and finances with any
employee, officer or director thereof.

     

     

    Section 6.5.   Maintenance
and Insurance.

     

    (a)    The Company shall
maintain or cause to be maintained, at its own expense, all of its assets and
properties in good working order and condition, making all necessary repairs
thereto and renewals and replacements thereof.

     

    (b)   The Company shall maintain or cause to
be maintained, at its own expense, insurance in form, substance and amounts
(including deductibles), which the Company deems reasonably necessary to the
Company’s business, (i) adequate to insure all assets and properties of the
Company, which assets and properties are of a character usually insured by
persons engaged in the same or similar business against loss or damage resulting
from fire or other risks included in an extended coverage policy;
(ii) against public liability and other tort claims that may be incurred by
the Company; (iii) as may be required by the Transaction Documents and/or
applicable law and (iv) as may be reasonably requested by Secured Party,
all with adequate, financially sound and reputable insurers.

     

    Section 6.6.   Contracts
and Other Collateral.

     

    The
Company shall perform all of its obligations under or with respect to each
instrument, receivable, contract and other intangible included in the Pledged
Property to which the Company is now or hereafter will be party on a timely
basis and in the manner therein required, including, without limitation, this
Agreement.

     

    Section 6.7.   Defense of
Collateral, Etc.

     

    The
Company shall defend and enforce its right, title and interest in and to any
part of: (a) the Pledged Property; and (b) if not included within the
Pledged Property, those assets and properties whose loss could have a Material
Adverse Effect, the Company shall defend the Secured Party’s right, title and
interest in and to each and every part of the Pledged Property, each against all
manner of claims and demands on a timely basis to the full extent permitted by
applicable law.

     

    Section 6.8.   Payment of
Debts, Taxes, Etc.

     

    The
Company shall pay, or cause to be paid, all of its indebtedness and other
liabilities and perform, or cause to be performed, all of its obligations in
accordance with the respective terms thereof, and pay and discharge, or cause to
be paid or discharged, all taxes, assessments and other governmental charges and
levies imposed upon it, upon any of its assets and properties on or before the
last day on which the same may be paid without penalty, as well as pay all other
lawful claims (whether for services, labor, materials, supplies or
otherwise) as and when due.

     

    Section 6.9.   Taxes and
Assessments; Tax Indemnity.

     

    The
Company shall (a) file all tax returns and appropriate schedules thereto
that are required to be filed under applicable law, prior to the date of
delinquency, (b) pay and discharge all taxes, assessments and governmental
charges or levies imposed upon the Company, upon its income and profits or upon
any properties belonging to it, prior to the date on which penalties attach
thereto, and (c) pay all taxes, assessments and governmental charges or
levies that, if unpaid, might become a lien or charge upon any of its
properties; provided,
however, that the Company in good faith may contest any such tax,
assessment, governmental charge or levy described in the foregoing clauses (b)
and (c) so long as appropriate reserves are maintained with respect
thereto.

     

     

    Section 6.10.   Compliance
with Law and Other Agreements.

     

    The
Company shall maintain its business operations and property owned or used in
connection therewith in material compliance with (a) all applicable
federal, state and local laws, regulations and ordinances governing such
business operations and the use and ownership of such property, and (b) all
agreements, licenses, franchises, indentures and mortgages to which the Company
is a party or by which the Company or any of its properties is bound. Without
limiting the foregoing, the Company shall pay all of its indebtedness promptly
in accordance with the terms thereof.

     

    
      
        
        

      

      
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    Section 6.11.   Notice of
Default.

     

    The
Company shall give written notice to the Secured Party of the occurrence of any
default or Event of Default under this Agreement, the Transaction Documents or
any other Loan Instrument or any other agreement of Company for the payment of
money, promptly upon the occurrence thereof.

     

    Section 6.12.   Notice of
Litigation.

     

    The
Company shall give notice, in writing, to the Secured Party of (a) any
actions, suits or proceedings wherein the amount at issue is in excess of
$50,000, instituted by any persons against the Company, or materially affecting
any of the assets of the Company, and (b) any dispute, not resolved within
fifteen (15) days of the commencement thereof, between the Company on the one
hand and any governmental or regulatory body on the other hand, which might
reasonably be expected to have a Material Adverse Effect on the business
operations or financial condition of the Company.

     

    ARTICLE
7.

     

    NEGATIVE
COVENANTS

     

    The
Company covenants and agrees that, from the date hereof until the Obligations
have been fully paid and satisfied, the Company shall not, unless the Secured
Party shall consent otherwise in writing:

     

    Section 7.1.   Liens and
Encumbrances.

     

    The
Company shall not directly or indirectly make, create, incur, assume or permit
to exist any assignment, transfer, pledge, mortgage, security interest or other
lien or encumbrance of any nature in, to or against any part of the Pledged
Property, or offer or agree to do so, or own or acquire or agree to acquire any
asset or property of any character subject to any of the foregoing encumbrances
(including any conditional sale contract or other title retention agreement), or
assign, pledge or in any way transfer or encumber its right to receive any
income or other distribution or proceeds from any part of the Pledged Property;
or enter into any sale-leaseback financing respecting any part of the Pledged
Property as lessee, or cause or assist the inception or continuation of any of
the foregoing.

     

     

    Section 7.2.   Certificate
of Incorporation, By-Laws, Mergers, Consolidations, Acquisitions and
Sales.

     

    Without
the prior express written consent of the Secured Party, the Company shall not,
except for the increase of the Company’s authorized common stock, amend its
Certificate of Incorporation or By-Laws without notice and approval of the
Buyers, such approval not to be unreasonably withheld.

     

    Section 7.3.   Management,
Ownership.

     

    The
Company shall not materially change its ownership, executive staff or management
without the prior written consent of the Secured Party. The ownership, executive
staff and management of the Company are material factors in the Secured Party's
willingness to institute and maintain a lending relationship with the
Company.

     

    
      
        
        

      

      
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    Section 7.4.   Dividends,
Etc.

     

    The
Company shall not declare or pay any dividend of any kind, in cash or in
property, on any class of its capital stock, nor purchase, redeem, retire or
otherwise acquire for value any shares of such stock, nor make any distribution
of any kind in respect thereof, nor make any return of capital to shareholders,
nor make any payments in respect of any pension, profit sharing, retirement,
stock option, stock bonus, incentive compensation or similar plan (except as
required or permitted hereunder), without the prior written consent of the
Secured Party.

     

    Section 7.5.   Guaranties;
Loans.

     

    The
Company shall not guarantee nor be liable in any manner, whether directly or
indirectly, or become contingently liable after the date of this Agreement in
connection with the obligations or indebtedness of any person or persons, except
for (i) the indebtedness currently secured by the liens identified on the
Pledged Property identified on Exhibit A hereto and (ii) the endorsement of
negotiable instruments payable to the Company for deposit or collection in the
ordinary course of business. The Company shall not make any loan, advance or
extension of credit to any person other than in the normal course of its
business.

     

    Section 7.6.   Debt.

     

    The
Company shall not create, incur, assume or suffer to exist any additional
indebtedness of any description whatsoever in an aggregate amount in excess of
$100,000 (excluding any indebtedness of the Company to the Secured Party, trade
accounts payable and accrued expenses incurred in the ordinary course of
business and the endorsement of negotiable instruments payable to the Company,
respectively for deposit or collection in the ordinary course of
business).

     

    Section 7.7.   Conduct of
Business.

     

    The
Company will continue to engage, in an efficient and economical manner, in a
business of the same general type as conducted by it on the date of this
Agreement.

     

    Section 7.8.   Places of
Business.

     

    The
location of the Company’s chief place of business is 33 6th Street South, Suite 600, St
Petersburg, FL 33701. The Company shall not change the location of its
chief place of business, chief executive office or any place of business
disclosed to the Secured Party or move any of the Pledged Property from its
current location without thirty (30) days' prior written notice to the Secured
Party in each instance.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    


    ARTICLE
8.

     

    MISCELLANEOUS

     

    Section 8.1.Notices.

     

    All
notices or other communications required or permitted to be given pursuant to
this Agreement shall be in writing and shall be considered as duly given on:
(a) the date of delivery, if delivered in person, by nationally recognized
overnight delivery service or (b) five (5) days after mailing if
mailed from within the continental United States by certified mail, return
receipt requested to the party entitled to receive the same:

     

    
      	
              If
      to the Secured Party:

            	 
      
	 
      	 
      
	
              Atlas
      Capital Partners, LLC

              17703
      Raintree Terrace

              Boca
      Raton, Florida 33487

               

            	 
      


    

     

     

    
      	
              And
      if to the Company:

            	 
      
	 	 
	
              336th
      Street South,

              Suite
      600,

              St
      Petersburg, FL 33701

            	 
      
	 
      	 
      


    

    


    Any party
may change its address by giving notice to the other party stating its new
address. Commencing on the tenth (10th) day
after the giving of such notice, such newly designated address shall be such
party’s address for the purpose of all notices or other communications required
or permitted to be given pursuant to this Agreement.

     

    Section 8.2.   Severability.

     

    If any
provision of this Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall not
in any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein.

     

    Section 8.3.   Expenses.

     

    In the
event of an Event of Default, the Company will pay to the Secured Party the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel, which the Secured Party may incur in connection with:
(i) the custody or preservation of, or the sale, collection from, or other
realization upon, any of the Pledged Property; (ii) the exercise or
enforcement of any of the rights of the Secured Party hereunder or
(iii) the failure by the Company to perform or observe any of the
provisions hereof.

    


    Section 8.4.   Waivers,
Amendments, Etc.

     

    The Secured Party’s delay or failure at
any time or times hereafter to require strict performance by Company of any
undertakings, agreements or covenants shall not waiver, affect, or diminish any
right of the Secured Party under this Agreement to demand strict compliance and
performance herewith. Any waiver by the Secured Party of any Event of Default
shall not waive or affect any other Event of Default, whether such Event of
Default is prior or subsequent thereto and whether of the same or a different
type. None of the undertakings, agreements and covenants of the Company
contained in this Agreement, and no Event of Default, shall be deemed to have
been waived by the Secured Party, nor may this Agreement be amended, changed or
modified, unless such waiver, amendment, change or modification is evidenced by
an instrument in writing specifying such waiver, amendment, change or
modification and signed by the Secured Party.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Section
8.5.   Continuing
Security Interest.

     

    This
Agreement shall create a continuing security interest in the Pledged Property
and shall: (i) remain in full force and effect until payment in full of the
Obligations; and (ii) be binding upon the Company and its successors and
heirs and (iii) inure to the benefit of the Secured Party and its
successors and assigns. Upon the payment or satisfaction in full of the
Obligations, the Company shall be entitled to the return, at its expense, of
such of the Pledged Property as shall not have been sold in accordance with
Section 5.2 hereof or otherwise applied pursuant to the terms
hereof.

     

    Section 8.6.   Independent
Representation.

     

    Each
party hereto acknowledges and agrees that it has received or has had the
opportunity to receive independent legal counsel of its own choice and that it
has been sufficiently apprised of its rights and responsibilities with regard to
the substance of this Agreement.

     

    Section 8.7.   Applicable
Law: Jurisdiction.

     

    This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of California without regard to the principles of conflict of laws.
The parties further agree that any action between them shall be heard in
California, and expressly consent to the jurisdiction and venue of the Superior
Court of California and the United States District Court for the District of
California for the adjudication of any civil action asserted pursuant to this
Paragraph.

     

    Section 8.8.   Waiver of
Jury Trial.

     

    AS A
FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO
MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS
TRANSACTION.

     

    Section 8.9.   Entire
Agreement.

     

    This
Agreement constitutes the entire agreement among the parties and supersedes any
prior agreement or understanding among them with respect to the subject matter
hereof.

    


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        11

        
          

        

      

      
        
        

      

    

     

    


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

    
      	 
      	 
      	 
      
	 
      	
              COMPANY:

              ADVENTURE
      ENERGY, INC.

            
	 
      	 
      	 
      
	 
      	
              By:  

            	/s/
      Wayne Anderson  
	 
      	
              Name:Wayne
    Anderson

            
	 
      	
              Title:President

            


    

     

    
      	 
      	 
      	 
      
	 
      	
              SECURED
      PARTY:

              
                ATLAS
      CAPITAL PARTNERS, LLC.

              

            
	 
      	 
      	
               

            
	 
      	
              By:  

            	/s/ Christopher
      Davies  
	 
      	
              Name: Christopher
      Davies

            
	 
      	
              Title:
      Principal

            


    

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    EXHIBIT
A

    DEFINITION OF PLEDGED
PROPERTY

    (TO BE
DETERMINED)

    For the
purpose of securing prompt and complete payment and performance by the Company
of all of the Obligations, the Company unconditionally and irrevocably hereby
grants to the Secured Party a continuing security interest in and to, and lien
upon, the following Pledged Property of the Company:

    


    L Hardin
#1 Well (which was drilled and completed in May 2009. Drilled to 404ft TD.
Production from the Coniferous formation. Production of 15-20 BOD. 40% interest
held by the Company with a 34% net rev. interest in this well).

    


    Reynolds
#1 Well (which was drilled and completed in Oct. 2008. Producing 2
BOD).

    


    Reynolds
#2  Well (which was drilled and completed to 380 ft.).

    


    Two #35
Pump Jacks.