Filed by sedaredgar.com - Fox Petroleum, Inc. - Exhibit 10.6






AMENDED SECURITY AGREEMENT 

          THIS
AMENDED SECURITY AGREEMENT (the “Agreement”), is entered into
and made effective as of October 31, 2008, by and between Fox Petroleum,
Inc. a Nevada corporation, with headquarters located at 64 Knightsbridge,
London, SW1X7JF (the “Company”), and Trafalgar Capital Specialized
Investment Fund, Luxembourg (the “Secured Party”). Capitalized words
which are otherwise undefined in this Agreement shall have the same definition
as in the Securities Purchase Agreement entered into by the parties hereto on
the date hereof. 

          WHEREAS,
the Company shall issue and sell to the Secured Party, as provided in the
Securities Purchase Agreement dated the date hereof, and the Secured Party shall
purchase up to Three Million Five Hundred Thousand U.S. Dollars (US$3,500,000)
of secured convertible redeemable debentures (the “Debentures”) in the
respective amounts set forth opposite each Buyer(s) name on Schedule I attached
to the Securities Purchase Agreement; 

          WHEREAS,
to induce the Secured Party to enter into the transaction contemplated by
the Securities Purchase Agreement, the Debentures, the Registration Rights
Agreement, the Escrow Agreement dated June 24, 2008, the Irrevocable Transfer
Agent Instructions, the Pledge and Escrow Agreement and the Warrants, each as
amended as the case may be (collectively referred to as the “Transaction
Documents”), the Company hereby grants to the Secured Party a first priority
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 premises 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 to the
Secured Party 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
the Securities Purchase Agreement and the Debenture and any other amounts now or
hereafter owed to the Secured Party by the Company thereunder or hereunder
(collectively, the “Obligations”). 

ARTICLE 2. 

PLEDGED PROPERTY, ADMINISTRATION OF COLLATERAL 
AND
TERMINATION OF SECURITY INTEREST 

          Section
2.1.      Grant of Security Interest. 

          1.      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 in the property described in “Exhibit A” hereto,
whether now existing or hereafter from time to time acquired (collectively, the
“Pledged Property.”). 

                    (a)      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 of the Company’s interest in the Genesco-Edwards Fields leases (Kansas)
shall be immediately assigned to the Secured Party; and 

                              (ii)      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 

2 




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 Property such payments;
provided, however, that if the Secured Party shall become entitled and
shall elect to exercise its right to realize on the Pledged Property 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


                              (iii)     
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

                              (iv)     
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 Debenture as
described herein 

                    (c)      Each
of the following events, subject to the lapse of applicable cure periods, shall
constitute a default under this Agreement (each an “Event of Default”):


                              (i)      any
default, whether in whole or in part, shall occur in the payment to the Secured
Party of principal, interest or other item comprising the Obligations as and
when due or with respect to any other debt or obligation of the Company to a
party other than the Secured Party; 

                              (ii)      any
default, whether in whole or in part, shall occur in the due observance or
performance of any obligations or other covenants, terms or provisions to be
performed under this Agreement or the Transaction Documents;

                              (iii)      the
Company shall: (1) make a general assignment for the benefit of its creditors;
(2) apply for or consent to the appointment of a receiver, trustee, assignee,
custodian, sequestrator, liquidator or similar official for itself or any of its
assets and properties; (3) commence a voluntary case for relief as a debtor
under the United States Bankruptcy Code; (4) file with or otherwise submit to
any governmental authority any petition, answer or other document seeking: (A)
reorganization, (B) an arrangement with creditors or (C) to take advantage of
any other present or future applicable law respecting bankruptcy,
reorganization, insolvency, readjustment of debts, relief of debtors,
dissolution or liquidation; (5) file or otherwise submit any answer or other
document admitting or failing to contest the material allegations of a petition
or other document filed or otherwise submitted against it in any of the
proceedings set forth in this Section 2.2(c)(iii) under any such applicable law,
or (6) be adjudicated a bankrupt or insolvent by a court of competent
jurisdiction; or 

                              (iv)     
any case, proceeding or other action shall be commenced against the Company for
the purpose of effecting, or an order, judgment or decree shall be entered by
any court of competent jurisdiction approving (in whole or in part) anything
specified in Section 2.2(c)(iii) hereof, or any receiver, trustee, assignee,
custodian, sequestrator, liquidator or 

3 




other official shall be appointed with respect to the Company,
or shall be appointed to take or shall otherwise acquire possession or control
of all or a substantial part of the assets and properties of the Company, and
any of the foregoing shall continue unstayed and in effect for any period of
thirty (30) days. 

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 Property 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 Property
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 except for the security interest created by this Agreement
and for the Permitted Liens. For purposes hereof, “Permitted Liens” shall mean
(i) liens for taxes or other 

4 




governmental charges which are not yet delinquent or are being
contested in good faith by appropriate proceedings, (ii) liens for carriers,
contractors, warehousemen, mechanics, materialmen, laborers, employees,
suppliers or other similar persons arising by operation of law and incurred in
the ordinary course of business for sums not yet delinquent or being contested
in good faith, (iii) liens relating to deposits made in the ordinary course of
business in connection with workers’ compensation, unemployment insurance and
other types of social security or to secure the performance of leases, trade
contracts or other similar agreements; and (iv) in the case of real property,
any matters, restrictions, covenants, conditions, limitations, rights, rights of
way, encumbrances, encroachments, reservations, easements, agreements and other
matters of record, such state of facts of which an accurate survey or inspection
of the property would reveal and do not materially interfere with the use or
value of the property. 

ARTICLE 5. 

DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL


          Section
5.1.      Default and Remedies. 

                    (a)     
If an Event of Default described in Section 2.2(c)(i) or (ii) 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 described in Sections 2.2(c)(iii) or (iv) 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 as provided herein. 

          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 ten (10) 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 

5 




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 Property 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 Property 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; 

                              (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. 

                    (d)     
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. 

                    (e)      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), 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 

6 




                              (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. 

          Section
5.4.      Duties Regarding Pledged Property.


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

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, whether individually or in the aggregate, upon
(a) the Company’s assets, business, operations, properties or condition,
financial or otherwise or results of operations of the Company, taken as a
whole, excluding any change, event, circumstance or effect that is caused by
changes in general economic conditions or changes generally affecting the
industry in which the Company operates (provided that such changes do not affect
the Company in a materially disproportionate manner); or (b) the Company’s
ability to make payment as and when due of all or any part of the Obligations;
or (c) the Pledged Property. 

          Section
6.2      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: 

7 




                    (b)     
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 $25,000 (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 $25,000,
including any received from any person acting on behalf of the Secured Party or
beneficiary thereof, except for supplier requests in the normal course of
business for payment of past due accounts payable invoices so long as such past
due amounts do not exceed in the aggregate $50,000 at any time; and

                    (c)      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; or
(iii) any part of the Pledged Property. 

          Section
6.2.      Maintenance of Books and Records;
Inspection. 

          The
Company shall maintain its books, accounts and records in accordance with United
States 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, during business hours and upon reasonable
notice to visit and inspect any of its properties (including but not limited to
the Pledged Property), corporate books and financial records, and to discuss its
accounts, affairs and finances with any employee, officer or director thereof.


          Section
6.3.      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
6.4.      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 

8 




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
6.5.      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
6.6.      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 (other than those being contested by the Company in good
faith), 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
6.7.      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
6.8.      Compliance with Law and Other
Agreements.

          The
Company shall maintain its business operations and property owned or used in
connection therewith in compliance with (a) all applicable federal, state and
local laws, regulations and ordinances governing such business operations and
the use and ownership of such property, and (b) all agreements, licenses,
franchises, indentures and mortgages to which 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.

9 




          Section
6.9.      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 or the Transaction Documents,
promptly upon the occurrence thereof. 

          Section
6.10.      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 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.      Indebtedness. 

          Other
than in the ordinary course of business consistent with past practice or as
otherwise permitted herein, without the prior written consent of the Secured
Party, the Company shall not directly or indirectly permit, create, incur,
assume, permit to exist, increase, renew or extend on or after the date hereof
any indebtedness on its part, including commitments, contingencies and credit
availabilities, or apply for or offer or agree to do any of the foregoing. 

          Section
7.2.      Liens and Encumbrances. 

          Except
for Permitted Liens and for transfers in the ordinary course of business, and
except for such assignment, transfer, pledge, mortgage, security interest or
other lien or encumbrance as is outstanding on the date of this Agreement, 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 of the Company’s capital stock, 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. 

10 




          Section
7.3.      Certificate of Incorporation,
By-Laws, Mergers, Consolidations, Acquisitions and Sales, Sales of
Capital Stock, Incurrence of Debt. 

          Other
than in the ordinary course of business, without the prior express written
consent of the Secured Party, the Company shall not: (a) Amend its Articles of
Incorporation or ByLaws; (b) issue or sell its common stock without
consideration or for a consideration per share less than the bid price of the
common stock determined immediately prior to its issuance, (c) issue or sell
shares of Common Stock or Preferred Stock without consideration or for a
consideration per share less than the bid price of the Common Stock determined
immediately prior to its issuance provided that upon such sale with Secured
Party’s consent, the Fixed Conversion Price in the Debentures shall be reset to
an amount equal to eighty-five percent of such sales price (the “Reset Price”)
if such Reset Price would be lower than the then current Fixed Conversion Price,
(d) issue or sell any warrant, option, right, contract, call, or other security
instrument granting the holder thereof, the right to acquire Common Stock
without consideration or for a consideration less than such Common Stock’s bid
price value determined immediately prior to it’s issuance, (e) incur any
additional debt or permit any subsidiary of the Company to incur any additional
debt without the Secured Party’s prior written consent, (f) be a party to any
merger, consolidation or corporate reorganization, (g) purchase or otherwise
acquire all or substantially all of the assets or stock of, or any partnership
or joint venture interest in, any other person, firm or entity, (e) sell,
transfer, convey, grant a security interest in (except for Permitted Liens) or
lease all or any substantial part of its assets, nor (h) create any new
subsidiaries nor convey any of its assets to any subsidiary. 

          Section
7.4.      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.


          Section
7.5.      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
7.6.      Guaranties; Loans. 

          Other
than in the ordinary course of business, and except for such guarantees or
liabilities as are outstanding on the date of this Agreement, 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 

11 




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
7.7.      Debt. 

          Other
than in the ordinary course of business, and except for such indebtedness as is
outstanding on the date of this Agreement, without the prior written approval of
Secured Party, 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 $50,000 (excluding any indebtedness of the Company to the Secured
Party, indebtedness otherwise permitted by the terms of this Agreement, 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
7.8.      Conduct of Business. 

          The
Company will continue to engage in a business of the general type as conducted
by it on the date of this Agreement. 

          Section
7.9.      Places of Business. 

          The
location of the Company’s chief place of business is at the address set forth in
Section 8.1 hereof. 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.

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: 	Trafalgar Capital Specialized
      Investment Fund 
	 	  	8-10 Rue Mathias Hardt 
	 	  	BP 3023 
	 	 	L-1030 Luxembourg
    
	 	  	Attention: Andrew Garai, Chairman
      of the Board of 
	 	  	Trafalgar Capital Sarl, General
      Partner 
	 	  	Facsimile:     011-44-207-405-0161 and
    
	 	  	                     
      001-786-323-1651 


12 




 


	 	With a copy to: 	James G. Dodrill II, P.A. 
	 	  	5800 Hamilton Way 
	 	  	Boca Raton, FL 33496 
	 	  	Attention:      
      James Dodrill, Esq. 
	 	  	Telephone:      (561)
      862-0529 
	 	  	Facsimile:         (561)
      892-7787 
	 	  	 
	 	  	 
	 	And if to the Company: 	Fox Petroleum, Inc. 
	 	 	64 Knightsbridge 
	 	  	London, SW1X7JF 
	 	  	Attention: Mr. Richard Joseph Moore, CEO and
  
	 	  	Director 
	 	  	Telephone: 011-44-207-590-9630 
	 	  	Facsimile: 011-44-207-590-9601 
	 	  	 
	 	  	 
	 	With a copy to: 	As above 
	 	  	 
	 	  	 
	 	  	 
	 	  	Attention: Alex Craven - Director 
	 	  	Telephone: as above 
	 	  	Facsimile: as above 



          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. 

13 




          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. 

          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 (whether by payment of cash, redemption or conversion); 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. Upon payment in full of all Obligations, the Secured Party shall
execute and deliver to the Company all instruments and other documents as may be
necessary or proper to release the lien on and security interest in the Pledged
Property which has been granted hereunder. 

          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 Florida without regard to the principles of conflict of laws. The
parties further agree that any action between them shall be heard in Florida and
expressly consent to the jurisdiction and venue of the Florida State Court
sitting in Broward County, Florida or the United States District Court for the
Southern District of Florida, 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 

14 




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. 

          Section
8.10      Further Assurances. 

          The
Company shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the Secured Party may
reasonably request in order to carry out the intent and accomplish the purposes
of Furthermore, the Company agrees to execute such other documents as are
reasonably required by the Secured Party. It shall be deemed a default of this
Agreement if the Company fails to sign any such agreement within one business
day of the date of request by Secured Party. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

15 




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

COMPANY: 
FOX PETROLEUM,
INC. 

By:        /s/ Richard
Joseph
Moore                             

Name:   Mr. Richard Joseph Moore 
Title:   
CEO and Director 

 

SECURED PARTY: 
TRAFALGAR
CAPITAL SPECIALIZED 
INVESTMENT FUND, LUXEMBOURG

By:        Trafalgar Capital Sarl

Its:         General Partner


By:          /s/
Andrew
Garai                                          
 
Name:    Andrew Garai

Title:      Portfolio Manager 

16 




EXHIBIT A 
DEFINITION OF PLEDGED
PROPERTY 

          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, all of the Company’s and its current or future acquired subsidiaries’
assets, including specifically the following Pledged Property of the Company and
its current or future acquired subsidiaries: 

                         (a)      all
goods of the Company, including, without limitation, machinery, equipment,
furniture, furnishings, fixtures, signs, lights, tools, parts, supplies and
motor vehicles of every kind and description, now or hereafter owned by the
Company or in which the Company may have or may hereafter acquire any interest,
and all replacements, additions, accessions, substitutions and proceeds thereof,
arising from the sale or disposition thereof, and where applicable, the proceeds
of insurance and of any tort claims involving any of the foregoing; 

                         (b)      all
inventory of the Company, including, but not limited to, all goods, wares,
merchandise, parts, supplies, finished products, other tangible personal
property, including such inventory as is temporarily out of Company’s custody or
possession and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any of
the foregoing; 

                         (c)     
all contract rights and general intangibles of the Company, including, without
limitation, goodwill, trademarks, trade styles, trade names, leasehold
interests, partnership or joint venture interests, patents and patent
applications, copyrights, deposit accounts whether now owned or hereafter
created; 

                         (d)      all
documents, warehouse receipts, instruments and chattel paper of the Company
whether now owned or hereafter created; 

                         (e)     
all accounts and other receivables, instruments or other forms of obligations
and rights to payment of the Company, including specifically an assignment of
the receivables from ABB (herein collectively referred to as “Accounts”),
together with the proceeds thereof, all goods represented by such Accounts and
all such goods that may be returned by the Company’s customers, and all proceeds
of any insurance thereon, and all guarantees, securities and liens which the
Company may hold for the payment of any such Accounts including, without
limitation, all rights of stoppage in transit, replevin and reclamation and as
an unpaid vendor and/or lienor, all of which the Company represents and warrants
will be bona fide and existing obligations of its respective customers, arising
out of the sale of goods by the Company in the ordinary course of business; 

                         (f)      to
the extent assignable, all of the Company’s rights under all present and future
authorizations, permits, licenses and franchises issued or granted in connection
with the operations of any of its facilities; 

                         (g)      all
products and proceeds (including, without limitation, insurance proceeds) from
the above-described Pledged Property; 

                         (h)      all
equity interests, securities or other instruments in other companies, including,
without limitation, any subsidiaries, investments or other entities (whether or
not controlled); 

                         (i)      an
assignment of all of the Company’s interest in the Genesco-Edwards Fields leases
(Kansas), which shall be held in escrow and which shall be immediately assigned
to the Secured Party upon the occurrence of an Event of Default; and 

                         (j)      fifteen
million (15,000,000) shares of the Company’s Common Stock, pursuant to the
Pledge and Escrow Agreement as described in such agreement.

A-1