**Exhibit 10.5**

** **

**SECURITY AGREEMENT**

**(All Personal Property)**

 

THIS SECURITY AGREEMENT is made and enteredinto effective as of August 5, 2008 (this “Agreement”) among **CYMRI, L.L.C.,**a Nevada limited liability company (F/K/A THECYMRI CORPORATION**,** a Texas corporation) and **TRIUMPH ENERGY, INC**., a Louisiana corporation, eachindividually, a “Debtor” and collectively, “Debtors”) in favor of**TEXAS CAPITAL BANK, N.A.** (“SecuredParty”), for the benefit of itself and any counterparty under a PermittedCommodity Hedge Agreement and party to an Intercreditor Agreement.

 

**Background:**

** **

A.            On thesame date as this Agreement, Debtors, as Borrowers, and Secured Party, asLender, executed that certain Second Amended and Restated Credit Agreement (asamended, restated, or supplemented, the “Credit Agreement”) pursuant towhich Secured Party agreed to make loans to Debtors from time to time on theconditions set out in the Credit Agreement.

 

B.            SecuredParty has conditioned its obligations under the Credit Agreement upon, amongother things, the execution and delivery by Debtors of this Agreement, andDebtors have agreed to enter into this Agreement.

 

**Agreements:**

 

In order to comply with the terms andconditions of the Credit Agreement and for and in consideration of the premisesand the agreements herein contained, and other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged, each Debtorhereby agrees with Secured Party as follows:

 

**ARTICLE I**

# **DEFINITIONS**

 

## Section 1.1             Terms DefinedAbove; Other Defined Terms.  As usedin this Agreement, the terms “Credit Agreement,” “Debtor,” “Debtors,”and “Secured Party,” shall have the meanings indicated above.  Unless otherwise defined herein or thecontext otherwise requires, all capitalized terms used but not defined in thisAgreement have the respective meanings given them in the Credit Agreement.

##  

## Section 1.2             CertainDefinitions.  As used in thisAgreement, the following terms shall have the following meanings, unless thecontext otherwise requires:

##  

“Accounts” has the meaning indicatedin subsection 2.1(a) hereof.

 

“Agreement” is defined in the preambleand means this Security Agreement, as the same may from time to time be amendedor supplemented.

 

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“Code” means (a) the UniformCommercial Code as presently in effect in the State of Texas, as amended fromtime to time, and (b) with respect to rights in states other than Texas,the Uniform Commercial Code as enacted in the applicable state, as amended fromtime to time.

 

“Collateral” means all property,including without limitation cash or other proceeds, in which Secured Partyshall have a security interest pursuant to Section 2.1 of thisAgreement.

 

“Controlled Foreign Entity” means a “controlledforeign corporation” as defined in the Tax Code.

 

“Default”any event, circumstance, or condition which, with the giving of notice or thepassage of time, or both, would constitute an Event of Default.

 

“Equipment” has the meaning indicatedin subsection 2.1(c) hereof.

 

“Event of Default” means theoccurrence of any of the events specified in Section 5.3 hereof; providedthat any requirement for notice or lapse of time or other condition precedenthas been satisfied.

 

“General Intangibles” has the meaningindicated in subsection 2.1(d) hereof.

 

“Inventory” has the meaning indicatedin subsection 2.1(e) hereof.

 

“Other Liable Party” means any person,other than a Debtor, who is or becomes primarily or secondarily liable for anyof the Secured Obligations or who grants Secured Party a lien on any propertyas security for the Secured Obligations.

 

“Related Rights” means all chattelpaper, electronic chattel paper, payment intangibles, promissory notes, letterof credit rights, supporting obligations, documents and instruments relating tothe Accounts or the General Intangibles and all rights now or hereafterexisting in and to all security agreements, leases, and other contractssecuring or otherwise relating to any Accounts or General Intangibles or anysuch chattel paper, electronic chattel paper, payment intangibles, promissorynotes, letter of credit rights, documents and instruments.

 

“Secured Obligations” has the meaningindicated in Section 2.3 hereof.

 

“Security Documents” means thisAgreement together with all financing statements filed in connection with thisAgreement.

 

“Tax Code” means the Internal RevenueCode of 1986, as the same may be amended or supplemented from time to time, andany successor statute of similar import, and the rules and regulationsthereunder, as from time to time in effect.

 

## Section 1.3             Terms Defined inCode.  Unless otherwise definedherein, all terms used herein which are defined in the Code shall have the samemeaning herein.

 

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**ARTICLE II**

# **SECURITYINTEREST**

 

## Section 2.1             Grant of SecurityInterest.  As collateral security forall of the Secured Obligations, each Debtor hereby grants to Secured Party asecurity interest in, a general lien upon, and a right of set-off against allof such Debtor’s right, title and interest in all of its personal and fixtureproperty of every kind and nature, whether tangible or intangible, includingbut not limited to the following, and whether now owned or later acquired:

##  

### (a)           allof such Debtor’s accounts (as is defined in the Code) of any kind (the “Accounts”),and all rights in and to all security agreements, leases, and other contractssecuring or otherwise relating to any Accounts;

###  

### (b)           allof such Debtor’s goods, chattel paper, electronic chattel paper, paymentintangibles, promissory notes, letters of credit and letter-of-credit rights,documents and instruments, in each case as defined in the Code, and all rightsin and to all security agreements, leases, and other contracts securing orotherwise relating to any such goods, chattel paper, electronic chattel paper,payment intangibles, promissory notes, letters of credit and letter-of-creditrights, documents and instruments;

###  

### (c)           allof such Debtor’s equipment (as defined in the Code) in all of its forms, andwherever located, together with all parts thereof and all accessions oradditions thereto, including all of such Debtor’s vehicles (collectively, the “Equipment”);

###  

### (d)           allof such Debtor’s general intangibles (as defined in the Code) of any kind (the “GeneralIntangibles”), and all rights in and to all security agreements, leases,and other contracts securing or otherwise relating to any General Intangibles;

###  

### (e)           allof such Debtor’s inventory (as defined in the Code) in all of its forms, andwherever located, together with all accessions or additions thereto andproducts thereof (collectively the “Inventory”);

###  

### (f)            allof such Debtor’s investment property (as defined in the Code) wherever located;

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### (g)           allof such Debtor’s deposit accounts (as defined in the Code) wherever located;

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### (h)           allof such Debtor’s as-extracted collateral and fixtures, in each case as definedin the Code;

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### (i)            allof such Debtor’s insurance claims and proceeds and commercial tort claims;

###  

### (j)            anyother contract rights of such Debtor or rights to the payment of money;

 

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### (k)           anyadditional tangible or intangible property from time to time delivered to ordeposited with Secured Party as security for the Secured Obligations orotherwise pursuant to the terms of this Agreement; and

###  

### (l)            theproceeds, products, supporting obligations, Related Rights, additions to,substitutions for and accessions of any and all Collateral described insubsections (a)-(k) in this Section 2.1.

###  

## Section 2.2             Certain LimitedExclusions.  Notwithstanding anythingherein to the contrary, in no event shall the Collateral include (nor shall anycomponent definition of Collateral include), or the security interest grantedunder Section 2.1 hereof attach to (a) any contract right orgeneral intangible that prohibits or creates a termination right with respectto any grant or attempt to grant a security interest therein, or (b) anyof the outstanding Equity Interests of, a Controlled Foreign Entity in excessof sixty-five percent (65%) of the voting power of all classes of EquityInterests of such Controlled Foreign Entity entitled to vote.

##  

## Section 2.3             SecuredObligations.  The security interestin, general lien upon, and right of set-off against the Collateral is grantedto secure the following (collectively, the “Secured Obligations”):

##  

### (a)           thepayment of all the Obligations (as defined in the Credit Agreement) of Debtorsto Secured Party now or hereafter existing including, without limitation, theIndebtedness of Debtors under the Note, and any and all renewals, extensionsfor any period or rearrangement of the Obligations;

###  

### (b)           theperformance of all obligations of Debtors under this Agreement and the otherLoan Documents; and

###  

### (c)           allobligations of Debtors owed to a counterparty under a Permitted Commodity HedgeAgreement defined in or arising pursuant to the terms of the Credit Agreement,including without limitation, any ISDA Master Agreement executed pursuant tothe Credit Agreement between any Debtor and such counterparty (together withall schedules and confirmations in respect thereof, as ratified, amended,supplemented, restated, extended or replaced from time to time).

###  

**ARTICLE III**

# **REPRESENTATIONSAND WARRANTIES**

 

In order to induce Secured Party to acceptthis Agreement, each Debtor represents and warrants to Secured Party (whichrepresentations and warranties will survive the creation of any SecuredObligations and the extension of any credit under the Credit Agreement) that:

 

## Section 3.1             Ownership andLiens.  Except for the securityinterest of Secured Party granted in this Agreement and except for liens,security interests and other encumbrances permitted under the Credit Agreement(“Permitted Encumbrances”), each Debtor owns defensible title to theCollateral free and clear of any other liens, adverse claims or options otherthan Permitted Encumbrances.  Each Debtorhas rights in or the right, power and authority to grant a security interest inthe Collateral to Secured Party in the manner provided herein, free and 

 

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## clear of any other liens, adverse claims and options other thanPermitted Encumbrances.  No other lien,adverse claim or option has been created by any Debtor or is known by anyDebtor to exist with respect to any Collateral other than PermittedEncumbrances.  No financing statement orother security instrument is on file in any jurisdiction covering any part ofthe Collateral other than those in favor of Secured Party other than PermittedEncumbrances.  At the time the securityinterest in favor of Secured Party attaches to any after-acquired propertyincluded within the Collateral, defensible title to such after-acquiredproperty, free and clear of any other liens, adverse claims or options (otherthan Permitted Encumbrances) will be vested in a Debtor.

##  

## Section 3.2             Status of Accounts.  Each Account hereafter arising willrepresent, and to the best knowledge of such Debtor each Account now existingrepresents, the valid and legally enforceable obligations of a bona fideaccount debtor and is not and will not be subject to contra accounts, set-offs,defenses or counterclaims by or available to account debtors obligated on theAccounts except as disclosed to Secured Party in writing; and the amount shownas to each Account on such Debtor’s books will be the true and undisputedamount owing and unpaid thereon, subject to any discounts, allowances, rebates,credits and adjustments to which the account debtor has a right and which havearisen in such Debtor’s ordinary course of business, or which have otherwisebeen disclosed to Secured Party in writing.

##  

## Section 3.3             Status of RelatedRights.  All Related Rights are, andthose hereafter arising will be, valid and genuine.

##  

## Section 3.4             Inventory NotCovered by Other Documents.  None ofthe Inventory is, and at the time the security interest in favor of SecuredParty attaches none of the Inventory hereafter acquired will be, covered by anydocument (as defined in the Code).

##  

## Section 3.5             Name;Organization; Authority.  The exactlegal name of each Debtor is set out in the opening paragraph of thisAgreement.  Each Debtor is a corporationor a limited liability company as noted in the preamble hereof, duly organized,validly existing, and in good standing under the laws of the jurisdiction ofits organization.  The execution,delivery and performance of this Agreement has been duly authorized by allcompany action, and this Agreement constitutes the valid and binding obligationof each Debtor, enforceable against each Debtor in accordance with its terms,except as the enforceability thereof may be limited or affected by bankruptcy,insolvency, reorganization, moratorium or similar laws affecting theenforcement of creditors rights generally and by general equitable principles.

##  

## Section 3.6             Location.  As of the date hereof, the chief executiveoffice and chief place of business of each Debtor that is a Borrower is locatedat the address set out in Section 8.3 of the Credit Agreement.  The office where such Debtor keeps itsrecords concerning the Accounts and the General Intangibles and the originalsof all the Related Rights has the same address as such Debtor’s chief executiveoffice and chief place of business. Debtors’ Inventory and Equipment (other than mobile goods) are locatedin the States of Texas and Louisiana and such other states as Debtors shallhave, from time to time, given written notice of to Secured Party.

##  

## Section 3.7             Secured Party’sSecurity Interest.  This Agreementcreates a valid and binding security interest in the Collateral securing theSecured Obligations, subject to the Permitted Encumbrances.  Upon filing the financing statementsdescribed in Section 4.9 of this Agreement covering the Collateralin the Office of the Secretary of State for the state in which 

 

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## each Debtor is organized (and such other jurisdictions as Secured Partymay deem appropriate), Secured Party will have a perfected security interest inthat Collateral in which a security interest may be perfected by filing,subject only to Permitted Encumbrances. No further or subsequent filing, recording, registration or other publicnotice of such security interest is necessary in any office or jurisdiction inorder to perfect such security interest or to continue, preserve or protectsuch security interest except for continuation statements or for filings uponthe occurrence of any of the events stated in Section 4.9 of thisAgreement.  Such perfected securityinterest in the Collateral shall constitute a first-priority security interestunder the Code, subject only to Permitted Encumbrances.

##  

**ARTICLE IV**

# **COVENANTSAND AGREEMENTS**

 

Each Debtor will at all times comply with thecovenants contained in this Article IV, from the date hereof andfor so long as any part of the Secured Obligations or the commitment of Lendersto make loans under the Credit Agreement is outstanding.

 

## Section 4.1             Title; ProhibitedLiens and Filings.  Each Debtoragrees to protect the title to the Collateral. Debtors will not pledge, mortgage, otherwise encumber, create or suffera lien to exist on any of the Collateral (other than Permitted Encumbrances)or, subject to Section 4.12 hereof, sell, assign, dispose orotherwise transfer any of the Collateral (other than as expressly permitted bythe Credit Agreement) to or in favor of any person other than SecuredParty.  Debtors will not file or permitto be filed or recorded any financing statement or other security instrumentwith respect to the Collateral other than in favor of Secured Party or as permittedby the Credit Agreement.

##  

## Section 4.2             Taxes, Etc.  Each Debtor agrees to pay prior todelinquency all taxes, charges, liens and assessments against the Collateralwhich, if unpaid, might result in the imposition of a lien on the Collateral; provided,however, Debtors shall not be required to pay any tax, charge, lien orassessment that is not yet past due or is being contested in good faith byappropriate proceedings diligently conducted by or on behalf of Debtors and ifDebtors shall have set up reserves therefor adequate under generally acceptedaccounting principles.

##  

## Section 4.3             Possession ofCollateral.  Except (i) asotherwise contemplated in the Credit Agreement with regard to cash proceeds, (ii) whereSecured Party chooses to perfect its security interest by possession inaddition to the filing of a financing statement, or (iii) the Collateralis in transit in the ordinary course of business, the Collateral shall remainin Debtors’ possession or control at all times at Debtors’ risk of loss and shall(except for temporary removal consistent with its normal use) be kept atlocations owned or leased by Debtors.

##  

## Section 4.4             Inspection ofCollateral.  Secured Party may fromtime to time during normal business hours and upon two (2) Business Dayswritten notice, inspect any Debtor’s records concerning the Accounts and theGeneral Intangibles, the originals of the Related Rights, the Equipment, theInventory and other Collateral.

##  

## Section 4.5             FilingReproductions.  At the option ofSecured Party, a photographic or other reproduction of this Agreement or of afinancing statement covering the Collateral may be filed as a financingstatement.

 

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## Section 4.6             Delivery ofInformation.  Each Debtor willtransmit promptly to Secured Party all information that such Debtor may have orreceive with respect to (a) the Collateral, or (b) account debtors orobligors in respect of the Accounts, the General Intangibles and the RelatedRights, in each case which could reasonably be expected to materially andadversely affect the value of the Collateral or Secured Party’s rights orremedies with respect thereto.

##  

## Section 4.7             Compromise ofCollateral.  Debtors will not adjust,settle or compromise any of the Accounts, the General Intangibles or theRelated Rights without the prior written consent of Secured Party, or otherthan in a manner that does not materially affect the aggregate value of theCollateral and is in the ordinary course of business.

##  

## Section 4.8             Expenses.  Each Debtor agrees to pay to Secured Party atSecured Party’s offices, all advances, charges, costs and expenses (includingreasonable attorneys’ fees and legal expenses) incurred by Secured Party inconnection with the transaction which gives rise to this Agreement, inconnection with confirming, perfecting and preserving the security interestcreated under this Agreement, in connection with protecting Secured Partyagainst the claims or interests of any Person against the Collateral, and inexercising any right, power or remedy conferred by this Agreement or by law orin equity (including, but not limited to, reasonable attorneys’ fees and legalexpenses incurred by Secured Party in the collection of instruments depositedwith or purchased by Secured Party and amounts incurred in connection with theoperation, maintenance or foreclosure of any or all of the Collateral).  The amount of all such advances, charges,costs and expenses shall be due and payable by each Debtor to Secured Partythirty (30) days after invoice or demand by Secured Party together withinterest thereon from the due date at the Default Rate as provided in theCredit Agreement.

##  

## Section 4.9             FinancingStatement Filings; Notifications. Each Debtor recognizes that financing statements pertaining to theCollateral will be filed with the Office of the Secretary of State for thestate in which each Debtor is organized and a mortgage will be filed in eachcounty in each state in which any real property of any Debtor is located.  Debtors will promptly notify Secured Party ofany condition or event that may change the proper location for the filing ofany financing statements or other public notice or recordings for the purposeof perfecting a security interest in the collateral.  Without limiting the generality of theforegoing, Debtors will (a) promptly notify Secured Party of any change toa jurisdiction other than as represented in Section 3.5 or Section 3.6:(i) in the location of such Debtor’s registered office; (ii) in thelocation of the Inventory (other than Inventory sold or leased in the ordinarycourse of business); (iii) in the location where the Equipment is kept(other than Equipment removed in the ordinary course of business for not morethan thirty (30) days) or disposed of as permitted by the Credit Agreement; (iv) inthe location of the office where any Debtor keeps its records concerning theAccounts; or (v) in the “location” of any Debtor within the meaning of theCode; (b) prior to any of the Collateral becoming so related to any particularreal estate so as to become a fixture on such real estate, notify Secured Partyof the description of such real estate and the name of the record ownerthereof; and (c) promptly notify Secured Party of any change in any Debtor’sname, identity or organizational structure. In any notice furnished pursuant to this section, Debtors will expresslystate that the notice is required by this Agreement and contains facts thatwill or may require additional filings of financing statements or other noticesfor the purpose of continuing perfection of Secured Party’s security interestin the Collateral.

 

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## Section 4.10           Maintenance ofCollateral Generally.  Except formatters which could not reasonably be expected to have a Material AdverseEffect, Debtors will (a) maintain all the Collateral in good condition,repair, and working order (ordinary wear and tear excepted); (b) notmisuse, abuse, waste, destroy or allow the Collateral to deteriorate, except,with respect to the Equipment only, for ordinary wear and tear from itsintended use; (c) promptly, or in the case of any loss or damage to anygoods included in the Collateral as soon as practicable, make or cause to bemade all repairs, replacements or other improvements to the Collateral as arenecessary or desirable to accomplish the foregoing; and (d) not use anyCollateral in violation of any law, statute, ordinance or regulation or allowit to be so used.

##  

## Section 4.11           Account Obligations.  Debtors will duly perform or cause to beperformed all material obligations of Debtors with respect to the goods orservices, the sale or lease or rendition of which gave rise or will give riseto each Account relating thereto.

##  

## Section 4.12           Use of Inventory.  Until an Event of Default has occurred and iscontinuing, each Debtor may use its Inventory in any lawful manner notinconsistent with this Agreement, the Credit Agreement and with the terms ofinsurance thereon and may sell, lease or otherwise dispose of its Inventory inthe ordinary course of business.  EachDebtor will not and shall not be permitted to use any item of Inventory in amanner inconsistent with the holding thereof for sale, lease or disposition inthe ordinary course of business or in contravention of the terms of anyagreement.  A sale, lease or dispositionin the ordinary course of business does not include the exchange of items ofInventory for goods in kind or otherwise or transfers of items of Inventorymade in satisfaction of present or future Secured Obligations.

##  

## Section 4.13           Proceeds.  All proceeds received by any Debtor from thesale or disposition of any portion of the Collateral, all proceeds received byany Debtor in the ordinary course of business and all other proceeds of theCollateral shall be delivered or paid to Secured Party as provided in andsubject to the terms of the Credit Agreement. To evidence Secured Party’s rights in this regard, each Debtor willassign or endorse proceeds to Secured Party as Secured Party reasonablyrequests.  Secured Party may, from timeto time so long as an Event of Default exists, in its discretion, hold non-cashproceeds as part of the Collateral or apply cash proceeds of the Collateralreceived by Secured Party in the manner set out in Section 5.2 ofthis Agreement.  Subject to the terms andconditions set out in the Credit Agreement, if an Event of Default exists eachDebtor will notify obligors on all of the Collateral to make payments directlyto Secured Party, and thereafter Secured Party may endorse as any Debtor’sagent any checks, instruments, chattel paper or other documents connected withthe Collateral, take control of the Collateral and may hold the non-cashproceeds as part of the Collateral and may apply cash proceeds received bySecured Party in the manner set out in Section 5.2 of thisAgreement.  Secured Party may take anyaction reasonably necessary to obtain, preserve and enforce the liens grantedhereunder and maintain and preserve the Collateral.

##  

## Section 4.14           Delivery ofCertificate of Title to Equipment. In the case of Equipment now owned constituting goods in which asecurity interest is perfected by a notation on the certificate of title orsimilar evidence of the ownership of such goods, Debtors shall, as soon aspracticable after a request by Secured Party, deliver to Secured Party any andall certificates of title, applications for title or similar evidence ofownership of such Equipment and shall cause Secured Party to be named aslienholder on any such certificate of title or other evidence ofownership.  In the case of such Equipmenthereafter acquired, Debtors shall provide evidence of 

 

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## ownership within ten (10) days of its acquisition of suchEquipment.  Debtors shall provide noticeto Secured Party of any material loss or damage to any Equipment and shall notpermit any such Equipment.

##  

## Section 4.15           Third-PartyAcknowledgments; Control Agreements. Upon the request of Secured Party, if any of the Collateral is in thepossession of a third-party, Debtors will join with Secured Party in notifyingthe third-party of Secured Party’s security interest and obtaining anacknowledgment in form and substance reasonably satisfactory to Secured Partyfrom such third-party that it is holding the Collateral for the benefit of theSecured Party.  Upon the request ofSecured Party, Debtors will fully cooperate with Secured Party in obtaining acontrol agreement in form and substance reasonably satisfactory to SecuredParty with respect to any Collateral consisting of deposit accounts, investmentproperty, electronic chattel paper or letter of credit rights.

##  

## Section 4.16           Further Assurances.  Debtors will from time to time sign, execute,deliver and file, alone or with Secured Party, upon reasonable request, anyfinancing statements, security agreements or other documents necessary toperfect or continue in favor of Secured Party a first-priority securityinterest (subject to the Permitted Encumbrances) in the Collateral; procure anynecessary instruments or documents as may be reasonably requested by SecuredParty; and take all further action that may be necessary, or that Secured Partymay reasonably request, to confirm, perfect, preserve and protect the securityinterests intended to be granted hereby. Notwithstanding the previous sentence, however, each Debtor herebyauthorizes Secured Party to execute and deliver on behalf of such Debtor and tofile such financing statements, security agreements and other documents withoutthe signature of such Debtor either in Secured Party’s name or in the name ofsuch Debtor and as attorney-in-fact for such Debtor.  Each Debtor shall do all such additional andfurther acts or things, give such assurances and execute such documents orinstruments as Secured Party reasonably requires to vest more completely in andassure to Secured Party its rights under this Agreement, including, withoutlimiting the generality of the foregoing, (a) marking conspicuously eachchattel paper or electronic chattel paper included in the Collateral and, atthe request of Secured Party, each of such Debtor’s records pertaining to theCollateral with a legend, in form and substance reasonably satisfactory toSecured Party, indicating that such chattel paper or Collateral is subject tothe security interest granted by this Agreement, and (b) if any Account,General Intangible or Related Right is evidenced by a promissory note, chattelpaper, electronic chattel paper or other instrument, transferring, delivering,assigning to Secured Party such promissory note, chattel paper, electronicchattel paper or other instrument duly endorsed and authenticated andaccompanied by duly executed instruments of transfer and assignment, all inform and substance reasonably satisfactory to Secured Party, to be held bySecured Party as Collateral under this Agreement.

##  

**ARTICLE V**

# **RIGHTS,REMEDIES AND DEFAULT**

 

## Section 5.1             With Respect toCollateral.  Secured Party is herebyfully authorized and empowered (without the necessity of any further consent orauthorization from any Debtor) and the right is expressly granted to SecuredParty, and each Debtor hereby constitutes, appoints and makes Secured Party assuch Debtor’s true and lawful attorney-in-fact and agent for such Debtor and insuch Debtor’s name, place and stead with full power of substitution, in SecuredParty’s name or such Debtor’s name or otherwise, for Secured Party’s sole useand benefit, but at such 

 

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## Debtor’s cost and expense.  Withregard to such rights, Secured Party may exercise, without notice, all or anyof the following powers at any time following the occurrence and during thecontinuation of an Event of Default hereunder with respect to all or any of theCollateral:

##  

### (a)           notifyaccount debtors or the obligors on the Accounts, the General Intangibles andthe Related Rights to make and deliver payment to Secured Party;

###  

### (b)           todemand, sue for, collect, receive and give acquittance for any and all moniesdue or to become due by virtue thereof and otherwise deal with proceeds;

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### (c)           toreceive, take, endorse, assign and deliver any and all checks, notes, drafts,documents and other negotiable and non-negotiable instruments and chattel papertaken or received by Secured Party in connection therewith;

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### (d)           tosettle, compromise, compound, prosecute or defend any action or proceeding withrespect thereto;

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### (e)           tosell, transfer, assign or otherwise deal in or with the same or the proceeds oravails thereof or the relative goods, as fully and effectively as if SecuredParty were the absolute owner thereof; and

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### (f)            toextend the time of payment of any or all thereof and to grant waivers and makeany allowance or other adjustment with reference thereto;

###  

provided, however, Secured Party shall be under no obligation or duty toexercise any of the powers hereby conferred upon it and shall be withoutliability for any act or failure to act in connection with the collection of,or the preservation of any rights under, any Collateral.

 

## Section 5.2             Application ofProceeds.  All proceeds paid to andreceived by Secured Party on account of the Collateral will be, at the optionof Secured Party, applied by Secured Party to the Secured Obligations inaccordance with the terms and provisions of the Credit Agreement, whether ornot such Secured Obligations shall have by its terms matured; provided, however,Secured Party need not apply or give credit for any item included in such sumsuntil Secured Party has received final payment thereof as required under theCredit Agreement or solvent credits accepted as such by Secured Party; and providedfurther that Secured Party’s failure to so apply any such sums shall notbe a waiver of Secured Party’s right to so apply such sums or any other sums atany time.

##  

## Section 5.3             Events of Default.  Any of the following events shall beconsidered an Event of Default under this Agreement:

##  

### (a)           Theoccurrence and continuation of an “Event of Default” under the CreditAgreement; or

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### (b)           AnyDebtor defaults in its performance of any covenants or agreements contained inthis Agreement and such default continues unremedied after the expiration ofthirty (30) days after receipt of notice from Secured Party of such default.

 

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## Section 5.4             Default Remedies.  Upon the occurrence and during thecontinuation of any Event of Default, Secured Party may then, or at any timethereafter and from time to time after giving any notice required under theCredit Agreement, if any notice is required with respect to such Event ofDefault, apply, set-off, collect, sell in one or more sales, lease, orotherwise dispose of, any or all of the Collateral, in its then condition or,at Secured Party’s option, following any commercially reasonable preparation orprocessing, in such order as Secured Party may elect, and any such sale may bemade either at public or private sale at its place of business or elsewhere, orat any brokers’ board or securities exchange, either for cash or upon credit orfor future delivery, and Secured Party may be the purchaser of any or allCollateral so sold and may hold the same thereafter in its own right free fromany Debtor or right of redemption.  Nosuch purchase or holding by Secured Party shall be deemed a retention bySecured Party in satisfaction of the Secured Obligations.  All demands, notices and advertisements, andthe presentment of property at sale are hereby waived except to the extentreasonably necessary to conduct a commercially reasonable sale.  If, notwithstanding the foregoing provisions,any applicable provision of the Code or other law requires Secured Party togive reasonable notice of any such sale or disposition or other action, Debtorshereby agree ten (10) days prior written notice shall constitutereasonable notice.  Upon the occurrenceand during the continuation of any Event of Default, Secured Party may requireDebtors to assemble the Collateral and make it available to Secured Party at aplace designated by Secured Party which is reasonably convenient to SecuredParty and Debtors.  Any sale hereundermay be conducted by an auctioneer or any officer or agent of Secured Party.

##  

## Section 5.5             Deficiency.  Each Debtor shall remain liable to SecuredParty for any unpaid Secured Obligations, advances, costs, charges andexpenses, together with interest thereon and shall pay the same immediately toSecured Party as set out in the Credit Agreement.

##  

## Section 5.6             Secured Party’sDuties.  The powers conferred uponSecured Party by this Agreement are solely to protect the interest of SecuredParty in the Collateral and shall not impose any duty upon Secured Party toexercise any such powers.  Secured Partyshall be under no duty whatsoever to make or give any presentment, demand for performance,notice of nonperformance, protest, notice of protest, notice of dishonor, orother notice or demand in connection with any Collateral or the SecuredObligations, or to take any steps necessary to preserve any rights againstprior parties.  Secured Party shall notbe liable for failure to collect or realize upon any or all of the SecuredObligations or Collateral, or for any delay in so doing, nor shall SecuredParty be under any duty to take any action whatsoever with regard thereto.  Secured Party shall use reasonable care inthe custody and preservation of any Collateral in its possession.  Secured Party shall have no duty to complywith any recording, filing, or other legal requirements necessary to establishor maintain the validity, priority or enforceability of, or Secured Party’srights in or to, any of the Collateral.

##  

## Section 5.7             Secured Party’sActions.  Each Debtor waives anyright to require Secured Party to proceed against any Person, exhaust anyCollateral, or have any Other Liable Party joined with any Debtor in any suit arisingout of the Secured Obligations or this Agreement or pursue any other remedy inSecured Party’s power; waives any and all notice of acceptance of thisAgreement or of creation, modification, rearrangement, renewal or extension forany period of any of the Secured Obligations from time to time; and waives anydefense arising by reason of any disability or other defense of any OtherLiable Party, or by reason of the cessation from any 

 

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## cause whatsoever of the liability of any Other Liable Party.  All dealings between any Debtor and SecuredParty, whether or not resulting in the creation of the Secured Obligations,shall conclusively be presumed to have been had or consummated in reliance uponthis Agreement.  Until all the SecuredObligations shall have been paid in full or otherwise fully performed, eachDebtor shall have no right to subrogation, and each Debtor waives until all theSecured Obligations shall have been paid in full or otherwise fully performedany right to enforce any remedy which Secured Party now has or may hereafterhave against Other Liable Party and waives any benefit of and any right toparticipate in any Collateral or security whatsoever now or hereafter held bySecured Party.  Each Debtor authorizesSecured Party, without notice or demand and without any reservation of rightsagainst any Debtor and without affecting any Debtor’s liability hereunder or onthe Secured Obligations, from time to time to (a) take and hold any otherproperty as collateral, other than the Collateral, for the payment of any orall of the Secured Obligations, and exchange, enforce, waive and release any orall of the Collateral or such other property; (b) upon the occurrence andduring the continuation of any Event of Default, apply the Collateral or suchother property and direct the order or manner of sale thereof as Secured Partyin its discretion may determine; (c) renew, extend for any period,accelerate, modify, compromise, settle or release the obligation of any OtherLiable Party with respect to any or all of the Secured Obligations orCollateral; (d) waive, enforce, modify, amend or supplement any of theprovisions of any of the Security Documents, the Credit Agreement or the Noteor any other promissory note or document evidencing any of the SecuredObligations (except for an amendment or supplement to any of the foregoing towhich a Debtor is a party to the extent such amendment or supplement requiresthe consent of such Debtor); and (e) release or substitute any OtherLiable Party.

##  

## Section 5.8             Transfer ofSecured Obligations and Collateral. Secured Party may transfer any or all of Secured Party’s interest in theSecured Obligations, and upon any such transfer Secured Party may transfer itssecurity interest in any or all of the Collateral and shall be fully dischargedthereafter from all liability with respect to the Collateral transferred, andthe transferee shall be vested with all rights, powers and remedies of SecuredParty hereunder with respect to Collateral so transferred; provided, however,with respect to any security interest in the Collateral not so transferred,Secured Party shall retain all rights, powers and remedies provided under thisAgreement.  Secured Party may at any timedeliver any or all of the Collateral to Debtors whose receipt shall be acomplete and full acquittance for the Collateral so delivered, and SecuredParty shall thereafter be discharged from any liability therefor.

##  

## Section 5.9             CumulativeSecurity and Rights.  The executionand delivery of this Agreement in no manner shall impair or affect any othersecurity (by endorsement or otherwise) for the Secured Obligations.  No security taken hereafter as security forthe Secured Obligations shall impair in any manner or affect thisAgreement.  All such present and futureadditional security is to be considered as cumulative security.  The rights, powers and remedies of SecuredParty hereunder shall be in addition to all rights, powers and remedies givenby statute or rule of law and are cumulative.  The exercise of any one or more of therights, powers and remedies provided herein shall not be construed as a waiverof any other rights, powers and remedies of Secured Party.  Furthermore, regardless of whether or not theUniform Commercial Code is in effect in the jurisdiction where such rights,powers and remedies are asserted, Secured Party shall have the rights, powersand remedies of a secured party under the Code. Secured Party may 

 

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## exercise its bankers’ lien or right of set-off with respect to theSecured Obligations in the same manner as if the Secured Obligations wereunsecured.

##  

## Section 5.10           Continuing Agreement.  This is a continuing Agreement and the grantof a security interest hereunder shall remain in full force and effect and allthe rights, powers and remedies of Secured Party hereunder shall continue toexist until (a) the Secured Obligations are paid in full or otherwisefully performed, and (b) Secured Party has no further obligation toadvance monies to Debtors under the Credit Agreement, at which time SecuredParty shall deliver or cause to be delivered to Debtors, at Debtors’ expense,releases and satisfactions, or transfers without warranty, of all Collateral,including releases of deeds of trust and mortgages, financing statements, andother registrations of security with respect to the Collateral, and Debtorsshall deliver to Secured Party a general release of all of Secured Party’sliabilities and obligations including under the Loan Documents and anacknowledgment that the same have been terminated.  Furthermore, it is contemplated by theparties hereto that there may be times when no Secured Obligations are owing;notwithstanding such occurrences, however, this Agreement shall remain validand shall be in full force and effect as to subsequent Secured Obligationsprovided Secured Party has not executed a written termination statement andreturned possession of the Collateral to Debtors.  Otherwise this Agreement shall continueirrespective of the fact that the liability of Other Liable Party may haveceased, or irrespective of the validity or enforceability of the Note or any ofthe Security Documents, including the Credit Agreement, to which Other LiableParty may be a party, and notwithstanding the reorganization, death, incapacityor bankruptcy of Other Liable Party, and notwithstanding the reorganization orbankruptcy of any Debtor, or any other event or proceeding affecting any Debtoror Other Liable Party.

##  

## Section 5.11           Exercise of Rights,Etc.  Time shall be of the essencefor the performance of any act under this Agreement or the Secured Obligationsby any Debtor or Other Liable Party, but neither Secured Party’s acceptance ofpartial or delinquent payments nor any forbearance, failure or delay by SecuredParty in exercising any right, power or remedy shall be deemed a waiver of anyobligation of any Debtor or of Other Liable Party or of any right, power orremedy of Secured Party or preclude any other or further exercise thereof; andno single or partial exercise of any right, power or remedy shall preclude anyother or further exercise thereof, or the exercise of any other right, power orremedy.

##  

## Section 5.12           Remedy and Waiver.  Secured Party may remedy any Default or Eventof Default without waiving the Default or Event of Default or waiving any prioror subsequent Default or Event of Default.

##  

## Section 5.13           Non-JudicialRemedies. Secured Party may enforce its rights hereunder without priorjudicial process or judicial hearing, and each Debtor expressly waives,renounces and knowingly relinquishes any and all legal rights which mightotherwise require Secured Party to enforce its rights by judicial process.  In so providing for non-judicial remedies,each Debtor recognizes and concedes that such remedies are consistent with theusage of the trade, are responsive to commercial necessity, and are the resultof bargain at arm’s length.  Nothingherein is intended to prevent Secured Party or any Debtor from resorting tojudicial process at any party’s option.

 

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## Section 5.14           Compliance withOther Laws.  Secured Party may complyin all material respects with the requirements of any applicable state or federallaw in connection with the disposition of all or any part of the Collateral,and compliance with such laws will not be considered to adversely affect thecommercial reasonableness of any sale of all or any part of the Collateral.

##  

## Section 5.15           Disclaimer ofWarranties.  Secured Party may sellthe Collateral without giving any warranties as to the Collateral.  Secured Party may specifically disclaim anywarranties of title or similar warranties. The disclaimer of any such warranties will not be considered toadversely affect the commercial reasonableness of any sale of all or any partof the Collateral.

##  

## Section 5.16           Sales on Credit.  If Secured Party sells all or any part of theCollateral upon credit, Debtors will be credited only with payments actuallymade by the purchaser, received by the Secured Party and applied against theSecured Obligations.  In the event thepurchaser fails to pay for the Collateral, Secured Party may resell theCollateral and Debtors shall be credited with the proceeds of such sale.

##  

**ARTICLE VI**

# **MISCELLANEOUS**

 

## Section 6.1             Preservation ofLiability.  Neither this Agreementnor the exercise by Secured Party of (or the failure to so exercise) any right,power or remedy conferred herein or by law shall be construed as relieving anyPerson liable on the Secured Obligations from liability on the SecuredObligations and for any deficiency thereon.

##  

## Section 6.2             Notices. Anyrecord, notice, demand or document which either party is required or may desireto give hereunder shall be given as provided in the Credit Agreement.

##  

## Section 6.3             Choice of Law.  THIS AGREEMENT HAS BEEN MADE IN AND THESECURITY INTEREST GRANTED HEREBY IS GRANTED IN AND EACH SHALL BE GOVERNED BYTHE LAWS OF THE STATE OF TEXAS (EXCEPT TO THE EXTENT THAT THE LAWS OF ANY OTHERJURISDICTION GOVERN THE PERFECTION AND PRIORITY OF THE SECURITY INTERESTGRANTED HEREBY) WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.  SUBJECT TO THE TERMS OF THE CREDIT AGREEMENT,COURTS WITHIN THE STATE OF TEXAS SHALL HAVE JURISDICTION OVER ANY AND ALLDISPUTES BETWEEN DEBTORS AND SECURED PARTY, WHETHER IN LAW OR EQUITY, INCLUDINGANY AND ALL DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHERRELATED DOCUMENT; AND VENUE IN ANY SUCH DISPUTE WHETHER IN FEDERAL OR STATECOURT SHALL BE LAID IN HARRIS COUNTY, TEXAS.

##  

## Section 6.4             Amendment andWaiver.  This Agreement may not beamended (nor may any of its terms be waived) except in the manner provided inthe Credit Agreement.

##  

## Section 6.5             Severability.  If any provision of this Agreement isrendered or declared invalid, illegal or unenforceable by reason of anyexisting or subsequently enacted legislation or by a judicial decision whichshall have become final, Debtors and Secured Party shall promptly 

 

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## meet and discuss substitute provisions for those rendered invalid,illegal or unenforceable, but all of the remaining provisions shall remain infull force and effect.

##  

## Section 6.6             Survival ofAgreements.  All representations andwarranties of each Debtor herein, and all covenants and agreements herein notfully performed before the effective date of this Agreement, shall survive suchdate.

##  

## Section 6.7             Counterparts.  This Agreement may be executed in two or morecounterparts, and it shall not be necessary that the signatures of all partieshereto be contained on any one counterpart hereof.  Each counterpart shall be deemed an original,but all such counterparts taken together shall constitute one and the sameinstrument.

##  

## Section 6.8             Successors andAssigns.  The covenants andagreements herein contained by or on behalf of each Debtor shall bind eachDebtor, each Debtor’s legal representatives, successors and assigns and allpersons who become bound as a debtor to this Agreement and shall inure to thebenefit of Secured Party, its successors and permitted assigns, in each case asprovided under the Credit Agreement.

##  

## Section 6.9             Titles ofArticles, Sections and Subsections. All titles or headings to articles, sections, subsections or otherdivisions of this Agreement are only for the convenience of the parties andshall not be construed to have any effect or meaning with respect to the othercontent of such articles, sections, subsections or other divisions, such othercontent being controlling as to the agreement between the parties hereto.

##  

## Section 6.10           WAIVER OF JURY TRIAL.  TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,EACH OF THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVESANY RIGHT WHICH IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANYLITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR INCONNECTION WITH THE NOTE, THIS AGREEMENT OR THE OTHER SECURITY DOCUMENTS, ORANY TRANSACTION CONTEMPLATED THEREBY, BEFORE OR AFTER MATURITY.

##  

## Section 6.11           Interest.  It is the intention of the parties hereto tocomply strictly to usury laws applicable to the Secured Party.  Interest on the indebtedness is expresslylimited so that in no contingency or event whatsoever, whether by accelerationof the maturity of the Note or otherwise, shall the interest taken, reserved,contracted for, charged or received by the Secured Party exceed the maximumamount permissible under applicable law. If from any circumstances whatsoever fulfillment of any provisions ofthe Credit Agreement, this Agreement, any of the other Security Documents or ofany other document evidencing, securing or pertaining to the indebtednessevidenced by the Note, at the time performance of such provision shall be due,would be usurious under applicable law, then, ipso facto, the obligation to befulfilled shall be reduced to the limit of such validity so that the aggregateconsideration which constitutes interest that is contracted for, taken,reserved, charged for, or received shall not exceed the maximum amount allowedby applicable law and such amount that would otherwise be excessive interestshall be applied to the reduction of the principal amount owing under the Noteor on account of any other indebtedness of Debtors to the Secured Party, or ifprincipal of the Note and such other indebtedness has been paid in full,refunded to the Debtors.  In determiningwhether or not the interest paid or agreed to be paid for the use, forbearance,or detention of sums hereunder 

 

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## exceeds the highest lawful rate, Debtors and the Secured Party shall,to the maximum extent permitted by applicable law, (a) characterize anynon-principal payment as an expense, fee or premium rather than as interest, (b) excludevoluntary prepayments and the effects thereof, (c) amortize, prorate,allocate and spread the total amount of interest throughout the full term ofsuch indebtedness so that the actual rate of interest on account of suchindebtedness does not exceed the highest lawful rate, and/or (d) allocateinterest between portions of such indebtedness, to the end that no such portionshall bear interest at a rate greater than that permitted by applicable law.

##  

## Section 6.12           Entire Agreement.  THIS AGREEMENT, THE CREDIT AGREEMENT, THENOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THEPARTIES WITH RESPECT TO THE MATTERS ADDRESSED HEREIN AND THEREIN AND WILL NOTBE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORALAGREEMENTS OF THE PARTIES.  THERE ARE NOUNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

##  

(Signatures on the following pages)

 

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INWITNESS WHEREOF, the undersigned hereby execute this Agreement to be effectiveas of the date first set out above.

 

 
|   | **DEBTORS:**                                      |
|--------|---------------------------------------------------|
|   | ** **                                        |
|   | **CYMRI,  L.L.C. (F/K/A THE CYMRI  CORPORATION)** |
|   | ** **                                        |
|   | ** **                                        |
|   | By:                                               | /s/ Larry M. Wright |
|   |                                              | Larry M. Wright |
|   |                                              | Chief Executive  Officer |
|   |                                              |   |
|   |                                              |   |
|   | **TRIUMPH  ENERGY, INC.**                         |
|   | ** **                                        |
|   | ** **                                        |
|   | By:                                               | /s/ Larry M. Wright |
|   |                                              | Larry M. Wright |
|   |                                              | Chief Executive  Officer |
|   |                                              |   |
|   |                                              |   |
|   | **SECURED  PARTY:**                               |
|   | ** **                                        |   |
|   | **TEXAS  CAPITAL BANK, N.A.**                     |
|   | ** **                                        |   |
|   | ** **                                        |   |
|   | By:                                               | /s/ Jonathan Gregory |
|   |                                              | Jonathan Gregory |
|   |                                              | Executive Vice  President |

 

Signature Page toSecurity Agreement

 

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