<PAGE>

                                                                    EXHIBIT 10.7
                              SECURITY AGREEMENT
                              ------------------



          SECURITY AGREEMENT, dated as of August 2,1999, West Star Energy Group
formerly known as Mid-States Fuels, Inc., a California corporation having an
office at Atwater, 695 Atwater Blvd., Atwater, CA 95301 and LLO-Gas, Inc. a
California corporation, having an office at Laws Bulk Plant, 108 Dehy - Law,
Bishop, CA 93514 and 23805 Stuart Ranch Road, Suite 265, Malibu, CA 90265 and
LLO-Gas, Inc., a Delaware Corporation having an office at 1013 Centre Road,
Wilmington, DE 19805, (the "Borrower"), for the benefit of Capstone Capital,
                           -----------
LLC, a Delaware limited liability company (the "Lender"), having an office at
                                               ---------
515 Madison Avenue New York New York 10022.

                                  WITNESSETH:
                                  -----------
          WHEREAS, on the date hereof, the Lender is establishing a revolving
credit facility in favor of the Borrower in the principal amount of up to
$900,000 (the "Loan"), pursuant to a Promissory Note, dated of even date
              -------
herewith, made by the Borrower in favor of the Lender in the original principal
amount of $900,000 (as the same may be supplemented, amended, modified or
restated from time to time in accordance with the terms thereof, the "Note"),
                                                                     --------
and

          WHEREAS, on the date hereof, the Lender and the Borrower have entered
into a Supply Agreement (the "Supply Agreement") pursuant to which, among other
                             -------------------
things, Lender shall provide a letter of credit facility to Borrower of up to
$900,000; and

          WHEREAS, in order to provide additional security for the payment and
performance of all of its obligations to the Lender under the Note and the
Supply Agreement, the Borrower has agreed to grant to the Lender a continuing
lien and security interest in and to certain of the Borrower's accounts and
contract rights and to execute this and such other security agreements and
instruments as are necessary to grant such lien and security, interest;

          NOW, THEREFORE, in consideration of the premises contained herein and
in the Note, and as further inducement to the Lender to make the Loan, and for
other good and valuable consideration the sufficiency of which is hereby
acknowledged, the Borrower agrees with the Lender as follows:

Section 1. GRANT OF SECURITY INTEREST.

          (a)  The Borrower hereby pledges, assigns and grants to the Lender a
continuing security interest in and lien on the properties, assets and rights
described on Exhibit 'A' hereto, whether now or hereafter owned by the Borrower
             -----------
(collectively, the "Collateral"), which security
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interest shall, be primary and subordinate only to Pre-Bank Business Credit,
Inc. pursuant to a certain intercreditor agreement executed between the parties
(the "Intercreditor Agreement").
      -----------------------

          (b)  The Borrower hereby pledges assigns and grants to the Lender a
continuing priority security interest in and a lien on any asset, property or
right of Borrower, which Lender has an interest in by virtue of the Supply
Agreement, including, but not limited to, all Supplier Orders and Client Orders
(as those terms are defined in the Supply Agreement) and all accounts, inventory
and proceeds related to the Supplier Orders and the Client Orders.

Section 2. OBLIGATIONS SECURED.

          The Collateral hereunder constitutes and will constitute continuing
security for the strict performance and observance by the Borrower of the
following obligations (the "Obligations"):
                           -------------

          (a) The prompt payment, when due, of all present and future
obligations and indebtedness of the Borrower to the Lender under the Supply
Agreement.

          (b) The strict performance and observance by the Borrower of
all warranties covenants and agreements contained in the Supply Agreement.

          (c) The prompt payment, when due, of all present and future
obligations and indebtedness of the Borrower to the Lender under the Note and
this Agreement; and

          (d) The strict performance and observance by the Borrower of all
warranties covenants and agreements contained in the Note and this Agreement.

          As among the foregoing, the obligations with respect to the Supply
Agreement, set forth in clauses (a) and (b) above, are and will be senior to and
be secured on a senior basis in relation to the obligations with respect to the
Note.

Section 3. BORROWER REMAINS LIABLE.

          Anything herein to the contrary notwithstanding, in the absence of the
Lender's express prior written consent thereto, (a) the Borrower shall remain
liable under any and all contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by the Lender of any of the rights hereunder shall not release the
Borrower from any of its duties or obligations under any contracts and
agreements included in the Collateral, and (c) the Lender shall not have any
obligation or liability under any contracts and agreements included in the
Collateral by reason of this Agreement, nor shall the Lender be obligated to
perform any of the obligations or duties of the Borrower under any such contract
or agreement or to take any action to collect or enforce any claim for payment
assigned hereunder.

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Section 4. GUARANTEES AND WARRANTIES.

          The Borrower represents and warrants to the Lender that:

          4.1.     The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation, is
duly qualified and in good standing under the laws of each jurisdiction where
the character of its properties or the transaction of its business makes such
qualification necessary, and has full power to own or hold under lease its
properties and assets and to conduct its business as now being conducted.

          4.2.(a)  The Borrower has full power and authority to execute,
deliver and perform, this Agreement and the Note, which has been duly authorized
by all necessary and proper corporate action.  No consent of stockholders or
members or of any public authority is required as a condition to the validity of
this Agreement, the Note, or the Supply Agreement. The making and performance by
the Borrower of this Agreement and the Note will not violate any provision of
law and will not conflict with or result in the breach of any order, writ,
injunction or decree of any court or government instrumentality, or its
certificate of formation or operating agreement or create a default under any
agreement, note or indenture to which it is a party or by which it is bound or
to which any of its property is subject, or result in the imposition of any
lien, charge, security interest or encumbrance of any nature whatsoever upon any
of its properties or assets, except for the liens created under this Agreement.

          (b)      Each of this Agreement, the Note and the Supply Agreement has
been duly executed and delivered, and constitutes the legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms.

          4.3.     The Borrower has good title to and is the lawful owner of the
Collateral free from all claims, liens, encumbrances, charges or security
interests whatsoever. The Collateral will at all times be kept at the location
set forth on Exhibit "A" hereto.

          4.4.     The provisions of this Agreement create a valid and perfected
first priority security interest in the Collateral, enforceable in accordance
with their respective terms.

          4.5.     There are no judgments outstanding against the Borrower and
there are no actions or proceedings before any court or administrative agency
pending or, to the knowledge of the Borrower, threatened against the Borrower
which, if determined adversely to the Borrower, would affect the Collateral
other than those disclosed in the Supply Agreement.

          4.6.     The Borrower's principal office and place of business where
it maintains its records concerning the Collateral is at its address stated
above. The Borrower has no other office or place of business except as indicated
on Exhibit "A" hereto.

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          4.7.     All the Collateram (I) is owned solely by Borrower free and
clear of all claims, liens, security interests and encumbrances (including
without limitation any vlaims of infringement) except those in Lender's favor
and (ii) is not subject to any agreement prohibiting the granting of a security
interest or requiring notice of or consent to the granting of a security
interest; Any limitations or incurrence of additional indebtedness, payment of
dividends, etc.

Section 5. COVENANTS.

          The Borrower covenants and agrees that from the date of this Agreement
until Satisfaction in full of all of the Obligations the irrevocable termination
of this Agreement.

          5.1.     Upon the Lender's request, the Borrower shall keep and
maintain the Collateral insured against loss or damage by such risks as are
customarily insured against by similar businesses for the full insurable value
thereof with such companies and by policies in such forms and terms as shall be
satisfactory to the Lender. Such standard policies shall by their terms be
payable to the Lender as its interests may appear, shall name the Lender as an
"additional insured" and "Lender", and shall provide that the Lender shall be
given at least thirty (30) days prior written notice of any amendment,
modification or cancellation thereof and that the Lender shall have the option,
but not the obligation, to pay the premiums to continue such insurance in effect
or obtain like coverage. The originals or certificates of all such policies
shall be delivered to the Lender. The Borrower agrees that any payment made by
the Lender pursuant to the foregoing authorization, shall bear interest thereon
at the Default Rate (as defined in the Note) from the date of such payment and
shall become part of the Obligations and be shall secured by the Collateral
pursuant to the terms of this Agreement. The Borrower hereby appoints the Lender
as its attorney-in-fact to make, adjust or settle any claim under any insurance
policy insuring the Collateral.

          5.2.     The Borrower shall give the Lender full and free access to
the Collateral and to all books, correspondence and records of the Borrower with
respect thereto, permit the Lender and its representatives to examine the same
and to make extracts therefrom all at the Borrower's expense.

          5.3.     The Borrower shall promptly pay and discharge or cause to be
paid and discharged all its obligations and liabilities including (without
limitation) all taxes, assessments and governmental charges upon it or its
income or properties, when due unless and to the extent that only that the same
shall be contested in good faith and by appropriate proceedings and then only to
the extent that a bond is filed in cases where the filing of a bond is necessary
to avoid the creation of a lien against any of its property .

          5.4.     The Borrower shall do, or cause to be done, all things
necessary to preserve and keep in full force and effect its limited liability
company existence and all franchises, rights and privileges necessary for the
proper conduct of its business, and continue to engage in the business of the
same type as now conducted by it.

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          5.5.     The Borrower shall not grant, permit or suffer to exist any
lien, claim, security interest or encumbrance on the Collateral, except those in
favor of the Lender.

          5.6.     The Borrower shall notify the Lender in writing within three
(3) business day after the occurrence thereof, of the occurrence of any event
which constitutes, or which with notice or lapse of time, or both, would
constitute an Event of Default (as hereinafter defined).

          5.7.     The Borrower shall deliver to the Lender promptly upon
request therefore such financial data, reports or information with respect to
Borrower or the Collateral as the Lender may reasonable request from time to
time.

          5.8.     The Borrower shall execute and deliver such further or
additional instruments and assurances, and take all such additional action as
the Lender may require for the purpose of carrying out the provisions of this
Agreement, the Note and the Supply Agreement, including for the purpose of the
Lender maintain its first priority perfected lien in the collateral.

          5.9.     The Borrower shall not sell, assign or otherwise dispose of
the Collateral except the Borrower may sell, assign or otherwise dispose of the
               ------
Collateral only if the gross proceeds of such sale, assignment or other
disposition are immediately paid to the Lender to be applied to the outstanding
obligations under the Note pursuant to Section A.5 thereof.

          5.10.    The Borrower shall not change its principal office or the
place where it maintains its records pertaining to the Collateral as specified
in Section 4.6 hereof without giving the Lender at least thirty (30) days nor
written notice thereof.

          5.11.    The Borrower shall defend the Collateral against claims and
demands of all parties.

          5.12.    Subject to Section 5.10 hereof the Borrower shall not remove
or permit the removal of the Collateral from its present location as set forth
on Exhibit 'A" hereto without the prior written consent of the Lender.

          5.13.    The Borrower hereby irrevocably and unconditionally sells,
transfers and assigns all of the Borrower's right, title and interest in and to
the Accounts to the Lender.

          5.14.    The Borrower shall place notations upon its books of account
and any financial statement prepared by Borrower to disclose Lender's security
interest in the collateral.

Section 6. OPTION TO PERFORM OBLIGATION OF THE BORROWER IN RESPECT COLLATERAL.

          If the Borrower fails or refuses to make any payment, performance any
covenant or obligation, or take any other action which the Borrower is obligated
hereunder to perform,

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observe, take or do, then the Lender may, at its option, without notice or
demand upon the Borrower and without releasing the Borrower from any obligation
or covenant hereof, perform, observe, take or do the same in such manner and to
such extent as the Lender may deem necessary to protect any of the Collateral
and its rights hereunder including without limitation, obtaining insurance and
the payment of any taxes and the payment of any sums necessary to discharge
liens or security interests at any time levied or placed on the Collateral. The
Borrower agrees that any payment or expense incurred by the Lender pursuant to
the foregoing authorization, shall bear interest at the Default Rate from the
date of the incurrence of such expense and shall become part of the Obligations
and shall be secured by the Collateral pursuant to the terms of this Agreement.

Section 7. EVENTS OF DEFAULT.

          If one or more of the events listed below (any such event, an 'Event
                                                                        ------
of Default" shall occur, the entire unpaid balance of all Obligations owing to
-----------
the Lender by the Borrower shall immediately become due and payable at the
election of the Lender without notice or demand and without presentment, protest
or notice of protest, or notice of non-payment, all of which are hereby waived:

          7.1.     The Borrower shall fail to make any payment of principal or
interest on the Note (including, without limitation, any mandatory prepayment of
principal) or any other amount when due (or, if applicable, when demanded by the
Lender) thereunder or under this Agreement;

          7.2.     The Borrower shall default in the performance or observance
of any covenant agreement contained in the Note or in this Agreement, excluding
the Event of Default as described in Paragraph 7.1, above and any breach of
Sections 5.1, 5.2, 5.3, 5.5, 5.9, 5.10, and 5.11, and not cure said default
within 30 days from occurrence;

          7.3.     An uncured event of default or uncured default shall occur
and be continuing under any other agreement, document or instrument executed and
delivered to the Lender by the Borrower or any guarantor or hypothecator
relating to any Liabilities (as defined in the Note), including, without
limitation) this Agreement or Supply Agreement;

          7.4.     Any material representation or warranty made by or on behalf
of the Borrower in the Note or in this Agreement or in any other certificate,
agreement, instrument or statement delivered to the Lender by or on behalf of
the Borrower shall at any time prove to have been incorrect when made in any
material respect;

          7.5.     The Borrower or any Affiliate (as defined in the Supply
Agreement) shall materially default in the payment of principal of or interest
on any indebtedness for borrowed money (including any such indebtedness in the
nature of a lease) or shall default in the performance or observance of the
terms of any instrument pursuant to which such indebtedness is

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outstanding, the result of which is to cause the same to become due prior to its
stated maturity (and whether or not such default is waived by the holder
thereof);

          7.6.     Any material change in the condition or affairs (financial or
otherwise) of the Borrower, any Affiliate or any guarantor of any of the
obligations shall occur which, in the opinion of the Lender, increases its risk
with respect to the loan evidenced by the Note or impair any security therefor;

          7.7.     There shall be a defect in the Borrower's title to any of the
Collateral and such defect in title shall not have been cured or removed within
ten (10) days after the Borrower's receipt of notice thereof;

          7.8.     The Borrower, any Affiliate or any guarantor of any of the
Obligations, shall become insolvent, make an assignment for the benefit of
creditors, file a petition in bankruptcy, be adjudicated insolvent or bankrupt,
admit in writing its inability to pay its debts when they mature, petition or
apply for, consent to, or acquiesce in the appointment of, a trustee or receiver
for the Borrower or for a substantial part of its property; or any other
bankruptcy, reorganization, debt arrangement or other proceeding under any
bankruptcy, insolvency law, or any dissolution or liquidation proceeding shall
be instituted by or against the Borrower, and if instituted against it, shall be
consented to or acquiesced in by the Borrower or shall not be dismissed or, if
contested, stayed within a period of thirty (30) days; or any judgment, writ of
attachment or execution or any similar process shall be issued or levied against
a substantial part of the property of the Borrower and shall not be released,
stayed, bonded or vacated within a period of thirty (30) days after its issue or
levy;

          7.9.     The Borrower shall, at any time without the prior written
consent of the Lender, enter into an agreement to change the location of the
Collateral or permit any change in such location of the Collateral from that
specified in Section 5.1 hereof except as permitted by Section 5.11; and/or

          7.10.    The lien created hereunder shall, for any reason other than
by or through the conduct of the Lender, cease to be a valid first priority
perfected security interest.

          7.11     A default or an event of default shall occur and be
continuing under any agreement, document or instrument executed and delivered to
the Lender by the Borrower, any, guarantor, or any Affiliate relating to any
Liabilities (as defined in the Note).

          7.12.    A Change in Control (as hereinafter defined) of the Borrower
or any affiliate (including, without limitation, West, shall occur, or a change
in any executive officer of the Borrower not approved in advance by Capstone.
For the purposes of this Agreement, "Change in Control" shall mean (i) a "change
                                    ------------------
in control' as such term is used in Item 5(f) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended at the date
hereof ("Act"), (ii) a change in control as the term "control" is defined in

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Rule 12b-2 promulgated under the Act, (iii) when any "person' (as such term is
defined in Sections 3 (a)(9) and 13(d)(3) of the Act) becomes a beneficial
owner, directly or indirectly, of securities of the Borrower representing (30%)
percent or more of the Borrower's or any Affiliate's then outstanding securities
having the right to vote on the election of directors, (iv) when individuals who
are members of the Borrower's or any Affiliate's Board of Directors at any one
time shall immediately thereafter cease to constitute a majority of the Board of
Directors or (v) when a majority of the directors elected at any annual or
special meeting of stockholders are not individuals nominated by the Borrower's
or any Affiliate's incumbent Board of Directors;

Section 8. REMEDIES.

          In case any Event of Default shall have occurred and be continuing,
the Lender shall, have, in addition to all other rights and remedies given it by
this Agreement or the Note, those allowed by law and the rights and remedies of
a secured party under the Uniform Commercial Code as enacted in any jurisdiction
in which any of the Collateral may be located and without limiting the
generality of the foregoing, the Lender may immediately, without demand of
performance and without notice of intention to sell or of time or place of sale
or redemption or other notice or demand whatsoever to the Borrower, all of which
are hereby expressly waived, and without advertisement, enter onto the premises
where the Collateral is located and take possession thereof without liability
for any lawsuit or action, and sell, lease or otherwise dispose of all or any
part of the Collateral or any interest which the Borrower may have therein,
either at pubic or private sale or otherwise, and after deducting from the
proceeds of sale or other disposition of the Collateral all expenses (including
all reasonable fees and expenses of counsel) as provided in Section 14 hereof,
shall apply the residue of such proceeds toward the payment of the Obligations.
If notice of any sale or other disposition is required by law to be given the
Borrower hereby agrees that a notice sent at least ten (10) days before the time
of any intended public sale or before the time after which any private sale or
other disposition of the Collateral is to be made shall be reasonable notice of
such sale or other disposition.  The Borrower agrees to assemble the Collateral,
or cause it to be assembled, at such place or places as the Lender may designate
by written notice.  At any such sale or other disposition, the Lender may
purchase the whole or any part of the Collateral, free from any right of
redemption on the part of the Borrower, which right is hereby waived and
released.  Without limiting the generality of the rights and remedies conferred
upon the Lender under this Section 8, the Lender may: (a) enter upon the
premises of the Borrower and take immediate possession of the Collateral, either
personally or by means of a receiver appointed by a court therefor, using all
necessary force to do so;  (b) at the Lender's option, use, operate, manage and
control the Collateral in any lawful manner; (c) collect and receive all rents,
income, revenue, earnings, issue and profits therefrom; and (d) maintain,
repair, renovate, alter or remove the Collateral as the Lender may determine in
its discretion and any monies so collected or received by the Lender shall be
applied to, or may be accumulated for application upon the Obligations and the
Borrower shall be liable for any deficiency.

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Section 9. POWER OF ATTORNEY.

          The Borrower authorizes the Lender and does hereby make, constitute
and appoint the Lender and any officer, employee or agent of the Lender with
full power of substitution as the Borrower's true and lawful attorney-in-fact
with power, in its own name or in the name of the Borrower, to endorse any
notes, checks, drafts. money orders, or other instruments of payment (including
payments under or in respect of any policy of insurance) in respect of the
Collateral that may come into possession of the Lender; to sign and endorse any
documents relating to the Collateral and to verify Borrower's accounts
receivable and upon the occurrence of an Event of Default; to pay or discharge
taxes, liens, security interests or other encumbrances at any time levied or
placed on or threatened against the Collateral; to grant, collect, receipt for,
compromise, settle and sue for monies due in respect of the Collateral; and,
generally, to do at the Lender's option and at the Borrower's expense, at any
time, or from time to time, all acts and things which the Lender deems necessary
to protect, preserve and realize upon the Collateral and the Lender's security
interests therein in order to effect the intent of this Agreement, as fully and
effectual as the Borrower might or could do; and the Borrower hereby ratifies
all that said attorney shall do or cause to be done by virtue hereof.  THIS
POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE FOR AS
LONG AS ANY OF THE OBLIGATIONS SHALL BE OUTSTANDING.  The Borrower agrees that
any fees, costs and expense incurred by the Lender pursuant to the foregoing
authorization, and interest thereon at the rate prescribed in the Note from the
date of incurring any such fees, costs and expense, shall become part of the
Obligations and be secured by the Collateral.

Section 10. JURISDICTION; WAIVER OF JURY TRIAL AND SETOFF, ETC.

          The Borrower hereby irrevocably consents to the jurisdiction and venue
of any, New York State or Federal court located in New York County, New York
over any action or proceeding arising out of any dispute between the Borrower
and the Lender under the Note or this Agreement or otherwise and the Borrower
further irrevocably consents to the service of process in any such action or
proceeding by the mailing of a copy of such process to the Borrower at the
address set forth in the first paragraph of this Agreement.  "EACH OF THE
BORROWER AND THE LENDER HEREBY WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THE TRANSACTIONS
CONTEMPLATED BY THE NOTE AND THIS AGREEMENT, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF, OR ANY OTHER CLAIM OR DISPUTE
HOWSOEVER ARISING, BETWEEN THE BORROWER AND THE LENDER"

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Section 11. NOTICES.

          All notices, requests, demands and other communications to or upon the
respective parties hereto shall be deemed to have been given or made when
deposited in the mails and sent by registered or certified mail, postage
prepaid, return receipt requested, or when delivered personally, to the parties
at their addresses hereinafter provided, or to such other addresses as may
hereafter be designated in writing by the respective parties hereto.

Section 12. NO WAIVER.

          No failure on the part of the Lender to exercise, and no delay in
exercising any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by the Lender of any right,
remedy or power hereunder preclude any other or future exercise of any other
right, remedy or power.  Each and every right, remedy or power hereby granted to
the Lender or allowed it by law or other agreement shall be cumulative and not
exclusive of any other, and may be exercised by the Lender from time to time.

Section 13. FINANCING STATEMENTS; FURTHER ASSURANCES; FILING

          At the Closing, the Borrower shall deliver UCC-1 financing statements
in form and substance satisfactory to the Lender and with the Lender's security
interest duly noted thereon with respect  to the Collateral for filing at the
appropriate offices.  Thereafter, within three (3) business days after the
Lender's written request therefor, the Borrower shall cause such additional
Uniform Commercial Code financing statements with respect to the Collateral or
any modifications, assignments, or amendments to any such financing statements
(all in form and substance satisfactory to the Lender) to be delivered to the
Lender for filing at the appropriate offices.  The Borrower from time to time,
at its sole expense, will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or  the Lender may request, and hereby authorizes the Lender to take all action
(including the filing of any financing statements, continuation statements,
assignments or amendments thereto with respect to the Collateral without the
signature of the Borrower where permitted by law) as the Lender may deem
necessary, proper or desirable in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Lender to
exercise and enforce its rights and remedy hereunder with respect to any
Collateral.  A carbon, photographic or other reproduction of the Agreement or
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.

Section 14. INDEMNITY AND EXPENSES.

          14.1.    The Borrower here by indemnifies the Lender from and against
any and all actions, claims, losses, fees, expenses and liabilities growing out
of or resulting from this Agreement and/or the Note (including, without
limitation, enforcement of this Agreement and/or the Note, except claims, losses
or liabilities resulting from the Lender's willful misconduct.

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          14.2.    The Borrower will upon demand pay to the Lender the amount
of any and all expenses, including the fees and disbursements of its counsel and
of any experts and agents, which the Lender may incur in connection with (a) the
administration of this Agreement, (b) the custody, preservation, verification,
use or operation of, or the sale of, collection from, or other realization upon-
any of the Collateral, (c) the exercise, enforcement or protection of any of the
rights of the Lender hereunder, (d) preparation, execution, and delivery of any
waiver, any amendment thereto or consent proposed or executed in connection with
the transactions contemplated by this Agreement, the Note and the Supply
Agreement (e) the failure by the Borrower to perform or observe any of the
provisions hereof.  The foregoing expenses shall become part of the Obligations
(and the definition of the term Obligations shall include such fees,
disbursements and other expenses) and shall be secured by the Collateral as set
forth in this Agreement and the Lender may at any time apply to the payment of
all such costs and expenses all proceeds arising from the possession or
disposition of all or an portion of the Collateral.

Section 15. MODIFICATIONS, ETC.

          Neither this Agreement nor any provision hereof may be changed,
waived, discharged, or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of such change, waiver, discharge
or termination is sought.

Section 16. TERMINATION

          Upon the payment in full of all Obligations and the irrevocable
termination of this Agreement, the Note and the Supply Agreement, the Lender
shall execute and deliver to the Borrower all such documents and instruments as
shall be necessary to evidence termination of this Agreement and the security
interests created hereunder; provided, however, the obligations of the Borrower
                             -----------------
under Section 14 hereof shall survive any termination under this Section 16.

Section 17. GOVERNING LAW.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR
CHOICE OF LAW.

Section 18. ASSIGNMENT, ETC.

          The Borrower shall not assign, pledge, or otherwise transfer or
encumber any of its rights or obligations under this Agreement or in the
                    ------
Collateral or any part thereof except as expressly permitted by Section 5.9
hereof.  Any such purported assignment, pledge, transfer or other action without
the Lender's written consent shall be void.  The Lender may, without notice,
transfer or assign this Agreement or any interest herein and may encumber or
transfer any of its rights or interest in and to the Collateral or any part
thereof and any such assignee or transferee of any of the Lender's rights under
this Agreement or with respect to the Collateral shall have the

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<PAGE>

right to transfer or assign its interest as aforesaid. Each such assignee or
transferee shall have all of the rights but none of the obligations of the
Lender under this Agreement and the Borrower shall not assert against any of
them any defense, counterclaim or setoff that the Borrower may have against the
Lender. This Agreement shall be binding upon each of the Borrower and its
successors and shall inure to the benefit of the Lender and its successors and
assigns.

Section 19. PARTIAL INVALIDITY.

If any provision of this Agreement is held to be invalid or unenforceable, such
invalidity or unenforceability shall not invalidate this Agreement as a whole,
but this Agreement shall be construed as though it did not contain the
particular provision or provisions held to be invalid or unenforceable and the
rights and obligations of the parties shall be construed and enforced to such
extent as shall be entitled by law.

Section 20. SETOFF.

The Borrower hereby waives the right to interpose any and all defenses, setoffs,
counterclaims, crossclaims or abatements with respect to, in connection with, or
arising out of this Agreement or the Note; provided, however, that nothing in
                                           -----------------
this Section 20 shall prevent Borrower from asserting, in a separate and
independent proceeding, any claim it may have against the Lender.

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their authorized representatives on the date first above
written.


     /s/  [illegible]                         /s/ John Castellucci
-----------------------------------      ---------------------------------------
Witness                                  John D. Castellucci, President
                                         West Star Energy Group


     /s/  [illegible]                         /s/ John Castellucci
-----------------------------------      ---------------------------------------
Witness                                  John D. Castellucci, President
                                         LLO-Gas, Inc., a Delaware corporation


     /s/  [illegible]                         /s/ John Castellucci
-----------------------------------      ---------------------------------------
Witness                                  John D. Castellucci, President
                                         LLO-Gas, Inc., a California corporation


     /s/  [illegible]                         /s/ John Castellucci
-----------------------------------      ---------------------------------------
Witness                                  John D. Castellucci, Individually
                                         as Guarantor

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<PAGE>

ACCEPTED AND AGREED

Capstone Capital, LLC


By:     /s/ Joseph F. Ingrassia
    ------------------------------------------
      Joseph F. Ingrassia
      Member

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<PAGE>

Address For Notices:

West Star Energy
Atwater
695 Atwater Blvd.
Atwater, CA 95301

LLO-Gas, Inc.
Laws Bulk Plant
108 Dehy -Laws
Bishop, CA 93514

LLO-Gas, Inc.
23805 Stuart Ranch Road
Suite 265
Malibu, CA 90265

LLO-Gas, Inc.
1013 Centre Road
Wilmington, DE 19805

John D. Castellucci
5740 Kanan Dume
Malibu, CA 90265

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<PAGE>

                                   Exhibit-A
                                       to
                               Security Agreement

1.   Description of Collateral:

(a)  All inventory and goods, including without limitation, all inventory and
goods held for sale or lease or to be furnished under contracts of service, raw
materials, work in process, finished goods, goods in transit, advertising,
packaging and shipping materials, and all designs, creations, patterns, styles,
samples and all other material and supplies (collectively, the "Inventory');

(b)  All documents, including without limitation, documents of transport,
payment and title relating to any of the foregoing and all such other documents
as are made available to Borrower for the purpose of ultimate sale or exchange
of goods or for the purpose of loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with goods in a
manner preliminary to their sale or exchange;

(c)  All rights, claims, rights of offset, rights of return, actions and causes
of action against any person, including without limitation, those arising out of
the purchase by Borrower of any of its Inventory including, without limitation,
the Supplier Orders, and all rights of stoppage in transit, replevin,
reclamation and rights of any unpaid vendor or as a lienor;

(d)  All equipment, machinery, fixtures, trade fixtures, vehicles, furnishings,
furniture supplies, materials, tools, machine tools, office equipment,
appliances, apparatus, dies, jigs, and chattels; trucks, trailers, loaders and
other vehicles and all replacements and substitutions therefore and all
accessories thereto;

(e)  All of Borrower's now owned or hereafter acquired general intangibles
including, without limitation, trademarks, tradenames, tradestyles, trade
secrets, equipment formulation, manufacturing procedures, quality control
procedures, product specifications, patents, patent applications, copyrights,
registrations, contract rights, choses in action, causes of action, corporate or
other business records, inventions, designs, goodwill, claims under guarantees,
licenses, franchises, tax refunds, tax refund claims, computer programs,
computer data bases, computer program flow diagrams, source codes, object codes
and all other intangible property of every kind and nature;

(f)  All of Borrower's now owned or hereafter acquired accounts and contract
rights, instruments, insurance proceeds, documents, chattel paper, letters of
credit and Borrower's rights to receive payment thereunder, any and all rights
to the payment or receipt of money or other forms of consideration of any kind
at any time now or hereafter owing or to be owing to Borrower (Receivables"),
all proceeds thereof and all files in which Borrower has any interest whatsoever
containing information identifying or pertaining to any of Borrower's
Receivables,

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<PAGE>

together with all of Borrower's rights to any merchandise which is represented
thereby, and all Borrower's right, title, security and guarantees with respect
to each Receivable, including, without limitation, all rights of stoppage in
transit, replevin and reclamation and all rights as an unpaid vendor;

(g)  All of Borrower's now owned and hereafter acquired investment property,
including without limitation, sercurities (whether certificated or
uncertificated), securities entitlements, securities accounts, commodities
accounts, and commodities contracts;

(h)  All guarantees, liens on real or personal property, leases, and other
agreements and property which in any way secure or relate to the foregoing, or
are acquired for the purpose of securing and enforcing any item thereof;

(i)  (1) all cash held as collateral to the extent not otherwise constituting
collateral, all other cash or property at any time on deposit with or held by
Lender for the account of Borrower (whether for safekeeping, custody, pledge,
transmission or otherwise), (2) all present or future deposit accounts (whether
time or demand or interest or non-interest bearing of Borrower with Lender any
other person including those to which any such cash may at any time and from
time to time be credited, (3) all investments and reinvestments (however
evidenced) of amounts from time to time credited to such accounts, and (4) all
interest, dividends, distributions and other proceeds payable on or with respect
to (x) such investments and reinvestments and (y)such accounts;

(j)  All instruments, chattel paper, documents, and contract rights and other
rights, irrespective of when acquired, including without limitation the Client
Orders and Supplier Orders;

(k)  All proceeds, insurance proceeds, products and accessions of or to any and
all of the foregoing, and all collateral and security for, and guarantees of,
any and all of the foregoing, and all books and records relating to any and all
of the foregoing (including without limitation, any and all microfilm,
microfiche, computer programs and records, source materials, tapes and discs)
and all equipment containing said books and records;

The Collateral is presently located at: West Star Energy Group formerly known as
Mid-State Fuels, Inc. Atwater, 695 Atwater Blvd., Atwater, CA 95301; LLO-Gas,
Inc., Laws Bulk Plant 108 Dehy-Laws, Bishop, CA 93514; Bishop Texas Retail
Station & Pacific Pride Cardlock, 1223 N. Main Street, Bishop, CA 93514; Mammoth
Pacific Pride Cardlock, 240 Commerce Rd., Mammoth Lakes, CA 93546; Mammoth Bulk
Plant, Location #3, Old Mammoth Rd & 395, Mammoth Lakes, CA 95301;  Lone Pine
Station, 840 So. Main Street, Lone Pine, CA 93545;   Lock Box, P.O. Box 45715,
San Francisco, CA 94145-0715;1013 Centre Road, Wilmington, DE 19805; and 23805
Stuart Ranch Road, Suite 265, Malibu, CA 90265.

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