SECURITY
      AGREEMENT

    (All
      Personal Property)

    


    THIS
      SECURITY AGREEMENT (as amended, restated, or supplemented from time to time,
      this “Security
      Agreement”)
      is
      made and entered into as of October 16, 2007 by RANCHER
      ENERGY CORP.,
      a
      Nevada
      corporation, with an address at 999 18th
      Street,
      Suite 3400, Denver, Colorado 80202 (“Debtor”),
      in
      favor of GASROCK
      CAPITAL LLC,
      a
      Delaware limited liability company, with an address at 1301 McKinney Street,
      Suite 2800, Houston, Texas 77010 (“Secured
      Party”),
      for
      itself and
      BP CORPORATION NORTH AMERICA, an
      Indiana corporation (“Swap
      Counterparty”),
      as
      parties under that certain Intercreditor Agreement dated as of October 16,
      2007
      (as amended, restated, or supplemented from time to time, the “Intercreditor
      Agreement”).

     

    RECITALS

    


    A. Debtor,
      as borrower, and Secured Party, as lender, have entered into that certain Term
      Credit Agreement dated the same date as this Security Agreement (as amended,
      restated, or supplemented from time to time, the “Credit
      Agreement”),
      pursuant to which Secured Party has agreed to make a loan to Debtor on the
      conditions set out in the Credit Agreement.

     

    B. Secured
      Party has conditioned its obligations under the Credit Agreement upon, among
      other things, the execution and delivery by Debtor of this Security Agreement,
      and Debtor has agreed to enter into this Security Agreement.

     

    AGREEMENTS

    


    In
      order
      to comply with the terms and conditions of the Credit Agreement and in
      consideration of the premises and the agreements contained in this Security
      Agreement, and other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, Debtor hereby agrees with Secured
      Party as follows:

     

    ARTICLE
      I

    DEFINITIONS

     

    Section
      1.1  Terms
      Defined Above.
      As used
      in this Security Agreement, the terms “Debtor,”
      “Secured
      Party,”
      “Swap
      Counterparty,”
      “Intercreditor
      Agreement,”
and
      “Credit
      Agreement”
shall
      have the meanings indicated above.

     

    Section
      1.2  Definitions
      Contained in the Credit Agreement.
      Unless
      otherwise defined herein or the context otherwise requires, all capitalized
      terms used but not defined in this Security Agreement have the respective
      meanings given to those terms in the Credit Agreement.

     

    Section
      1.3  Certain
      Definitions.
      As used
      in this Security Agreement, the following terms shall have the following
      meanings, unless the context otherwise requires:

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Code”
means
      (a) the Uniform Commercial Code as presently in effect in the State of
      Texas, as amended from time 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 from time to time.

     

    “Collateral”
means
      all property, including without limitation cash or other proceeds, in which
      Secured Party shall have a security interest pursuant to Section
      2.1
      of this
      Security Agreement.

     

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

     

    “Default”
means
      the occurrence of any of the events specified in Section
      5.3
      hereof,
      whether or not any requirement for notice or lapse of time or other condition
      precedent has been satisfied.

     

    “Equipment”
has
      the
      meaning indicated in subsection
      2.1(b)
      hereof.

     

    “Event
      of Default”
means
      the occurrence of any of the events specified in Section 5.3
      hereof,
provided
      that
      any
      requirement for notice or lapse of time or other condition precedent has been
      satisfied.

     

    “General
      Intangibles”
has
      the
      meaning indicated in subsection
      2.1(c)
      hereof.

     

    “Inventory”
has
      the
      meaning indicated in subsection
      2.1(d)
      hereof.

     

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

     

    “Related
      Rights”
means
      all chattel paper, electronic chattel paper, payment intangibles, promissory
      notes, letter of credit rights, supporting obligations, documents and
      instruments relating to the Accounts or the General Intangibles and all rights
      now or hereafter existing in and to all security agreements, leases, and other
      contracts securing or otherwise relating to any Accounts or General Intangibles
      or any such chattel paper, electronic chattel paper, payment intangibles,
      promissory notes, letter of credit rights, documents and
      instruments.

     

    “Secured
      Obligations”
has
      the
      meaning indicated in Section
      2.3
      hereof.

     

    “Security
      Agreement”
means
      this Security Agreement, as the same may from time to time be amended or
      supplemented.

     

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

     

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

     

    
      
        
        

      

      
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    Section
      1.4  Terms
      Defined in Code.
      Unless
      otherwise defined herein, all terms used herein which are defined in the Code
      shall have the same meaning herein.

     

    ARTICLE
      II

    SECURITY
      INTEREST

     

    Section
      2.1  Grant
      of Security Interest.
      As
      collateral security for all of the Secured Obligations, Debtor hereby grants
      to
      Secured Party a security interest in, a general lien upon, and a right of
      set-off against all of Debtor’s right, title and interest in all of its assets,
      whether tangible or intangible, including but not limited to the following
      and
      whether now owned or later acquired:

     

    (a)  all
      of
      Debtor’s accounts (as is defined in the Code) of any kind (the “Accounts”);
      all
      chattel paper, electronic chattel paper, payment intangibles, promissory notes,
      documents and instruments relating to the Accounts; and all rights in and to
      all
      security agreements, leases, and other contracts securing or otherwise relating
      to any Accounts or any such chattel paper, documents and
      instruments;

     

    (b)  all
      of
      Debtor’s equipment (as defined in the Code) in all of its forms, and wherever
      located, together with all parts thereof and all accessions or additions
      thereto, (collectively, the “Equipment”);

     

    (c)  all
      of
      Debtor’s general intangibles (as defined in the Code) of any kind (the
“General
      Intangibles”);
      all
      chattel paper, electronic chattel paper, payment intangibles, promissory notes,
      letters of credit and letter of credit rights, documents and instruments
      relating to the General Intangibles; and all rights in and to all security
      agreements, leases, and other contracts securing or otherwise relating to any
      General Intangibles or any such chattel paper, documents and
      instruments;

     

    (d)  all
      of
      Debtor’s inventory (as defined in the Code) in all of its forms, and wherever
      located, together with all accessions or additions thereto and products thereof
      (collectively the “Inventory”);

     

    (e)  all
      of
      Debtor’s investment property (as defined in the Code) wherever
      located;

     

    (f)  all
      of
      Debtor’s deposit accounts (as defined in the Code) wherever
      located;

     

    (g)  any
      additional tangible or intangible property from time to time delivered to or
      deposited with Secured Party as security for the Secured Obligations or
      otherwise pursuant to the terms of this Security Agreement; and

     

    (h)  the
      proceeds, products, supporting obligations, Related Rights, additions to,
      substitutions for and accessions of any and all Collateral described in
      subparagraphs (a)-(g) in this Section
      2.1.

     

    Section
      2.2  Certain
      Limited Exclusions.
      Notwithstanding anything herein to the contrary, in no event shall the
      Collateral include (nor shall any component definition of Collateral include),
      or the security interest granted under Section
      2.1
      hereof
      attach to any of the outstanding capital stock of, a Controlled Foreign
      Corporation in excess of sixty-five percent (65%) of the voting power of all
      classes of capital stock of such Controlled Foreign Corporation entitled to
      vote.

     

    
      
        
        

      

      
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    Section
      2.3  Secured
      Obligations.
      The
      security interest in, general lien upon, and right of set-off against the
      Collateral is granted to secure the following (collectively, the “Secured
      Obligations”):

     

    (a)  the
      payment of all the Obligations (as defined in the Credit Agreement) of Debtor
      to
      Secured Party now or hereafter existing including, without limitation, the
      Indebtedness of Debtor under the Note, and any and all renewals, extensions
      for
      any period or rearrangement of the Obligations;

     

    (b)  the
      performance of all obligations of Debtor under this Security Agreement, the
      Permitted Swap Agreements (as defined in the Credit Agreement) and the other
      Loan Documents; and

     

    (c)  all
      obligations of Debtor owed to Swap Counterparty, as counterparty under those
      certain Permitted Swap Agreements defined in or arising pursuant to the terms
      of
      the Credit Agreement and referenced as “Swap
      Documents”
in
      the
      Intercreditor Agreement, including without limitation, that certain ISDA Master
      Agreement dated on or about October 16, 2007 between Debtor and Swap
      Counterparty (together with all schedules and confirmations in respect thereof,
      as ratified, amended, supplemented, restated, extended or replaced from time
      to
      time).

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     

    In
      order
      to induce Secured Party to accept this Security Agreement, Debtor represents
      and
      warrants to Secured Party (which representations and warranties will survive
      the
      creation of any Secured Obligations and the extension of any credit under the
      Credit Agreement) that:

     

    Section
      3.1  Ownership
      and Liens.
      Except
      for the security interest of Secured Party granted in this Security Agreement,
      and except for liens, security interests and other encumbrances permitted under
      the Credit Agreement (“Permitted
      Encumbrances”),
      Debtor owns good and valid title to the Collateral free and clear of any other
      liens, adverse claims or options other than (i) Permitted Encumbrances, or
      (ii)
      minor defects of title that do not materially interfere with Debtor’s ability to
      conduct its business or to utilize any Collateral for its intended purpose.
      Debtor has rights in or the right, power and authority to grant a security
      interest in the Collateral to Secured Party in the manner provided herein,
      free
      and clear of any other liens, adverse claims and options other than Permitted
      Encumbrances. No other lien, adverse claim or option has been created by Debtor
      or is known by Debtor to exist with respect to any Collateral other than
      Permitted Encumbrances. No financing statement or other security instrument
      is
      on file in any jurisdiction covering any part of the Collateral other than
      those
      in favor of Secured Party other than Permitted Encumbrances. At the time the
      security interest in favor of Secured Party attaches to any after-acquired
      property included within the Collateral, good and valid title to such
      after-acquired property, free and clear of any other liens, adverse claims
      or
      options (other than those permitted by the first sentence of this Section 3.1)
      will be
      vested in Debtor.

     

    
      
        
        

      

      
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    Section
      3.2  Status
      of Accounts.
      Each
      Account hereafter arising will represent, and to the best knowledge of Debtor
      each Account now existing represents, the valid and legally enforceable
      obligations of a bona fide account 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 the Accounts except as disclosed to Secured Party in
      writing; and the amount shown as to each Account on Debtor’s books will be the
      true and undisputed amount owing and unpaid thereon, subject to any discounts,
      allowances, rebates, credits and adjustments to which the account debtor has
      a
      right and which have arisen in Debtor’s ordinary course of business, or which
      have otherwise been disclosed to Secured Party in writing.

     

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

     

    Section
      3.4  Inventory
      Not Covered by Other Documents.
      None of
      the Inventory is, and at the time the security interest in favor of Secured
      Party attaches none of the Inventory hereafter acquired will be, covered by
      any
      document (as defined in the Code).

     

    Section
      3.5  Name;
      Organization; Authority.
      The
      exact legal name of Debtor is set out in the opening paragraph of this Security
      Agreement. Debtor is a corporation, duly organized, validly existing, and in
      good standing under the laws of the State of Nevada. The execution, delivery
      and
      performance of this Security Agreement has been duly authorized by all company
      action, and this Security Agreement constitutes the valid and binding obligation
      of Debtor, enforceable against 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 the enforcement of
      creditors rights generally and by general equitable principles.

     

    Section
      3.6  Location.
      As of
      the date hereof, Debtor’s chief executive office and chief place of business is
      located at the address set out in the opening paragraph of this Security
      Agreement. The office where Debtor keeps its records concerning the Accounts
      and
      the General Intangibles and the originals of all the Related Rights has the
      same
      address as Debtor’s chief executive office and chief place of business. Debtor’s
      Inventory and Equipment (other than mobile goods) are located in the States
      of
      Colorado and Wyoming and such other states as Debtor shall have, from time
      to
      time, given written notice of to Secured Party.

     

    Section
      3.7  Secured
      Party’s Security Interest.
      This
      Security Agreement creates a valid and binding security interest in the
      Collateral securing the Secured Obligations. Upon filing the financing
      statements described in Section
      4.10
      of this
      Security Agreement covering the Collateral in the Office of the Secretary of
      State for the state in which Debtor is organized, Secured Party will have a
      fully perfected security interest in that 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 public notice
      of
      such security interest is necessary in any office or jurisdiction in order
      to
      perfect such security interest or to continue, preserve or protect such security
      interest except for continuation statements or for filings upon the occurrence
      of any of the events stated in Section 4.10
      of this
      Security Agreement. Such perfected security interest in the Collateral shall
      constitute a first-priority security interest under the Code, subject only
      to
      Permitted Encumbrances and minor defects of title that do not materially
      interfere with Debtor’s ability to conduct its business or to utilize any
      Collateral for its intended purpose.

     

    
      
        
        

      

      
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    ARTICLE
      IV

    COVENANTS
      AND AGREEMENTS

     

    A
      deviation from the provisions of this Article
      IV
      shall
      not constitute a Default under this Security Agreement if such deviation is
      consented to in writing (in the manner provided in the Credit Agreement) in
      advance by Secured Party. Debtor will at all times comply with the covenants
      contained in this Article
      IV,
      from
      the date hereof and for so long as any part of the Secured Obligations (other
      than obligations under the ORRIs and indemnity obligations and similar
      obligations that expressly survive the termination of the Loan Documents for
      which no notice of a claim has been received by Debtor) or the commitment of
      Secured Party to make the Loan under the Credit Agreement is
      outstanding.

     

    Section
      4.1  Title;
      Prohibited Liens and Filings.
      Debtor
      agrees to protect the title to the Collateral. Debtor will not pledge, mortgage,
      otherwise encumber, create or suffer a lien to exist on any of the Collateral
      (other than in favor of Secured Party or as permitted by the Credit Agreement)
      or, subject to Section
      4.13
      hereof,
      sell, assign or otherwise transfer any of the Collateral (other than as
      permitted by the Credit Agreement) to or in favor of any person other than
      Secured Party. Debtor will not file or permit to be filed or recorded any
      financing statement or other security instrument with respect to the Collateral
      other than in favor of Secured Party or as permitted by the Credit
      Agreement.

     

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

     

    Section
      4.3  Possession
      of Collateral.
      Secured
      Party shall be deemed to have possession of any of the Collateral in transit
      to
      it or set apart for it. Otherwise, the Collateral shall remain in Debtor’s
      possession or control at all times (except where Secured Party chooses to
      perfect its security interest by possession in addition to the filing of a
      financing statement) at Debtor’s risk of loss and shall (except for temporary
      removal consistent with its normal use) be kept at locations owned or leased
      by
      Debtor.

     

    Section
      4.4  Inspection
      of Collateral.
      Upon
      reasonable notice, Secured Party may from time to time, during normal business
      hours, inspect Debtor’s records concerning the Accounts and the General
      Intangibles, the originals of the Related Rights, the Equipment, the Inventory
      and other Collateral but not as to unreasonably interfere with the business
      of
      Debtor.

     

    Section
      4.5  Further
      Assurances.
      Debtor
      will from time to time sign, execute, deliver and file, alone or with Secured
      Party, upon reasonable request, any financing statements, security agreements
      or
      other documents necessary to perfect or continue in favor of Secured Party
      a
      first-priority security interest (subject to the Permitted Encumbrances) in
      the
      Collateral; procure any necessary instruments or documents as may be reasonably
      requested by Secured Party; and take all further action that may be necessary
      or
      desirable, or that Secured Party may reasonably request, to confirm, perfect,
      preserve and protect the security interests intended to be granted hereby.
      Notwithstanding the previous sentence, however, Debtor hereby authorizes Secured
      Party to execute and deliver on behalf of Debtor and to file such financing
      statements, security agreements and other documents without the signature of
      Debtor either in Secured Party’s name or in the name of Debtor and as
      attorney-in-fact for Debtor. Debtor shall do all such additional and further
      acts or things, give such assurances and execute such documents or instruments
      as Secured Party reasonably requires to vest more completely in and assure
      to
      Secured Party its rights under this Security Agreement, including, without
      limiting the generality of the foregoing, (a) marking conspicuously each chattel
      paper or electronic chattel paper included in the Collateral and, at the request
      of Secured Party, each of Debtor’s records pertaining to the Collateral with a
      legend, in form and substance satisfactory to Secured Party, indicating that
      such chattel paper or Collateral is subject to the security interest granted
      by
      this Security Agreement, and (b) if any Account, General Intangible or Related
      Right is evidenced by a promissory note, chattel paper, electronic chattel
      paper
      or other instrument, transferring, delivering, assigning to Secured Party such
      promissory note, chattel paper, electronic chattel paper or other instrument
      duly endorsed and authenticated and accompanied by duly executed instruments
      of
      transfer and assignment, all in form and substance reasonably satisfactory
      to
      Secured Party, to be held by Secured Party as Collateral under this Security
      Agreement.

     

    Section
      4.6  Filing
      Reproductions.
      At the
      option of Secured Party, a photographic or other reproduction of this Security
      Agreement or of a financing statement covering the Collateral shall be
      sufficient as a financing statement and may be filed as a financing
      statement.

     

    Section
      4.7  Delivery
      of Information.
      Debtor
      will transmit promptly to Secured Party all information that Debtor may have
      or
      receive with respect to (a) the Collateral, or (b) account debtors or obligors
      in respect of the Accounts, the General Intangibles and the Related Rights,
      in
      each case which could reasonably be expected to materially and adversely affect
      the aggregate value of the Collateral or Secured Party’s rights or remedies with
      respect thereto.

     

    Section
      4.8  Compromise
      of Collateral.
      Debtor
      will not adjust, settle or compromise any of the Accounts, the General
      Intangibles or the Related Rights without the prior written consent of Secured
      Party, other than in a manner that does not materially affect the aggregate
      value of the Collateral and is in the ordinary course of business.

     

    Section
      4.9  Expenses.
      Debtor
      agrees to pay to Secured Party at Secured Party’s offices, all reasonable
      advances, charges, costs and expenses (including reasonable attorneys’ fees and
      legal expenses) incurred by Secured Party in connection with the transaction
      which gives rise to this Security Agreement, in connection with confirming,
      perfecting and preserving the security interest created under this Security
      Agreement, in connection with protecting Secured Party against the claims or
      interests of any Person against the Collateral, and in exercising any right,
      power or remedy conferred by this Security Agreement or by law or in equity
      (including, but not limited to, reasonable attorneys’ fees and legal expenses
      incurred by Secured Party in the collection of instruments deposited with or
      purchased by Secured Party and amounts incurred in connection with the
      operation, 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 Debtor to Secured Party ten (10) days after invoice or demand by
      Secured Party together with interest thereon from the due date at the Default
      Rate as provided in the Credit Agreement.

     

    
      
        
        

      

      
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    Section
      4.10  Financing
      Statement Filings; Notifications.
      Debtor
      recognizes that financing statements pertaining to the Collateral will be filed
      with the Office of the Secretary of State for the State of Nevada and a
      Mortgage, Security Agreement, Financing Statement and Assignment of Production
      and Revenues (the “Mortgage”)
      will
      be filed in each county in Wyoming in which “Mortgaged Property” (as defined in
      the Mortgage) is located. Debtor will promptly notify Secured Party of any
      condition or event that may change the proper location for the filing of any
      financing statements or other public notice or recordings for the purpose of
      perfecting a security interest in the Collateral. Without limiting the
      generality of the foregoing, Debtor will (a) promptly notify Secured Party
      of
      any change to a jurisdiction other than as represented in Section
      3.5
      or
Section 3.6:
      (i)
      in the
      location of Debtor’s registered office; (ii)
      in the
      location of the Inventory (other than Inventory sold or leased in the ordinary
      course of business); (iii)
      in the
      location where the Equipment is kept (other than Equipment removed in the
      ordinary course of business for not more than thirty (30) days) or disposed
      of
      as permitted by the Credit Agreement; (iv)
      in the
      location of the office where Debtor keeps its records concerning the Accounts;
      or (v)
      in the
“location” of Debtor within the meaning of the Code; (b) prior to any of the
      Collateral becoming so related to any particular real estate so as to become
      a
      fixture on such real estate, notify Secured Party of the description of such
      real estate and the name of the record owner thereof; and (c) promptly notify
      Secured Party of any change in Debtor’s name, identity or organizational
      structure. In any notice furnished pursuant to this section, Debtor will
      expressly state that the notice is required by this Security Agreement and
      contains facts that will or may require additional filings of financing
      statements or other notices for the purpose of continuing perfection of Secured
      Party’s security interest in the Collateral.

     

    Section
      4.11  Maintenance
      of Collateral Generally.
      Except
      as otherwise provided in the Credit Agreement, (a) Debtor will maintain all
      the Collateral in good condition, repair, and working order (ordinary wear
      and
      tear excepted), and substantially in accordance with any manufacturer’s manual
      if applicable; (b) Debtor will not misuse, abuse, waste, destroy, endanger
      or allow the Collateral to deteriorate, except, with respect to the Equipment
      only, for ordinary wear and tear from its intended use; (c) Debtor will
      promptly, or in the case of any loss or damage to any goods included in the
      Collateral as soon as practicable, make or cause to be made all repairs,
      replacements or other improvements to the Collateral as are reasonably necessary
      or desirable to accomplish the foregoing; and (d) Debtor will not use any
      Collateral in violation of any law, statute, ordinance or regulation or allow
      it
      to be so used.

     

    Section
      4.12  Account
      Obligations.
      Debtor
      will duly perform or cause to be performed all obligations of Debtor with
      respect to the goods or services, the sale or lease or rendition of which gave
      rise or will give rise to each Account relating thereto.

     

    Section
      4.13  Use
      of
      Inventory.
      Until
      an Event of Default has occurred and is continuing, Debtor may use its Inventory
      in any lawful manner not inconsistent with this Security Agreement and with
      the
      terms of insurance thereon and may sell, lease or otherwise dispose of its
      Inventory in the ordinary course of business. Debtor will not and shall not
      be
      permitted to use any item of Inventory in a manner inconsistent with the holding
      thereof for sale, lease or disposition in the ordinary course of business or
      in
      contravention of the terms of any agreement. A sale, lease or disposition in
      the
      ordinary course of business does not include the exchange of items of Inventory
      for goods in kind or otherwise or transfers of items of Inventory made in
      satisfaction of present or future Secured Obligations.

     

    
      
        
        

      

      
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    Section
      4.14  Proceeds.
      All
      proceeds received by Debtor from the sale or disposition of any portion of
      the
      Collateral shall be delivered or paid to Secured Party as provided in the Credit
      Agreement. To evidence Secured Party’s rights in this regard, Debtor will assign
      or endorse proceeds to Secured Party as Secured Party reasonably requests.
      Secured Party may, from time to time, in its discretion, hold non-cash proceeds
      as part of the Collateral or apply cash proceeds received by Secured Party
      in
      the manner set out in Section
      5.2
      of this
      Security Agreement. Upon the occurrence and during the continuation of an Event
      of Default, subject to the terms and conditions set out in the Credit Agreement,
      and at the request of Secured Party, Debtor will notify obligors on all of
      the
      Accounts and Related Rights to make payments directly to Secured Party, and
      thereafter Secured Party may endorse as Debtor’s agent any checks, instruments,
      chattel paper or other documents connected with the Collateral, take control
      of
      proceeds of the Collateral and may hold the non-cash proceeds as part of the
      Collateral and may apply cash proceeds received by Secured Party in the manner
      set out in Section
      5.2
      of this
      Security Agreement, and may take any action necessary to obtain, preserve and
      enforce the liens granted hereunder and maintain and preserve the
      Collateral.

     

    Section
      4.15  Insurance.
      Debtor
      shall have and maintain, or cause to be had and maintained, insurance as
      provided in the Credit Agreement. Secured Party may act as attorney-in-fact
      for
      Debtor and Debtor hereby irrevocably appoints Secured Party as Debtor’s true and
      lawful attorney-in-fact, with full power of substitution, in Secured Party’s
      name or Debtor’s name or otherwise, but at Debtor’s cost and expense and without
      notice to Debtor upon the occurrence and during the continuance of an Event
      of
      Default, to obtain, adjust, sell and cancel such insurance and endorse any
      draft
      drawn by insurers of the goods included in the Collateral. If any insurance
      policy covering the goods included in the Collateral expires or is canceled
      before the Secured Obligations (other than obligations under the ORRIs and
      indemnity obligations and similar obligations that expressly survive the
      termination of the Loan Documents) are paid in full or otherwise fully
      performed, or before the termination of the Secured Party’s commitment to make
      loans as provided in the Credit Agreement, at Secured Party’s option, Secured
      Party may, at Debtor’s expense, obtain replacement insurance which may, but need
      not, be single interest insurance in favor of Secured Party.

     

    Section
      4.16  Collateral
      not to be Fixture or Accession.
      Debtor
      will not permit any Collateral to be installed in or affixed to other goods
      so
      as to become an accession to such other goods unless such other goods are
      included in the Collateral; in the event that any Collateral is to become so
      related to any particular real estate so as to become a fixture on such real
      estate or so installed or affixed to other goods, prior thereto Debtor will
      (i)
      notify
      Secured Party of such fact and (ii)
      upon
      demand of Secured Party furnish written consents to Secured Party’s security
      interest and disclaimers of any interest in such Collateral signed by any Person
      having an interest in such real estate or such other goods, if
      applicable.

     

    Section
      4.17  Delivery
      of Certificate of Title to Equipment.
      In the
      case of Equipment now owned constituting goods in which a security interest
      is
      perfected by a notation on the certificate of title or similar evidence of
      the
      ownership of such goods, Debtor shall, as soon as practicable after a request
      by
      Secured Party, deliver to Secured Party any and all certificates of title,
      applications for title or similar evidence of ownership of such Equipment and
      shall cause Secured Party to be named as lienholder on any such certificate
      of
      title or other evidence of ownership. In the case of such Equipment hereafter
      acquired, Debtor shall provide evidence of ownership within ten (10) days of
      its
      acquisition of such Equipment. Debtor shall provide notice to Secured Party
      of
      any material loss or damage to any Equipment and shall not permit any such
      Equipment to become a fixture to real estate or an accession to other personal
      property other than in compliance with the Credit Agreement and Section
      4.16
      above.

     

    
      
        
        

      

      
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    Section
      4.18  Third-Party
      Acknowledgments; Control Agreements.
      If any
      of the Collateral is in the possession of a third-party, Debtor will join with
      Secured Party in notifying the third-party of Secured Party’s security interest
      and obtaining an acknowledgment in form and substance reasonably satisfactory
      to
      Secured Party from such third-party that it is holding the Collateral for the
      benefit of the Secured Party. Debtor will fully cooperate with Secured Party
      in
      obtaining a control agreement in form and substance reasonably satisfactory
      to
      Secured Party with respect to any Collateral consisting of deposit accounts,
      investment property, electronic chattel paper or letter of credit
      rights.

     

    ARTICLE
      V

    RIGHTS,
      REMEDIES AND DEFAULT

     

    Section
      5.1  With
      Respect to Collateral.
      Secured
      Party is hereby fully authorized and empowered (without the necessity of any
      further consent or authorization from Debtor) and the right is expressly granted
      to Secured Party, and Debtor hereby constitutes, appoints and makes Secured
      Party as Debtor’s true and lawful attorney-in-fact and agent for Debtor and in
      Debtor’s name, place and stead with full power of substitution, in Secured
      Party’s name or Debtor’s name or otherwise, for Secured Party’s sole use and
      benefit, but at Debtor’s cost and expense, to exercise, without notice, all or
      any of the following powers at any time following the occurrence and during
      the
      continuation of an Event of Default hereunder with respect to all or any of
      the
      Collateral:

     

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

     

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

     

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

     

    (d)  to
      settle, compromise, compound, prosecute or defend any action or proceeding
      with
      respect thereto;

     

    (e)  to
      sell,
      transfer, assign or otherwise deal in or with the same or the proceeds or avails
      thereof or the relative goods, as fully and effectively as if Secured Party
      were
      the absolute owner thereof; and

     

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

     

    
      
        
        

      

      
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    provided,
      however,
      Secured
      Party shall be under no obligation or duty to exercise any of the powers hereby
      conferred upon it and shall be without liability 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
      of Cash Sums.
      All
      cash sums paid to and received by Secured Party on account of the Collateral
      will be (a) released to Debtor for use in Debtor’s business or, at the
      option of Secured Party pursuant and subject to the terms and conditions of
      the
      Credit Agreement, (b) applied by Secured Party on the Secured Obligations
      whether or not such Secured Obligations shall have by its terms matured, in
      accordance with and subject to the terms of the Credit Agreement; provided,
      however,
      Secured
      Party need not apply or give credit for any item included in such sums until
      Secured Party has received final payment thereof at its banking quarters or
      solvent credits accepted as such by Secured Party; and provided further
      that
      Secured Party’s failure to so apply any such sums shall not be a waiver of
      Secured Party’s right to so apply such sums or any other sums at any
      time.

     

    Section
      5.3  Events
      of Default.
      An
“Event
      of Default”
under
      this Security Agreement shall occur upon the occurrence of an “Event of Default”
under the Credit Agreement.

     

    Section
      5.4  Default
      Remedies.
      Upon
      the occurrence and during the continuation of any Event of Default, Secured
      Party may then, or at any time thereafter during such continuation and from
      time
      to time after giving any notice required under the Credit Agreement, if any
      notice is required with respect to such Event of Default, apply, set-off,
      collect, sell in one or more sales, lease, or otherwise dispose of, any or
      all
      of the Collateral, in its then condition or, at Secured Party’s option,
      following any commercially reasonable preparation or processing, in such order
      as Secured Party may elect, and any such sale may be made either at public
      or
      private sale at its place of business or elsewhere, or at any brokers’ board or
      securities exchange, either for cash or upon credit or for future delivery,
      and
      Secured Party may be the purchaser of any or all Collateral so sold and may
      hold
      the same thereafter in its own right free from any claim of Debtor or right
      of
      redemption. No such purchase or holding by Secured Party shall be deemed a
      retention by Secured Party in satisfaction of the Secured Obligations. All
      demands, notices and advertisements, and the presentment of property at sale
      are
      hereby waived except to the extent reasonably necessary to conduct a
      commercially reasonable sale. If, notwithstanding the foregoing provisions,
      any
      applicable provision of the Code or other law requires Secured Party to give
      reasonable notice of any such sale or disposition or other action, Debtor hereby
      agrees ten (10) days prior written notice shall constitute reasonable notice.
      Upon the occurrence and during the continuation of any Event of Default, Secured
      Party may require Debtor to assemble the Collateral and make it available to
      Secured Party at a place designated by Secured Party which is reasonably
      convenient to Secured Party and Debtor. Any sale hereunder may be conducted
      by
      an auctioneer or any officer or agent of Secured Party.

     

    Section
      5.5  Proceeds.
      The
      proceeds of any sale or other disposition of the Collateral conducted pursuant
      to Section
      5.4
      above
      and all sums received or collected by Secured Party from or on account of the
      Collateral shall be applied by Secured Party in the manner set out in the
      Code.

     

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

     

    
      
        
        

      

      
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    Section
      5.7  Secured
      Party’s Duties.
      The
      powers conferred upon Secured Party by this Security Agreement are solely to
      protect the interest of Secured Party in the Collateral and shall not impose
      any
      duty upon Secured Party to exercise any such powers. Secured Party shall be
      under no duty whatsoever to make or give any presentment, demand for
      performance, notice of nonperformance, protest, notice of protest, notice of
      dishonor, or other notice or demand in connection with any Collateral or the
      Secured Obligations, or to take any steps necessary to preserve any rights
      against prior parties. Secured Party shall not be liable for failure to collect
      or realize upon any or all of the Secured Obligations or Collateral, or for
      any
      delay in so doing, nor shall Secured Party be under any duty to take any action
      whatsoever with regard thereto. Secured Party shall use reasonable care in
      the
      custody and preservation of any Collateral in its possession but need not take
      any steps to keep the Collateral identifiable. Secured Party shall have no
      duty
      to comply with any recording, filing, or other legal requirements necessary
      to
      establish or maintain the validity, priority or enforceability of, or Secured
      Party’s rights in or to, any of the Collateral.

     

    Section
      5.8  Secured
      Party’s Actions.
      Debtor
      waives any right to require Secured Party to proceed against any Person, exhaust
      any Collateral, or have any Other Liable Party joined with Debtor in any suit
      arising out of the Secured Obligations or this Security Agreement or pursue
      any
      other remedy in Secured Party’s power; waives any and all notice of acceptance
      of this Security Agreement or of creation, modification, rearrangement, renewal
      or extension for any period of any of the Secured Obligations from time to
      time;
      and waives any defense arising by reason of any disability or other defense
      of
      any Other Liable Party, or by reason of the cessation from any cause whatsoever
      of the liability of any Other Liable Party. All dealings between Debtor and
      Secured Party, whether or not resulting in the creation of the Secured
      Obligations, shall conclusively be presumed to have been had or consummated
      in
      reliance upon this Security Agreement. Until all the Secured Obligations shall
      have been paid in full or otherwise fully performed (other than the obligations
      under the ORRIs and the indemnity obligations and similar obligations that
      expressly survive the termination of the Loan Documents), Debtor shall have
      no
      right to subrogation, and Debtor waives until all the Secured Obligations shall
      have been paid in full or otherwise fully performed (other than the obligations
      under the ORRIs and the indemnity obligations and similar obligations that
      expressly survive the termination of the Loan Documents) any right to enforce
      any remedy which Secured Party now has or may hereafter have against any Other
      Liable Party and waives any benefit of and any right to participate in any
      Collateral or security whatsoever now or hereafter held by Secured Party. Debtor
      authorizes Secured Party, without notice or demand and without any reservation
      of rights against Debtor and without affecting Debtor’s liability hereunder or
      on the Secured Obligations, from time to time to (a) take and hold any other
      property as collateral, other than the Collateral, for the payment of any or
      all
      of the Secured Obligations, and exchange, enforce, waive and release any or
      all
      of the Collateral or such other property; (b) upon the occurrence and during
      the
      continuation of any Event of Default, apply the Collateral or such other
      property and direct the order or manner of sale thereof as Secured Party in
      its
      discretion may determine; (c) renew, extend for any period, accelerate, modify,
      compromise, settle or release the obligation of any Other Liable Party with
      respect to any or all of the Secured Obligations or Collateral; (d) waive,
      enforce, modify, amend or supplement any of the provisions of any of the
      Security Documents, the Credit Agreement or the Note or any other promissory
      note or document evidencing any of the Secured Obligations (except for an
      amendment or supplement to any of the foregoing to which Debtor is a party
      to
      the extent such amendment or supplement requires the consent of Debtor); and
      (e)
      release or substitute any Other Liable Party.

     

    
      
        
        

      

      
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    Section
      5.9  Transfer
      of Secured Obligations and Collateral.
      Secured
      Party may transfer any or all of Secured Party’s interest in the Secured
      Obligations in accordance with the terms of the Credit Agreement, and upon
      any
      such transfer Secured Party may transfer its security interest in any or all
      of
      the Collateral and shall be fully discharged thereafter from all liability
      with
      respect to the Collateral transferred, and the transferee shall be vested with
      all rights, powers and remedies of Secured Party 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 this Security
      Agreement. Secured Party may at any time deliver any or all of the Collateral
      to
      Debtor whose receipt shall be a complete and full acquittance for the Collateral
      so delivered, and Secured Party shall thereafter be discharged from any
      liability therefor.

     

    Section
      5.10  Cumulative
      Security.
      The
      execution and delivery of this Security Agreement in no manner shall impair
      or
      affect any other security (by endorsement or otherwise) for the Secured
      Obligations. No security taken hereafter as security for the Secured Obligations
      shall impair in any manner or affect this Security Agreement. All such present
      and future additional security is to be considered as cumulative
      security.

     

    Section
      5.11  Continuing
      Agreement.
      This is
      a continuing Security Agreement and the grant of a security interest hereunder
      shall remain in full force and effect and all the rights, powers and remedies
      of
      Secured Party hereunder shall continue to exist until (a) the Secured
      Obligations are paid in full or otherwise fully performed (other than the
      obligations under the ORRIs and the indemnity obligations and similar
      obligations that expressly survive the termination of the Loan Documents),
      and
      (b) Secured Party has no further obligation to advance monies to Debtor under
      the Credit Agreement, at which time Secured Party, upon written request of
      Debtor, shall execute a written termination statement, and, if applicable,
      reassign to Debtor, without recourse, the Collateral and all rights conveyed
      hereby and return possession of the Collateral to Debtor. Furthermore, it is
      contemplated by the parties hereto that there may be times when no Secured
      Obligations are owing; notwithstanding such occurrences, however, this Security
      Agreement shall remain valid and shall be in full force and effect as to
      subsequent Secured Obligations provided Secured Party has not executed a written
      termination statement and returned possession of the Collateral to Debtor.
      Otherwise this Security Agreement shall continue irrespective of the fact that
      the liability of any Other Liable Party may have ceased, or irrespective of
      the
      validity or enforceability of the Note or any of the Security Documents,
      including the Credit Agreement, to which any Other Liable Party may be a party,
      and notwithstanding the reorganization, death, incapacity or bankruptcy of
      any
      Other Liable Party, and notwithstanding the reorganization or bankruptcy of
      Debtor, or any other event or proceeding affecting Debtor or any Other Liable
      Party.

     

    Section
      5.12  Cumulative
      Rights.
      The
      rights, powers and remedies of Secured Party hereunder shall be in addition
      to
      all rights, powers and remedies given by statute or rule of law and are
      cumulative. The exercise of any one or more of the rights, powers and remedies
      provided herein shall not be construed as a waiver of any other rights, powers
      and remedies of Secured Party. Furthermore, regardless of whether or not the
      Uniform Commercial Code is in effect in the jurisdiction where such rights,
      powers and remedies are asserted, Secured Party shall have the rights, powers
      and remedies of a secured party under the Code. Secured Party may exercise
      its
      bankers’ lien or right of set-off with respect to the Secured Obligations in the
      same manner as if the Secured Obligations were unsecured.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Section
      5.13  Exercise
      of Rights, Etc.
      Time
      shall be of the essence for the performance of any act under this Security
      Agreement or the Secured Obligations by Debtor or Other Liable Party, but
      neither Secured Party’s acceptance of partial or delinquent payments nor any
      forbearance, failure or delay by Secured Party in exercising any right, power
      or
      remedy shall be deemed a waiver of any obligation of Debtor or of Other Liable
      Party or of any right, power or remedy of Secured Party or preclude any other
      or
      further exercise thereof; and no single or partial exercise of any right, power
      or remedy shall preclude any other or further exercise thereof, or the exercise
      of any other right, power or remedy.

     

    Section
      5.14  Remedy
      and Waiver.
      Secured
      Party may remedy any Default or Event of Default without waiving the Default
      or
      Event of Default or waiving any prior or subsequent Default or Event of
      Default.

     

    Section
      5.15  Non-Judicial
      Remedies.
      Secured
      Party may enforce its rights hereunder without prior judicial process or
      judicial hearing, and Debtor expressly waives, renounces and knowingly
      relinquishes any and all legal rights which might otherwise require Secured
      Party to enforce its rights by judicial process. In so providing for
      non-judicial remedies, Debtor recognizes and concedes that such remedies are
      consistent with the usage of the trade, are responsive to commercial necessity,
      and are the result of bargain at arm’s length. Nothing herein is intended to
      prevent Secured Party or Debtor from resorting to judicial process at any
      party’s option.

     

    Section
      5.16  Compliance
      with Other Laws.
      Secured
      Party may comply with the requirements of any applicable state or federal law
      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 the
      commercial reasonableness of any sale of all or any part of the
      Collateral.

     

    Section
      5.17  Disclaimer
      of Warranties.
      Secured
      Party may sell the Collateral without giving any warranties as to the
      Collateral. Secured Party may specifically disclaim any warranties of title
      or
      similar warranties. The disclaimer of any such warranties will not be considered
      to adversely affect the commercial reasonableness of any sale of all or any
      part
      of the Collateral.

     

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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    ARTICLE
      VI

    MISCELLANEOUS

     

    Section
      6.1  Preservation
      of Liability.
      Neither
      this Security Agreement nor 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 any Person liable on the Secured Obligations from
      liability on the Secured Obligations and for any deficiency
      thereon.

     

    Section
      6.2  Notices.
      Any
      record, notice, demand or document which either party is required or may desire
      to give hereunder shall be given as provided in the Credit Agreement.


     

    Section
      6.3  Choice
      of Law.
      THIS
      SECURITY AGREEMENT HAS BEEN MADE IN AND THE SECURITY INTEREST GRANTED HEREBY
      IS
      GRANTED IN AND EACH SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS (EXCEPT
      TO THE EXTENT THAT THE LAWS OF ANY OTHER JURISDICTION GOVERN THE PERFECTION
      AND
      PRIORITY OF THE SECURITY INTEREST GRANTED HEREBY) WITHOUT REGARD TO ITS
      CONFLICTS OF LAWS PRINCIPLES.

     

    Section
      6.4  Amendment
      and Waiver.
      This
      Security Agreement may not be amended (nor may any of its terms be waived)
      except in the manner provided in the Credit Agreement.

     

    Section
      6.5  Severability.
      If any
      provision of this Security Agreement is rendered or declared invalid, illegal
      or
      unenforceable by reason of any existing or subsequently enacted legislation
      or
      by a judicial decision which shall have become final, Debtor and Secured Party
      shall promptly meet and discuss substitute provisions for those rendered
      invalid, illegal or unenforceable, but all of the remaining provisions shall
      remain in full force and effect.

     

    Section
      6.6  Survival
      of Agreements.
      All
      representations and warranties of Debtor herein, and all covenants and
      agreements herein not fully performed before the effective date of this Security
      Agreement, shall survive such date.

     

    Section
      6.7  Counterparts.
      This
      Agreement may be executed in two or more counterparts, and it shall not be
      necessary that the signatures of all parties hereto 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 same instrument. This
      Agreement may be transmitted and signed by facsimile and portable document
      format (PDF). The effectiveness of any such documents and signatures shall,
      subject to Applicable Law, have the same force and effect as manually-signed
      originals and shall be binding on Debtor and Secured Party. Secured Party may
      also require that any such documents and signatures be confirmed by a
      manually-signed original; provided
      that,
      the
      failure to request or deliver the same shall not limit the effectiveness of
      any
      facsimile or PDF document or signature.

     

    Section
      6.8  Successors
      and Assigns.
      The
      covenants and agreements herein contained by or on behalf of Debtor shall bind
      Debtor, Debtor’s legal representatives, successors and assigns and all persons
      who become bound as a debtor to this Security Agreement and shall inure to
      the
      benefit of Secured Party, its successors and permitted assigns under the Credit
      Agreement.

     

    
      
        
        

      

      
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    Section
      6.9  Titles
      of Articles, Sections and Subsections.
      All
      titles or headings to articles, sections, subsections or other divisions of
      this
      Security Agreement are only for the convenience of the parties and shall not
      be
      construed to have any effect or meaning with respect to the other content of
      such articles, sections, subsections or other divisions, such other content
      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 WAIVES ANY RIGHT WHICH IT MAY HAVE TO A TRIAL
      BY
      JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING
      OUT
      OF, UNDER OR IN CONNECTION WITH THE NOTE, THIS AGREEMENT OR THE OTHER SECURITY
      DOCUMENTS, OR ANY TRANSACTION CONTEMPLATED THEREBY, BEFORE OR AFTER
      MATURITY.

     

    Section
      6.11  Interest.
      It is
      the intention of the parties hereto to comply strictly to usury laws applicable
      to the Secured Party. Interest on the indebtedness is expressly limited so
      that
      in no contingency or event whatsoever, whether by acceleration of the maturity
      of the Note or otherwise, shall the interest taken, reserved, contracted for,
      charged or received by the Secured Party exceed the maximum amount permissible
      under applicable law. If from any circumstances whatsoever fulfillment of any
      provisions of the Credit Agreement, this Agreement, any of the other Security
      Documents or of any other document evidencing, securing or pertaining to the
      indebtedness evidenced 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 be fulfilled shall be reduced to the limit of such validity so
      that the aggregate consideration which constitutes interest that is contracted
      for, taken, reserved, charged for, or received shall not exceed the maximum
      amount allowed by applicable law and such amount that would otherwise be
      excessive interest shall be applied to the reduction of the principal amount
      owing under the Note or on account of any other indebtedness of the Debtor
      to
      the Secured Party, or if principal of the Note and such other indebtedness
      has
      been paid in full, refunded to the Debtor. In determining whether or not the
      interest paid or agreed to be paid for the use, forbearance, or detention of
      sums hereunder exceeds the highest lawful rate, the Debtor and the Secured
      Party
      shall, to the maximum extent permitted by applicable law, (a) characterize
      any
      non-principal payment as an expense, fee or premium rather than as interest,
      (b)
      exclude voluntary prepayments and the effects thereof, (c) amortize, prorate,
      allocate and spread the total amount of interest throughout the full term of
      such indebtedness so that the actual rate of interest on account of such
      indebtedness does not exceed the highest lawful rate, and/or (d) allocate
      interest between portions of such indebtedness, to the end that no such portion
      shall bear interest at a rate greater than that permitted by applicable
      law.

     

    THIS
      SECURITY AGREEMENT, THE CREDIT AGREEMENT, THE NOTE AND THE SECURITY DOCUMENTS
      REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE MATTERS
      ADDRESSED HEREIN AND THEREIN AND WILL NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
      CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
      UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     

    [Signatures
      are on the following page.]


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    



    IN
      WITNESS WHEREOF, the undersigned have caused this instrument to be executed
      by
      their duly authorized undersigned officers effective as the date first written
      above.

     

    DEBTOR:

     

    RANCHER
      ENERGY CORP.,

    a
      Nevada
      corporation

    


    


    By:          /s/
      John
      Works                                  


    John
      Works

    President
      & Chief Executive Officer

    


    



    Signature
      Page to Security Agreement

    (All
      Personal Property)

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      



    SECURED
      PARTY:

     

    GASROCK
      CAPITAL LLC,

    a
      Delaware limited liability company,

    


    


    By:           /s/
      Marshall Lynn
      Bass             
           
      

    Marshall
      Lynn Bass

    Principal

     

    


      Signature
        Page to Security Agreement

      (All
        Personal Property)