Document:

Unassociated Document

    

    SECURITY
AGREEMENT

     

    THIS SECURITY AGREEMENT (this "Agreement")
is made as of May 14, 2009, by ENERGYTEC, INC., a Nevada corporation, as debtor
and debtor-in-possession ("Energytec"),
and COMANCHE WELL SERVICE CORPORATION, a Texas corporation, as debtor and
debtor-in-possession ("Comanche
Well"; collectively Energytec and Comanche Well herein called the "Debtors"
and individually called a "Debtor"),
in favor of RED RIVER RESOURCES, INC., an Oklahoma corporation ("Lender").

    

    W I T N E S S E T
H:

    

    WHEREAS, the Debtors have commenced
cases under Chapter 11 of Title 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the Eastern District of Texas (the "Bankruptcy
Court") and the Debtors have retained possession of their assets and are
authorized under the  Bankruptcy Code to continue the operations of
their business as debtors-in possession;

    

    WHEREAS, the Debtors and Lender are
parties to a Debtor-in-Possession Credit Agreement dated as of May 14, 2009 (the
"DIP
Credit Agreement"); and

    

    WHEREAS, in order to induce Lender to
extend credit pursuant to the DIP Credit Agreement, Debtors have agreed to grant
to Lender a security interest in the Collateral as defined herein;

    

    NOW, THEREFORE, in consideration of the
premises and in order to induce Lender to extend such credit under the DIP
Credit Agreement, Debtors hereby agree with Lender, as follows:

     

    ARTICLE
I

     

    Definitions and
References

     

    Section 1.1  General
Definitions.  As used herein, the terms "Agreement",
"Energytec", "Comanche Wells", "Debtor", "Debtors", "Lender", "Bankruptcy Court"
and "DIP Credit Agreement" shall have the meanings indicated above, and the
following terms shall have the following meanings:

     

    "Collateral" means all
property, of whatever type, which is described in Section 2.1 as being at any
time subject to a security interest granted hereunder to Lender.

    

    "Commercial Tort
Claims" means all "commercial tort claims" (as defined in the
UCC).

     

    
      
        
        

      

      
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    "Commitment" means the
agreement or commitment by Lender to make loans or otherwise extend credit to
Debtors under the DIP Credit Agreement.

    

    "Deposit Accounts"
means all "deposit accounts" (as defined in the UCC).

    

    "DIP Loan Documents"
means the DIP Credit Agreement, the Note, the Loan Documents, and all other
documents and instruments under, by reason of which, or pursuant to which any or
all of the Secured Obligations are evidenced, governed, secured, or otherwise
dealt with, and all other agreements, certificates, and other documents,
instruments and writings heretofore or hereafter delivered in connection
herewith or therewith.

    

    "Documents" means all
"documents" (as defined in the UCC) or other receipts covering, evidencing or
representing inventory, equipment, or other goods.

    

    "Equipment" means all
"equipment" (as defined in the UCC) and all parts thereof, all accessions
thereto, and all replacements therefor.

    

    "Bankruptcy Court
Order" means that certain [Interim Order Authorizing Debtors to Incur
Post-Petition Secured Indebtedness and Granting Security Interests and
Superpriority Claims and that certain Final Order Authorizing Debtors to Incur
Post-Petition Secured Indebtedness and Granting Security Interests and
Superpriority Claims] entered by the Bankruptcy Court.

    

    "General Intangibles"
means all "general intangibles" (as defined in the UCC) of any kind (including
Commercial Tort Claims, Software, Payment Intangibles, tax refunds, insurance
proceeds, and contract rights).

    

    "Instruments" means
all "instruments", "chattel paper" or "letters of credit" (as each is defined in
the UCC) and all Letter-of-Credit Rights.

    

    "Investment Property"
means all "investment property" (as defined in the UCC).

    

    "Letter-of-Credit
Rights" means all rights to payment or performance under a "letter of
credit" (as defined in the UCC) whether or not the beneficiary has demanded or
is at the time entitled to demand payment or performance.

    

    "Payment Intangibles"
means all "payment intangibles" (as defined in the UCC).

    

    "Proceeds" means, with
respect to any property of any kind, all proceeds of, and all other profits,
products, rentals or receipts, in whatever form, arising from any sale,
exchange, collection, lease, licensing or other disposition of, distribution in
respect of, or other realization upon, such property, including all claims
against third parties for loss of, damage to or destruction of, or for proceeds
payable under (or unearned premiums with respect to) insurance in respect of,
such property (regardless of whether Lender is named a loss payee thereunder),
and any payments paid or owing by any third party under any indemnity, warranty,
or guaranty with respect to such property, and any condemnation or requisition
payments with respect to such property, in each case whether now existing or
hereafter arising.

     

    
      
        
        

      

      
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    "Receivables" means
(a) all "accounts" (as defined in the UCC) and all other rights to payment for
goods or other personal property which have been (or are to be) sold, leased, or
exchanged or for services which have been (or are to be) rendered, regardless of
whether such accounts or other rights to payment have been earned by performance
and regardless of whether such accounts or other rights to payment are evidenced
by or characterized as accounts receivable, contract rights, book debts, notes,
drafts or other obligations of indebtedness, (b) all Documents and Instruments
of any kind relating to such accounts or other rights to payment or otherwise
arising out of or in connection with the sale, lease or exchange of goods or
other personal property or the rendering of services, (c) all rights in, to, or
under all security agreements, leases and other contracts securing or otherwise
relating to any such accounts, rights to payment, Documents, or Instruments, (d)
all rights in, to and under any purchase orders, service contracts, or other
contracts out of which such accounts and other rights to payment arose (or will
arise on performance), and (e) all rights in or pertaining to any goods arising
out of or in connection with any such purchase orders, service contracts, or
other contracts, including rights in returned or repossessed goods and rights of
replevin, repossession, and reclamation.

     

    "Secured Obligations"
has the meaning given such term in Section 2.2.

     

    "Software" means all
"software" (as defined in the UCC), including all computer programs, any
supporting information provided in connection with a transaction relating to a
computer program, all licenses or other rights to use any of such computer
programs, and all license fees and royalties arising from such use to the extent
permitted by such license or rights.

     

    "UCC" means the
Uniform Commercial Code in effect in the State of Texas from time to
time.

     

    Section
1.2  Other
Definitions.  Reference is
hereby made to the DIP Credit Agreement for a statement of the terms
thereof.  All capitalized terms used in this Agreement which are
defined in the DIP Credit Agreement and not otherwise defined herein shall have
the same meanings herein as set forth therein.  All terms used in this
Agreement which are defined in the UCC and not otherwise defined herein or in
the DIP Credit Agreement shall have the same meanings herein as set forth
therein, except where the context otherwise requires.

     

    Section
1.3  Attachments.  All exhibits or
schedules which may be attached to this Agreement are a part hereof for all
purposes.

     

    Section
1.4  Amendment
of Defined Instruments.  Unless the
context otherwise requires or unless otherwise provided herein, references in
this Agreement to a particular agreement, instrument or document (including, but
not limited to, references in Section 2.1) also refer to and include all
renewals, extensions, amendments, modifications, supplements or restatements of
any such agreement, instrument or document, provided that nothing contained in
this Section shall be construed to authorize any Person to execute or enter into
any such renewal, extension, amendment, modification, supplement or
restatement.

     

    
      
        
        

      

      
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    Section
1.5 References
and Titles.  All references
in this Agreement to Exhibits, Articles, Sections, subsections, and other
subdivisions refer to the Exhibits, Articles, Sections, subsections and other
subdivisions of this Agreement unless expressly provided
otherwise.  Titles appearing at the beginning of any subdivision are
for convenience only and do not constitute any part of any such subdivision and
shall be disregarded in construing the language contained in this
Agreement.  The words "this Agreement", "herein", "hereof", "hereby",
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited.  The
phrases "this Section" and "this subsection" and similar phrases refer only to
the Sections or subsections hereof in which the phrase occurs.  The
word "or" is not exclusive, and the word "including" (in all of its forms) means
"including without limitation".  Pronouns in masculine, feminine and
neuter gender shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa unless the
context otherwise requires.

     

    ARTICLE
II

     

    Security
Interest

     

    Section
2.1Grant of
Security Interest.  As collateral security for all of the
Secured Obligations, each Debtor hereby pledges and assigns to Lender and grants
to Lender a continuing security interest in and to all right, title and interest
of such Debtor in and to any and all of the following property, whether now
owned or existing or hereafter acquired or arising and regardless of where
located:

     

    (a)  all
Receivables.

    

    (b)  all General
Intangibles.

    

    (c)  all
Documents.

    

    (d)  all
Instruments.

    

    (e)  all
Inventory.

    

    (f)  all
Equipment.

    

    (g)  all Deposit
Accounts.

    

    (h)  all Investment
Property.

     

    
      
        
        

      

      
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    (i)  All books and records
(including, without limitation, customer lists, marketing information, credit
files, price lists, operating records, vendor and supplier price lists, sales
literature, computer software, computer hardware, computer disks and tapes and
other storage media, printouts and other materials and records) of such Debtor
pertaining to any of the Collateral.

    

    (j)  All moneys and property
of any kind of such Debtor in the possession or under the control of
Lender.

    

    (k)  All Proceeds of any and
all of the foregoing Collateral.

    

    In each
case, the foregoing shall be covered by this Agreement, whether such Debtor's
ownership or other rights therein are presently held or hereafter acquired and
howsoever such Debtor's interests therein may arise or appear (whether by
ownership, security interest, claim or otherwise).

     

    Section
2.2  Secured
Obligations Secured.  The security interest created hereby in
the Collateral constitutes continuing collateral security for all of the
following obligations, indebtedness and liabilities, whether now existing or
hereafter incurred or arising:

     

    (a)  DIP Credit Agreement
Indebtedness.  The payment by Debtors, jointly and severally,
as and when due and payable, of all amounts from time to time owing by Debtors
or either of them under or in respect of the DIP Credit Agreement, the Note, or
any of the other DIP Loan Documents.

    

    (b)  Performance.  The
due performance and observance by each Debtor of all of its other obligations
from time to time existing under or in respect of any of the DIP Loan
Documents.

    

    As used
herein, the term "Secured Obligations" refers to all present and future
indebtedness, obligations and liabilities of whatever type which are described
above in this section.  Each Debtor hereby acknowledges that the
Secured Obligations are owed to Lender and that Lender is entitled to the
benefits of the liens given under this Agreement.

     

    ARTICLE
III

     

    Representations, Warranties
and Covenants

     

    Section
3.1 Representations
and Warranties.  Each of the
representations and warranties in the DIP Credit Agreement made by Debtors or
either of them is true and correct.  In addition, each Debtor hereby
represents and warrants to Lender as follows:

     

    
      
        
        

      

      
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    (a)  Name, Place of Business and
Formation. Each Debtor is a corporation organized under the laws of the
state of its formation referenced in the first paragraph hereof which is each
such Debtor's location pursuant to the UCC.  Neither Debtor has
conducted business under any name except the name in which it has executed this
Agreement, which is the exact name as it appears in such Debtor’s organizational
documents, as amended, as filed with such Debtor’s jurisdiction of
organization.

    

    (b)  Ownership Free of
Liens.  Each Debtor has good and marketable title to the
Collateral owned by it, free and clear of all Liens, encumbrances or adverse
claims except for the security interest created by this Agreement and any
Permitted Encumbrances.  No effective financing statement or other
registration or instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except any which have been filed
in favor of Lender relating to this Agreement.  None of the Collateral
is in the possession of any Person other than a Debtor or Lender, except for
Collateral being transported in the ordinary course of business.

    

    (c)  No Conflicts or
Consents. Neither the ownership or the intended use of the Collateral by
Debtors, nor the grant of the security interest by Debtors to Lender herein, nor
the exercise by Lender of its rights or remedies hereunder, will (i) conflict
with any provision of (a) any domestic or foreign law, statute, rule or
regulation, (b) the articles or certificate of incorporation, charter or bylaws
of a Debtor, or (c) any agreement, judgment, license, order or permit applicable
to or binding upon a Debtor, or (ii) result in or require the creation of
any lien, charge or encumbrance upon any assets or properties of a Debtor.
Except as expressly contemplated in the DIP Loan Documents, no consent,
approval, authorization or order of, and no notice to or filing with any court,
governmental authority or third party is required in connection with the grant
by Debtors of the security interest herein, or the exercise by Lender of its
rights and remedies hereunder.

    

    (d)  Security
Interest.  Each Debtor has and will have at all times full
right, power and authority to grant a security interest in the Collateral owned
by it to Lender as provided herein, free and clear of any Lien, adverse claim,
or encumbrance, except for the Permitted Encumbrances.  This Agreement
creates a valid and binding security interest in favor of Lender in the
Collateral, which security interest secures all of the Secured
Obligations.

    

    (e)  Perfection.  The
Lender will have a perfected, first priority lien in the Collateral by virtue of
the Bankruptcy Court Order.  Additionally, (i) the taking possession
by Lender of all money constituting Collateral from time to time will perfect,
and establish the first priority of, Lender's security interest hereunder in
such Collateral, (ii) Lender's control of all Investment Property, Deposit
Accounts, and Letter-of-Credit Rights constituting Collateral from time to time
will perfect, and establish the first priority of, Lender's security interest
hereunder in such Collateral and (iii) the filing of a financing statement with
the secretary of state (or equivalent governmental official) of the state in
which a Debtor is organized which sufficiently indicates all other Collateral
will perfect, and establish the first priority (subject only to Permitted
Encumbrances) of, Lender's security interest hereunder in such Collateral owned
by such Debtor.  No further or subsequent filing, recording,
registration, other public notice or other action is necessary or desirable to
perfect or otherwise continue, preserve or protect such security interest except
as described in Section 3.2(a).

     

    
      
        
        

      

      
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    (f)  Receivables.  Each
Receivable represents the valid and legally binding indebtedness of a bona fide
account debtor arising from the sale or lease by a Debtor of goods or the
rendition by a Debtor of proceeds of oil or gas production services and is not
subject to contra-accounts, setoffs, defenses or counterclaims by or available
to account debtors obligated on the Receivables except as disclosed to Lender in
writing.  No material amount of a Debtor's Receivables is doubtful of
collection except as has been disclosed to Lender in writing.  Goods
which have been delivered to, and services which have been rendered by a Debtor
to the account debtor on each such Receivable have been accepted by such account
debtor, and the amount shown as to each Receivable on such Debtor's books is the
true and undisputed amount owing and unpaid thereon, subject only to discounts,
allowances, rebates, credits and adjustments to which such account debtor has a
right.

    

    (g)  General
Intangibles.  Each General Intangible included within the
Collateral which is material to a Debtor's business represents the valid and
legally binding obligation of each other Person who is a party thereto or who is
otherwise stated to be obligated thereunder, subject to no contra-accounts,
setoffs, defenses, counterclaims, discounts, allowances, rebates, credits or
adjustments by or available to account debtors obligated thereon, except for
those which do not materially impair the value to such Debtor or the enforcement
by such Debtor of such General Intangibles.

    

    (h)  Documents and
Instruments.  All Documents and Instruments included within the
Collateral are valid and genuine.  Any such Document or Instrument has
only one original counterpart which constitutes collateral within the meaning of
the UCC or the law of any applicable jurisdiction.

    

    (i)  Goods.  None
of the Collateral which constitutes goods (i) is covered by any Document, (ii)
is subject to any landlord's lien or similar Lien (other than Permitted
Encumbrances), (iii) has been related to, attached to, or used in connection
with any real property so as to constitute a fixture upon such real property
(except for real property which is subject to a Lien in favor of Lender), (iv)
is installed in or affixed to other goods so as to be an accession to such other
goods (unless such other goods are included in the Collateral), or (v) has been
produced in violation of the Fair Labor Standards Act, as
amended.  All such goods are insured to the extent required under the
DIP Credit Agreement.

    

    Section
3.2  General
Covenants Applicable to Collateral.  Unless Lender
shall otherwise consent in writing, each Debtor will at all times comply with
the covenants contained in the DIP Credit Agreement which are applicable to such
Debtor for so long as any part of the Secured Obligations or the Commitment is
outstanding.  In addition, each Debtor will at all times comply with
the covenants contained in this Section 3.2.

     

    
      
        
        

      

      
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    (a)  Change of Name, Location, or
Structure; Additional Filings.  Each Debtor recognizes that
financing statements pertaining to the Collateral have been or may be filed with
the secretary of state (or equivalent governmental official) of the state in
which such Debtor is organized.  Without limitation of any other
covenant herein, no Debtor will cause or permit any change to be made in its
name, identity or corporate structure, or any change to be made to its
jurisdiction of organization, unless such Debtor shall have first (1) notified
Lender of such change at least ten (10) days prior to the effective date of such
change and (2) taken all action requested by Lender (under the following
subsection (b) or otherwise) for the purpose of further confirming and
protecting Lender's security interests and rights under this Agreement and the
perfection and priority thereof.  In any notice furnished pursuant to
this subsection, a Debtor will expressly state that the notice is required by
this Agreement and contains facts that may require additional filings of
financing statements or other notices for the purposes of continuing perfection
of Lender's security interest in the Collateral.

    

    (b)  Further
Assurances.  Each Debtor will, at its expense as from time to
time requested by Lender, promptly execute and deliver all further instruments,
agreements, filings and registrations, and take all further action, in
order:  (i) to confirm and validate this Agreement and Lender's rights
and remedies hereunder, (ii) to correct any errors or omissions in the
descriptions herein of the Secured Obligations or the Collateral or in any other
provisions hereof, (iii) to perfect, register and protect the security interests
and rights created or purported to be created hereby or to maintain or upgrade
in rank the priority of such security interests and rights, (iv) to enable
Lender to exercise and enforce its rights and remedies hereunder in respect of
the Collateral, or (v) to otherwise give Lender the full benefits of the rights
and remedies described in or granted under this Agreement.  As part of
the foregoing each Debtor will, consistent with the Bankruptcy Court Order,
whenever requested by Lender (1) file any financing statements, continuation
statements, and other filings or registrations relating to Lender's security
interests and rights hereunder, and any amendments thereto, and (2) mark its
books and records relating to any Collateral to reflect that such Collateral is
subject to this Agreement and the security interests hereunder.

    

    (c)  Inspection of Collateral and
Information.  Each Debtor will keep adequate records concerning
the Collateral and will permit Lender and all representatives appointed by
Lender, including independent accountants, agents, attorneys, appraisers and any
other persons, to inspect any of the Collateral and the books and records of or
relating to the Collateral at any time during normal business hours, and to make
photocopies and photographs thereof, and to write down and record any
information which such representatives obtain.

    

    (d)  Information.  Upon
request from time to time by Lender, each Debtor will furnish to Lender (i) any
information concerning any covenant, provision or representation contained
herein or any other matter in connection with the Collateral or such Debtor's
business, properties, or financial condition, and (ii) statements and schedules
identifying and describing the Collateral and other reports and information
reasonably requested in connection with the Collateral, all in reasonable
detail.

     

    
      
        
        

      

      
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    (e)  Ownership, Liens, Possession
and Transfers.  Each Debtor will maintain good and marketable
title to all Collateral owned by it, free and clear of all Liens, encumbrances
or adverse claims except for the security interest created by this Agreement and
any Permitted Encumbrances, and no Debtor will grant or allow any such Liens,
encumbrances or adverse claims to exist.  No Debtor will sell, assign
(by operation of law or otherwise), transfer, exchange, lease or otherwise
dispose of any of the Collateral, nor will any Debtor deliver actual or
constructive possession of the Collateral to any other Person, other than: (i)
sales of Inventory (including oil and natural gas) in the ordinary course of
business, and (ii) sale or other disposal, other than during the continuance of
an Event of Default, of any item of Equipment which is worn out or obsolete and
which has been replaced by an item of equal suitability and value, owned by a
Debtor and made subject to the security interest under this Agreement, but which
is otherwise free and clear of any liens, security interest, encumbrance or
adverse claim (other than those in favor of Lender pursuant to the terms hereof
or any Permitted Encumbrances).

    

    (f)  Impairment of Security
Interest.  No Debtor will take or fail to take any action which
would in any manner impair the value or enforceability of Lender's security
interest in any Collateral.

    

    (g)  Insurance and Payment of
Taxes, etc.  Debtors will, at their own expense, maintain
insurance with respect to all Collateral which constitutes
goods.  Debtors (i) will timely pay all property and other taxes,
assessments and governmental charges or levies imposed upon the Collateral owned
by them or any part thereof; (ii) will timely pay all lawful claims which, if
unpaid, might become a lien or charge upon the Collateral or any part thereof;
and (iii) will maintain appropriate accruals and reserves for all such
liabilities in a timely fashion in accordance with generally accepted accounting
principles.  Debtors may, however, delay paying or discharging any
such taxes, assessments, charges, claims or liabilities so long as the validity
thereof is contested in good faith by proper proceedings and it has set aside on
their books adequate reserves therefor.

    

    Debtors will not grant or allow to
remain in effect, and Debtors will cause to be terminated, any financing
statement or other registration or instrument similar in effect covering all or
any part of the Collateral owned by them, except for the Permitted Encumbrances
and any liens which have been filed in favor of Lender relating to this
Agreement. Debtors will defend Lender’s right, title and special property and
security interest in and to the Collateral owned by them against the claims of
any Person. Debtors (i) will insure that all of the Collateral is and
remains in their possession, except for goods being transported in the ordinary
course of business, and (ii) will not sell, assign (by operation of law or
otherwise), transfer, exchange, lease or otherwise dispose of any of the
Collateral.

    

    Section
3.3  Covenants
for Specified Types of Collateral.  Unless Lender
shall otherwise consent in writing, Debtors will at all times comply with the
covenants contained in this Section 3.3 from the date hereof and so long as any
part of the Secured Obligations or the Commitment is outstanding.

     

    
      
        
        

      

      
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    (a)  Receivables and General
Intangibles.  Debtors will, except as otherwise provided
herein, collect, at their own expense, all amounts due or to become due under
each of the Receivables and General Intangibles.  In connection with
such collections, Debtors may (and, at Lender's direction, will) take such
action (not otherwise forbidden hereunder) as Debtors or Lender may deem
necessary or advisable to enforce collection or performance of each of the
Receivables and General Intangibles.  Debtors will duly perform and
cause to be performed all of its obligations with respect to the goods or
services, the sale or lease or rendering of which gave rise or will give rise to
each such Receivable, and (ii) will not (whether through failure to duly perform
their obligations under any contracts, instruments, and agreements which are
related to any such Receivable or General Intangible, or by any written
instrument, or otherwise) take or allow any action or omission which causes any
such Receivable or General Intangible to become subject to any contra-accounts,
setoffs, defenses, counterclaims, discounts, allowances, rebates, credits or
adjustments by or available to account debtors obligated on such Receivable or
General Intangible.

    

    (b)  Inventory.  Debtors
will maintain, preserve, protect and store all Inventory in good condition,
repair and working order and in a manner which will not make void or cancelable
any insurance with respect to such Collateral.  Except for Documents
delivered into the possession of Lender, Debtors will not allow any Inventory
included within the Collateral to be covered by any Document, except in
connection with the Permitted Encumbrances.

    

    (c)  Equipment.  Debtors
will maintain, preserve, protect and keep all Equipment in good condition,
repair and working order and will cause such Equipment to be used and operated
in a good and workmanlike manner, in accordance with applicable law and in a
manner which will not make void or cancelable any insurance with respect to such
Equipment.  Debtors will promptly make or cause to be made all
repairs, replacements and other improvements to or in connection with such
Equipment which are necessary or desirable.  Debtors will not permit
any of the Collateral which constitutes Equipment to at any time become so
related to attached to, or used in connection with any particular real property
so as to become a fixture upon such real property, or to be installed in or
affixed to other goods so as to become an accession to such other goods unless
such other goods are also included in the Collateral.

    

    (d)  Documents and
Instruments.  Debtors will cause all Instruments to have only
one original counterpart.  Upon request by Lender, Debtors will mark
each chattel paper which is included within the Collateral with a legend
indicating that such chattel paper is subject to the security interest granted
by this Agreement.

     

    
      
        
        

      

      
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    ARTICLE
IV

     

    Remedies, Powers and
Authorizations

    

    Section
4.1  Normal
Provisions Concerning the Collateral.

    

    (a)  Authorization to File
Financing Statements.  Debtors hereby irrevocably authorize
Lender at any time and from time to time to file, without the signature of
Debtors, in any jurisdiction any amendments to existing financing statements and
any initial financing statements and amendments thereto that (a) indicate the
Collateral as "all assets of a particular Debtor and all proceeds thereof, and
all rights and privileges with respect thereto" or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Chapter 9 of the UCC; (b) contain any other information
required by the UCC for the sufficiency or filing office acceptance of any
financing statement or amendment, including whether a Debtor is an organization,
the type of organization and any organization identification number issued to
such Debtor; and (c) are reasonably necessary, in the sole discretion of Lender,
to properly effectuate the transactions described in the DIP Loan Documents, as
determined by Lender in its discretion. Debtors agree to furnish any such
information to Lender promptly upon request. Debtors further agree that a
carbon, photographic or other reproduction of this Agreement or any financing
statement describing any Collateral is sufficient as a financing statement and
may be filed in any jurisdiction by Lender.

    

    (b)  Power of
Attorney.  Each Debtor hereby appoints Lender as such Debtor's
attorney-in-fact and proxy, with full authority in the place and stead of such
Debtor and in the name of such Debtor or otherwise, from time to time in
Lender's discretion upon the occurrence and during the continuance of an Event
of Default, to take any action and to execute any instrument which Lender may
deem necessary or advisable to accomplish the purposes of this Agreement
including any action or instrument:  (i) to obtain and adjust any
insurance required to be paid to Lender pursuant hereto; (ii) to ask, demand,
collect, sue for, recover, compound, receive and give acquittance and receipts
for moneys due and to become due under or in respect of any of the Collateral;
(iii) to receive, indorse and collect any drafts or other Instruments or
Documents; (iv) to enforce any obligations included among the Collateral; and
(v) to file any claims or take any action or institute any proceedings which
Lender may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of a Debtor or Lender with respect
to any of the Collateral.  Each Debtor hereby acknowledges that such
power of attorney and proxy are coupled with an interest, are irrevocable, and
are to be used by Lender for the sole benefit of Lender.

    

    (c)  Performance by
Lender.  If a Debtor fails to perform any agreement or
obligation contained herein, Lender may itself perform, or cause performance of,
such agreement or obligation, and the expenses of Lender incurred in connection
therewith shall be payable by Debtors under Section 4.5.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (d)  Bailees.  If
any Collateral is at any time in the possession or control of any warehouseman,
bailee or any of Debtors’ agents or processors, Debtors shall, upon the request
of Lender, notify such warehouseman, bailee, agent or processor of Lender's
rights hereunder and instruct such Person to hold all such Collateral for
Lender's account subject to Lender's instructions.

    

    (e)  Collection.  Lender
shall have the right at any time, upon the occurrence and during the continuance
of an Event of Default, to notify (or to require Debtors to notify) any and all
obligors under any Receivables, General Intangibles, Instruments, or other
rights to payment included among the Collateral of the assignment thereof to
Lender under this Agreement and to direct such obligors to make payment of all
amounts due or to become due to such Debtor thereunder directly to Lender and,
upon such notification and at the expense of such Debtor and to the extent
permitted by law, to enforce collection of any such Receivables, General
Intangibles, Instruments, or other rights to payment and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as such Debtor could have done.  After any Debtor receives
notice that Lender has given (and after Lender has required such Debtor to give)
any notice referred to above in this subsection:

    

    (i) all amounts and proceeds (including
instruments and writings) received by such Debtor in respect of such
Receivables, General Intangibles, Instruments, or other rights to payment shall
be received in trust for the benefit of Lender hereunder, shall be segregated
from other funds of such Debtor and shall be forthwith paid over to Lender in
the same form as so received (with any necessary endorsement) to be, at Lender's
discretion, either (A) held as cash collateral and released to such Debtor upon
the remedy of all Events of Default, or (B) while any Event of Default is
continuing, applied as specified in Section 4.3, and

    

    (ii) such Debtor will not adjust,
settle or compromise the amount or payment of any such Receivable, General
Intangible, Instrument, or other right to payment or release wholly or partly
any account debtor or obligor thereof or allow any credit or discount
thereon.

    

    Section
4.2  Event of
Default Remedies.  If an Event of
Default shall have occurred and be continuing, Lender may from time to time in
its discretion, without limitation and without notice except as expressly
provided below:

    

    (a)  exercise in respect of
the Collateral, in addition to any other rights and remedies provided for
herein, under the other DIP Loan Documents, or otherwise available to it, all
the rights and remedies of a secured creditor on default under the UCC (whether
or not the UCC applies to the affected Collateral);

    

    (b)  require Debtors to, and
Debtors hereby agree that they will at their expense and upon request of Lender
forthwith, assemble all or part of the Collateral as directed by Lender and make
it (together with all books, records and information of such Debtor relating
thereto) available to Lender at a place to be designated by Lender which is
reasonably convenient to both parties;

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (c)  prior to the disposition
of any Collateral, (i) to the extent permitted by applicable law, enter, with or
without process of law and without breach of the peace, any premises where any
of the Collateral is or may be located, and without charge or liability to
Lender seize and remove such Collateral from such premises, (ii) have access to
and use the Debtors’ books, records, and information relating to the Collateral,
and (iii) store or transfer any of the Collateral without charge in or by means
of any storage or transportation facility owned or leased by a Debtor, process,
repair or recondition any of the Collateral or otherwise prepare it for
disposition in any manner and to the extent Lender deems appropriate and, in
connection with such preparation and disposition, use without charge any
copyright, trademark, trade name, patent or technical process used by
Debtors;

    

    (d)  reduce its claim to
judgment or foreclose or otherwise enforce, in whole or in part, the security
interest created hereby by any available judicial procedure;

    

    (e)  dispose of, at its
office, on the premises of a Debtor or elsewhere, all or any part of the
Collateral, as a unit or in parcels, by public or private proceedings, and by
way of one or more contracts (it being agreed that the sale of any part of the
Collateral shall not exhaust Lender's power of sale, but sales may be made from
time to time, and at any time, until all of the Collateral has been sold or
until the Secured Obligations have been paid and performed in full), and at any
such sale it shall not be necessary to exhibit any of the
Collateral;

    

    (f)  buy the Collateral, or
any part thereof, at any public sale;

    

    (g)  buy the Collateral, or
any part thereof, at any private sale if the Collateral is of a type customarily
sold in a recognized market or is of a type which is the subject of widely
distributed standard price quotations; and

    

    (h)  apply by appropriate
judicial proceedings for appointment of a receiver for the Collateral, or any
part thereof, and Debtors hereby consent to any such appointment.

    

    Each
Debtor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days' notice to Debtors of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification.  Lender shall not be obligated to make any
sale of Collateral regardless of notice of sale having been
given.  Lender may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.

    

    Section
4.3  Application
of Proceeds.  If any Event of
Default shall have occurred and be continuing, Lender may in its discretion
apply any cash held by Lender as Collateral, and any cash proceeds received by
Lender in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral, to any or all of the following in such order as
Lender may elect:

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (a)  To the repayment of the
reasonable costs and expenses, including reasonable attorneys' fees and legal
expenses, incurred by Lender in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any Collateral, (iii) the exercise
or enforcement of any of the rights of Lender hereunder, or (iv) the failure of
Debtors to perform or observe any of the provisions hereof;

    

    (b)  To the payment or other
satisfaction of any Liens, encumbrances, or adverse claims upon or against any
of the Collateral to the extent not inconsistent with the Bankruptcy Court
Order;

    

    (c)  To the reimbursement of
Lender for the amount of any obligations of Debtors paid or discharged by Lender
pursuant to the provisions of this Agreement or the other DIP Loan Documents,
and of any expenses of Lender payable by Debtors hereunder or under the other
DIP Loan Documents;

    

    (d)  To the satisfaction of
any other Secured Obligations;

    

    (e)  By holding the same as
Collateral;

    

    (f)  To the payment of any
other amounts required by applicable law (including any provision of the UCC);
and

    

    (g)  By delivery to Debtor or
to whoever shall be lawfully entitled to receive the same.

    

    Section
4.4  Deficiency.  In the event
that the proceeds of any sale, collection or realization of or upon Collateral
by Lender are insufficient to pay all Secured Obligations, Lender shall have the
priority claim specified in the Bankruptcy Court Order.  Additionally,
Debtors shall be liable for the deficiency, together with interest thereon as
provided in the governing DIP Loan Documents or (if no interest is so provided)
at such other rate as shall be fixed by applicable law, together with the costs
of collection.

    

    Section
4.5  Indemnity
and Expenses.  In addition to, but not in qualification or
limitation of, any similar obligations under other DIP Loan
Documents:

    

    (a)  Debtors will indemnify
Lender from and against any and all claims, losses and liabilities growing out
of or resulting from this Agreement (including enforcement of this
Agreement), except
to the extent such claims, losses or liabilities are proximately caused by such
indemnified party's individual negligence, willful misconduct or bad
faith.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (b)  Debtors will upon demand
pay to Lender the amount of any and all costs and expenses, including the fees
and disbursements of Lender's counsel and of any experts and agents, which
Lender may incur in connection with (i) the transactions which give rise to this
Agreement, (ii) the preparation of this Agreement and the perfection and
preservation of this security interest created under this Agreement, (iii) the
administration of this Agreement; (iv) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral; (v) the exercise or enforcement of any of the rights of Lender
hereunder; or (vi) the failure by Debtor to perform or observe any of the
provisions hereof, except expenses resulting from Lender's individual
negligence, willful misconduct or bad faith.

    

    Section
4.6  Waiver.  Debtors waive
any and all notice of acceptance of this Agreement.

    

    Section
4.7 Limitation
on Duty of Lender in Respect of Collateral.  Beyond the
exercise of reasonable care in the custody thereof, Lender shall have no duty as
to any Collateral in its possession or control or in the possession or control
of any agent or bailee or as to the preservation of rights against prior parties
or any other rights pertaining thereto.  Lender shall be deemed to
have exercised reasonable care in the custody of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which it accords its own property, and shall not be liable or responsible for
any loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee or other agent or bailee selected by Lender in good
faith.

     

    ARTICLE
V

     

    Miscellaneous

    

    Section
5.1  Notices.  Any notice or
communication required or permitted hereunder shall be given as provided in the
DIP Credit Agreement.

    

    Section
5.2  Amendments.  No amendment of
any provision of this Agreement shall be effective unless it is in writing and
signed by Debtor and Lender and approved by the Bankruptcy Court after
appropriate notice and hearing.  No waiver of any provision of this
Agreement, and no consent to any departure by Debtors therefrom, shall be
effective unless it is in writing and signed by Lender, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given and to the extent specified in such
writing.

    

    Section
5.3  Preservation
of Rights.  No failure on
the part of Lender to exercise, and no delay in exercising, any right hereunder
or under any other DIP Loan Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.  Neither
the execution nor the delivery of this Agreement shall in any manner impair or
affect any other security for the Secured Obligations.  The rights and
remedies of Lender provided herein and in the other DIP Loan Documents are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law, in the Bankruptcy Court Order or otherwise.  The
rights of Lender under any DIP Loan Document against any party thereto are not
conditional or contingent on any attempt by Lender to exercise any of its rights
under any other DIP Loan Document against such party or against any other
Person.

     

    
      
        
        

      

      
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    Section
5.4  Unenforceability.  Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or invalidity without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

    

    Section
5.5  Survival
of Agreements.  All representations and warranties of Debtors
herein, and all covenants and agreements herein shall survive the execution and
delivery of this Agreement, the execution and delivery of any other DIP Loan
Documents and the creation of the Secured Obligations.

    

    Section
5.6  Binding
Effect and Assignment.  This Agreement
creates a continuing security interest in the Collateral and (a) shall be
binding on each Debtor and its successors and permitted assigns and (b) shall
inure, together with all rights and remedies of Lender hereunder, to the benefit
of Lender and its respective successors, transferees and
assigns.  Without limiting the generality of the
foregoing,  none of the rights or duties of Debtors hereunder may be
assigned or otherwise transferred without the prior written consent of Lender
and approval of the Bankruptcy Court after appropriate notice and
hearing.

    

    Section
5.7 Termination.  It is
contemplated by the parties hereto that there may be times when no Secured
Obligations are outstanding, but notwithstanding such occurrences, this
Agreement shall remain valid and shall be in full force and effect as to
subsequent outstanding Secured Obligations.  Upon the satisfaction in
full of the Secured Obligations and the termination or expiration of the DIP
Credit Agreement and any other commitment of Lender to extend credit to Debtors,
then upon written request for the termination hereof delivered by Debtors to
Lender and an appropriate order of the Bankruptcy Court, this Agreement and the
security interest created hereby shall terminate and all rights to the
Collateral shall revert to Debtors.  Lender will thereafter, upon
Debtors’ request and at Debtors’ expense, (a) return to Debtors such of the
Collateral in Lender's possession as shall not have been sold or otherwise
disposed of or applied pursuant to the terms hereof, and (b) execute and deliver
to Debtors such documents as Debtors shall reasonably request to evidence such
termination.

    

    Section
5.8  Governing
Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas applicable to contracts made and to be performed entirely within
such state.

     

    
      
        
        

      

      
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    Section
5.9  Final
Agreement.  This
written Agreement and the other DIP Loan Documents represent the final agreement
between the parties hereto and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties
hereto.  There are no unwritten oral agreements between the parties
hereto.

    

    Section
5.10 Counterparts;
Fax.  This Agreement
may be separately executed in any number of counterparts, all of which when so
executed shall be deemed to constitute one and the same
Agreement.  This Agreement may be validly executed and delivered by
facsimile or other electronic transmission.

    

    Section
5.11 "Loan
Document".  This Agreement
is a "Loan Document", as defined in the DIP Credit Agreement, and, except as
expressly provided herein to the contrary, this Agreement is subject to all
provisions of the DIP Credit Agreement governing such DIP Loan
Documents.  This Agreement, the Bankruptcy Court Order and such other
Loan Documents supplement each other, and the grants, priorities, rights and
remedies of Lender hereunder and thereunder are cumulative.

    

    [THE REMAINDER OF THIS PAGE IS
INTENTIONALLY LEFT BLANK]

    

    
      
        
        

      

      
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    IN WITNESS WHEREOF, Debtors have
executed and delivered this Agreement as of the date first above
written.

     

    
      	 	

              DEBTORS:

              

              ENERGYTEC,
      INC., a Nevada

              corporation,
      as a Debtor and Debtor-in-Possession

            	 
	 	 	 	 
	
               

            	
              By:
      

            	/s/ W.
      Wayne Hardin	 
	 	Name:  	W.
      Wayne Hardin	 
	 	Title:  	President	 
	 	 	 	 

    

     

    
      	 	

              

                COMANCHE
      WELL SERVICE 

                CORPORATION,
      a Texas corporation,

                as
      a Debtor and Debtor-in-Possession

              

            	 
	 	 	 	 
	
               

            	
              By:
      

            	/s/ Dorothea
      Krempein	 
	 	Name:  	Dorothea
      Krempein	 
	 	Title:  	Vice
      President	 
	 	 	 	 

    

     

    

    
      Signature
PageUnassociated Document

     

    
      	
              WHEN
      RECORDED OR FILED RETURN TO:

            
	
              Thompson
      & Knight LLP

              333
      Clay Street, Suite 3300

              Houston,
      Texas 77002

              Attention:
      Susan M. Smith

            

    

     

    DEED OF
TRUST, MORTGAGE,

    ASSIGNMENT,
SECURITY AGREEMENT, FIXTURE FILING

    AND
FINANCING STATEMENT

    FROM

    

    ENERGYTEC,
INC.,

    Mortgagor
and Debtor-in-Possession

    Organizational
I.D. No. C17483-1999

    

    TO

     

    CARLTON
L. NICHOLS, TRUSTEE

     

    AND

     

    RED RIVER
RESOURCES, INC., LENDER

     

    Dated May
14, 2009

     

    A CARBON,
PHOTOGRAPHIC, FACSIMILE, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS SUFFICIENT
AS A FINANCING STATEMENT.

     

    THIS
INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS, SECURES PAYMENT OF
FUTURE ADVANCES, AND COVERS PROCEEDS OF COLLATERAL.

     

    THIS
INSTRUMENT COVERS, AMONG OTHER THINGS, (A) GOODS WHICH ARE OR ARE TO BECOME
FIXTURES RELATED TO THE REAL PROPERTY DESCRIBED HEREIN, AND (B) AS-EXTRACTED
COLLATERAL RELATED TO THE REAL PROPERTY DESCRIBED HEREIN (INCLUDING WITHOUT
LIMITATION OIL, GAS, OTHER MINERALS AND OTHER SUBSTANCES OF VALUE WHICH MAY BE
EXTRACTED FROM THE EARTH AND ACCOUNTS ARISING OUT OF THE SALE AT THE WELLHEAD OR
MINEHEAD THEREOF).  THIS INSTRUMENT IS TO BE FILED FOR RECORD, AMONG
OTHER PLACES, IN THE REAL ESTATE OR COMPARABLE RECORDS OF THE COUNTIES
REFERENCED IN EXHIBIT
A HERETO AND SUCH FILING SHALL SERVE, AMONG OTHER PURPOSES, AS A FIXTURE
FILING AND AS A FINANCING STATEMENT COVERING AS-EXTRACTED
COLLATERAL.  THE MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL
ESTATE CONCERNED, WHICH INTEREST IS DESCRIBED IN SECTION 1.1 OF THIS
INSTRUMENT.

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    A POWER OF SALE HAS BEEN
GRANTED IN THIS MORTGAGE.  AS PROVIDED BY APPLICABLE LAW, A POWER OF
SALE MAY ALLOW LENDER (AS HEREINAFTER DEFINED) OR THE TRUSTEE (AS HEREINAFTER
DEFINED) TO TAKE THE MORTGAGED PROPERTIES AND SELL THEM WITHOUT GOING TO COURT
IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR (AS HEREINAFTER DEFINED)
UNDER THIS MORTGAGE.

     

    THIS
MORTGAGE IS ENTERED INTO PURSUANT TO THAT CERTAIN [INTERIM ORDER AUTHORIZING
DEBTOR TO INCUR POST-PETITION SECURED INDEBTEDNESS AND GRANTING SECURITY
INTERESTS AND SUPERPRIORITY CLAIMS] (THE "INTERIM
BANKRUPTCY COURT ORDER") ENTERED BY THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF TEXAS (THE "BANKRUPTCY
COURT") IN MORTGAGOR'S BANKRUPTCY CASE FILED UNDER CASE NO.
_________.

     

    
      	 	
              THIS
      DOCUMENT PREPARED BY:

            
	 	
              Robert
      C. Shearer

              Thompson
      & Knight LLP

              333
      Clay Street, Suite 3300

              Houston,
      Texas 77002

              (713)
      951-5896

               

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    DEED OF
TRUST, MORTGAGE

    ASSIGNMENT,
SECURITY AGREEMENT, FIXTURE FILING

    AND
FINANCING STATEMENT

    (this
"Mortgage")

     

    ARTICLE
I.

     

    GRANTING CLAUSES; SECURED
INDEBTEDNESS

     

    Section
1.1.             Grant
and Mortgage.
Energytec, Inc., a Nevada corporation, as Mortgagor and debtor-in-possession
(herein called "Mortgagor"),
pursuant to the Interim Bankruptcy Court Order, for and in consideration of the
sum of Ten Dollars ($10.00) to Mortgagor in hand paid, and in order to secure
the payment of the secured indebtedness hereinafter referred to and the
performance of the obligations, covenants, agreements, warranties and
undertakings of Mortgagor hereinafter described, does hereby GRANT, BARGAIN,
SELL, CONVEY, TRANSFER, ASSIGN AND SET OVER to Carlton L. Nichols, whose address
for notice is set forth at the end of this Mortgage (the "Trustee"),
and grants to Trustee a POWER OF SALE (pursuant to this Mortgage and applicable
law) with respect to all of the following described rights, interests and
properties (the "Mortgaged
Properties"):

     

    (A)           The
oil, gas and/or other mineral properties which are described in Exhibit A attached
hereto and made a part hereof;

     

    (B)           Without
limitation of the foregoing, all other right, title and interest of Mortgagor of
whatever kind or character (whether now owned or hereafter acquired by operation
of law or otherwise) in and to (i) the oil, gas and/or mineral leases or other
instruments or agreements described in Exhibit A hereto,
(ii) the lands described or referred to in Exhibit A (or
described in any of the instruments described or referred to in Exhibit A), without
regard to any limitations as to specific lands or depths that may be set forth
in Exhibit A
hereto or in any of the leases or other agreements described in Exhibit A
hereto;

     

    (C)           All
of Mortgagor's interest (whether now owned or hereafter acquired by operation of
law or otherwise) in and to all presently existing and hereafter created oil,
gas and/or mineral unitization, pooling and/or communitization agreements,
declarations and/or orders, and in and to the properties, rights and interests
covered and the units created thereby (including, without limitation, units
formed under orders, rules, regulations or other official acts of any federal,
state or other authority having jurisdiction), which cover, affect or otherwise
relate to the properties, rights and interests described in clause A or B
above;

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (D)           All
of Mortgagor's interest in and rights under (whether now owned or hereafter
acquired by operation of law or otherwise) all presently existing and hereafter
created operating agreements, equipment leases, production sales contracts,
processing agreements, transportation agreements, gas balancing agreements,
farmout and/or farm-in agreements, salt water disposal agreements, area of
mutual interest agreements, and other contracts and/or agreements which cover,
affect, or otherwise relate to the properties, rights and interests described in
clause A, B or C above or to the operation of such properties, rights and
interests or to the treating, handling, storing, processing, transporting or
marketing of oil, gas, other hydrocarbons, or other minerals produced from (or
allocated to) such properties, rights and interests (including, but not limited
to, those contracts listed in Exhibit A hereto), as
same may be amended or supplemented from time to time; and

     

    (E)           All
of Mortgagor's interest (whether now owned or hereafter acquired by operation of
law or otherwise) in and to all improvements, fixtures, movable or immovable
property and other real and/or personal property (including, without limitation,
all wells, pumping units, wellhead equipment, tanks, pipelines, flow lines,
gathering lines, compressors, dehydration units, separators, meters, buildings,
injection facilities, salt water disposal facilities, and power, telephone and
telegraph lines), and all easements, servitudes, rights-of-way, surface leases,
licenses, permits and other surface rights, which are now or hereafter used, or
held for use, in connection with the properties, rights and interests described
in clause A, B or C above, or in connection with the operation of such
properties, rights and interests, or in connection with the treating, handling,
storing, processing, transporting or marketing of oil, gas, other hydrocarbons,
or other minerals produced from (or allocated to) such properties, rights and
interests; and

     

    (F)           All
rights, estates, powers and privileges appurtenant to the foregoing rights,
interests and properties.

     

    TO HAVE
AND TO HOLD the Mortgaged Properties unto the Trustee, and its successors or
substitutes in this trust, and to its or their successors and assigns, in trust,
however, upon the terms, provisions and conditions herein set
forth.

     

    Section
1.2.            Grant of
Security Interest.  In order to
further secure the payment of the secured indebtedness hereinafter referred to
and the performance of the obligations, covenants, agreements, warranties, and
undertakings of Mortgagor hereinafter described, Mortgagor hereby grants to
Lender (as hereinafter defined) a security interest in the entire interest of
Mortgagor (whether now owned or hereafter acquired by operation of law or
otherwise) in and to:

     

    (a)           the
Mortgaged Properties, to the extent a security interest may be created
therein,

     

    (b)           all
oil, gas, other hydrocarbons, and other minerals produced from or allocated to
the Mortgaged Properties, and any products processed or obtained therefrom
(herein collectively called the "Production"),
together with all proceeds of Production (regardless of whether Production to
which such proceeds relate occurred on or before or after the date hereof),
together with all other as-extracted collateral related to the Mortgaged
Properties and together with all liens and security interests securing payment
of the proceeds of the Production, including, but not limited to, those liens
and security interests provided for under (i) statutes enacted in the
jurisdictions in which the Mortgaged Properties are located, or (ii) statutes
made applicable to the Mortgaged Properties under federal law (or some
combination of federal and state law);

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c)           without
limitation of any other provisions of this Section 1.2, all payments received in
lieu of production from the Mortgaged Properties (regardless of whether such
payments accrued, and/or the events which gave rise to such payments occurred,
on or before or after the date hereof), including, without limitation, "take or
pay" payments and similar payments, payments received in settlement of or
pursuant to a judgment rendered with respect to take or pay or similar
obligations or other obligations under a production sales contract, payments
received in buyout or buydown or other settlement of a production sales
contract, and payments received under a gas balancing or similar agreement as a
result of (or received otherwise in settlement of or pursuant to judgment
rendered with respect to) rights held by Mortgagor as a result of Mortgagor
(and/or its predecessors in title) taking or having taken less gas from lands
covered by a Mortgaged Property (or lands pooled or unitized therewith) than
their ownership of such Mortgaged Property would entitle them to receive (the
payments described in this subsection (c) being herein called "Payments
in Lieu of Production");

     

    (d)           all
equipment, inventory, improvements, fixtures, accessions, goods and other
personal property  of whatever nature now or hereafter located on or
used or held for use in connection with the Mortgaged Properties (or in
connection with the operation thereof or the treating, handling, storing,
processing, transporting, or marketing of Production), and all licenses and
permits of whatever nature now or hereafter used or held for use in connection
with the Mortgaged Properties (or in connection with the operation thereof or
the treating, handling, storing, processing, transporting, or marketing of
Production), and all renewals or replacements of the foregoing or substitutions
for the foregoing;

     

    (e)           all
accounts, receivables, contract rights, choses in action (i.e., rights to
enforce contracts or to bring claims thereunder), commercial tort claims and
other general intangibles of whatever nature (regardless of whether the same
arose and/or the events which gave rise to the same occurred, on or before or
after the date hereof related to the Mortgaged Properties, the operation thereof
(whether Mortgagor is operator or non-operator), or the treating, handling,
separation, stabilization, storing, processing, transporting, gathering, or
marketing of Production (including, without limitation, any of the same relating
to payment of proceeds of Production or to payment of amounts which could
constitute Payments in Lieu of Production);

     

    (f)           without
limitation of the generality of the foregoing, any rights and interests of
Mortgagor under any present or future hedge or swap agreements, cap, floor,
collar, exchange, forward or other hedge or protection agreements or
transactions relating to crude oil, natural gas or other hydrocarbons, or any
option with respect to any such agreement or transaction now existing or
hereafter entered into by or on behalf of Mortgagor;

     

    
      
        
        

      

      
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    (g)           all
geological, geophysical, engineering, accounting, title, legal, and other
technical or business data concerning the Mortgaged Properties, the Production
or any other item of Property (as hereinafter defined) which are now or
hereafter in the possession of Mortgagor or in which Mortgagor can otherwise
grant a security interest, and all books, files, records, magnetic media,
software and other forms of recording or obtaining access to such
data;

     

    (h)           all
money, documents, instruments, chattel paper (including without limitation,
electronic chattel paper and tangible chattel paper), rights to payment
evidenced by chattel paper, securities, accounts, payment intangibles, general
intangibles, letters of credit, letter-of-credit rights, supporting obligations
and rights to payment of money arising from or by virtue of any transaction
(regardless of whether such transaction occurred on or before or after the date
hereof) related to the Mortgaged Properties, the Production or any other item of
Property (all of the properties, rights and interests described in subsections
(a), (b), (c), (d), (e), (f) and (g) above and this subsection (h) being herein
sometimes collectively called the "Collateral");

     

    (i)           all
proceeds of the Collateral whether such proceeds or payments are goods, money,
documents, instruments, chattel paper, securities, accounts, payment
intangibles, general intangibles, fixtures, real property, personal property or
other assets (the Mortgaged Properties, the Collateral and the proceeds of the
Collateral being herein sometimes collectively called the "Property").

     

    Except as
otherwise expressly provided in this Mortgage, all terms in this Mortgage
relating to the Collateral and the grant of the foregoing security interest
which are defined in the Uniform Commercial Code, as adopted in the State of
Texas(as such term is defined herein) (the "UCC")
shall have the meanings assigned to them in Article 9 (or, absent definition in
Article 9, in any other Article) of the UCC, as those meanings may be amended,
revised or replaced from time to time.

     

    Section
1.3.            DIP Loan
Documents, Other Obligations.  This Mortgage is
made to secure and enforce the payment and performance of the following
obligations, indebtedness and liabilities:

     

    (a)           All
indebtedness and other obligations now or hereafter incurred or arising pursuant
to the provisions of that certain Debtor-In-Possession DIP Credit Agreement
dated as of May ____, 2009, among Mortgagor and Comanche Well Service
Corporation, a Texas corporation, each as a debtor and debtor-in-possession
under Chapter 11 of Title 11 of the Bankruptcy Code, and Red River Resources,
Inc., an Oklahoma corporation, as Lender (herein called "Lender"),
and all supplements thereto and amendments or modifications thereof, and all
agreements given in substitution therefor or in restatement, renewal or
extension thereof, in whole or in part (such Debtor-in-Possession Credit
Agreement as the same may from time to time be supplemented, amended or
modified, and all other agreements given in substitution therefor or in
restatement, renewal or extension thereof, in whole or in part, being herein
called the "DIP
Credit Agreement");

     

    
      
        
        

      

      
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    (b)           All
"Loans" (as defined in the DIP Credit Agreement) in an aggregate principal
amount of up to $1,500,000, bearing interest as provided in the DIP Credit
Agreement and having a final maturity date of March 31, 2010; and

     

    (c)           All
indebtedness and other obligations now or hereafter incurred or arising pursuant
to or permitted by the provisions of Interim Bankruptcy Court Order and the DIP
Credit Agreement, this Mortgage or any other instrument now or hereafter
evidencing, governing, guaranteeing or securing the "secured indebtedness" (as
hereinafter defined) or any part thereof or otherwise executed in connection
with any advance or loan evidenced or governed by the DIP Credit Agreement (the
DIP Credit Agreement, this Mortgage and such other instruments being herein
sometimes collectively called the "DIP Loan
Documents").

     

    Section
1.4.           Secured
Indebtedness.  The indebtedness
referred to in Section 1.3, and all renewals, extensions and modifications
thereof, and all substitutions therefor, in whole or in part, are herein
sometimes referred to as the "secured
indebtedness" or the "indebtedness
secured hereby".

     

    ARTICLE
II.

     

    REPRESENTATIONS, WARRANTIES
AND COVENANTS

     

    Section
2.1.           Mortgagor
represents, warrants, and covenants as follows:

     

    (a)           Title and Permitted
Encumbrances.  To the best of its knowledge, Mortgagor has, and
Mortgagor covenants to maintain, good and defensible title to the Property, free
and clear of all liens, security interests, and encumbrances except for
Permitted Encumbrances (as defined in the DIP Credit
Agreement).  Mortgagor will warrant and defend title to the Property,
subject as aforesaid, against the claims and demands of all persons claiming or
to claim the same or any part thereof.  With respect to each Mortgaged
Property, the ownership of Mortgagor in such Mortgaged Property does and will,
(i) with respect to each tract of land described in Exhibit A hereto
(whether described directly in such Exhibit A or
described by reference to another instrument) in connection with such Mortgaged
Property, (A) entitle Mortgagor to receive (subject to the terms and provisions
of this Mortgage) a decimal or percentage share of the oil, gas and other
hydrocarbons produced from, or allocated to, such tract equal to not less than
the decimal or percentage share set forth in Exhibit A in
connection with such tract under the words "Net Revenue Interest" (or
words of similar import), (B) cause Mortgagor to be obligated to bear a decimal
or percentage share of the cost of exploration, development and operation of
such tract of land not greater than the decimal or percentage share set forth in
Exhibit A in
connection with such tract under the words "Working Interest" (or words
of similar import).  With respect to each Property described in Exhibit A hereto
which is subject to a voluntary or involuntary pooling, unitization or
communitization agreement and/or order, the term "tract of land" as used in this
Section 2.1(a) shall mean the pooled, unitized or communitized area as an
entirety and shall not be deemed to refer to any individual tract committed to
said pooled, unitized or communitized area.  The above-described
shares of production which Mortgagor is entitled to receive and shares of
expenses which Mortgagor is obligated to bear are not and will not be subject to
change (other than changes which arise pursuant to non-consent provisions of
operating agreements described in Exhibit A in
connection with operations hereafter proposed), except, and only to the extent
that, such changes are expressly set out in Exhibit
A.

     

    
      
        
        

      

      
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    (b)           Leases and Contracts;
Performance of Obligations.  The oil, gas and/or mineral
leases, contracts, servitudes and other agreements forming a part of the
Property, to the extent the same cover or otherwise relate to the Property, are
in full force and effect, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the valuation of the Property as of the date
hereof.  Mortgagor agrees to maintain The oil, gas and/or mineral
leases, contracts, servitudes and other agreements forming a part of the
Property in full force and effect, to the extent commercially reasonable under
the circumstances.  All rents, royalties and other payments due and
payable under such leases, contracts, servitudes and other agreements, or under
the Permitted Encumbrances, or otherwise attendant to the ownership or operation
of the Property, have been, and will continue to be, properly and timely paid,
except to the extent failure to do so could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
valuation of the Property as of the date hereof.  Mortgagor is not in
default with respect to Mortgagor's obligations (and Mortgagor is not aware of
any default by any third party with respect to such third party's obligations)
under such leases, contracts, servitudes and other agreements, or under the
Permitted Encumbrances, or otherwise attendant to the ownership or operation of
any part of the Property, except where such default could not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the valuation of the Property as of the date hereof; Mortgagor will fulfill all
such obligations coming due in the future, to the extent commercially reasonable
under the circumstances.  Mortgagor is not currently accounting (and
will not hereafter agree to account) for any royalties, or overriding royalties
or other payments out of production, on a basis (other than delivery in kind)
less favorable to Mortgagor than proceeds received by Mortgagor (calculated at
the well) from sale of production, and there are no situations where Mortgagor
is aware that a contingent liability may exist to account on a basis less
favorable to Mortgagor than the basis on which Mortgagor is currently
accounting.

     

    
      
        
        

      

      
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    (c)           Sale of
Production.  No Mortgaged Property is or will become subject to
any contractual or other arrangement (i) whereby payment for Production is
or can be deferred for a substantial period after the month in which such
production is delivered (i.e., in the case of oil, not in excess of 60 days, and
in the case of gas, not in excess of 90 days) or (ii) whereby payments are
made to Mortgagor other than by checks, drafts, wire transfer advises or other
similar writings, instruments or communications for the immediate payment of
money.  Except for production sales contracts, processing agreements
or transportation agreements (or other agreements relating to the marketing of
Production), (i) no Mortgaged Property is or will become subject to any
contractual or other arrangement for the sale, processing or transportation of
Production (or otherwise related to the marketing of Production) which cannot be
cancelled on 120 days' (or less) notice and (ii) all contractual or other
arrangements for the sale, processing or transportation of
Production  (or otherwise related to the marketing of Production)
shall be bona fide arm's length transactions with third parties not affiliated
with Mortgagor and shall be at the best price (and on the best terms) available
(such price shall, in the case of Production sales which are subject to price
controls, be determined giving consideration to such fact).  Mortgagor
is presently receiving a price for all Production covered by a production sales
contract listed on Exhibit A as computed
in accordance with the terms of such contract, and is not having deliveries of
such Production curtailed substantially below such property's delivery
capacity.  Neither Mortgagor, nor any of its predecessors in title,
has received prepayments (including, but not limited to, payments for gas not
taken pursuant to "take or pay" or other similar arrangements) for any oil, gas
or other hydrocarbons produced or to be produced from the Mortgaged Properties
after the date hereof, and Mortgagor hereby covenants not to enter into any such
advance or prepayment arrangements whereby it accepts consideration for oil, gas
or other hydrocarbons not yet produced.  No Mortgaged Property is or
will become subject to any "take or pay" or other similar arrangement (i) which
can be satisfied in whole or in part by the production or transportation of gas
from other properties or (ii) as a result of which production from the Mortgaged
Properties may be required to be delivered to one or more third parties without
payment (or without full payment) therefor as a result of payments made, or
other actions taken, with respect to other properties.  There is no
Mortgaged Property with respect to which Mortgagor, or its predecessors in
title, has, prior to the date hereof, taken more ("overproduced"), or less
("underproduced"), gas from the lands covered thereby (or pooled or unitized
therewith) than its ownership interest in such Mortgaged Property would entitle
it to take plus or minus five percent (5%) in the aggregate with respect to all
Mortgaged Properties.  No Mortgaged Property is or will become subject
to a gas balancing arrangement under which one or more third parties may take a
portion of the production attributable to such Mortgaged Property without
payment (or without full payment) therefor as a result of production having been
taken from, or as a result of other actions or inactions with respect to, other
properties.  No Mortgaged Property is subject at the present time to
any regulatory refund obligation and, to Mortgagor's knowledge, no facts exist
which might cause the same to be imposed.

     

    (d)           Condition of Personal
Property.  The equipment, inventory, improvements, fixtures,
goods  and other tangible personal property forming a part of the
Property are and will remain in good repair and condition and are and will be
adequate for the normal operation of the Property in accordance with prudent
industry standards; all of such Property is, and will remain, located on the
Mortgaged Properties, except for that portion thereof which is or shall be
located elsewhere (including that usually located on the Mortgaged Properties
but temporarily located elsewhere) in the course of the normal operation of the
Property, or which is hereafter sold or otherwise disposed of as permitted under
the DIP Credit Agreement.

     

    
      
        
        

      

      
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    (e)           Operation of Mortgaged
Properties.  The Mortgaged Properties (and properties unitized
therewith) are being (and, to the extent the same could adversely affect the
ownership or operation of the Mortgaged Properties after the date hereof, have
in the past been), and hereafter will be, maintained, operated and developed in
a good and workmanlike manner, in accordance with prudent industry standards and
in conformity with all applicable laws and all rules, regulations and orders of
all duly constituted authorities having jurisdiction and in conformity with all
oil, gas and/or other mineral leases and other contracts and agreements forming
a part of the Property and in conformity with the Permitted Encumbrances, except
for such failures as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the Mortgaged Properties;
specifically in this connection, (i) no Mortgaged Property is subject to having
allowable production after the date hereof reduced below the full and regular
allowable (including the maximum permissible tolerance) because of any
overproduction (whether or not the same was permissible at the time) prior to
the date hereof and (ii) none of the wells located on the Mortgaged Properties
(or properties unitized therewith) are or will be deviated from the vertical
more than the maximum permitted by applicable laws, regulations, rules and
orders, and such wells are, and will remain, bottomed under and producing from,
with the well bores wholly within, the Mortgaged Properties (or, in the case of
wells located on properties unitized therewith, such unitized
properties).  There are no wells being drilled, deepened, plugged back
or reworked, and no other operations are being conducted for which consent is
required under the applicable operating agreement (or which are other than
normal operation of existing wells on the Mortgaged Properties); there are no
proposals currently outstanding (whether made by Mortgagor or by any other
party) to drill, deepen, plug back, or rework wells, or to conduct any such
other operations, or to abandon any wells on the Mortgaged Properties (nor are
there any such proposals which have been approved either by Mortgagor or any
other party, with respect to which the operations covered thereby have not been
commenced).  Mortgagor has, and will have in the future, all
governmental licenses and permits necessary or appropriate to own and operate
the Property; and Mortgagor has not received notice of any violations in respect
of any such licenses or permits.

     

    (f)           Sale or
Disposal.  Mortgagor will not, without the prior written
consent of Lender, sell, exchange, lease, transfer, or otherwise dispose of any
part of, or interest in, the Property other than (i) sales, transfers and
other dispositions of machinery, equipment and other personal property and
fixtures made in connection with a release, surrender or abandonment (to which
Lender has given its prior written consent) of a lease, (ii) sales,
transfers and other dispositions of machinery, equipment and other personal
property and fixtures in connection with the abandonment (to which Lender has
given its prior written consent) of a well, (iii) sales, transfers and
other dispositions of machinery, equipment and other personal property and
fixtures which are (A) obsolete for their intended purpose and disposed of in
the ordinary course of business or (B) replaced by articles of at least equal
suitability and value owned by Mortgagor free and clear of all liens except this
Mortgage and the Permitted Encumbrances, and (iv) sales of Production which
are made in the ordinary course of business and in compliance with Section
2.1(c) hereof; provided that nothing in clause (iv) shall be construed as
limiting Lender's rights under Article III of this
Mortgage.  Mortgagor shall account fully and faithfully for and, if
Lender so elects, shall promptly pay or turn over to Lender the proceeds in
whatever form received from disposition in any manner of any of the
Property.  Mortgagor shall at all times keep the Property and its
proceeds separate and distinct from other property of Mortgagor and shall keep
accurate and complete records of the Property and its proceeds.

     

    
      
        
        

      

      
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    (g)           Ad Valorem and Severance
Taxes.  Mortgagor has paid and discharged, and will continue to
pay and discharge, all ad valorem taxes assessed against the Property or any
part thereof and all production, severance and other taxes assessed against, or
measured by, the Production or the value, or proceeds, of the
Production.

     

    (h)           Suits and
Claims.  Except as disclosed in the DIP Credit Agreement, there
are no suits, actions, claims, investigations, inquiries, proceedings or demands
pending (or, to Mortgagor's knowledge, threatened) which affect the Property
(including, without limitation, any which challenge or otherwise pertain to
Mortgagor's title to the Property).

     

    (i)          
 Environmental.

     

    (A)           Current
Status.  The Property and Mortgagor are not in violation of
Applicable Environmental Laws (below defined), or subject to any existing,
pending or, to the knowledge of Mortgagor, threatened investigation or inquiry
by any governmental authority or any other person under or with respect to
Applicable Environmental Laws, or subject to any remedial obligations under
Applicable Environmental Laws, and are in compliance with all permits and
licenses required under Applicable Environmental Laws which the failure to
comply with could reasonably be expected to have a Material Adverse Effect (as
defined in the DIP Credit Agreement), and this representation will continue to
be true and correct following disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances, if any,
pertaining to the Property and Mortgagor.  "Applicable
Environmental Laws" shall mean any applicable laws, orders, rules, or
regulations (including, without limitation, the common law) pertaining to
safety, health or the environment, as such laws, orders, rules or regulations
now exist or are hereafter enacted and/or amended (Applicable Environmental Laws
shall include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 (as amended, hereinafter called "CERCLA"),
the Resource Conservation and Recovery Act of 1976, as amended by the Used Oil
Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended, hereinafter called
"RCRA")
and applicable state and local law).  Mortgagor has taken all
reasonable steps to determine and, to its knowledge, no hazardous substances or
solid wastes have been disposed of or otherwise released at, into, upon or under
the Property in violation of Applicable Environmental Laws.  The use
which Mortgagor makes and intends to make of the Property will not result in the
use, treatment, storage or disposal or other release of any hazardous substance
or solid waste at, into, upon or under the Property, except such usage, and
temporary storage in anticipation of usage, as is in the ordinary course of
business and in compliance with Applicable Environmental Laws.  The
terms "hazardous
substance" and "release"
as used in this Mortgage shall have the meanings specified in CERCLA, and the
terms "solid
waste" and "disposal"
(or "disposed")
shall have the meanings specified in RCRA.

     

    
      
        
        

      

      
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    (B)           Future
Performance.  Mortgagor will not cause or permit the Property
or Mortgagor to be in violation of, or do anything or permit anything to be done
which will subject the Property  to any remedial obligations under, or
result in noncompliance with applicable permits and licenses under, any
Applicable Environmental Laws, assuming disclosure to the applicable
governmental authorities of all relevant facts, conditions and circumstances, if
any, pertaining to the Property which would reasonably be expected to have a
Material Adverse Effect.  Mortgagor will promptly notify Lender in
writing of any existing, pending or, to the knowledge of Mortgagor, threatened
investigation, claim, suit or inquiry by any governmental authority or any
person in connection with any Applicable Environmental
Laws.  Mortgagor will take all commercially reasonable steps necessary
to determine that no hazardous substances or solid wastes have been disposed of
or otherwise released on or onto the Property or any property adjacent to the
Property.  Mortgagor will not cause or permit the disposal or other
release of any hazardous substance or solid waste at, into, upon or under the
Property or any property adjacent to the Property in violation of Applicable
Environmental Laws and covenants and agrees to keep or cause the Property to be
kept free of any hazardous substance or solid waste (except such use, and
temporary storage in anticipation of use, as is required in the ordinary course
of business, all while in compliance with Applicable Environmental Laws), and to
remove the same (or if removal is prohibited by law, to take whatever action is
required by law) promptly upon discovery at its sole expense.

     

    (j)           Not Abandon Wells;
Participate in Operations.  Mortgagor will not, without prior
written consent of Lender, abandon, or consent to the abandonment of, any well
producing from the Mortgaged Properties (or properties unitized therewith) so
long as such well is capable (or is subject to being made capable through
drilling, reworking or other operations which it would be commercially feasible
to conduct) of producing oil, gas, or other hydrocarbons or other minerals in
commercial quantities (as determined without considering the effect of this
Mortgage).  Mortgagor will not, without the prior written consent of
Lender, elect not to participate in a proposed operation on the Mortgaged
Properties where the effect of such election would be the forfeiture either
temporarily (i.e. until a certain sum of money is received out of the forfeited
interest) or permanently of any interest in the Mortgaged
Properties.

     

    
      
        
        

      

      
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    (k)           Defense of
Mortgage.  If the validity or priority of this Mortgage or of
any rights, titles, liens or security interests created or evidenced hereby with
respect to the Property or any part thereof or the title of Mortgagor to the
Property shall be endangered or questioned or shall be attacked directly or
indirectly or if any legal proceedings are instituted against Mortgagor with
respect thereto, Mortgagor will give prompt written notice thereof to Lender and
at Mortgagor's own cost and expense, to the extent commercially reasonable under
the circumstances, will diligently endeavor to cure any defect that may be
developed or claimed, and will take all necessary and proper steps for the
defense of such legal proceedings, including, but not limited to, the employment
of counsel, the prosecution or defense of litigation and the release or
discharge of all adverse claims.

     

    (l)           Fees and Expenses;
Indemnity.   Mortgagor will reimburse Trustee and Lender
(for purposes of this paragraph, the terms "Trustee"
and "Lender"
shall include the directors, officers, partners, employees and agents of Trustee
or Lender and any persons or entities owned or controlled by or affiliated with
Trustee or Lender) for all expenditures, including reasonable attorneys' fees
and expenses, incurred or expended in connection with (i) the breach by
Mortgagor of any covenant, agreement or condition contained herein or in any
other DIP Loan Document, (ii) the exercise of any rights and remedies
hereunder or under any other DIP Loan Document, and (iii) the protection of the
Property and/or liens and security interests therein.  Mortgagor will
indemnify and hold harmless Trustee and Lender from and against (and will
reimburse Trustee and Lender for) all claims, demands, liabilities, losses,
damages (including without limitation consequential damages), causes of action,
judgments, penalties, costs and expenses (including without limitation
reasonable attorneys' fees and expenses) which may be imposed upon, asserted
against or incurred or paid by either of them on account of, in connection with,
or arising out of (A) any bodily injury or death or natural resource, human
health or property damage occurring in, at, into, under or upon or in the
vicinity of the Property through any cause whatsoever, (B) any act
performed or omitted to be performed hereunder or the breach of any
representation or warranty herein, (C) the exercise of any rights and
remedies hereunder or under any other DIP Loan Document, (D) any
transaction, act, omission, event or circumstance arising out of or in any way
connected with the Property or with this Mortgage or any other DIP Loan
Document, (E) any violation on or prior to the Release Date (as hereinafter
defined) of any Applicable Environmental Law, (F) any act, omission, event
or circumstance existing or occurring on or prior to the Release Date (including
without limitation the presence on or under the Property  or release
at, into, upon, under or from the Property of hazardous substances or solid
wastes disposed of or otherwise released) resulting from or in connection with
the ownership, construction, occupancy, operation, use and/or maintenance of the
Property, regardless of whether the act, omission, event or circumstance
constituted a violation of any Applicable Environmental Law at the time of its
existence or occurrence, and (G) any and all claims or proceedings (whether
brought by private party or governmental agencies) for human health, bodily
injury, property damage, abatement or remediation, environmental damage,
cleanup, mitigation, removal, natural resource damage or impairment or any other
injury or damage resulting from or relating to any hazardous or toxic substance,
solid waste or contaminated material located upon or migrating into, from or
through the Property (whether or not the release of such materials was caused by
Mortgagor, a tenant or subtenant or a prior owner or tenant or subtenant on the
Property and whether or not the alleged liability is attributable to the use,
treatment, handling, storage, generation, transportation, removal or disposal of
such substance, waste or material or the mere presence of such substance, waste
or material on or under the Property), which the Lender and/or Trustee may have
liability with respect to due to the making of the loan or loans evidenced by
the DIP Credit Agreement, the granting of this Mortgage, the exercise of any
rights under the DIP Loan Documents, or otherwise.  The "Release
Date" as used herein shall mean the earlier of the following two
dates:  (i) the date on which the indebtedness and obligations
secured hereby have been paid and performed in full and this Mortgage has been
released of record, or (ii) the date on which the lien of this Mortgage is
foreclosed or a deed in lieu of such foreclosure is fully effective and
recorded.  Such indemnities shall not apply to any particular
indemnified party (but shall apply to the other indemnified parties) to the
extent the subject of the indemnification is caused by or arises out of the
negligence, willful misconduct or bad faith of such particular indemnified
party.  Any amount to be paid hereunder by Mortgagor to Lender and/or
Trustee shall be a demand obligation owing by Mortgagor to Lender and/or Trustee
and shall be subject to and covered by the provisions of Section 2.3
hereof.

     

    
      
        
        

      

      
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    (m)           Insurance.  Mortgagor
will carry insurance as provided in the DIP Credit Agreement.  In the
event of any loss under any insurance policies so carried by Mortgagor, Lender
shall have the right (but not the obligation) to make proof of loss and collect
the same, and all amounts so received shall be applied toward costs, charges and
expenses (including reasonable attorneys' fees), if any, incurred in the
collection thereof, then to the payment, in the order determined by Lender in
its own discretion, of the secured indebtedness, and any balance remaining shall
be subject to the order of Mortgagor.  In the event of foreclosure of
this Mortgage, or other transfer of title to the Property in extinguishment in
whole or in part of the secured indebtedness, all right, title and interest of
Mortgagor in and to such policies then in force concerning the Property and all
proceeds payable thereunder shall thereupon vest in the purchaser at such
foreclosure or other transferee in the event of such other transfer of
title.

     

    (n)           Further
Assurances.  Mortgagor will, on request of Lender, (i) promptly
correct any defect, error or omission which may be discovered in the contents of
this Mortgage, or in any other DIP Loan Document, or in the execution or
acknowledgment of this Mortgage or any other DIP Loan Document; (ii) execute,
acknowledge, deliver and record and/or file such further instruments (including,
without limitation, further deeds of trust, mortgages, security agreements,
financing statements, continuation statements, and assignments of production,
accounts, funds, contract rights, general intangibles, and proceeds) and do such
further acts as may be necessary, desirable or proper to carry out more
effectively the purposes of this Mortgage and the other DIP Loan Documents and
to more fully identify and subject to the liens and security interests hereof
any property intended to be covered hereby, including specifically, but without
limitation, any renewals, additions, substitutions, replacements, or
appurtenances to the Property; and (iii) execute, acknowledge, deliver, and file
and/or record any document or instrument (including specifically any financing
statement) desired by Lender to protect the lien or the security interest
hereunder against the rights or interests of third persons.  Mortgagor
shall pay all costs connected with any of the foregoing.

     

    
      
        
        

      

      
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    Section
2.2.           Compliance
by Operator.  As to any part
of the Mortgaged Properties which is not a working interest, Mortgagor agrees to
take all such action and to exercise all rights and remedies as are reasonably
available to Mortgagor to cause the owner or owners of the working interest in
such properties to comply with the covenants and agreements contained herein;
and as to any part of the Mortgaged Properties which is a working interest but
which is operated by a party other than Mortgagor, Mortgagor agrees to take all
such action and to exercise all rights and remedies as are reasonably available
to Mortgagor (including, but not limited to, all rights under any operating
agreement) to cause the party who is the operator of such property to comply
with the covenants and agreements contained herein.

     

    Section
2.3.           Performance
on Mortgagor's Behalf.  Mortgagor agrees
that, if Mortgagor fails to perform any act or to take any action which
hereunder Mortgagor is required to perform or take, or to pay any money which
hereunder Mortgagor is required to pay, Lender, in Mortgagor's name or its own
name, may, but shall not be obligated to, perform or cause to be performed such
act or take such action or pay such money, and any expenses so incurred by
Lender and any money so paid by Lender shall be a demand obligation owing by
Mortgagor to Lender (which obligation Mortgagor hereby expressly promises to
pay) and Lender, upon making such payment, shall be subrogated to all of the
rights of the person, corporation or body politic receiving such
payment.  Each amount due and owing by Mortgagor to Lender pursuant to
this Mortgage shall bear interest each day, from the date of such expenditure or
payment until paid, the Post-Default Rate (as defined in the DIP Credit
Agreement) all such amounts, together with such interest thereon, shall be a
part of the secured indebtedness and shall be secured by this
Mortgage.

     

    ARTICLE
III.

     

    ASSIGNMENT OF PRODUCTION,
ACCOUNTS, AND PROCEEDS

     

    Section
3.1.           Assignment
of Production.  Effective as of
the date hereof, Mortgagor does hereby absolutely and unconditionally assign and
transfer to Lender all Production which accrues to Mortgagor's interest in the
Mortgaged Properties, all proceeds of such Production and all Payments in Lieu
of Production (herein collectively referred to as the "Production
Proceeds"), together with the immediate and continuing right to collect
and receive such Production Proceeds; provided until the occurrence of a default
Mortgagor shall continue to have the right to collect and receive Production
Proceeds.  Mortgagor shall never require Lender to institute legal
proceedings of any kind whatsoever to enforce the provisions of this assignment
and transfer and hereby, to the extent legally permitted, waives any rights to
require such proceedings.  Mortgagor directs and instructs any and all
purchasers of any Production, upon notice from Lender, to pay to Lender all of
the Production Proceeds accruing to Mortgagor's interest after the occurrence of
a default and until such time as such purchasers have been furnished with
evidence that all secured indebtedness has been paid and that this Mortgage has
been released.  Mortgagor agrees that no purchasers of the Production
shall have any responsibility for the application of any funds paid to Lender or
any other responsibility or liability for any funds paid to Lender.

     

    
      
        
        

      

      
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    Section
3.2.           Effectuating
Payment of Production Proceeds to Lender.  In furtherance
of the assignment and transfer in Section 3.1, Mortgagor agrees to execute and
deliver any and all transfer orders, division orders and other instruments that
may be requested by Lender or that may be required by any purchaser of any
Production for the purpose of effectuating payment of the Production Proceeds to
Lender.  If under any existing sales agreements, other than division
orders or transfer orders, any Production Proceeds paid to Mortgagor are held in
trust for the Lender are required to be paid by the purchaser to Mortgagor so
that under such existing agreements payment cannot be made of such Production
Proceeds to Lender, Mortgagor's interest in all Production Proceeds under such
sales agreements and in all other Production Proceeds which for any reason may
be paid to Mortgagor shall, when received by Mortgagor, constitute trust funds
in Mortgagor's hands and shall be immediately paid over to Lender after the
occurrence of a default.  Without limitation upon any of the
foregoing, Mortgagor hereby constitutes and appoints Lender as Mortgagor's
special attorney-in-fact (with full power of substitution, either generally or
for such periods or purposes as Lender may from time to time prescribe) in the
name, place and stead of Mortgagor to do any and every act and exercise any and
every power that Mortgagor might or could do or exercise personally with respect
to all Production and Production Proceeds (the same having been assigned by
Mortgagor to Lender pursuant to Section 3.1 hereof), expressly inclusive, but
not limited to, the right, power and authority to:

     

    (a)           Execute
and deliver in the name of Mortgagor any and all transfer orders, division
orders, letters in lieu of transfer orders, indemnifications, certificates and
other instruments of every nature that may be requested or required by any
purchaser of Production from any of the Mortgaged Properties for the purposes of
effectuating payment of the Production Proceeds to Lender or which Lender may
otherwise deem necessary or appropriate to effect the intent and purposes of the
assignment contained in Section 3.1; and

     

    (b)           If
under any product sales agreements other than division orders or transfer
orders, any Production Proceeds are required to be paid by the purchaser to
Mortgagor so that under such existing agreements payment cannot be made of such
Production Proceeds to Lender, to make, execute and enter into such sales
agreements or other agreements as are necessary to direct Production Proceeds to
be payable to Lender;

     

    
      
        
        

      

      
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    giving
and granting unto said attorney-in-fact full power and authority to do and
perform any and every act and thing whatsoever necessary and requisite to be
done as fully and to all intents and purposes, as Mortgagor might or could do if
personally present, and Mortgagor shall be bound thereby as fully and
effectively as if Mortgagor had personally executed, acknowledged and delivered
any of the foregoing certificates or documents.  The powers and
authorities herein conferred upon Lender may be exercised by Lender through any
person who, at the time of the execution of the particular instrument, is an
officer of Lender.  The power of attorney herein conferred is granted
for valuable consideration and hence is coupled with an interest and is
irrevocable so long as the secured indebtedness, or any part thereof, shall
remain unpaid.  All persons dealing with Lender or any substitute
shall be fully protected in treating the powers and authorities conferred by
this paragraph as continuing in full force and effect until advised by Lender
that all the secured indebtedness is fully and finally paid.  Lender
may, but shall not be obligated to, take such action as it deems appropriate in
an effort to collect the Production Proceeds and any reasonable expenses
(including reasonable attorney's fees) so incurred by Lender shall be a demand
obligation of Mortgagor and shall be part of the secured indebtedness, and shall
bear interest each day, from the date of such expenditure or payment until paid,
at the rate described in Section 2.3 hereof.

     

    Section
3.3.            Change
of Purchaser.  To the extent a default has occurred hereunder
and is continuing, should any person now or hereafter purchasing or taking
Production fail to make payment promptly to Lender of the Production Proceeds,
Lender shall, subject to then-existing contractual prohibitions, have the right
to make, or to require Mortgagor to make, a change of purchaser, and the right
to designate or approve the new purchaser, and Lender shall have no liability or
responsibility in connection therewith so long as ordinary care is used in
making such designation.

     

    Section
3.4.            Application
of Production Proceeds.  The Production
Proceeds received by Lender during each calendar month shall on the first
business day of the next succeeding calendar month be applied by Lender as
follows:

     

    FIRST, to the payment
of all secured indebtedness then due and payable, in such manner and order as
Lender deems advisable;

     

    SECOND, to the
prepayment of the remainder of the secured indebtedness in such manner and order
and to such extent as Lender deems advisable; and

     

    THIRD, the remainder,
if any, of the Production Proceeds shall be paid over to Mortgagor or to
Mortgagor's order or to such other parties as may be entitled thereto by
law.

     

    After a
default hereunder has occurred, all Production Proceeds from time to time in the
hands of Lender may be applied by it toward the payment of all secured
indebtedness (principal, interest, attorneys' fees and other fees and expenses)
at such times and in such manner and order and to such extent as Lender deems
advisable.

     

    
      
        
        

      

      
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    Section
3.5.            Release
From Liability; Indemnification.  Lender and its
successors and assigns are hereby released and absolved from all liability for
failure to enforce collection of the Production Proceeds and from all other
responsibility in connection therewith, except the responsibility of each to
account to Mortgagor for funds actually received by each.  Mortgagor
agrees to indemnify and hold harmless Lender (for purposes of this paragraph,
the term "Lender"
shall include the directors, officers, partners, employees and agents of Lender
and any persons or entities owned or controlled by or affiliated with Lender)
from and against all claims, demands, liabilities, losses, damages (including
without limitation consequential damages), causes of action, judgments,
penalties, costs and expenses (including without limitation reasonable
attorneys' fees and expenses) imposed upon, asserted against or incurred or paid
by Lender by reason of the assertion that Lender received, either before or
after payment in full of the secured indebtedness, funds from the production of
oil, gas, other hydrocarbons or other minerals claimed by third persons (and/or
funds attributable to sales of production which (i) were made at prices in
excess of the maximum price permitted by applicable law or (ii) were otherwise
made in violation of laws, rules, regulations and/or orders governing such
sales).    Such indemnities shall not apply to any
particular indemnified party (but shall apply to the other indemnified parties)
to the extent the subject of the indemnification is caused by or arises out of
the negligence, willful misconduct or bad faith of such particular indemnified
party.

     

    Section
3.6.            Mortgagor's
Absolute Obligation to Pay.  Nothing herein
contained shall detract from or limit the obligations of Mortgagor to make
prompt payment of the any and all secured indebtedness, at the time and in the
manner provided herein and in the DIP Loan Documents, regardless of whether the
Production and Production Proceeds herein assigned are sufficient to pay same,
and the rights under this Article III shall be cumulative of all other rights
under the DIP Loan Documents.

     

    ARTICLE
IV.

     

    REMEDIES UPON
DEFAULT

     

    Section
4.1.             Default.  The term "default"
as used in this Mortgage shall mean the occurrence of an "Event of Default" as
defined in the DIP Credit Agreement.

     

    Section
4.2.             Acceleration
of Secured Indebtedness.  The secured
indebtedness may be accelerated as provided in the DIP Credit
Agreement.

     

    Section
4.3.             Pre-Foreclosure
Remedies.  Upon the
occurrence of a default hereunder, Lender is authorized, prior or subsequent to
the institution of any foreclosure proceedings, and to the extent allowed by
applicable law and any required Bankruptcy Court order, to enter upon the
Property, or any part thereof, and to take possession of the Property and all
books and records relating thereto, and to exercise without interference from
Mortgagor any and all rights which Mortgagor has with respect to the management,
possession, operation, protection or preservation of the Property.  If
necessary to obtain the possession provided for above, Lender may invoke any and
all remedies to dispossess Mortgagor, including, but not limited to, summary
proceeding or restraining order.  Mortgagor agrees to peacefully
surrender possession of the Property upon default, if requested.  All
costs, expenses and liabilities of every character incurred by Lender in
managing, operating, maintaining, protecting or preserving the Property shall
constitute a demand obligation (which obligation Mortgagor hereby expressly
promises to pay) owing by Mortgagor to Lender and shall bear interest from date
of expenditure until paid at the rate described in Section 2.3 hereof, all of
which shall constitute a portion of the secured indebtedness and shall be
secured by this Mortgage and by any other instrument securing the secured
indebtedness.

     

    
      
        
        

      

      
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    Section
4.4.             Foreclosure.

     

    (a)           Upon
the occurrence of a default, Trustee is authorized and empowered and it shall be
Trustee's special duty at the request of Lender to sell the Mortgaged
Properties, or any part thereof, as an entirety or in parcels as Lender may
elect, at such place or places and otherwise in the manner and upon such notice
as may be required by law or, in the absence of any such requirement, as Trustee
may deem appropriate.  If Trustee shall have given notice of sale
hereunder, any successor or substitute Trustee thereafter appointed may complete
the sale and the conveyance of the property pursuant thereto as if such notice
had been given by the successor or substitute Trustee conducting the
sale.  Cumulative of the foregoing and the other provisions of this
Section 4.4, sales of all or any part of the Mortgaged Properties shall be
conducted at the courthouse of any county (whether or not the counties in which
the Mortgaged Properties are located are contiguous) in the State of Texas in
which any part of the Mortgaged Properties is situated, at public venue to the
highest bidder for cash between the hours of ten o'clock a.m. and four o'clock
p.m. on the first Tuesday in any month or at such other place, time and date as
provided by the statutes of the State of Texas then in force governing sales of
real estate under powers conferred by deed of trust, after having given notice
of such sale in accordance with such statutes.

     

    A POWER
OF SALE HAS BEEN GRANTED IN THIS MORTGAGE.  A POWER
OF SALE MAY ALLOW TRUSTEE TO TAKE THE MORTGAGED PROPERTIES AND SELL THEM WITHOUT
GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY MORTGAGOR UNDER THIS
MORTGAGE.

     

    (b)           Upon
the occurrence of a default, Lender may exercise its rights of enforcement with
respect to the Collateral under the UCC of Texas.  Cumulative of the
foregoing and the other provisions of this Section 4.4:

     

    (i)           
to the extent permitted by law, Lender may enter upon the Mortgaged Properties
or otherwise upon Mortgagor's premises to take possession of, assemble and
collect the Collateral or to render it unusable;

     

    (ii)           Lender
may require Mortgagor to assemble the Collateral and make it available at a
place Lender designates which is mutually convenient to allow Lender to take
possession or dispose of the Collateral;

     

    (iii)          written
notice mailed to Mortgagor as provided herein at least ten (10) days prior to
the date of public sale of the Collateral or prior to the date after which
private sale of the Collateral will be made shall constitute reasonable notice;
and

     

    
      
        
        

      

      
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    (iv)          in
the event of a foreclosure of the liens and/or security interests evidenced
hereby, the Collateral, or any part thereof, and the Mortgaged Properties, or
any part thereof, may, at the option of Lender, be sold, as a whole or in parts,
together or separately (including, without limitation, where a portion of the
Mortgaged Properties is sold, the Collateral related thereto may be sold in
connection therewith);

     

    (v)           the
expenses of sale provided for in Section 4.5 shall include the reasonable
expenses of retaking the Collateral, or any part thereof, holding the same and
preparing the same for sale or other disposition; and

     

    (vi)          should,
under this subsection, the Collateral be disposed of other than by sale, any
proceeds of such disposition shall be treated under Section 4.5 as if the same
were sales proceeds.

     

    (c)           To
the extent permitted by applicable law, the sale hereunder of less than the
whole of the Property shall not exhaust the powers of sale herein granted or the
right to judicial foreclosure, and successive sale or sales may be made until
the whole of the Property shall be sold, and, if the proceeds of such sale of
less than the whole of the Property shall be less than the aggregate of the
indebtedness secured hereby and the expense of conducting such sale, this
Mortgage and the liens and security interests hereof shall remain in full force
and effect as to the unsold portion of the Property just as though no sale had
been made; provided, however, that Mortgagor shall never have any right to
require the sale of less than the whole of the Property.  In the event
any sale hereunder is not completed or is defective in the opinion of Lender,
such sale shall not exhaust the powers of sale hereunder or the right to
judicial foreclosure, and Lender shall have the right to cause a subsequent sale
or sales to be made.  Any sale may be adjourned by announcement at the
time and place appointed for such sale without further notice except as may be
required by law.  The Trustee or his successor or substitute, and the
Lender acting under power of sale, respectively, may appoint or delegate any one
or more persons as agent to perform any act or acts necessary or incident to any
sale held by it (including, without limitation, the posting of notices and the
conduct of sale), and such appointment need not be in writing or
recorded.  Any and all statements of fact or other recitals made in
any deed or deeds, or other instruments of transfer, given in connection with a
sale as to nonpayment of the secured indebtedness or as to the occurrence of any
default, or as to all of the secured indebtedness having been declared to be due
and payable, or as to the request to sell, or as to notice of time, place and
terms of sale and the properties to be sold having been duly given, or, with
respect to any sale by the Trustee, or any successor or substitute trustee, as
to the refusal, failure or inability to act of Trustee or any substitute or
successor trustee or the appointment of any substitute or successor trustee, or
as to any act or thing having been duly done, shall be taken as prima facie
evidence of the truth of the facts so stated and recited.  With
respect to any sale held in foreclosure of the liens and/or security interests
covered hereby, it shall not be necessary for the Trustee, Lender, any public
officer acting under execution or order of the court or any other party to have
physically present or constructively in his/her or its possession, either at the
time of or prior to such sale, the Property or any part thereof.

     

    
      
        
        

      

      
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    Section
4.5.            Proceeds
of Foreclosure.  The proceeds of any sale held in foreclosure
of the liens and/or security interests evidenced hereby shall be applied as
provided in the DIP Credit Agreement and, to the extent not so provided, as set
forth in Section 3.4 hereof.  Such proceeds may be applied to (among
other items of secured indebtedness) the payment of all necessary costs and
expenses incident to such foreclosure sale, including but not limited to all
court costs and charges of every character in the event foreclosed by
suit.

     

    Section
4.6.            Lender
as Purchaser.  Any party
constituting Lender shall have the right to become the purchaser at any sale
held in foreclosure of the liens and/or security interests evidenced hereby, and
any party constituting Lender which is purchasing at any such sale shall have
the right to credit upon the amount of the bid made therefor, to the extent
necessary to satisfy such bid, the secured indebtedness owing to such party, or
if such party holds less than all of such indebtedness, the pro rata part
thereof owing to such party.

     

    Section
4.7.            Foreclosure
as to Matured Debt.  Upon the
occurrence of a default, Lender shall have the right to proceed with foreclosure
of the liens and/or security interests evidenced hereby without declaring the
entire secured indebtedness due, and in such event, any such foreclosure sale
shall not in any manner affect the unmatured part of the secured indebtedness,
but as to such unmatured part, this Mortgage shall remain in full force and
effect just as though no sale had been made.  The proceeds of such
sale shall be applied as provided in Section 4.5.  Several sales may
be made hereunder without exhausting the right of sale for any unmatured part of
the secured indebtedness.

     

    Section
4.8.            Remedies
Cumulative.  All remedies
herein provided for are cumulative of each other and of all other remedies
existing at law or in equity and are cumulative of any and all other remedies
provided for in any other DIP Loan Document, and, in addition to the remedies
herein provided, there shall continue to be available all such other remedies as
may now or hereafter exist at law or in equity for the collection of the secured
indebtedness and the enforcement of the covenants herein and the foreclosure of
the liens and/or security interests evidenced hereby, and the resort to any
remedy provided for hereunder or under any such other DIP Loan Document or
provided for by law shall not prevent the concurrent or subsequent employment of
any other appropriate remedy or remedies. This Mortgage, the Interim Bankruptcy
Court Order and any final order relating thereto and the other DIP Loan
Documents supplement each other, and the grants, priorities, rights and remedies
of Lender hereunder and thereunder are cumulative.

     

    Section
4.9.             Discretion
as to Security.  Lender may
resort to any security given by this Mortgage or to any other security now
existing or hereafter given to secure the payment of the secured indebtedness,
in whole or in part, and in such portions and in such order as may seem best to
Lender in its sole and absolute discretion, and any such action shall not in any
way be considered as a waiver of any of the rights, benefits, liens or security
interests evidenced by this Mortgage.

     

    
      
        
        

      

      
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    Section
4.10.           Mortgagor's
Waiver of Certain Rights.  To the full
extent Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any time
insist upon, plead, claim or take the benefit or advantage of any law now or
hereafter in force providing for any appraisement, valuation, stay, extension or
redemption, and Mortgagor, for Mortgagor, Mortgagor's representatives,
successors and assigns, and for any and all persons ever claiming any interest
in the Property, to the extent permitted by applicable law, hereby waives and
releases all rights of appraisement, valuation, stay of execution, redemption,
notice of intention to mature or declare due the whole of the secured
indebtedness, notice of election to mature or declare due the whole of the
secured indebtedness and all rights to a marshaling of assets of Mortgagor,
including the Property, or to a sale in inverse order of alienation in the event
of foreclosure of the liens and/or security interests hereby
created.  Mortgagor shall not have or assert any right under any
statute or rule of law pertaining to the marshaling of assets, sale in inverse
order of alienation, the exemption of homestead, the administration of estates
of decedents, or other matters whatever to defeat, reduce or affect the right
under the terms of this Mortgage to a sale of the Property for the collection of
the secured indebtedness without any prior or different resort for collection,
or the right under the terms of this Mortgage to the payment of the secured
indebtedness out of the proceeds of sale of the Property in preference to every
other claimant whatever.

     

    ARTICLE
V.

     

    MISCELLANEOUS

     

    Section
5.1.              Scope of
Mortgage.  This Mortgage is
a deed of trust and mortgage of both real and personal property, a security
agreement, a financing statement and an assignment, and also covers proceeds,
fixtures as-extracted collateral and all rights as set out herein.

     

    Section
5.2.             Effective
as a Financing Statement.  This Mortgage,
among other things, covers goods which are or are to become fixtures related to
the real property described herein, and covers as-extracted collateral related
to the real property described herein.  This Mortgage shall be
effective as a financing statement (i) filed as a fixture filing with respect to
all fixtures included within the Property, (ii) covering as-extracted collateral
with respect to all as-extracted collateral included within the Property
(including, without limitation, all oil, gas, other minerals and other
substances of value which may be extracted from the earth and all accounts
arising out of the sale at the wellhead or minehead thereof), and (iii) covering
all other Property.  This Mortgage is to be filed for record in the
real property records of each county where any part of the Mortgaged Properties
is situated, and may also be filed in the offices of the Bureau of Land
Management or the Minerals Management Service, the General Land Office or any
relevant federal, state, local or tribal agency (or any successor
agencies).  The mailing address of Mortgagor is the address of
Mortgagor set forth at the end of this Mortgage and the address of Lender from
which information concerning the security interests hereunder may be obtained is
the address of Lender set forth at the end of this Mortgage.  Nothing
contained in this paragraph shall be construed to limit the scope of this
Mortgage nor its effectiveness as a financing statement covering any type of
Property.

     

    Section
5.3.             Reproduction
of Mortgage as Financing Statement; Authorization to File.  A carbon,
photographic, facsimile or other reproduction of this Mortgage or of any
financing statement relating to this Mortgage shall be sufficient as a financing
statement for any purpose.  Without limiting any other provision
herein, Mortgagor hereby authorizes Lender to file, in any filing or recording
office, one or more financing statements and any renewal or continuation
statements thereof, describing the Property.

     

    
      
        
        

      

      
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    Section
5.4.             Notice
to Account Debtors.  In addition to, but without limitation of,
the rights granted in Article III hereof, Lender may, at any time after a
default has occurred that is continuing, notify the account debtors or obligors
of any accounts, chattel paper, negotiable instruments or other evidences of
indebtedness included in the Collateral to pay Lender directly.

     

    Section
5.5.             Waivers.  Lender may at
any time and from time to time in writing waive compliance by Mortgagor with any
covenant herein made by Mortgagor to the extent and in the manner specified in
such writing, or consent to Mortgagor's doing any act which hereunder Mortgagor
is prohibited from doing, or to Mortgagor's failing to do any act which
hereunder Mortgagor is required to do, to the extent and in the manner specified
in such writing, or release any part of the Property or any interest therein or
any Production Proceeds from the lien and security interest of this
Mortgage.  Any party liable, either directly or indirectly, for the
secured indebtedness or for any covenant herein or in any other DIP Loan
Document may be released from all or any part of such obligations without
impairing or releasing the liability of any other party.  No such act
shall in any way impair any rights or powers hereunder except to the extent
specifically agreed to in such writing.

     

    Section
5.6.             No
Impairment of Security.  The lien,
security interest and other security rights hereunder shall not be impaired by
any indulgence, moratorium or release which may be granted including, but not
limited to, any renewal, extension or modification which may be granted with
respect to any secured indebtedness, or any surrender, compromise, release,
renewal, extension, exchange or substitution which may be granted in respect of
the Property (including without limitation Production Proceeds), or any part
thereof or any interest therein, or any release or indulgence granted to any
endorser, guarantor or surety of any secured indebtedness.

     

    Section
5.7.             Acts Not
Constituting Waiver.  Any default may
be waived without waiving any other prior or subsequent default.  Any
default may be remedied without waiving the default remedied.  Neither
failure to exercise, nor delay in exercising, any right, power or remedy upon
any default shall be construed as a waiver of such default or as a waiver of the
right to exercise any such right, power or remedy at a later date.  No
single or partial exercise of any right, power or remedy hereunder shall exhaust
the same or shall preclude any other or further exercise thereof, and every such
right, power or remedy hereunder may be exercised at any time and from time to
time.  No modification or waiver of any provision hereof nor consent
to any departure by Mortgagor therefrom shall in any event be effective unless
the same shall be in writing and signed by Lender and then such waiver or
consent shall be effective only in the specific instances, for the purpose for
which given and to the extent therein specified.  No notice to nor
demand on Mortgagor in any case shall of itself entitle Mortgagor to any other
or further notice or demand in similar or other
circumstances.  Acceptance of any payment in an amount less than the
amount then due on any secured indebtedness shall be deemed an acceptance on
account only and shall not in any way excuse the existence of a default
hereunder.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    Section
5.8.             Mortgagor's
Successors.  In the event the ownership of the Property or any
part thereof becomes vested in a person other than Mortgagor, then, without
notice to Lender, such successor or successors in interest may be dealt with,
with reference to this Mortgage and to the indebtedness secured hereby, in the
same manner as with Mortgagor, without in any way vitiating or discharging
Mortgagor's liability hereunder or for the payment of the indebtedness or
performance of the obligations secured hereby.  No transfer of the
Property, no forbearance, and no extension of the time for the payment of the
indebtedness secured hereby, shall operate to release, discharge, modify, change
or affect, in whole or in part, the liability of Mortgagor hereunder or for the
payment of the indebtedness or performance of the obligations secured hereby, or
the liability of any other person hereunder or for the payment of the
indebtedness secured hereby.

     

    Section
5.9.             Place of
Payment.  All secured
indebtedness which may be owing hereunder at any time by Mortgagor shall be
payable at the place designated in the DIP Credit Agreement (or if no such
designation is made, at the address of Lender indicated at the end of this
Mortgage), or at such other place as Lender may designate in
writing.

     

    Section
5.10.           Compliance
With Usury Laws.  It is the intent
of Mortgagor, Lender and all other parties to the DIP Loan Documents to contract
in strict compliance with applicable usury law from time to time in
effect.  In furtherance thereof, it is stipulated and agreed that none
of the terms and provisions contained herein shall ever be construed to create a
contract to pay, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be collected, charged,
taken, reserved, or received by applicable law from time to time in
effect.

     

    Section
5.11.           Substitute
Trustee.  The Trustee may
resign by an instrument in writing addressed to Lender, or Trustee may be
removed at any time with or without cause by an instrument in writing executed
by Lender.  In case of the death, resignation, removal, or
disqualification of Trustee, or if for any reason Lender shall deem it desirable
to appoint a substitute or successor trustee to act instead of the herein named
trustee or any substitute or successor trustee, then Lender shall have the right
and is hereby authorized and empowered to appoint a successor trustee, or a
substitute trustee, without other formality than appointment and designation in
writing executed by Lender and the authority hereby conferred shall extend to
the appointment of other successor and substitute trustees successively until
the indebtedness secured hereby has been paid in full, or until the Property is
sold hereunder.  Such appointment and designation by Lender shall be
full evidence of the right and authority to make the same and of all facts
therein recited.  If Lender is a corporation or association and such
appointment is executed in its behalf by an officer of such corporation or
association, such appointment shall be conclusively presumed to be executed with
authority and shall be valid and sufficient without proof of any action by the
board of directors or any superior officer of the corporation or
association.  Lender may act through an agent or attorney-in-fact in
substituting trustees.  Upon the making of any such appointment and
designation, all of the estate and title of Trustee in the Mortgaged Properties
shall vest in the named successor or substitute Trustee and such successor or
substitute shall thereupon succeed to, and shall hold, possess and execute, all
the rights, powers, privileges, immunities and duties herein conferred upon
Trustee; but nevertheless, upon the written request of Lender or of the
successor or substitute Trustee, the Trustee ceasing to act shall execute and
deliver an instrument transferring to such successor or substitute Trustee all
of the estate and title in the Mortgaged Properties of the Trustee so ceasing to
act, together with all the rights, powers, privileges, immunities and duties
herein conferred upon the Trustee, and shall duly assign, transfer and deliver
any of the properties and moneys held by said Trustee hereunder to said
successor or substitute Trustee.  All references herein to Trustee
shall be deemed to refer to Trustee (including any successor or substitute
appointed and designated as herein provided) from time to time acting
hereunder.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    Section
5.12.           No
Liability for Trustee.  THE TRUSTEE SHALL NOT BE LIABLE FOR
ANY ERROR OF JUDGMENT OR ACT DONE BY TRUSTEE IN GOOD FAITH, OR BE OTHERWISE
RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER (INCLUDING,
WITHOUT LIMITATION, THE TRUSTEE'S NEGLIGENCE), EXCEPT FOR TRUSTEE'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.  The Trustee shall have the
right to rely on any instrument, document or signature authorizing or supporting
any action taken or proposed to be taken by the Trustee hereunder, believed by
the Trustee in good faith to be genuine.  All moneys received by
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated in any
manner from any other moneys (except to the extent required by law), and Trustee
shall be under no liability for interest on any moneys received by him
hereunder.  Mortgagor hereby ratifies and confirms any and all acts
which the herein named Trustee or its successor or successors, substitute or
substitutes, shall do lawfully by virtue hereof.  Mortgagor will
reimburse Trustee for, and indemnify and save Trustee harmless against, any and
all liability and expenses (including attorneys fees) which may be incurred by
Trustee in the performance of his duties.  The foregoing indemnities
shall not terminate upon the release, foreclosure or other termination of this
Mortgage but will survive such release, termination and/or foreclosure of this
Mortgage, and any conveyance in lieu of foreclosure, and the repayment of the
secured indebtedness and the discharge and release of this Mortgage and the
other documents evidencing and/or securing the secured
indebtedness.  Any amount to be paid hereunder by Mortgagor to Trustee
shall be a demand obligation owing by Mortgagor to Trustee and shall be subject
to and covered by the provisions of Section 2.3 hereof.

     

    Section
5.13.            Release
of Mortgage.  If all of the secured indebtedness be paid as the
same becomes due and payable and all of the covenants, warranties, undertakings
and agreements made in this Mortgage are kept and performed and no further
obligation shall exist to provide credit or advance funds to Mortgagor or the
maker of any promissory note (or other obligor with respect to other
indebtedness) secured hereby, then, at Mortgagor's request this Mortgage shall
be released, in due form and at Mortgagor's cost; provided, however, that,
notwithstanding such release, certain indemnifications, and other rights, which
are provided herein to continue following the release hereof shall continue in
effect unaffected by such release; and provided further that if any payment to
Lender is held to constitute a preference or a voidable transfer under
applicable state or federal laws or if for any other reason Lender is required
to refund such payment to the payor thereof or to pay the amount thereof to any
third party, this Mortgage shall be reinstated to the extent of such payment or
payments.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    Section
5.14.            Notices. All notices, requests,
consents, demands and other communications required or permitted hereunder shall
be in writing and shall be deemed sufficiently given or furnished if delivered
in compliance with and according to Section 11.01 of the DIP Credit
Agreement. Notwithstanding the foregoing, or anything else in the DIP Loan
Documents which may appear to the contrary, any notice given in connection with
a foreclosure of the liens and/or security interests created hereunder, or
otherwise in connection with the exercise by Lender of its respective rights
hereunder or under any other DIP Loan Document, which is given in a manner
permitted by applicable law shall constitute proper notice; without limitation
of the foregoing, notice given in a form required or permitted by statute shall
(as to the portion of the Property to which such statute is applicable)
constitute proper notice.

     

    Section
5.15.             Invalidity
of Certain Provisions.  A determination that any provision of
this Mortgage is unenforceable or invalid shall not affect the enforceability or
validity of any other provision and the determination that the application of
any provision of this Mortgage to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to other persons or circumstances.

     

    Section
5.16.             Gender;
Titles.  Within this
Mortgage, words of any gender shall be held and construed to include any other
gender, and words in the singular number shall be held and construed to include
the plural, unless the context otherwise requires.  Titles appearing
at the beginning of any subdivisions hereof are for convenience only, do not
constitute any part of such subdivisions, and shall be disregarded in construing
the language contained in such subdivisions.

     

    Section
5.17.             Recording.  Mortgagor will
cause this Mortgage and all amendments and supplements thereto and substitutions
therefor and all financing statements and continuation statements relating
thereto to be recorded, filed, re-recorded and refiled in such manner and in
such places as Lender shall reasonably request and will pay all such recording,
filing, re-recording and refiling taxes, fees and other charges.

     

    Section
5.18.             Reporting
Compliance.  Mortgagor agrees
to comply with any and all reporting requirements applicable to the transaction
evidenced by the DIP Credit Agreement and secured by this Mortgage which are set
forth in any law, statute, ordinance, rule, regulation, order or determination
of any governmental authority, and further agrees upon request of Lender to
furnish Trustee or Lender with evidence of such compliance.

     

    Section
5.19.              Certain
Consents.  Except where
otherwise expressly provided herein, in any instance hereunder where the
approval, consent or the exercise of judgment of Lender is required, the
granting or denial of such approval or consent and the exercise of such judgment
shall be within the sole discretion of Lender, and Lender shall not, for any
reason or to any extent, be required to grant such approval or consent or
exercise such judgment in any particular manner, regardless of the
reasonableness of either the request or Lender's judgment.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    Section
5.20.              Counterparts.  This Mortgage
may be executed in several counterparts, all of which are identical, except
that, to facilitate recordation, certain counterparts hereof may include only
that portion of Exhibit A which
contains descriptions of the properties located in (or otherwise subject to the
recording or filing requirements and/or protections of the recording or filing
acts or regulations of) the recording jurisdiction in which the particular
counterpart is to be recorded, and other portions of Exhibit A shall be
included in such counterparts by reference only.  All of such
counterparts together shall constitute one and the same
instrument.  Complete copies of the Mortgage containing the entire
Exhibit A have
been retained by Mortgagor and Lender.

     

    Section
5.21.              Successors
and Assigns.  The terms,
provisions, covenants, representations, indemnifications and conditions hereof
shall be binding upon Mortgagor, and the successors and assigns of Mortgagor,
and shall inure to the benefit of Trustee and each person constituting Lender
and its respective successors and assigns, and shall constitute covenants
running with the Mortgaged Properties.  All references in this
Mortgage to Mortgagor, Lender or Trustee shall be deemed to include all such
successors and assigns.

     

    Section
5.22.              FINAL
AGREEMENT OF THE PARTIES.  THE WRITTEN DIP LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

     

    Section
5.23.             CHOICE OF
LAW.  WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW, THIS MORTGAGE SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE.

     

    Section
5.24.               Reliance
on Certificate or Statement of Lender. All third parties may rely
upon a certificate or statement of the Lender as to the occurrence of any act or
event, including, but not limited to, the occurrence of a default hereunder, or
the occurrence of an Event of Default under the DIP Credit
Agreement.

     

    [THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, this instrument is executed by Mortgagor this 14 day of May,
2009, to be effective as of May 14, 2009.

     

    
      
        	 	ENERGYTEC, INC., a
      Nevada corporation, as Mortgagor and Debtor-in-Possession	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/
      W. Wayne Hardin	 
	 	 	Name:
      W. Wayne Hardin	 
	 	 	Title:  
      President 	 
	 	 	 	 

      

    

    
       

    

    
      	
              The
      address of Lender is:

            	 
      
	
               

              16
      East 16th
      Street

              Tulsa,
      Oklahoma  74119

              Attn:  President

               

            	 
      
	
              The
      address of Trustee is:

               

              5651
      Miramar Drive

              Frisco,
      Texas  75034

            	 
      

    

     

    
      
        
        

      

      
        
          Signature Page
1

        

        
          

        

      

      
        
        

      

    

     

    ACKNOWLEDGMENT

     

    STATE OF
TEXAS                                             
§

    §

    COUNTY OF
________                                     §

     

    
      	
                    The
      foregoing instrument was acknowledged before me on this day, by W. Wayne
      Hardin, the President of ENERGYTEC, INC., a Nevada corporation, on behalf
      of said corporation.

            
	 
      

    

    IN
WITNESS WHEREOF, I have hereunto set my hand and official seal on the day and
year first above written.

     

    
      	
              My
      commission expires:

               

               

               

            	
              _________________________________

              Notary
      Public, State of Texas

               

              ______________________________________

              (printed
      name)

               

              Commission
      number:__________________

            

    

     

    
      
        
        

      

      
        
          Signature Page
2

        

        
          

        

      

      
        
        

      

    

    
 

    PREAMBLE TO EXHIBIT
A

     

    Attached
to and made a part of the Deed of Trust, Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement

    (the
"Mortgage")
dated as May _____, 2009, by

    ENERGYTEC,
INC., a Nevada corporation, as

    Mortgagor
and Debtor-in-Possession

     ("Mortgagor"),
for the benefit of

    RED RIVER
RESOURCES, INC., an Oklahoma corporation, ("Mortgagee").

     

    1.           All
of the terms defined in the Mortgage have the same meanings when used, unless
otherwise defined in this preamble.

     

    2.           In
addition to the instruments and lands specifically identified in Exhibit A,
this exhibit shall also include and cover all right, title and interest in and
to all fee lands, all surface and other leases, licenses, permits, rights of
way, easements, servitudes, rights under oil and gas leases, licenses, permits
and other real property rights, titles and interests, together with buildings,
structures and improvements located thereon, and all related equipment, owned by
Mortgagor in each county that is listed or referred to in Exhibit A
without regard to whether the interest or the subject land is specifically
described or referred to in Exhibit
A.  This preamble, and specifically the description of land
contained in this paragraph, are incorporated into Exhibit
A.

     

    It is
Mortgagor’s intent that this Mortgage cover every tract of land in which
Mortgagor owns an interest in each county that is listed or referred to in Exhibit A,
without regard to whether any tract that is not specifically described is
adjacent to specifically described land, is smaller than, larger than or bears
any comparative relation to specifically described land.

     

    3.           Reference
is made to the land descriptions contained in the documents recorded as
described in Exhibit A
or if not described as being recorded, then as recorded.  To the
extent that the land descriptions in the Exhibits are incomplete, incorrect, or
not legally sufficient, the land descriptions contained in the documents so
recorded are incorporated herein by this reference.  Reference is also
hereby made to all amendments, modifications, and ratifications to leases,
easements, deeds and other documents described on Exhibit A,
whether recorded or unrecorded.

     

    4.           References
in Exhibit
A to instruments on file in the public records are made for all
purposes.  Unless provided otherwise, all recording references in the
exhibits are to the official real property records in the county or counties
where the lands covered by the leases, easements, deeds and other documents are
located and in which such instruments are or in the past have been customarily
recorded, whether designated as Deed Records, Official Public Records or by some
other title.

     

    5.           Exhibit A
contains descriptions of certain of the Mortgaged Property.  The
format of the description is a follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (a)           Exhibit A
consists of this Preamble and the county in which the Mortgaged Property is
located.

     

    (b)           Certain
property descriptions contain terms in abbreviated form.  In such
descriptions the following terms may be abbreviated as follows:

     

    North-N;
South-S; East-E; West-W; Northwest- NW; Northeast – NE;

    Southwest-SW;
Southeast-SE; Northwest Quarter-NW/4; Northeast

    Quarter-NE/4;
Southwest Quarter- SW/4; Southeast Quarter – SE/4;

    North
Half-N/2 or N2; South Half- S/2 or S2; East Half- E/2 or E2;

    West
Half-W/2 or W2; Section-Sec. or S; Township – T; Range – R.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
A

    

    Description of Mortgaged
Properties

    

    Bowie,
Cass, Hopkins and Titus Counties, Texas

    

    Sulphur
Bluff

    Redwater
Fields

    Trix Lix
Field

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