Document:

GREYSTONE
        BUSINESS
        CREDIT
        II, L.L.C.

    

     

    SECURITY
      AGREEMENT

     

    THIS
      SECURITY AGREEMENT (this "Agreement")
      is
      dated as of September 17, 2007, and is between Appco-KY,
      Inc.,
      a
      Tennessee corporation corporation ("Grantor")
      and
Greystone
      Business Credit II, L.L.C.
      ("Agent").

     

    WITNESSETH:

     

    WHEREAS,
      pursuant to that certain Loan and Security Agreement
      dated as of the date hereof among Appalacian Oil Company, Inc., a Tennessee
      corporation ("Borrower"),
      the
      Lenders parties thereto ("Lenders")
      and
      Agent (as the same may be amended, restated, modified or supplemented and in
      effect from time to time, the "Loan
      Agreement"),
      Lenders have agreed to make Loans and other financial accommodations available
      to the Borrower;

     

    WHEREAS,
      pursuant to that certain Guaranty dated as of the date hereof between Grantors
      and Agent, Grantors have agreed to guaranty all of Borrower's Obligations;
      and

     

    WHEREAS,
      it is a condition to availability of Loans under the Loan Agreement that
      Grantors shall have granted the security interests contemplated by this
      Agreement in order to secure the payment and performance of their obligations
      under the Guaranty and Borrower's Obligations under the Loan Agreement
      (collectively, the "Guarantied
      Obligations");

     

    NOW,
      THEREFORE, in consideration of the foregoing, and in order to induce Lenders
      to
      make the Loans and other financial accommodations available to the Borrower
      under the Loan Agreement, each Grantor hereby agrees with Lenders as
      follows:

     

    SECTION
      1.  Definitions.

     

    Except
      as
      provided by the immediately following sentence, capitalized terms used herein
      and not otherwise defined herein shall have the respective meanings provided
      for
      in the Loan Agreement. All capitalized terms defined in the UCC and not
      otherwise defined herein shall have the respective meanings provided for by
      the
      UCC. References to "Sections" or "Schedules" shall be to Sections or Schedules
      of this Agreement unless otherwise specifically provided. 

     

    SECTION
      2.  Grant
      of Security Interests.

     

    To
      secure
      the payment and performance of the Guarantied Obligations, each Grantor hereby
      grants to Agent, a lien on, security interest in and right of set-off against
      any and all right, title and interest in and to all of the following properties
      and interests in properties of each Grantor, whether now owned or hereafter
      created, acquired or arising (all being collectively referred to herein as
      the
      "Collateral"):

     

    (i)
      all
      Accounts and all Goods whose sale, lease or other disposition by Borrower has
      given rise to Accounts and have been returned to, or repossessed or stopped
      in
      transit by, Borrower; 

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (ii)
      all
      Chattel Paper, Instruments, Documents and General Intangibles (including all
      patents, patent applications, trademarks, trademark applications, trade names,
      trade secrets, goodwill, copyrights, copyright applications, registrations,
      licenses, software, franchises, customer lists, tax refund claims, claims
      against carriers and shippers, guarantee claims, contracts rights, payment
      intangibles, security interests, security deposits and rights to
      indemnification); 

     

    (iii)
      all
      Inventory;

     

    (iv)
      all
      Goods (other than Inventory), including Equipment, vehicles and Fixtures;

     

    (v)
      all
      Investment Property; 

     

    (vi)
      all
      Deposit Accounts, bank accounts, deposits and cash; 

     

    (vii)
      all
      Letter-of-Credit Rights; 

     

    (viii)
      all Commercial Tort Claims listed in Schedule 2; 

     

    (ix)
      all
      Supporting Obligations; 

     

    (x)
      any
      other property of any Grantor now or hereafter in the possession, custody or
      control of any Lender or Agent or any parent, Affiliate or Subsidiary of Agent
      or any Lender or any participant with any Lender in the Loans, for any purpose
      (whether for safekeeping, deposit, collection, custody, pledge, transmission
      or
      otherwise); and 

     

    (xi)
      all
      additions and accessions to, substitutions for, and replacements, products
      and
      Proceeds of the foregoing property, including proceeds of all insurance policies
      insuring the foregoing property, and all of Borrower's books and records
      relating to any of the foregoing and to Borrower's business.

     

    SECTION
      3.  Representations
      and Warranties.

     

    Each
      Grantor represents and warrants to Agent as of the date hereof as
      follows:

     

    3.1  Authorization;
      No Conflict.
      The
      execution, delivery and performance of this Agreement by each Grantor has been
      duly authorized by all necessary action pursuant to its organizational documents
      and requires no further action by or in respect of, or filing with, any
      governmental authority and do not violate, conflict with or cause a breach
      or a
      default under (i) any law or any of the organizational documents of such Grantor
      or (ii) any agreement or instrument binding upon it. Except for the filing
      of
      UCC financing statements with the Secretary of State of each Grantor's
      jurisdiction of organization, no authorization, approval or other action by,
      and
      no notice to or filing with, any governmental authority or consent of any other
      person is required for the perfection of the security interests granted
      hereby.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    3.2  Binding
      Obligation; Perfection.
      This
      Agreement constitutes a valid and binding obligation of each Grantor,
      enforceable against such Grantor in accordance with its terms, except as
      enforcement may be limited by bankruptcy, insolvency, or similar laws relating
      to the enforcement of creditors' rights generally and by general equitable
      principles. Lender has a valid first priority security interest in the
      Collateral, securing the payment of the Guarantied Obligations, and such
      security interests are entitled to all of the rights, priorities and benefits
      afforded by the UCC or other applicable law as enacted in any relevant
      jurisdiction which relates to perfected security interests.

     

    3.3  Collateral
      Locations.
      Schedule
      3.3
      hereto
      lists (i) each Grantor's exact legal name as it appears on its certificate
      or
      articles of incorporation, formation, organization or registration, (ii) each
      Grantor's organizational identification number, (iii) each Grantor's chief
      executive office and the address where books and records relating to the
      Collateral are maintained, (iv) each Grantor's other place(s) of business,
      (v) each Grantor's jurisdiction, as applicable, of incorporation, formation,
      organization or registration, (vi) location(s) of any other Equipment, Inventory
      and other tangible assets (other than mobile goods) included in the Collateral,
      (vii) location(s) of owned and leased facilities and name of
      lessor/sublessor, and (viii) other collateral location(s).

     

    3.4  Existing
      Liens.
      Other
      than those set forth on Schedule
      3.4,
      (x)
      Grantors own the Collateral free and clear of any Lien and (y) no effective
      financing statement or other form of lien notice covering all or any part of
      the
      Collateral is on file in any recording office.

     

    SECTION
      4.  Covenants
      and Further Assurances.

     

    4.1  Equipment.
      Grantor
      shall cause all of the Equipment to be maintained and preserved in the same
      condition, repair and in working order as when new, ordinary wear and tear
      excepted, and shall promptly make or cause to be made all repairs, replacements
      and other improvements in connection therewith that are necessary or desirable
      to such end. Upon request of Agent, Grantor shall promptly deliver to Agent
      any
      and all certificates of title, applications for title or similar evidence of
      ownership of all of the Equipment and shall cause Lender to be named as
      lienholder on any such certificate of title or other evidence of ownership.
      Grantor shall promptly inform Agent of any deletions from the
      Equipment.

     

    4.2  Collateral
      Generally.

     

    (a)  Each
      Grantor hereby authorizes Agent to file one or more financing or continuation
      statements, and amendments thereto (or similar documents required by any laws
      of
      any applicable jurisdiction), relating to all or any part of the Collateral
      without the signature of such Grantor (to the extent such signature is required
      under the laws of any applicable jurisdiction).

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    (b)  Each
      Grantor will furnish to Agent, from time to time upon request, statements and
      schedules further identifying, updating, and describing the Collateral and
      such
      other information, reports and evidence concerning the Collateral as Lender
      may
      reasonably request, all in reasonable detail.

     

    (c)  Subject
      to the next sentence, each Grantor shall keep the Collateral (other than
      Collateral in the possession of Agent, cash on deposit in permitted Deposit
      Accounts and investments in permitted Securities Accounts) at the locations
      maintained by such Grantor set forth on Schedule
      3.3.
      Each
      Grantor shall give Agent not less than thirty (30) days' prior written notice
      of
      any change in the location for any of the Collateral. 

     

    (d)  Each
      Grantor shall keep full and accurate books and records relating to the
      Collateral and shall stamp or otherwise mark such books and records in such
      manner as Agent may reasonably request indicating that the Collateral is subject
      to the security interests of Agent. 

     

    (e)  Except
      as
      otherwise permitted herein or by the Loan Agreement, each Grantor shall
      not sell, assign (by operation of law or otherwise) or otherwise dispose
      of, or grant any option with respect to, any of the Collateral.

     

    (f)  Each
      Grantor shall at all times maintain insurance with respect to the Collateral
      reasonably satisfactory to Agent. 

     

    (g)  Agent
      agrees that upon payment in full of all Guarantied Obligations and the
      termination of the Loan Agreement, the liens and security interests granted
      hereunder shall terminate and all rights to the Collateral shall revert to
      Grantors. Agent further agrees that upon such termination of the liens and
      security interests or release of any Collateral, Agent shall, at the expense
      of
      Grantors, execute and deliver to each Grantor such documents as such Grantor
      shall reasonably request to evidence the termination of the liens and security
      interests or the release of such Collateral, as the case may be.

     

    SECTION
      5.  Remedial
      Provisions.

     

    (a)  Upon
      the
      occurrence and during the continuance of an Event of Default, Agent or its
      attorneys shall have the right without notice or demand or legal process (unless
      the same shall be required by applicable law), personally, or by an agent,
      (i) to enter upon, occupy and use any premises owned or leased by any
      Grantor or where the Collateral is located (or is believed to be located) until
      the Guarantied Obligations are paid in full without any obligation to pay rent
      to such Grantor, to render the Collateral useable or saleable and to remove
      the
      Collateral or any part thereof to the premises of Agent for such time as Agent
      may desire in order to effectively collect or liquidate the Collateral and
      use
      in connection with such removal any and all services, supplies and other
      facilities of such Grantor; (ii) to take possession of any Grantor's
      original books and records, to obtain access to such Grantor's data processing
      equipment, computer hardware and software relating to the Collateral and to
      use
      all of the foregoing and the information contained therein in any manner Agent
      deems appropriate.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    (b)  If
      any
      Event of Default shall have occurred and be continuing, Agent may exercise
      in
      respect of the Collateral, in addition to all other rights and remedies provided
      for herein or otherwise available to it, all the rights and remedies of Agent
      on
      default under the UCC (whether or not the UCC applies to the affected
      Collateral) and also may: (i) require any Grantor to, and each Grantor
      hereby agrees that it will, at its expense and upon request of Agent forthwith,
      assemble all or part of the Collateral as directed by Agent and make it
      available to Agent at any place or places designated by Agent which is
      reasonably convenient to Agent in which event such Grantor shall at its own
      expense (A) forthwith cause the same to be moved to the place or places so
      designated by Agent, (B) store and keep any Collateral so delivered to Agent
      at
      such place or places pending further action by Agent, and (C) while Collateral
      shall be so stored and kept, provide such guards and maintenance services as
      shall be necessary to protect the same and to preserve and maintain the
      Collateral in good condition; (ii) withdraw all cash in any Deposit Account
      and apply such monies in payment of the Guarantied Obligations; and (iii)
      without notice except as specified below, sell, lease, license or otherwise
      dispose of the Collateral or any part thereof by one or more contracts, in
      one
      or more parcels at public or private sale, and without the necessity of
      gathering at the place of sale of the property to be sold, at any of Agent's
      offices or elsewhere, at such time or times, for cash, on credit or for future
      delivery, and at such price or prices and upon such other terms as Agent may
      deem commercially reasonable. Agent shall have no obligation to marshal any
      Collateral in favor of any Grantor or Borrower.

     

    (c)  Each
      Grantor agrees that, to the extent notice of sale shall be required by law,
      a
      reasonable authenticated notification of disposition shall be a notification
      given at least ten (10) days prior to any such sale and such notice shall (i)
      describe Agent and such Grantor, (ii) describe the Collateral that is the
      subject of the intended disposition, (iii) state the method of intended
      disposition, (iv) state that such Grantor is entitled to an accounting of the
      Guarantied Obligations and state the charge, if any, for an accounting, and
      (v)
      state the time and place of any public disposition or the time after which
      any
      private sale is to be made. At any sale of the Collateral, if permitted by
      law,
      Agent may bid (which bid may be, in whole or in part, in the form of
      cancellation of indebtedness) for the purchase, lease, license or other
      disposition of the Collateral or any portion thereof for the account of Agent
      (on behalf of Agent). Agent shall not be obligated to make any sale of
      Collateral regardless of notice of sale having been given. Agent may disclaim
      any warranties that might arise in connection with the sale, lease, license
      or
      other disposition of the Collateral and have no obligation to provide any
      warranties at such time. Agent 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. To the extent permitted by law, each Grantor hereby specifically
      waives all rights of redemption, stay or appraisal, which it has or may have
      under any law now existing or hereafter enacted.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    (d)  If
      an
      Event of Default has occurred and is continuing, each Grantor hereby irrevocably
      authorizes and empowers Agent, without limiting any other authorizations or
      empowerments contained in any of the other Loan Documents, to assert, either
      directly or on behalf of any Grantor, any claims any Grantor may have, from
      time
      to time, against any other party to any of the agreements to which any Grantor
      is a party or to otherwise exercise any right or remedy of any Grantor under
      any
      such agreements (including, without limitation, the right to enforce directly
      against any party to any such agreement all of any Grantor's rights thereunder,
      to make all demands and give all notices and to make all requests required
      or
      permitted to be made by such Grantor thereunder).

     

    (e)  If
      an
      Event of Default has occurred and is continuing, the proceeds of any collection,
      enforcement, sale or other disposition of, or other realization upon, all or
      any
      part of the Collateral shall be applied in accordance with the applicable
      provisions of the Loan Agreement.

     

    SECTION
      6.  Notices.

     

    All
      notices, approvals, requests, demands and other communications hereunder to
      be
      delivered to any Grantor and all notices, approvals, requests, demands and
      other
      communications hereunder shall be given in accordance with the notice provision
      of the Loan Agreement.

     

    SECTION
      7.  Successors
      and Assigns.

     

    This
      Agreement shall be binding upon and inure to the benefit of the parties hereto
      and their respective successors and assigns except that no Grantor may assign
      its rights or obligations hereunder without the written consent of Agent. No
      sales of participations, other sales, assignments, transfers or other
      dispositions of any agreement governing or instrument evidencing the Guarantied
      Obligations or any portion thereof or interest therein shall in any manner
      impair the Lien granted to Agent, for the benefit of Lenders,
      hereunder.

     

    SECTION
      8.  Changes
      in Writing.

     

    No
      amendment, modification, termination or waiver of any provision of this
      Agreement shall be effective unless the same shall be in writing signed by
      Agent.

     

    SECTION
      9.  GOVERNING
      LAW; SUBMISSION TO JURISDICTION.

     

    THIS
      AGREEMENT, AND ALL MATTERS RELATING HERETO OR ARISING THEREFROM (WHETHER
      SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE) SHALL BE GOVERNED BY, AND
      SHALL
      BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
      WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. EACH GRANTOR HEREBY CONSENTS
      TO
      THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN NEW YORK COUNTY,
      STATE OF NEW YORK AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION,
      ALL
      ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE
      LITIGATED IN SUCH COURTS. EACH GRANTOR EXPRESSLY SUBMITS AND CONSENTS TO THE
      JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
      CONVENIENS. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
      AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH GRANTOR BY
      CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH
      GRANTOR IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6 HEREOF AND SERVICE SO
      MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN
      POSTED.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    SECTION
      10.  WAIVER
      OF JURY TRIAL.

     

    EACH
      OF EACH GRANTOR AND AGENT HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
      BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
      AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND AGREES THAT ANY SUCH
      ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
      JURY.

     

    SECTION
      11.  Counterparts;
      Integration.

     

    This
      Agreement may be signed in any number of counterparts, each of which shall
      be an
      original, with the same effect as if the signatures thereto and hereto were
      upon
      the same instrument. This Agreement constitutes the entire agreement and
      understanding among the parties hereto and supersede any and all prior
      agreements and understandings, oral or written, relating to the subject matter
      hereof.

     

    SECTION
      12.  Headings.

     

    Headings
      and captions used in this Agreement are included for convenience of reference
      and shall not be given any substantive effect.

     

    [Signature
      page follows]

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

    

     

    Witness
      the due execution hereof by the respective duly authorized officers of the
      undersigned as of the date first written above.

     

    
      	 	 	 
	 	
              APPCO-KY,
                as a Grantor

            
	 
 	 
 	 
 
	
            	By  	/s/ 
	 	
              
                

              

              Its

              
                
 

            

    

     

    
      	 	 	 
	 	
              GREYSTONE BUSINESS CREDIT II, L.L.C.,

              as Agent

            
	 
 	 
 	 
 
	
            	By  	/s/ 
	 	
              
                

              

              Its

              
                
 

            

    

     

    
      Security
        Agreement

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
      2

    

    Commercial
      Tort Claims

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Schedule
      3.3

    

     

    Pursuant
      to Section 3.3, the following information is disclosed:

     

    
      	
              Legal
                Name and

              Identification
                No.

            	 	
              Chief
                Executive Office/Location of Books and Records*

            	 	
              Other
                Place(s) of Business*

            	 	
              Jurisdiction
                of Organization

            	 	
              Location
                of Equipment and Goods 

            	 	
              Location
                of Leased Facilities

            	 	
              Other
                Collateral Locations*

            
	
              Appco-KY,
                Inc.

            	 	 	 	 	 	 	 	 	 	 	 	 

    

    

    
      *
        For
        each such location, designate whether it is owned or leased, and if leased,
        the
        name of the lessor.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    Schedule
      3.4

    

    LiensGREYSTONE
        BUSINESS
        CREDIT
        II, L.L.C.

    

    CORPORATE
      GUARANTY

     

    
      	
              Borrower:

            	
              
                APP
                  ALACHIAN
                  OIL
                  COMPANY,
                  a
                  Tennessee 

                corporation

              

            
	 	 
	
              Guarantors
                (and each a Guarantor):

            	
              
                APPCO-KY,
                  INC., a
                  Tennessee corporation

              

            

    

    

    Borrower
      has requested that GREYSTONE
      BUSINESS
      CREDIT
      II, L.L.C. as
      agent
("Agent")
      for
      itself and certain lenders ("Lenders")
      provide certain financial accommodations to Borrower pursuant to the terms
      of a
      Loan and Security Agreement among Borrower, Agent and the Lenders parties
      thereto from time to time, dated of even date herewith (as amended from time
      to
      time, the "Loan
      Agreement").
      As
      one of the conditions to providing financing, Agent and Lenders have required
      that each Guarantor guaranty all obligations of Borrower to Agent and
      Lenders.

     

    For
      value
      received and in consideration of any loan, advance or financial accommodation
      of
      any kind whatsoever heretofore, now or hereafter made, given or granted to
      Borrower by any Lender pursuant to the Loan Agreement, each Guarantor, jointly
      and severally, unconditionally guaranties the full and prompt payment when
      due,
      whether at maturity or earlier, by reason of acceleration or otherwise, and
      at
      all times thereafter, of the indebtedness, liabilities and obligations of every
      kind and nature of Borrower to Agent and Lenders (including, without limitation,
      all interest accruing after the filing of a proceeding under the Bankruptcy
      Code
      (as defined in the Loan Agreement) whether or not allowed by the court in such
      proceeding, and all other indebtedness, liabilities and obligations arising
      after the filing of any proceeding under the Bankruptcy Code), howsoever
      created, arising or evidenced, whether direct or indirect, absolute or
      contingent, joint or several, now or hereafter existing, or due or to become
      due, in each case arising under the Loan Agreement or the other Loan Documents
      (as defined in the Loan Agreement), plus all costs and expenses (including,
      without limitation, all court costs and reasonable attorneys' and paralegals'
      fees and expenses) paid or incurred by Agent and Lenders in endeavoring to
      collect all or any part of such indebtedness, liabilities and obligations from,
      or in prosecuting any action against, any Guarantor or any other guarantor
      of
      all or any part of such indebtedness, liabilities and obligations (all such
      indebtedness, liabilities, obligations, costs and expenses being hereinafter
      referred to as "Borrower's
      Obligations").
      All
      sums becoming due under this Guaranty shall bear interest from the due date
      thereof until paid at the highest rate charged with respect to any of Borrower's
      Obligations under the Loan Agreement.

     

    Each
      Guarantor agrees that its obligations under this Guaranty are unconditional,
      irrespective of (i) the validity or enforceability of Borrower's Obligations
      or
      any note or other instrument evidencing Borrower's Obligations, (ii) the absence
      of any attempt by any Lender to collect Borrower's Obligations from Borrower
      or
      any other guarantor, (iii) any Lender's waiver or consent with respect to any
      provision of the Loan Documents, (iv) any Lender's failure to perfect or
      maintain its security interests in, or to preserve its rights with respect
      to,
      any of the Collateral (as defined in the Loan Agreement), (v) any Lender's
      election, in any proceeding under Chapter 11 of the Bankruptcy Code, of the
      application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing
      or
      grant of a security interest by Borrower as debtor-in-possession under Section
      364 of the Bankruptcy Code, (vii) the disallowance, under Section 502 of the
      Bankruptcy Code, of all or any of any Lender's claims for repayment of
      Borrower's Obligations or (viii) any other circumstance which might constitute
      a
      legal or equitable discharge or defense of Borrower or a guarantor.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    No
      payment made by or for the account or benefit of any Guarantor (including,
      without limitation, (i) a payment made by Borrower in respect of Borrower's
      Obligations, (ii) a payment made by any other Guarantor under this Guaranty
      or
      by any other person under any other guaranty of Borrower's Obligations or (iii)
      a payment made by means of set off or other application of funds by any Lender)
      shall entitle any Guarantor, by subrogation or otherwise, to any payment by
      Borrower or any
      other
      Guarantor or from
      or
      out of any property of Borrower or any other Guarantor, and no Guarantor shall
      exercise any rights or remedies against Borrower or any other Guarantor or
      any
      property of Borrower or any other Guarantor including, without limitation,
      any
      right of contribution, indemnity or reimbursement by reason of any performance
      by such Guarantor under this Guaranty, all of such rights of subrogation,
      contribution, indemnity and reimbursement being hereby waived by such Guarantor.
      The provisions of this paragraph shall survive the termination of this Guaranty
      or the release or discharge of any Guarantor from liability hereunder. Borrower
      is a third party beneficiary of the provisions of this paragraph.

     

    Each
      Guarantor hereby waives diligence, presentment, demand for payment, filing
      of
      claims with a court in the event of receivership or bankruptcy of Borrower,
      protest or notice with respect to Borrower's Obligations and all demands
      whatsoever, and covenants that this Guaranty will not be discharged, except
      by
      complete and irrevocable payment and performance of the obligations and
      liabilities contained herein. No notice to any party, including any Guarantor,
      shall be required for Lender to make demand hereunder. Such demand shall
      constitute a mature and liquidated claim against such Guarantor. At any time
      after maturity of Borrower's Obligations, whether by acceleration or otherwise,
      Agent may, at its sole election, proceed directly and at once, without notice,
      against any Guarantor to collect and recover the full amount or any portion
      of
      Borrower's Obligations, without first proceeding against Borrower or any other
      person or against any of the Collateral. Agent shall have the exclusive right
      to
      determine the application of payments and credits, if any, from any Guarantor,
      Borrower or any other person, on account of Borrower's Obligations.

     

    Agent
      is
      hereby authorized, without notice or demand to any Guarantor and without
      affecting or impairing the liability of any Guarantor hereunder, to from time
      to
      time (i) renew, extend, accelerate or otherwise change the time for payment
      of,
      or other terms relating to, Borrower's Obligations or otherwise modify, amend
      or
      change the terms of any promissory note or other agreement, document or
      instrument now or hereafter executed by Borrower and delivered to Agent and/or
      Lenders; (ii) accept partial payments on Borrower's Obligations; (iii) take
      and
      hold Collateral for the payment of Borrower's Obligations, or for the payment
      of
      this Guaranty, or for the payment of any other guaranties of Borrower's
      Obligations or other liabilities of Borrower, and exchange, enforce, waive
      and
      release any Collateral; (iv) apply Collateral and direct the order or manner
      of
      sale thereof as it may determine in its sole discretion; and (v) settle,
      release, compromise, collect or otherwise liquidate Borrower's Obligations
      and
      any Collateral in any manner.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    At
      any
      time after maturity of Borrower's Obligations, Agent may, in its sole
      discretion, without notice to any Guarantor and regardless of the acceptance
      of
      any Collateral for the payment hereof, appropriate (or cause to be appropriated)
      and apply toward payments of Borrower's Obligations, (i) any indebtedness due
      or
      to become due from Agent or any Lender to any Guarantor and (ii) any moneys,
      credits or other property belonging to any Guarantor at any time held by or
      coming into the possession of Agent or any affiliates of Agent, whether for
      deposit or otherwise.

     

    Each
      Guarantor assumes responsibility for keeping itself informed of the financial
      condition of Borrower and all other guarantors of all or any of Borrower's
      Obligations, and of all other circumstances bearing upon the risk of nonpayment
      of Borrower's Obligations or any part thereof that diligent inquiry might
      reveal, and each Guarantor agrees that neither Agent nor any Lender shall have
      any duty to advise such Guarantor of information known to Agent or such Lender
      regarding any of the foregoing. Each Guarantor acknowledges familiarity with
      Borrower's financial condition and represents that it has not relied on any
      statements made, or information furnished, by Agent or any Lender or their
      agents in obtaining such familiarity. If Agent or any Lender provides any such
      information to any Guarantor, Agent and such Lender shall be under no obligation
      to (i) undertake any investigation not a part of its regular business routine,
      (ii) disclose any information which, pursuant to accepted or reasonable
      commercial finance practices, Agent or such Lender wishes to maintain
      confidential or (iii) make any other or future disclosures of any information
      to
      such Guarantor.

     

    Notwithstanding
      any contrary provision of this Guaranty, it is intended that neither this
      Guaranty nor any liens or security interests securing this Guaranty constitute
      a
      "Fraudulent Conveyance" (as defined below). Consequently, each Guarantor agrees
      that if this Guaranty or any liens or security interests securing this Guaranty
      would, but for the application of this sentence, constitute a Fraudulent
      Conveyance, this Guaranty and each such lien and security interest shall be
      valid and enforceable only to the maximum extent that would not cause this
      Guaranty or such lien or security interest to constitute a Fraudulent
      Conveyance, and this Guaranty shall automatically be deemed to have been amended
      accordingly at all relevant times. For purposes hereof, a "Fraudulent
      Conveyance"
      means a
      fraudulent conveyance under Section 548 of the Bankruptcy Code or a fraudulent
      conveyance or fraudulent transfer under any applicable fraudulent conveyance
      or
      fraudulent transfer law or similar law of any state or other governmental unit
      as in effect from time to time.

     

    Each
      Guarantor waives the right to assert the doctrine of marshaling with respect
      to
      any of the Collateral securing Borrower's Obligations. Each Guarantor further
      agrees that, to the extent Borrower makes one or more payments to Agent or
      any
      Lender, or Agent or any Lender receives any proceeds of Collateral, which are
      subsequently invalidated, declared to be fraudulent or preferential, set aside
      or required to be repaid to Borrower, its estate, trustee, receiver or any
      other
      party under the Bankruptcy Code or other law, that portion of Borrower's
      Obligations which has been paid, reduced or satisfied by such payment or
      proceeds shall be reinstated and continued in full force and effect as of the
      date such initial payment, reduction or satisfaction occurred, and this Guaranty
      shall continue to be in existence and in full force and effect, irrespective
      of
      whether any evidence of indebtedness or this Guaranty has been surrendered
      or
      canceled.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    Each
      Guarantor agrees that all payments hereunder shall be made without setoff or
      counterclaims and each Guarantor waives all presentments, demands for
      performance, notices of nonperformance, protests, notices of protest, notices
      of
      dishonor and notices of acceptance of this Guaranty. Each Guarantor further
      waives all notices of the existence, creation or incurring of new or additional
      indebtedness, arising either from additional loans extended to Borrower or
      otherwise, and also waives all notices that the principal amount, or any portion
      thereof, or any interest on any instrument or document evidencing all or any
      part of Borrower's Obligations is due, notices of any and all proceedings to
      collect from the maker, any endorser or any other guarantor of all or any part
      of Borrower's Obligations, or from anyone else, and, to the extent permitted
      by
      law, notices of exchange, sale, foreclosure, surrender or other handling of
      any
      Collateral securing Borrower's Obligations.

     

    No
      delay
      on the part of Agent or any Lender in the exercise of any right or remedy shall
      operate as a waiver thereof, and no single or partial exercise by Agent or
      any
      Lender of any right or remedy shall preclude any further exercise thereof except
      as expressly set forth in a writing duly signed and delivered on Agent's and
      Required Lenders' behalf by authorized officers or agents of Agent and Required
      Lenders; nor shall any modification or waiver of any of the provisions of this
      Guaranty be binding upon Agent or Lenders, except as expressly set forth in
      a
      writing duly signed and delivered on Agent's and Required Lenders' behalf by
      authorized officers or agents of Agent and Required Lenders. Agent's and
      Lenders' failure at any time or times hereafter to require strict performance
      by
      Borrower or any Guarantor of any of the provisions, warranties, terms and
      conditions contained in any promissory note, security agreement, agreement,
      guaranty, instrument or document now or at any time or times hereafter executed
      by Borrower or any Guarantor and delivered to Agent, shall not waive, affect
      or
      diminish any right of Agent or any Lender at any time or times hereafter to
      demand strict performance thereof, and such right shall not be deemed to have
      been waived by any act or knowledge of Agent or any Lender, or its respective
      agents, officers or employees, unless such waiver is contained in an instrument
      in writing signed by an officer or agent of Agent and Required Lenders, and
      directed to Borrower or such Guarantor, as applicable, specifying such waiver.
      No waiver by Agent of any default shall operate as a waiver of any other default
      or the same default on a future occasion, and no action by Agent or any Lender
      permitted hereunder shall in any way affect or impair Agent's or such Lender's
      rights or the obligations of any Guarantor under this Guaranty. Any
      determination by a court of competent jurisdiction of the amount of any
      principal or interest owing by Borrower to Agent and Lenders shall be conclusive
      and binding on each Guarantor irrespective of whether such Guarantor was a
      party
      to the suit or action in which such determination was made.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    Each
      Guarantor hereby represents and warrants that (i) it is in such Guarantor's
      direct interest to assist Borrower in procuring credit, because Borrower is
      an
      affiliate of such Guarantor, furnishes goods or services to such Guarantor,
      purchases or acquires goods or services from such Guarantor, and/or otherwise
      has a direct or indirect corporate or business relationship with such Guarantor,
      (ii) this Guaranty has been duly and validly authorized, executed and
      delivered and constitutes the valid and binding obligation of such Guarantor,
      enforceable in accordance with its terms, and (iii) the execution and
      delivery of this Guaranty does not violate or constitute a default under (with
      or without the giving of notice, the passage of time, or both) any order,
      judgment, decree, instrument or agreement to which such Guarantor is a party
      or
      by which it or its assets are affected or bound.

     

    This
      Guaranty shall be binding upon each Guarantor and upon the successors and
      permitted assigns of each Guarantor and shall inure to the benefit of Agent
      and
      Lenders and their successors and assigns. All references herein to Borrower
      shall be deemed to include its successors and permitted assigns and all
      references herein to Agent shall be deemed to include its successors and
      assigns. Borrower's and each Guarantor's successors and permitted assigns shall
      include a receiver, trustee, custodian of or for Borrower or such Guarantor
      or
      any of their respective assets and Borrower or such Guarantor as
      debtor-in-possession. All references to the singular shall be deemed to include
      the plural where the context so requires.

     

    EACH
      GUARANTOR HEREBY CONSENTS AND AGREES THAT THE STATE AND FEDERAL COURTS IN NEW
      YORK COUNTY, NEW YORK SHALL HAVE NONEXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
      ANY CLAIMS OR DISPUTES WITH RESPECT TO THIS GUARANTY AND WAIVES ANY OBJECTION
      WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS
      TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND CONSENTS THAT ALL SERVICE
      OF PROCESS UPON SUCH GUARANTOR BE MADE BY REGISTERED MAIL OR MESSENGER DIRECTED
      TO SUCH GUARANTOR AT THE ADDRESS SET FORTH BELOW SUCH GUARANTOR'S SIGNATURE
      AND
      THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT
      THEREOF. EACH GUARANTOR HEREBY AGREES THAT ANY CLAIM OR DISPUTE BROUGHT BY
      SUCH
      GUARANTOR AGAINST AGENT OR ANY LENDER OR ANY MATTER ARISING OUT OF THIS GUARANTY
      SHALL BE BROUGHT EXCLUSIVELY IN THE STATE AND FEDERAL COURTS IN NEW YORK COUNTY,
      NEW YORK. EACH GUARANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY LAW, TRIAL
      BY
      JURY. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR ANY LENDER
      TO
      SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT
      OF
      AGENT OR ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST ANY GUARANTOR
      OR
      ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    THIS
      GUARANTY SHALL BE GOVERNED IN ALL RESPECTS BY THE INTERNAL LAWS OF THE STATE
      OF
      NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
      LAWS.

     

    Wherever
      possible each provision of this Guaranty shall be interpreted in such manner
      as
      to be effective and valid under applicable law, but if any provision of this
      Guaranty shall be prohibited by or invalid under such law, such provision shall
      be ineffective to the extent of such prohibition or invalidity without
      invalidating the remainder of such provision or the remaining provisions of
      this
      Guaranty.

     

    Each
      Guarantor hereby agrees that this Guaranty shall be deemed a "Loan Document"
      as
      defined in the Loan Agreement.

     

    This
      Guaranty may be executed in any number of counterparts, all of which shall
      constitute one and the same instrument, and any party hereto may execute this
      Guaranty by signing and delivering one or more counterparts.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, this Guaranty has been duly executed by the undersigned
      Guarantors this 17th day of September, 2007.

     

    
      	 	 	 
	 	APPCO-KY, INC.
	 
 	 
 	 
 
	
            	By  	/s/ Bryan
              Chance
	 	
              

              Its
                President

            

    

     

    
      
        
        

      

      
        -7-

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