Document:

Exhibit
4.19

 

AMENDED AND
RESTATED SECURITY AGREEMENT

 

AMENDED AND RESTATED SECURITY
AGREEMENT, dated as of October 31, 2007 (as amended, restated
or otherwise modified from time to time, this “Agreement”), made by WENTWORTH ENERGY, INC., an Oklahoma corporation (the “Company”),
and BARNICO DRILLING, INC., a Texas corporation (“Barnico”; each a “Grantor”
and collectively the “Grantors”), in
favor of CASTLERIGG MASTER INVESTMENTS LTD., a company organized under the laws
of the British Virgin Islands, in its capacity as collateral agent (in such
capacity, the “Collateral Agent”)
for the benefit of the Buyers (as defined below).

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS, the Company and
each party listed as a “Buyer” on the Schedule of Buyers attached thereto
(collectively, the “Buyers”) are
parties to that certain Securities Purchase Agreement, dated as of July 24,
2006 (as amended, restated or otherwise modified from time to time prior to the
date hereof, the “Existing  Securities Purchase Agreement”), pursuant
to which, among other things, the Buyers purchased from the Company an
aggregate original principal amount of $32,350,000 of senior secured
convertible notes (as amended, restated or otherwise modified from time to time
prior to the date hereof, the “Existing Notes”);

 

WHEREAS, contemporaneously
with the consummation of the transactions contemplated by the Existing
Securities Purchase Agreement, the following transactions (among others)
occurred: (i) Wentworth Oil & Gas, Inc., a Nevada corporation and
subsidiary of the Company (“WOG”), entered
into that certain Guaranty, dated as of July 25, 2006, in favor of the
Collateral Agent for the benefit of the Buyers (said guaranty, as amended,
restated or otherwise modified from time to time prior to the date hereof, the “Existing WOG Guaranty”);
(ii) the Company and WOG entered into that certain Security Agreement, dated as
of July 25, 2006, in favor of the Collateral Agent for the benefit of the
Buyers, as subsequently amended by that certain Joinder Agreement, dated as of August
8, 2006 (the “2006 Joinder Agreement”), in favor
of the Collateral Agent for the benefit of the Buyers, to join Barnico as a
party thereto and collateral grantor thereunder (said security agreement, as
amended by the 2006 Joinder Agreement, and as otherwise amended, restated or
otherwise modified from time to time prior to the date hereof, the “Existing Security
Agreement”); and (iii) the Company and WOG entered into that certain
Pledge Agreement, dated as of July 25, 2006, in favor of Collateral Agent for
the benefit of the Buyers, as amended by that certain Pledge Amendment, dated
August 8, 2006 (the “2006 Pledge Amendment”),
to include as collateral thereunder the shares of Barnico capital stock
referenced in the 2006 Pledge Amendment (said pledge agreement, as amended by
the 2006 Pledge Amendment, and as otherwise amended, and as otherwise amended,
restated or otherwise modified from time to time prior to the date hereof, the “Existing Pledge Agreement”);

 

WHEREAS, as contemplated by
the Existing Securities Purchase Agreement, the Company entered into certain
deeds of trust encumbering certain real property and personal property of the
Company (said deeds of trust, as amended, restated or otherwise modified from
time to time prior to the date hereof, the “Existing
Deeds of Trust”), in favor of the trustee referenced therein for the
benefit of the Collateral Agent for the benefit of the Buyers;

 

 

WHEREAS, Barnico’s execution
and delivery of the 2006 Joinder Agreement was effected contemporanously with
the Company’s purchase of all of the outstanding stock of Barnico; and, also in
conjunction with that acquisition by the Company, Barnico entered into that
certain Guaranty, dated as of August 8, 2006 (said guaranty, as amended,
restated or otherwise modified from time to time prior to the date hereof, the “Existing Barnico Guaranty”), in favor of the Collateral
Agent for the benefit of the Buyers;

 

WHEREAS, the Company and the Buyers, severally, are entering into those
certain Amendment Agreements, each dated as of the date hereof (the “Amendment Agreements”), pursuant to which (among other
things) the Company and the Buyers have agreed to amend the Existing Securities
Purchase Agreement (as so amended, and as thereafter amended, restated or
otherwise modified from time to time, the “Securities Purchase
Agreement”) to provide for, among other things, the following: (i)
the amendment and restatement of the Existing Barnico Guaranty by Barnico’s
execution and delivery of that certain Amended and Restated Barnico Guaranty,
in the form attached as an exhibit to the Amendment Agreements (said amended
and restated guaranty, as thereafter amended, restated or otherwise modified
from time to time, the “Barnico Guaranty”);
(ii) the amendment and restatement of all of the Existing Notes by the Company’s
issuance of amended and restated notes therefor, in the form attached as an
exhibit to the Amendment Agreements (said amended and restated notes, as
executed and delivered, and as thereafter, amended, restated or otherwise
modified from time to time, the “Amended and Restated Notes”);
(iii) the Company’s issuance and sale to one of the Buyers of a new senior
secured convertible note in the form attached as an exhibit to the Amendment
Agreements (said new note, as executed and delivered, and as thereafter
amended, restated or otherwise modified from time to time, the “New Note”; collectively with the Amended and Restated Notes,
the “Notes”); (iv) the amendment and
restatement of the Existing Pledge Agreement in the form attached as an exhibit
to the Amendment Agreements (said amended and restated pledge agreement, as
executed and delivered, and as thereafter amended, restated or otherwise
modified from time to time, the “Pledge Agreement”);
(v) the amendment and restatement of the Existing Security Agreement by the
execution and delivery of this Agreement; (vi) the amendment and restatement of
the Existing Deeds of Trust heretofore filed in Anderson, Freestone, Jones and
Leon Counties, Texas, in the form attached as an exhibit to the Amendment
Agreements (said amended and restated deeds of trust, as executed and
delivered, and as thereafter amended, restated or otherwise modified from time
to time, the “Deeds of Trust”); and (vii) to the
extent not heretofore terminated, the termination of the Existing Deeds of
Trust filed in Archer, Pecos and Wichita Counties, Texas;

 

WHEREAS, WOG has been dissolved and, prior hereto or contemporaneously
herewith, WOG is being released from all of its obligations under the Existing
WOG Guaranty, the Existing Pledge Agreement and the Existing Security
Agreement; and

 

WHEREAS, to induce each of the Buyers to execute and deliver its
respective Amendment Agreement and perform its respective obligations under the
Securities Purchase Agreement, Grantors have agreed to execute and deliver to
the Collateral Agent, for the benefit of the Buyers, this Agreement, which
amends, restates and supersedes the Existing Security Agreement;

 

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NOW, THEREFORE, in consideration of the premises and the agreements
herein, and in order to induce each of the Buyers to execute and deliver its
respective Amendment Agreement and to perform its respective obligations under
the Securities Purchase Agreement, each Grantor agrees with the Collateral
Agent, for the benefit of the Buyers, as follows:

 

SECTION 1.           Definitions.

 

(a)           Reference is made to the Securities Purchase Agreement and
the Notes for a statement of the terms thereof. 
All terms used in this Agreement which are defined in the Securities
Purchase Agreement or the Notes or in Article 8 or Article 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York (the “Code”), and which are not otherwise defined
herein, shall have the same meanings herein as set forth therein; provided
that terms used herein which are defined in the Code as in effect in the State
of New York on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute.

 

(b)           Except as otherwise expressly provided in this Agreement,
the following rules of interpretation apply to this Agreement: (i) the singular
includes the plural and the plural includes the singular; (ii) “or” and “any”
are not exclusive and “include” and “including” are not limiting; (iii) a
reference to any agreement or other contract includes permitted supplements and
amendments; (iv) a reference to a law includes any amendment or modification to
such law and any rules or regulations issued thereunder; (v) a reference to a
Person includes its permitted successors and assigns; and (vi) a reference in
this Agreement to an Article, Section, Annex, Exhibit or Schedule is to the
Article, Section, Annex, Exhibit or Schedule of this Agreement.

 

(c)           Notwithstanding subsection (a), above, the following terms
shall have the respective meanings provided for in the Code:  “Accounts”, “As-extracted Collateral”, “Cash
Proceeds”, “Chattel Paper”, “Commercial Tort Claim”, “Commodity Account”, “Commodity
Contracts”, “Deposit Account”, “Documents”, “Equipment”, “Fixtures”, “General
Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit
Rights”, “Noncash Proceeds”, “Payment Intangibles”, “Proceeds”, “Promissory
Notes”, “Security”, “Record”, “Securities Account”, “Software”, and “Supporting
Obligations”.

 

(d)           As used in this Agreement, the following terms shall have
the respective meanings indicated below, such meanings to be applicable equally
to both the singular and plural forms of such terms:

 

“Copyright Licenses” means
all licenses, contracts or other agreements, whether written or oral, naming
any Grantor as licensee or licensor and providing for the grant of any right to
use or sell any works covered by any copyright (including, without limitation,
all Copyright Licenses set forth in Schedule II hereto).

 

“Copyrights” means all
domestic and foreign copyrights, whether registered or not, including, without
limitation, all copyright rights throughout the universe (whether now or
hereafter arising) in any and all media (whether now or hereafter developed),
in and to all original works of authorship fixed in any tangible medium of
expression, acquired or used by any Grantor (including, without limitation, all
copyrights described in Schedule II hereto), all 

 

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applications, registrations and recordings
thereof (including, without limitation, applications, registrations and
recordings in the United States Copyright Office or in any similar office or
agency of the United States or any other country or any political subdivision
thereof), and all reissues, divisions, continuations, continuations in part and
extensions or renewals thereof.

 

“Event of  Default” shall have the meaning set forth
in the Notes.

 

“Insolvency Proceeding”
means any proceeding commenced by or against any Person under any provision of
the Bankruptcy Code (Chapter 11 of Title 11 of the United States Code) or
under any other bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, or extensions generally
with creditors, or proceedings seeking reorganization, arrangement, or other
similar relief.

 

“Intellectual Property”
means the Copyrights, Trademarks and Patents.

 

“Licenses” means the
Copyright Licenses, the Trademark Licenses and the Patent Licenses.

 

“Lien” means any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights).

 

“Patent Licenses” means
all licenses, contracts or other agreements, whether written or oral, naming
any Grantor as licensee or licensor and providing for the grant of any right to
manufacture, use or sell any invention covered by any Patent (including,
without limitation, all Patent Licenses set forth in Schedule II
hereto).

 

“Patents” means all
domestic and foreign letters patent, design patents, utility patents,
industrial designs, inventions, trade secrets, ideas, concepts, methods,
techniques, processes, proprietary information, technology, know-how, formulae,
rights of publicity and other general intangibles of like nature, now existing
or hereafter acquired (including, without limitation, all domestic and foreign
letters patent, design patents, utility patents, industrial designs,
inventions, trade secrets, ideas, concepts, methods, techniques, processes,
proprietary information, technology, know-how and formulae described in Schedule
II hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office, or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations, continuations in part and extensions or
renewals thereof.

 

“Trademark Licenses” means
all licenses, contracts or other agreements, whether written or oral, naming
any Grantor as licensor or licensee and providing for the grant of any right
concerning any Trademark, together with any goodwill connected with and
symbolized by any such trademark licenses, contracts or agreements and the
right to prepare for sale or lease and sell or lease any and all Inventory now
or hereafter owned by any Grantor and now or hereafter covered by such licenses
(including, without limitation, all Trademark Licenses described in Schedule
II hereto).

 

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“Trademarks” means all
domestic and foreign trademarks, service marks, collective marks, certification
marks, trade names, business names, d/b/a’s, Internet domain names, trade
styles, designs, logos and other source or business identifiers and all general
intangibles of like nature, now or hereafter owned, adopted, acquired or used
by any Grantor (including, without limitation, all domestic and foreign
trademarks, service marks, collective marks, certification marks, trade names,
business names, d/b/a’s, Internet domain names, trade styles, designs, logos
and other source or business identifiers described in Schedule II
hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any other country or any political
subdivision thereof), and all reissues, extensions or renewals thereof,
together with all goodwill of the business symbolized by such marks and all customer
lists, formulae and other Records of any Grantor relating to the distribution
of products and services in connection with which any of such marks are used.

 

SECTION 2.           Grant
of Security Interest.  As collateral
security for all of the “Obligations” (as defined in Section 3 hereof),
each Grantor hereby pledges and assigns to the Collateral Agent for the benefit
of the Buyers, and grants to the Collateral Agent for the benefit of the Buyers
a continuing security interest in, all personal property of such Grantor,
wherever located and whether now or hereafter existing and whether now owned or
hereafter acquired, of every kind and description, tangible or intangible
(collectively, the “Collateral”),
including, without limitation, the following:

 

(a)           all Accounts;

 

(b)           all Chattel Paper (whether tangible or electronic);

 

(c)           the Commercial Tort Claims specified on Schedule VI
hereto;

 

(d)           all Deposit Accounts, all cash and other property from
time to time deposited therein and the monies and property in the possession or
under the control of the Collateral Agent or any Buyer or any affiliate,
representative, agent or correspondent of the Collateral Agent or any Buyer;

 

(e)           all Documents;

 

(f)            all Equipment;

 

(g)           all Fixtures;

 

(h)           all General Intangibles (including, without limitation,
all Payment Intangibles);

 

(i)            all Goods

 

(j)            all As-extracted Collateral;

 

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(k)           all Instruments (including, without limitation, Promissory
Notes and each certificated Security);

 

(l)            all Inventory;

 

(m)          all Investment Property;

 

(n)           all Copyrights, Patents and
Trademarks, and all Licenses;

 

(o)           all Letter-of-Credit Rights;

 

(p)           all Supporting Obligations;

 

(q)           all other tangible and intangible personal property of
each Grantor (whether or not subject to the Code), including, without
limitation, all bank and other accounts and all cash and all investments
therein, all proceeds, products, offspring, accessions, rents, profits, income,
benefits, substitutions and replacements of and to any of the property of any
Grantor described in the preceding clauses of this Section 2 (including,
without limitation, any proceeds of insurance thereon and all causes of action,
claims and warranties now or hereafter held by each Grantor in respect of any
of the items listed above), and all books, correspondence, files and other
Records, including, without limitation, all tapes, desks, cards, Software, data
and computer programs in the possession or under the control of any Grantor or
any other Person from time to time acting for any Grantor, in each case, to the
extent of such Grantor’s rights therein, that at any time evidence or contain
information relating to any of the property described in the preceding clauses
of this Section 2 or are otherwise necessary or helpful in the
collection or realization thereof; and

 

(r)            all Proceeds, including all Cash Proceeds and Noncash
Proceeds, and products of any and all of the foregoing Collateral;

 

in each case howsoever any Grantor’s interest
therein may arise or appear (whether by ownership, security interest, claim or
otherwise).

 

Notwithstanding anything
to contrary contained in this Agreement or in any other Security Document or
Transaction Document, the Collateral Agent acknowledges and agrees individually
and as collateral agent for the Buyers that: (i) for purposes of this Agreement
and every other Security Document and every other Transaction Document, “Collateral”
shall not include any part of Grantors’ respective right, title and interest in
and to the personal property described in Exhibit B hereto (the “Excluded Assets”); and (b) the Collateral Agent
(either individually or on behalf of the Buyers) is not receiving a security
interest in or other Lien on or to all or any part of the Excluded Assets under
this Agreement or any other Security Document, or otherwise.

 

SECTION 3.           Security
for Obligations.  The security
interest created hereby in the Collateral constitutes continuing collateral
security for all of the following obligations, whether now existing or
hereafter incurred (collectively, the “Obligations”):

 

(a)           for so long as the Notes are outstanding, (i) the payment
by the Company, as and when due and payable (by scheduled maturity, required
prepayment, acceleration, demand 

 

6

 

or otherwise), of all
amounts from time to time owing by it in respect of the Securities Purchase
Agreement, the Notes and the other Transaction
Documents, and (ii) in the case of Barnico, the payment by Barnico, as
and when due and payable, of all “Guaranteed
Obligations” under (and as defined in) the Barnico Guaranty, including,
without limitation, in both cases, (A) all principal of and interest on the
Notes (including, without limitation, all interest that accrues after the
commencement of any Insolvency Proceeding of any Grantor, whether or not the
payment of such interest is unenforceable or is not allowable due to the
existence of such Insolvency Proceeding), and (B) all fees, commissions,
expense reimbursements, indemnifications and all other amounts due or to become
due under any of the Transaction Documents; and

 

(b)           for so long as the Notes are outstanding, the due
performance and observance by each Grantor of all of its other obligations from
time to time existing in respect of any of the Transaction Documents, including
without limitation, with respect to any conversion or redemption rights of the
Buyers under the Notes.

 

SECTION 4.           Representations
and Warranties.  Each Grantor
represents and warrants as of the date of this Agreement as follows:

 

(a)           Schedule I hereto sets forth (i) the exact legal
name of each Grantor, and (ii) the state of incorporation, organization or
formation and the organizational identification number of each Grantor in such
state.

 

(b)           There is no pending or, to its knowledge, written notice
threatening any action, suit, proceeding or claim affecting any Grantor before
any governmental authority or any arbitrator, or any order, judgment or award
issued by any governmental authority or arbitrator, in each case, that may
adversely affect the grant by any Grantor, or the perfection, of the security
interest purported to be created hereby in the Collateral, or the exercise by
the Collateral Agent of any of its rights or remedies hereunder.

 

(c)           Except as disclosed on Schedule 3(bb) of the Securities
Purchase Agreement, all Federal, state and local tax returns and other reports
required by applicable law to be filed by any Grantor have been filed, or
extensions have been obtained, and all taxes, assessments and other
governmental charges imposed upon any Grantor or any property of any Grantor
(including, without limitation, all federal income and social security taxes on
employees’ wages) and which have become due and payable on or prior to the date
hereof have been paid, except to the extent contested in good faith by proper
proceedings which stay the imposition of any penalty, fine or Lien resulting
from the non-payment thereof and with respect to which adequate reserves have
been set aside for the payment thereof in accordance with generally accepted
accounting principles consistently applied (“GAAP”).

 

(d)           All Equipment, Fixtures, Goods and Inventory of each
Grantor now existing are, and all Equipment, Fixtures, Goods and Inventory of
each Grantor hereafter existing will be, located and/or based at the addresses
specified therefor in Schedule III hereto, except that each Grantor will
give the Collateral Agent written notice of any change in the location of any
such Collateral within 20 days of such change, other than to locations set
forth on Schedule III hereto (or a new Schedule III delivered by
Grantors to Collateral Agent from time to time) and with respect to which the
Collateral Agent has filed financing statements and otherwise fully 

 

7

 

perfected its Liens thereon
or will take such actions pursuant to Section 5(n).  Each Grantor’s chief place of
business and chief executive office, the place where each Grantor keeps its
Records concerning Accounts and all originals of all Chattel Paper are located
at the addresses specified therefor in Schedule III hereto.  None of the Accounts is evidenced by
Promissory Notes or other Instruments, unless included on Schedule IV
hereto.  Set forth in Schedule IV
hereto is a complete and accurate list, as of the date of this Agreement, of
(i) each Promissory Note, Security and other Instrument owned by each Grantor
and (ii) each Deposit Account, Securities Account and Commodities Account of
each Grantor, together with the name and address of each institution at which
each such account is maintained, the account number for each such account and a
description of the purpose of each such account.  Set forth in Schedule II hereto is a
complete and correct list of each trade name used by each Grantor and the name
of, and each trade name used by, each Person from which each Grantor has
acquired any substantial part of the Collateral.

 

(e)           Each Grantor has delivered to the Collateral Agent
complete and correct copies of each License described in Schedule II
hereto, including all schedules and exhibits thereto, which represents all of
the Licenses existing on the date of this Agreement.  Each such License sets forth the entire
agreement and understanding of the parties thereto relating to the subject
matter thereof, and there are no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby or the
rights of such Grantor or any of its affiliates in respect thereof.  Each material License now existing is, and
any material License entered into in the future will be, the legal, valid and
binding obligation of the parties thereto, enforceable against such parties in
accordance with its terms.  No default
under any material License by any such party has occurred, nor does any
defense, offset, deduction or counterclaim exist thereunder in favor of any
such party.

 

(f)            Each Grantor owns and controls, or otherwise possesses
adequate rights to use, all Trademarks, Patents and Copyrights, which are the
only trademarks, patents, copyrights, inventions, trade secrets, proprietary
information and technology, know-how, formulae, rights of publicity necessary
to conduct its business in substantially the same manner as conducted as of the
date hereof.  Schedule II hereto
sets forth a true and complete list of all registered copyrights, issued
Patents, Trademarks, and Licenses annually owned or used by each Grantor as of
the date hereof.  To the best knowledge
of each Grantor, all such Intellectual Property of each Grantor is subsisting
and in full force and effect, has not been adjudged invalid or unenforceable,
is valid and enforceable and has not been abandoned in whole or in part.  Except as set forth in Schedule II, no
such Intellectual Property is the subject of any licensing or franchising
agreement.  Each Grantor has no knowledge
of any conflict with the rights of others to any such Intellectual Property
and, to the best knowledge of each Grantor, each Grantor is not now infringing
or in conflict with any such rights of others in any material respect, and to
the best knowledge of each Grantor, no other Person is now infringing or in
conflict in any material respect with any such properties, assets and rights
owned or used by each Grantor.  No Grantor
has received any notice that it is violating or has violated the trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity or other intellectual
property rights of any third party.

 

(g)           Each Grantor is and will be at all times the sole and
exclusive owner of, or otherwise has and will have adequate rights in, the
Collateral free and clear of any Liens, except 

 

8

 

for Permitted Liens.  No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording or filing office except such as (i) may have been filed
in favor of the Collateral Agent and/or the Buyers relating to this Agreement
or the other Security Documents or (ii) are described on Schedule 4(g)
hereto.

 

(h)           The exercise by the Collateral Agent of any of its rights
and remedies hereunder will not contravene any law or any contractual
restriction binding on or otherwise affecting each Grantor or any of its
properties and will not result in or require the creation of any Lien upon or
with respect to any of its properties.

 

(i)            No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or other regulatory body,
is required for (i) the grant by each Grantor, or the perfection, of the
security interest purported to be created hereby in the Collateral, or
(ii) the exercise by the Collateral Agent of any of its rights and
remedies hereunder, except (except (A) for the filing under the Uniform
Commercial Code as in effect in the applicable jurisdiction of the financing
statements described in Schedule V hereto (or a new Schedule V
delivered by Grantors to Collateral Agent from time to time), all of which
financing statements have been duly filed and are in full force and effect or
will be duly filed and in full force and effect, (B) with respect to Deposit
Accounts, and all cash and other property from time to time deposited therein,
for the execution of a control agreement with the depository institution with
which such account is maintained, as provided in Section 5(i),
(C) with respect to Commodity Contracts, for the execution of a control
agreement with the commodity intermediary with which such commodity contract is
carried, as provided in Section 5(i), (D) with respect to the
perfection of the security interest created hereby in the United States
Intellectual Property and Licenses, for the recording of the appropriate
Assignment for Security, substantially in the form of Exhibit A hereto,
in the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, (E) with respect to the perfection of the security
interest created hereby in foreign Intellectual Property and Licenses, for
registrations and filings in jurisdictions located outside of the United States
and covering rights in such jurisdictions relating to such foreign Intellectual
Property and Licenses, (F) with respect to the perfection of the security
interest created hereby in titled Collateral, for the submission of an
appropriate application requesting that the Lien of the Collateral Agent be
noted on the Certificate of Title or certificate of ownership, completed and
authenticated by the applicable Grantor, together with the Certificate of Title
or certificate of ownership, with respect to such titled Collateral, to the
appropriate governmental authority, (G) with respect to the perfection of the
security interest created hereby in any Letter-of-Credit Rights, for the
consent of the issuer of the applicable letter of credit to the assignment of
proceeds as provided in the Uniform Commercial Code as in effect in the
applicable jurisdiction, (H) with respect to any action that may be necessary
to obtain control of Collateral constituting Deposit Accounts, Commodity
Contracts, Electronic Chattel Paper, Investment Property or Letter-of-Credit
Rights, the taking of such actions, and (I) the Collateral Agent having possession
of all Documents, Chattel Paper, Instruments and cash constituting Collateral
(subclauses (A), (B), (C), (D), (E), (F), G), (H) and (I), each a “Perfection Requirement” and collectively, the “Perfection Requirements”).

 

(j)            This Agreement creates in favor of the Collateral Agent,
for the benefit of the Buyers, a legal, valid and enforceable security interest
in the Collateral, as security for the Obligations.  The Perfection Requirements result in the
perfection of such security interests.

 

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Such security interests are,
or in the case of Collateral in which each Grantor obtains rights after the
date hereof, will be, perfected, first priority security interests, subject
only to Permitted Liens and the Perfection Requirements and the financing statements
described in Schedule 4(g).  Such
recordings and filings and all other action necessary to perfect and protect
such security interest have been duly taken or will be taken pursuant to
Section 5(n), and, in the case of Collateral in which each Grantor obtains
rights after the date hereof, will be duly taken, except for the Collateral
Agent’s having possession of all Documents, Chattel Paper, Instruments and cash
constituting Collateral after the date hereof and the other actions, filings
and recordations described above, including the Perfection Requirements.

 

(k)           As of the date hereof, no Grantor holds any Commercial
Tort Claims or has knowledge of any pending Commercial Tort Claims, except for
such Commercial Tort Claims described in Schedule VI.

 

SECTION 5.           Covenants
as to the Collateral.  So long as any
of the Obligations shall remain outstanding, unless the Collateral Agent shall
otherwise consent in writing:

 

(a)           Further Assurances. 
Each Grantor will at its expense, at any time and from time to time,
promptly execute and deliver all further instruments and documents and take all
further action that the Collateral Agent may reasonably request in order
to:  (i) perfect and protect the
security interest purported to be created hereby; (ii) enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder in
respect of the Collateral; or (iii) otherwise effect the purposes of this
Agreement, including, without limitation: 
(A) marking conspicuously all Chattel Paper and each License and,
at the request of the Collateral Agent, each of its Records pertaining to the
Collateral with a legend, in form and substance satisfactory to the Collateral
Agent, indicating that such Chattel Paper, License or Collateral is subject to
the security interest created hereby, (B)  delivering and pledging to the
Collateral Agent pursuant to the Pledge Agreement each Promissory Note,
Security, Chattel Paper or other Instrument, now or hereafter owned by any
Grantor, duly endorsed and accompanied by executed instruments of transfer or
assignment, all in form and substance satisfactory to the Collateral Agent,
(C) executing and filing (to the extent, if any, that any Grantor’s
signature is required thereon) or authenticating the filing of, such financing
or continuation statements, or amendments thereto, as may be necessary or  that the Collateral Agent may reasonably
request in order to perfect and preserve the security interest purported to be
created hereby, (D) furnishing to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral in each case as the
Collateral Agent may reasonably request, all in reasonable detail, (E) if
any Collateral shall be in the possession of a third party, notifying such
Person of the Collateral Agent’s security interest created hereby and obtaining
a written acknowledgment from such Person that such Person holds possession of
the Collateral  for the benefit of the
Collateral Agent, which such written acknowledgement shall be in form and
substance reasonably satisfactory to the Collateral Agent, (F) if at any
time after the date hereof, any Grantor acquires or holds any Commercial Tort
Claim, promptly notifying the Collateral Agent in a writing signed by such
Grantor setting forth a brief description of such Commercial Tort Claim and
granting to the Collateral Agent a security interest therein and in the
proceeds thereof, which writing shall incorporate the provisions hereof and
shall be in form and substance satisfactory to the Collateral Agent,
(G) upon the acquisition after the date hereof by any Grantor of any motor
vehicle or other 

 

10

 

Equipment subject to a certificate
of title or ownership (other than a motor vehicle or Equipment that is subject
to a purchase money security interest), causing the Collateral Agent to be
listed as the lienholder on such certificate of title or ownership and
delivering evidence of the same to the Collateral Agent in accordance with Section
5(j) hereof; and (H) taking all actions required by any earlier
versions of the Uniform Commercial Code or by other law, as applicable, in any
relevant Uniform Commercial Code jurisdiction, or by other law as applicable in
any foreign jurisdiction.

 

(b)           Location of Equipment and Inventory.  Each Grantor will keep the Equipment and
Inventory (i) at the locations specified therefor on Schedule III
hereto, or (ii) at such other locations set forth on Schedule III (or a
new Schedule III delivered by Grantors to Collateral Agent from time to
time) and with respect to which the Collateral Agent has filed financing
statements and otherwise fully perfected its Liens thereon, or (iii) at such
other locations in the United States, provided that within 20 days following
the relocation of Equipment or Inventory to such other location or the
acquisition of Equipment or Inventory, Grantor shall deliver to the Collateral
Agent a new Schedule III indicating such new locations.

 

(c)           Condition of Equipment.  Each Grantor will maintain or cause the
Equipment (necessary or useful to its business) to be maintained and preserved
in good condition, repair and working order, ordinary wear and tear excepted,
and will forthwith, or in the case of any loss or damage to any Equipment of
any Grantor within a commercially reasonable time after the occurrence thereof,
make or cause to be made all repairs, replacements and other improvements in
connection therewith which are necessary or desirable, consistent with past
practice, or which the Collateral Agent may request to such end.  Any Grantor will promptly furnish to the
Collateral Agent a statement describing in reasonable detail any such loss or
damage in excess of $250,000  per
occurrence to any Equipment.

 

(d)           Taxes, Etc. 
Each Grantor agrees to pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect
to which adequate reserves in accordance with GAAP have been set aside for the
payment thereof.

 

(e)           Insurance.

 

(i)            Each Grantor will, at its
own expense, maintain insurance (including, without limitation, commercial
general liability and property insurance) with respect to the Equipment and
Inventory in such amounts, against such risks, in such form and with
responsible and reputable insurance companies or associations as is required by
any governmental authority having jurisdiction with respect thereto or as is
carried generally in accordance with sound business practice by companies in
similar businesses similarly situated and in any event, in amount, adequacy and
scope reasonably satisfactory to the Collateral Agent.  To the extent requested by the Collateral
Agent at any time and from time to time, each such policy for liability
insurance shall provide for all losses to be paid on behalf of the Collateral
Agent and any Grantor as their respective interests may appear, and each policy
for property 

 

11

 

damage insurance shall provide for all losses to be adjusted with, and
paid directly to, the Collateral Agent. 
To the extent requested by the Collateral Agent at any time and from
time to time, each such policy shall in addition (A) name the Collateral Agent
as an additional insured party thereunder (without any representation or
warranty by or obligation upon the Collateral Agent) as their interests may
appear, (B) contain an agreement by the insurer that any loss thereunder shall
be payable to the Collateral Agent on its own account notwithstanding any
action, inaction or breach of representation or warranty by any Grantor, (C)
provide that there shall be no recourse against the Collateral Agent for
payment of premiums or other amounts with respect thereto, and (D) provide that
at least 30 days’ prior written notice of cancellation, lapse, expiration or
other adverse change shall be given to the Collateral Agent by the
insurer.  Any Grantor will, if so
requested by the Collateral Agent, deliver to the Collateral Agent original or
duplicate policies of such insurance and, as often as the Collateral Agent may
reasonably request, a report of a reputable insurance broker with respect to
such insurance.  Any Grantor will also,
at the request of the Collateral Agent, execute and deliver instruments of
assignment of such insurance policies and cause the respective insurers to
acknowledge notice of such assignment.

 

(ii)           Reimbursement
under any liability insurance maintained by any Grantor pursuant to this Section
5(e) may be paid directly to the Person who shall have incurred liability
covered by such insurance.  In the case
of any loss involving damage to Equipment or Inventory, any proceeds of
insurance maintained by any Grantor pursuant to this Section 5(e) shall
be paid to the Collateral Agent (except as to which paragraph (iii) of this Section
5(e) is not applicable), any Grantor
will make or cause to be made the necessary repairs to or replacements of such
Equipment or Inventory, and any proceeds of insurance maintained by any Grantor
pursuant to this Section 5(e) shall be paid by the Collateral Agent to
any Grantor as reimbursement for the costs of such repairs or replacements.

 

(iii)          Following and during the
continuance of an Event of Default, all insurance payments in respect of such
Equipment or Inventory shall be paid to the Collateral Agent and applied as
specified in Section 7(b) hereof.

 

(f)            Provisions Concerning the Accounts and the Licenses.

 

(i)            Each Grantor will (A) give
the Collateral Agent at least 30 days’ prior written notice of any change in
such Grantor’s name, identity or organizational structure, (B) maintain its
jurisdiction of incorporation, organization or formation as set forth in Schedule
I hereto, (C) immediately notify the Collateral Agent upon obtaining an
organizational identification number, if on the date hereof such Grantor did
not have such identification number, and (D) keep adequate records concerning
the Accounts and Chattel Paper and permit representatives of the Collateral
Agent during normal business hours on reasonable notice to such Grantor, to
inspect and make abstracts from such Records and Chattel Paper.

 

(ii)           Each
Grantor will, except as otherwise provided in this subsection (f),
continue to collect, at its own expense, all amounts due or to become due under
the Accounts.  In connection with such
collections, any Grantor may (and, at the Collateral Agent’s direction, will)
take such action as any Grantor or the Collateral Agent may deem necessary or
advisable to enforce collection or performance of the Accounts; provided,
however, that the Collateral Agent shall have the right at any time,
upon the occurrence and during the 

 

12

 

continuance of an Event of Default, to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the
Collateral Agent and to direct such account debtors or obligors to make payment
of all amounts due or to become due to any Grantor thereunder directly to the
Collateral Agent or its designated agent and, upon such notification and at the
expense of any Grantor and to the extent permitted by law, to enforce
collection of any such Accounts and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as any Grantor might
have done.  After receipt by any Grantor
of a notice from the Collateral Agent that the Collateral Agent has notified,
intends to notify, or has enforced or intends to enforce any Grantor’s rights
against the account debtors or obligors under any Accounts as referred to in
the proviso to the immediately preceding sentence, (A) all amounts and
proceeds (including Instruments) received by any Grantor in respect of the
Accounts shall be received in trust for the benefit of the Collateral Agent
hereunder, shall be segregated from other funds of any Grantor and shall be
forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement) to be applied as specified in Section 7(b)
hereof, and (B) no Grantor will adjust, settle or compromise the amount or
payment of any Account or release wholly or partly any account debtor or
obligor thereof or allow any credit or discount thereon.  In addition, upon the occurrence and during
the continuance of an Event of Default, the Collateral Agent may (in its sole
and absolute discretion) direct any or all of the banks and financial
institutions with which any Grantor either maintains a Deposit Account or a lockbox
or deposits the proceeds of any Accounts to send immediately to the Collateral
Agent by wire transfer (to such account as the Collateral Agent shall specify,
or in such other manner as the Collateral Agent shall direct) all or a portion
of such securities, cash, investments and other items held by such
institution.  Any such securities, cash,
investments and other items so received by the Collateral Agent shall be
applied as specified in accordance with Section 7(b) hereof.

 

(iii)          Upon the occurrence and
during the continuance of any breach or default under any material License
referred to in Schedule II hereto by any party thereto other than any
Grantor, each Grantor party thereto will, promptly after obtaining knowledge
thereof, give the Collateral Agent written notice of the nature and duration
thereof, specifying what action, if any, it has taken and proposes to take with
respect thereto and thereafter will take reasonable steps to protect and
preserve its rights and remedies in respect of such breach or default, or will
obtain or acquire an appropriate substitute License.

 

(iv)          Each
Grantor will, at its expense, promptly deliver to the Collateral Agent a copy
of each notice or other communication received by it by which any other party
to any material License referred to in Schedule II hereto purports to
exercise any of its rights or affect any of its obligations thereunder,
together with a copy of any reply by such Grantor thereto.

 

(v)           Each
Grantor will exercise promptly and diligently each and every right which it may
have under each material License (other than any right of termination) and will
duly perform and observe in all respects all of its obligations under each
material License and will take all action reasonably necessary to maintain such
Licenses in full force and effect.  No
Grantor will, without the prior written consent of the Collateral Agent,
cancel, terminate, amend or otherwise modify in any respect, or waive any
provision of, any material License referred to in Schedule II hereto.

 

13

 

(g)           Transfers and Other Liens.

 

(i)            No Grantor will sell, assign
(by operation of law or otherwise), lease, license, exchange or otherwise
transfer or dispose of any of the Collateral, except such Grantor may (A) sell
or dispose of Inventory (including, without limitation, As-extracted
Collateral) in the ordinary course of business, and (B) sell or dispose of
asssets such Grantor has determined, in good faith, not to be useful in the
conduct of its business, and (C) sell or dispose of accounts in the course of
collection in the ordinary course of business consistent with past practice.

 

(ii)           No
Grantor will create, suffer to exist or grant any Lien upon or with respect to
any Collateral other than a Permitted Lien.

 

(h)           Intellectual Property.

 

(i)            If applicable, any Grantor
shall, upon the Collateral Agent’s written request, duly execute and deliver
the applicable Assignment for Security in the form attached hereto as Exhibit
A. 
Each Grantor (either itself or through licensees) will, and will cause
each licensee thereof to, take all action necessary to maintain all of the
Intellectual Property in full force and effect, including, without limitation,
using the proper statutory notices and markings and using the Trademarks on
each applicable trademark class of goods in order to so maintain the Trademarks
in full force and free from any claim of abandonment for non-use, and each
Grantor will not (nor permit any licensee thereof to) do any act or knowingly omit
to do any act whereby any Intellectual Property may become invalidated; provided,
however, that so long as no Event of Default has occurred and is
continuing, no Grantor shall have an obligation to use or to maintain any
Intellectual Property (A) that relates solely to any product or work, that
has been, or is in the process of being, discontinued, abandoned or terminated,
(B) that is being replaced with Intellectual Property substantially similar to
the Intellectual Property that may be abandoned or otherwise become invalid, so
long as the failure to use or maintain such Intellectual Property does not
materially adversely affect the validity of such replacement Intellectual
Property and so long as such replacement Intellectual Property is subject to
the Lien created by this Agreement or (C) that is substantially the same as
another Intellectual Property that is in full force, so long the failure to use
or maintain such Intellectual Property does not materially adversely affect the
validity of such replacement Intellectual Property and so long as such other
Intellectual Property is subject to the Lien and security interest created by
this Agreement.  Each Grantor will cause to be taken all necessary steps in any
proceeding before the United States Patent and Trademark Office and the United
States Copyright Office or any similar office or agency in any other country or
political subdivision thereof to maintain each registration of the Intellectual
Property (other than the Intellectual Property described in the proviso to the
immediately preceding sentence), including, without limitation, filing of
renewals, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and payment of maintenance fees,
filing fees, taxes or other governmental fees. 
If any Intellectual Property (other than Intellectual Property described
in the proviso to the first sentence of subsection (i) of this clause (h)) is
infringed, misappropriated, diluted or otherwise violated in any material
respect by a third party, each Grantor shall (x) upon learning of such
infringement, misappropriation, dilution or other violation, promptly notify
the Collateral Agent and (y) to the extent any Grantor shall deem appropriate
under the circumstances, promptly sue for infringement, misappropriation,
dilution or other 

 

14

 

violation, seek injunctive relief where
appropriate and recover any and all damages for such infringement,
misappropriation, dilution or other violation, or take such other actions as
such Grantor shall deem appropriate under the circumstances to protect such
Intellectual Property.  Each Grantor shall furnish to the Collateral Agent from time
to time upon its request statements and schedules further identifying and
describing the Intellectual Property and Licenses and such other reports in
connection with the Intellectual Property and Licenses as the Collateral Agent
may reasonably request, all in reasonable detail and promptly upon request of
the Collateral Agent, following receipt by the Collateral Agent of any such
statements, schedules or reports, each Grantor shall modify this Agreement by
amending Schedule II hereto, as the case may be, to include any
Intellectual Property and License, as the case may be, which becomes part of
the Collateral under this Agreement and shall execute and authenticate such
documents and do such acts as shall be necessary or, in the reasonable judgment
of the Collateral Agent, desirable to subject such Intellectual Property and
Licenses to the Lien and security interest created by this Agreement.  Notwithstanding anything herein to the
contrary, upon the occurrence and during the continuance of an Event of
Default, no Grantor may abandon or otherwise permit any Intellectual Property
to become invalid without the prior written consent of the Collateral Agent,
and if any Intellectual Property is infringed, misappropriated, diluted or
otherwise violated in any material respect by a third party, each Grantor will
take such action as the Collateral Agent shall deem appropriate under the
circumstances to protect such Intellectual Property.

 

(ii)           In
no event shall any Grantor, either itself or through any agent, employee,
licensee or designee, file an application for the registration of any Trademark
or Copyright or the issuance of any Patent with the United States Patent and
Trademark Office or the United States Copyright Office, as applicable, or in
any similar office or agency of the United States or any country or any
political subdivision thereof unless it gives the Collateral Agent prior
written notice thereof.  Upon request of
the Collateral Agent, any Grantor shall execute, authenticate and deliver any
and all assignments, agreements, instruments, documents and papers as the
Collateral Agent may reasonably request to evidence the Collateral Agent’s
security interest hereunder in such Intellectual Property and the General
Intangibles of any Grantor relating thereto or represented thereby, and each
Grantor hereby appoints the Collateral Agent its attorney-in-fact to execute
and/or authenticate and file all such writings for the foregoing purposes, all
acts of such attorney being hereby ratified and confirmed, and such power
(being coupled with an interest) shall be irrevocable until the indefeasible
payment in full in cash of all of the Obligations in full.

 

(i)            Deposit, Commodities and Securities Accounts.  Upon the Collateral Agent’s written request,
each Grantor shall cause each bank and other financial institution with an
account referred to in Schedule IV hereto to execute and deliver to the
Collateral Agent a control agreement, in form and substance reasonably
satisfactory to the Collateral Agent, duly executed by each Grantor and such
bank or financial institution, or enter into other arrangements in form and
substance satisfactory to the Collateral Agent, pursuant to which such
institution shall irrevocably agree, inter  alia, that (i) it
will comply at any time with the instructions originated by the Collateral Agent
to such bank or financial institution directing the disposition of cash,
Commodity Contracts, securities, Investment Property and other items from time
to time credited to such account, without further consent of each Grantor,
which instructions the Collateral Agent will not give to such bank or other
financial institution in the absence of a continuing Event of Default, (ii) all
Commodity Contracts, securities, Investment Property and 

 

15

 

other items of each Grantor
deposited with such institution shall be subject to a perfected, first priority
security interest in favor of the Collateral Agent, (iii) any right of set
off (other than recoupment of standard fees), banker’s Lien or other similar
Lien, security interest or encumbrance shall be fully waived as against the
Collateral Agent, and (iv) upon receipt of written notice from the
Collateral Agent during the continuance of an Event of Default, such bank or
financial institution shall immediately send to the Collateral Agent by wire
transfer (to such account as the Collateral Agent shall specify, or in such
other manner as the Collateral Agent shall direct) all such cash, the value of
any Commodity Contracts, securities, Investment Property and other items held
by it.  Without the prior written consent
of the Collateral Agent, each Grantor shall not make or maintain any Deposit
Account, Commodity Account or Securities Account except for the accounts set
forth in Schedule IV hereto.  The
provisions of this paragraph 5(i) shall not apply to (i) Deposit Accounts for
which the Collateral Agent is the depositary and (ii) Deposit Accounts
specially and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of each Grantor’s salaried or
hourly employees.

 

(j)            Motor Vehicles.

 

(i)            Upon
the Collateral Agent’s written request, each Grantor shall deliver to the
Collateral Agent originals of the certificates of title or ownership for all
motor vehicles with a value in excess of $50,000, owned by it with the
Collateral Agent listed as lienholder, for the benefit of the Buyers.

 

(ii)           Each
Grantor hereby appoints the Collateral Agent as its attorney-in-fact, effective
the date hereof and terminating upon the termination of this Agreement, for the
purpose of (A) executing on behalf of such Grantor title or ownership
applications for filing with appropriate state agencies to enable motor
vehicles now owned or hereafter acquired by such Grantor to be retitled and the
Collateral Agent listed as lienholder thereof, (B) filing such applications
with such state agencies, and (C) executing such other documents and
instruments on behalf of, and taking such other action in the name of, such
Grantor as the Collateral Agent may deem necessary or advisable to accomplish
the purposes hereof (including, without limitation, for the purpose of creating
in favor of the Collateral Agent a perfected Lien on the motor vehicles and
exercising the rights and remedies of the Collateral Agent hereunder).  This appointment as attorney-in-fact is
coupled with an interest and is irrevocable until all of the Obligations are
indefeasibly paid in full in cash.

 

(iii)          Any
certificates of title or ownership delivered pursuant to the terms hereof shall
be accompanied by odometer statements for each motor vehicle covered thereby.

 

(iv)          So
long as no Event of Default shall have occurred and be continuing, upon the
request of any Grantor, the Collateral Agent shall execute and deliver to any
Grantor such instruments as any Grantor shall reasonably request to remove the
notation of the Collateral Agent as lienholder on any certificate of title for
any motor vehicle; provided, however, that any such instruments
shall be delivered, and the release effective, only upon receipt by the
Collateral Agent of a certificate from any Grantor stating that such motor
vehicle is to be sold or has suffered a casualty loss (with title thereto in
such case passing to the casualty 

 

16

 

insurance company therefor in settlement of the claim for such loss)
and the amount that any Grantor will receive as sale proceeds or insurance
proceeds.  Any proceeds of such sale or
casualty loss shall be paid to the Collateral Agent hereunder immediately upon
receipt, to be applied to the Obligations then outstanding.

 

(k)           Control. 
Each Grantor hereby agrees to take any or all action that the Collateral
Agent may reasonably request in order for the Collateral Agent to obtain
control in accordance with Sections 9-105 — 9-107 of the Code with respect to
the following Collateral: 
(i) Electronic Chattel Paper, (ii) Investment Property, and (iii)
Letter-of-Credit Rights.

 

(l)            Inspection and Reporting.  Each Grantor shall permit the Collateral
Agent, or any agent or representatives thereof or such professionals or other
Persons as the Collateral Agent may designate, during normal business hours,
after reasonable notice in the absence of an Event of Default and not more than
once a year in the absence of an Event of Default, (i) to examine and make
copies of and abstracts from any Grantor’s records and books of account, (ii)
to visit and inspect its properties, (iii) to verify materials, leases,
Instruments, Accounts, Inventory and other assets of any Grantor from time to
time, and (iii) to conduct audits, physical counts, appraisals and/or
valuations, examinations at the locations of any Grantor.  Each Grantor shall also permit the Collateral
Agent, or any agent or representatives thereof or such professionals or other
Persons as the Collateral Agent may designate, to discuss such Grantor’s
affairs, finances and accounts with any of its directors, officers, managerial
employees, independent accountants or any of its other representatives.

 

(m)          Future Subsidiaries. 
If any Grantor shall hereafter create or acquire any Subsidiary,
simultaneously with the creation or acquisition of such Subsidiary, (i) such
Grantor shall cause such Subsidiary to become a party to this Agreement as an
additional “Grantor” hereunder, (ii) such Grantor shall deliver to Collateral
Agent revised Schedules to this Agreement, as appropriate, (iii) such Grantor
shall cause such Subsidiary to duly execute and deliver a guaranty of the
Obligations in favor of the Collateral Agent in form and substance reasonably
acceptable to the Collateral Agent, and (iv) such Grantor shall duly execute
and/or deliver, or cause such Subsidiary to duly execute and/or deliver, such
opinions of counsel and other documents, in form and substance reasonably acceptable
to the Collateral Agent, as the Collateral Agent shall reasonably request with
respect thereto, provided that any Grantor that acquires a Subsidiary on or
within two days after the 2007 Closing Date shall have 10 Business Days in
which to satisfy the requirements of this Section 5(m).

 

(n)           Fixture Filings. 
Within 10 Business Days after the 2007 Closing Date, Grantors shall
cause financing statements to be filed in the appropriate county clerk’s
offices in order to perfect the security interest of the Collateral Agent in
and to all Fixtures and As-extracted Collateral constituting Collateral on the
2007 Closing Date or within two Business Days after the 2007 Closing Date.

 

SECTION 6.           Additional
Provisions Concerning the Collateral.

 

(a)           Each Grantor hereby (i) authorizes the Collateral Agent to
file one or more Uniform Commercial Code financing or continuation statements,
and amendments thereto, relating to the Collateral and (ii) ratifies such
authorization to the extent that the Collateral Agent 

 

17

 

has filed any such financing
or continuation statements, or amendments thereto, prior to the date
hereof.  A photocopy or other
reproduction of this Agreement or any financing statement covering the Collateral
or any part thereof shall be sufficient as a financing statement where
permitted by law.  Without limiting the
generality of the foregoing, each Grantor hereby ratifies and confirms the
filing of any and all financing statements filed by the Collateral Agent as
secured party in connection with the transactions contemplated by the Existing
Security Agreement, and each Grantor agrees that any and all such financing
statements also shall apply to perfect the security interest in the Collateral
granted under this Agreement.

 

(b)           Each Grantor hereby irrevocably appoints the Collateral
Agent as its attorney-in-fact and proxy, with full authority in the place and
stead of such Grantor and in the name of such Grantor or otherwise, from time
to time in the Collateral Agent’s discretion, so long as an Event of Default
shall have occurred and is continuing, to take any action and to execute any
instrument which the Collateral Agent may reasonably deem necessary or
advisable to accomplish the purposes of this Agreement (subject to the rights
of each Grantor under Section 5 hereof), including, without limitation,
(i) to obtain and adjust insurance required to be paid to the Collateral Agent
pursuant to Section 5(e) hereof, (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 Collateral, (iii) to receive, endorse,
and collect any drafts or other instruments, documents and chattel paper in
connection with clause (i) or (ii) above, (iv) to file any claims or take any
action or institute any proceedings which the Collateral Agent may deem
necessary or desirable for the collection of any Collateral or otherwise to
enforce the rights of the Collateral Agent and the Buyers with respect to any
Collateral, and (v) to execute assignments, licenses and other documents to
enforce the rights of the Collateral Agent and the Buyers with respect to any
Collateral.  This power is coupled with an
interest and is irrevocable until all of the Obligations are indefeasibly paid
in full in cash.

 

(c)           For the purpose of enabling the Collateral Agent to
exercise rights and remedies hereunder, at such time as the Collateral Agent
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, each Grantor hereby grants to the Collateral Agent, to the
extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to any Grantor) to use, assign,
license or sublicense any Intellectual Property now owned or hereafter acquired
by such Grantor, wherever the same may be located, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof.  Notwithstanding
anything contained herein to the contrary, but subject to the provisions of the
Securities Purchase Agreement that limit the right of any Grantor to dispose of
its property, and Section 5(g) and Section 5(h) hereof, so long
as no Event of Default shall have occurred and be continuing, any Grantor may
exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or
take other actions with respect to the Intellectual Property in the ordinary
course of its business.  In furtherance
of the foregoing, unless an Event of Default shall have occurred and be
continuing, the Collateral Agent shall from time to time, upon the request of
any Grantor, execute and deliver any instruments, certificates or other
documents, in the form so requested, which such Grantor shall have certified
are appropriate (in such Grantor’s judgment) to allow it to take any action
permitted above (including relinquishment of the license provided pursuant to
this clause (c) as to any Intellectual Property).  Further, upon the indefeasible payment in
full in cash of all of the Obligations, the Collateral Agent (subject to

 

18

 

Section 10(e) hereof) shall
release and reassign to any Grantor all of the Collateral Agent’s right, title
and interest in and to the Intellectual Property, and the Licenses, all without
recourse, representation or warranty whatsoever.  The exercise of rights and remedies hereunder
by the Collateral Agent shall not terminate the rights of the holders of any
licenses or sublicenses theretofore granted by each Grantor in accordance with
the second sentence of this clause (c). 
Each Grantor hereby releases the Collateral Agent from any claims,
causes of action and demands at any time arising out of or with respect to any
actions taken or omitted to be taken by the Collateral Agent under the powers
of attorney granted herein other than actions taken or omitted to be taken
through the Collateral Agent’s gross negligence or willful misconduct, as
determined by a final determination of a court of competent jurisdiction.

 

(d)           If any Grantor fails to perform any agreement or
obligation contained herein, the Collateral Agent may itself perform, or cause
performance of, such agreement or obligation, in the name of such Grantor or
the Collateral Agent, and the expenses of the Collateral Agent incurred in
connection therewith shall be payable by such Grantor pursuant to Section 8
hereof and shall be secured by the Collateral.

 

(e)           The powers conferred on the Collateral Agent hereunder are
solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. 
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining
to any Collateral.

 

(f)            Anything herein to the contrary notwithstanding
(i) each Grantor shall remain liable under the Licenses and otherwise with
respect to any of the Collateral to the extent set forth therein to perform all
of its obligations thereunder to the same extent as if this Agreement had not
been executed, (ii) the exercise by the Collateral Agent of any of its
rights hereunder shall not release any Grantor from any of its obligations
under the Licenses or otherwise in respect of the Collateral, and (iii) the
Collateral Agent shall not have any obligation or liability by reason of this
Agreement under the Licenses or with respect to any of the other Collateral,
nor shall the Collateral Agent be obligated to perform any of the obligations
or duties of any Grantor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.

 

SECTION 7.           Remedies
Upon Event of Default.  If any Event
of Default shall have occurred and be continuing:

 

(a)           The Collateral Agent may exercise in respect of the
Collateral, in addition to any other rights and remedies provided for herein or
otherwise available to it, all of the rights and remedies of a secured party
upon default under the Code (whether or not the Code applies to the affected
Collateral), and also may (i) take absolute control of the Collateral,
including, without limitation, transfer into the Collateral Agent’s name or
into the name of its nominee or nominees (to the extent the Collateral Agent
has not theretofore done so) and thereafter receive, for the benefit of the
Collateral Agent, all payments made thereon, give all consents, waivers and
ratifications in respect thereof and otherwise act with respect thereto as
though it were the outright owner thereof, (ii) require each Grantor to, and
each Grantor hereby agrees that it will at 

 

19

 

its expense and upon request
of the Collateral Agent forthwith, assemble all or part of its respective
Collateral as directed by the Collateral Agent and make it available to the
Collateral Agent at a place or places to be designated by the Collateral Agent
that is reasonably convenient to both parties, and the Collateral Agent may
enter into and occupy any premises owned or leased by any Grantor where the Collateral
or any part thereof is located or assembled for a reasonable period in order to
effectuate the Collateral Agent’s rights and remedies hereunder or under law,
without obligation to any Grantor in respect of such occupation, and
(iii) without notice except as specified below and without any obligation
to prepare or process the Collateral for sale, (A) sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any of
the Collateral Agent’s offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the
Collateral Agent may deem commercially reasonable and/or (B) lease,
license or dispose of the Collateral or any part thereof upon such terms as the
Collateral Agent may deem commercially reasonable.  Each Grantor agrees that, to the extent
notice of sale or any other disposition of its respective Collateral shall be
required by law, at least ten (10) days’ notice to any Grantor of the time and
place of any public sale or the time after which any private sale or other
disposition of its respective Collateral is to be made shall constitute
reasonable notification.  The Collateral
Agent shall not be obligated to make any sale or other disposition of any
Collateral regardless of notice of sale having been given.  The Collateral 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.  Each
Grantor hereby waives any claims against the Collateral Agent and the Buyers
arising by reason of the fact that the price at which its respective Collateral
may have been sold at a private sale was less than the price which might have
been obtained at a public sale or was less than the aggregate amount of the
Obligations, even if the Collateral Agent accepts the first offer received and
does not offer such Collateral to more than one offeree, and waives all rights
that any Grantor may have to require that all or any part of such Collateral be
marshaled upon any sale (public or private) thereof.  Each Grantor hereby acknowledges that
(i) any such sale of its respective Collateral by the Collateral Agent
shall be made without warranty, (ii) the Collateral Agent may specifically
disclaim any warranties of title, possession, quiet enjoyment or the like, and
(iii) such actions set forth in clauses (i) and (ii) above shall not
adversely affect the commercial reasonableness of any such sale of
Collateral.  In addition to the
foregoing, (1) upon written notice to any Grantor from the Collateral
Agent after and during the continuance of an Event of Default, such Grantor
shall cease any use of the Intellectual Property or any trademark, patent or
copyright similar thereto for any purpose described in such notice; (2) the
Collateral Agent may, at any time and from time to time after and during the
continuance of an Event of Default, upon 10 days’ prior notice to such Grantor,
license, whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any of the Intellectual Property, throughout the universe
for such term or terms, on such conditions, and in such manner, as the
Collateral Agent shall in its sole discretion determine; and (3) the Collateral
Agent may, at any time, pursuant to the authority granted in Section 6
hereof (such authority being effective upon the occurrence and during the
continuance of an Event of Default), execute and deliver on behalf of such
Grantor, one or more instruments of assignment of the Intellectual Property (or
any application or registration thereof), in form suitable for filing,
recording or registration in any country.

 

(b)           Any cash held by the Collateral Agent as Collateral and
all Cash Proceeds received by the Collateral Agent in respect of any sale of or
collection from, or other realization

 

20

upon, all or any part of the
Collateral shall be applied (after payment of any amounts payable to the
Collateral Agent pursuant to Section 8 hereof) by the Collateral Agent
against all or any part of the Obligations in such order as the Collateral
Agent shall elect, consistent with the provisions of the Securities Purchase
Agreement.  Any surplus of such cash or
Cash Proceeds held by the Collateral Agent and remaining after the indefeasible
payment in full in cash of all of the Obligations shall be paid over to
whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct.

 

(c)           In the event that the proceeds of any such sale,
collection or realization are insufficient to pay all amounts to which the
Collateral Agent and the Buyers are legally entitled, each Grantor shall be
liable for the deficiency (to the extent of its respective obligations under
the Transaction Documents), together with interest thereon at the highest rate
specified in the Notes for interest on overdue principal thereof or such other
rate as shall be fixed by applicable law, together with the costs of collection
and the reasonable fees, costs, expenses and other client charges of any
attorneys employed by the Collateral Agent to collect such deficiency.

 

(d)           Each Grantor hereby
acknowledges that if the Collateral Agent complies with any applicable state,
provincial, or federal law requirements in connection with a disposition of the
Collateral, such compliance will not adversely affect the commercial
reasonableness of any sale or other disposition of the Collateral.

 

(e)           The Collateral Agent shall
not be required to marshal any present or future collateral security
(including, but not limited to, this Agreement and the Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of the Collateral Agent’s rights hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and in
addition to all other rights, however existing or arising.  To the extent that any Grantor lawfully may,
each Grantor hereby agrees that it will not invoke any law relating to the
marshaling of collateral which might cause delay in or impede the enforcement
of the Collateral Agent’s rights under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
each Grantor hereby irrevocably waives the benefits of all such laws.

 

SECTION 8.           Indemnity
and Expenses.

 

(a)           Each Grantor agrees, jointly and severally, to defend,
protect, indemnify and hold the Collateral Agent and each of the Buyers,
jointly and severally, harmless from and against any and all claims, damages,
losses, liabilities, obligations, penalties, fees, costs and expenses
(including, without limitation, reasonable legal fees, costs, expenses, and
disbursements of such Person’s counsel) to the extent that they arise out of or
otherwise result from this Agreement (including, without limitation,
enforcement of this Agreement), except to the extent resulting from such Person’s
gross negligence or willful misconduct, as determined by a final judgment of a
court of competent jurisdiction.

 

(b)           Each Grantor agrees, jointly and severally, to pay to the
Collateral Agent upon demand the amount of any and all costs and expenses,
including the reasonable fees, costs, 

 

21

 

expenses and disbursements
of counsel for the Collateral Agent and of any experts and agents (including,
without limitation, any collateral trustee which may act as agent of the
Collateral Agent), which the Collateral Agent may incur in connection with
(i) the preparation, negotiation, execution, delivery, recordation,
administration, amendment, waiver or other modification or termination 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 the Collateral
Agent hereunder, or (iv) the failure by any Grantor to perform or observe
any of the provisions hereof.

 

SECTION 9.           Notices,
Etc.  All notices and other
communications provided for hereunder shall be in writing and shall be mailed
(by certified mail, postage prepaid and return receipt requested), telecopied
or delivered in person, if to the Company or the Collateral Agent, at its
respective address specified in the Securities Purchase Agreement, and if to
Barnico, at its address specified in the Barnico Guaranty; or, as to any such Person,
at such other address as shall be designated by such Person in a written notice
to all other parties hereto complying as to delivery with the terms of this Section
9.  All such notices and other
communications shall be effective (a) if sent by certified mail, return receipt
requested, when received or three Business Days after deposited in the mails,
whichever occurs first, (b) if telecopied, when transmitted (during normal
business hours) and confirmation is received, and otherwise, the Business Day after
the notice or communication was transmitted and confirmation is received, or
(c) if delivered in person, upon delivery (provided same is on a Business Day
and, if not, on the next Business Day).

 

SECTION 10.         Miscellaneous.

 

(a)           No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by each Grantor and the Collateral
Agent, and no waiver of any provision of this Agreement, and no consent to any
departure by any party herefrom, shall be effective unless it is in writing and
signed by each Grantor and the Collateral Agent, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

 

(b)           No failure on the part of the Collateral Agent to exercise,
and no delay in exercising, any right hereunder or under any of the other
Transaction Documents 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. 
The rights and remedies of the Collateral Agent or any Buyer provided
herein and in the other Transaction Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law.  The rights of the Collateral Agent or any
Buyer under any of the other Transaction Documents against any party thereto
are not conditional or contingent on any attempt by such Person to exercise any
of its rights under any of the other Transaction Documents against such party
or against any other Person, including but not limited to, any Grantor.

 

(c)           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 unenforceability without
invalidating the remaining portions hereof in such jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.

 

22

 

(d)           This Agreement shall create a continuing security interest
in the Collateral and shall (i) remain in full force and effect until the
indefeasible payment in full in cash of the Obligations, and (ii) be binding on
each Grantor and all other Persons who become bound as debtor to this Agreement
in accordance with Section 9-203(d) of the Code and shall inure, together with
all rights and remedies of the Collateral Agent and the Buyers hereunder, to
the benefit of the Collateral Agent and the Buyers and their respective permitted
successors, transferees and assigns. 
Without limiting the generality of clause (ii) of the immediately
preceding sentence, without notice to any Grantor, the Collateral Agent and the
Buyers may assign or otherwise transfer their rights and obligations under this
Agreement and any of the other Transaction Documents to any other Person and
such other Person shall thereupon become vested with all of the benefits in
respect thereof granted to the Collateral Agent and the Buyers herein or
otherwise.  Upon any such assignment or
transfer, all references in this Agreement to the Collateral Agent or any such
Buyer shall mean the assignee of the Collateral Agent or such Buyer.  None of the rights or obligations of any
Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Collateral Agent, and any such assignment or transfer
without the consent of the Collateral Agent shall be null and void.

 

(e)           Upon the indefeasible payment in full in cash of the
Obligations, (i) this Agreement and the security interests created hereby shall
terminate and all rights to the Collateral shall revert to the respective
Grantor that granted such security interests hereunder, and (ii) the Collateral
Agent will, upon any Grantor’s request and at such Grantor’s expense, (A)
return to such Grantor such of the Collateral as shall not have been sold or
otherwise disposed of or applied pursuant to the terms hereof, and (B) execute
and deliver to such Grantor such documents as such Grantor shall reasonably
request to evidence such termination, all without any representation, warranty
or recourse whatsoever.

 

(f)            THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS
REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE
PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE MANDATORILY GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.

 

(g)           ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. 
EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM  NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF 

 

23

 

ANY SUCH ACTION, SUIT OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

 

(h)           EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF
THIS AGREEMENT) THE COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, ORAL OR WRITTEN STATEMENT OR OTHER
ACTION OF THE PARTIES HERETO.

 

(i)            Each Grantor irrevocably consents to the service of
process of any of the aforesaid courts in any such action, suit or proceeding
by the mailing of copies thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to any Grantor at its
address provided herein, such service to become effective 10 days after such
mailing.

 

(j)            Nothing contained herein shall affect the right of the
Collateral Agent to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against any Grantor or any
property of any Grantor in any other jurisdiction.

 

(k)           Each Grantor irrevocably and unconditionally waives any
right it may have to claim or recover in any legal action, suit or proceeding
referred to in this Section any special, exemplary, punitive or consequential
damages.

 

(l)            Section headings herein are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.

 

(m)          This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together
constitute one in the same Agreement.

 

(n)           This Agreement reflects the entire understanding of the
Grantors and the Collateral Agent with respect to the transactions contemplated
hereby and shall not be contradicted or qualified by any other agreement, oral
or written, entered into before the date hereof.  Without limiting the generality of the
foregoing, the Grantors and the Collateral Agent hereby agree that this Agreement
does hereby amend and restate, and completely replace, the Existing Security
Agreement, which shall have no further force or effect; and that WOG is hereby
released as a party under the Existing Security Agreement as amended and
restated hereby and discharged from any and all obligations and liabilities
thereunder.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT
BLANK]

 

24

 

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the date
first above written.

 

	
   

  	
  WENTWORTH ENERGY, INC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Punzo

  	
   

  
	
   

  	
   

  	
  Name:John Punzo

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  	
  Address: 112 E. Oak Street, Suite 200

  
	
   

  	
   

  	
  Palestine, Texas 75801

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile: (903) 723-5368

  
	
   

  	
   

  	
  Email: jpunzo@shaw.ca

  
	
   

  	
   

  
	
   

  	
  BARNICO DRILLING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Punzo

  	
   

  
	
   

  	
   

  	
  Name: John Punzo

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  	
  Address: 1006 Anderson County Road 2212

  
	
   

  	
   

  	
  Palestine, Texas 75803

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile: (903) 723-5368

  
	
   

  	
   

  	
  Email: jpunzo@shaw.ca

  

 

 

ACCEPTED AND AGREED:

 

CASTLERIGG MASTER INVESTMENTS LTD.,

as Collateral Agent

By: SANDELL ASSET MANAGEMENT CORP.

 

	
  By: 

  	
  /s/ Patrick T. Burke

  	
   

  	
   

  
	
  Name: Patrick T. Burke

  
	
  Title: Senior Managing Director

  

 

SCHEDULE I

 

LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR JURISDICTION
OF ORGANIZATION

 

	
  Grantor’s
  Name

  	
   

  	
  State
  of Organization

  	
   

  	
  Federal
  Employer I.D.

  	
   

  	
  Organizational
  I.D.

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Oklahoma

  	
   

  	
  73-1599600

  	
   

  	
  1900654541

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Barnico Drilling, Inc.

  	
   

  	
  Texas

  	
   

  	
  75-2429808

  	
   

  	
  01231808

  

 

SCHEDULE II

 

INTELLECTUAL
PROPERTY

 

None.

 

SCHEDULE III

 

LOCATIONS

 

 

	
  Grantor

  	
   

  	
  Chief
  Place of Business and Chief Executive Office

  	
   

  	
  Books
  and Records

  	
   

  	
  Equipment,
  Fixtures, Goods and Inventory

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Suite 200, 112 E. Oak Street

  Palestine, Anderson County

  Texas, 75801

  	
   

  	
  Suite 200, 112 E. Oak Street

  Palestine, Anderson County

  Texas, 75801

  	
   

  	
  Suite 306A

  15252 — 32nd
  Avenue

  Surrey, British
  Columbia

  V3S 0R7, Canada

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Suite 200, 112 E. Oak Street

  Palestine, Anderson County

  Texas, 75801

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  The real property of such Grantor located in
  Anderson, Freestone, Jones and Leon Counties, Texas.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Motor vehicles, laptop computers, cell phones and
  other movable Equipment, Inventory and Goods used by the officers, employees
  and contractors of Grantor and its Subsidiaries in the ordinary course of
  business will be at various locations from time to time.

  

 

 

	
  Barnico Drilling, Inc.

  	
   

  	
  1006 Anderson County Road 2212

  Palestine, Anderson
  County

  Texas, 75803

  	
   

  	
  Suite 200, 112 E. Oak Street

  Palestine, Anderson County

  Texas, 75801

  	
   

  	
  1006 Anderson County Road 2212

  Palestine, Anderson
  County

  Texas, 75803

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Suite 200, 112 E. Oak Street

  Palestine, Anderson County

  Texas, 75801

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  The real property of such Grantor or any other
  Grantor located in Anderson, Freestone, Jones, Leon, Cherokee, Limestone,
  Navarro, Robertson and Smith Counties Texas.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Motor vehicles, laptop computers, cell phones and
  other movable Equipment, Inventory and Goods used by the officers, employees
  and contractors of Grantor and its Subsidiaries in the ordinary course of
  business will be at various locations from time to time.

  

 

 

SCHEDULE IV

PROMISSORY NOTES, SECURITIES, DEPOSIT
ACCOUNTS, SECURITIES ACCOUNTS AND COMMODITIES ACCOUNTS

 

Securities

 

	
  Grantor

  	
   

  	
  Name of
  Issuer

  	
   

  	
  Number
  of Shares

  	
   

  	
  Class

  	
   

  	
  Certificate

  No.(s)

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Redrock Energy, Inc.
  (f/k/a

  Redrock Oil Sands, Inc. and

  Wentworth Oil Sands, Inc.)

  	
   

  	
  2,300,000

  	
   

  	
  Common

  	
   

  	
  71

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Redrock Energy, Inc.
  (f/k/a

  Redrock Oil Sands, Inc. and

  Wentworth Oil Sands, Inc.)

  	
   

  	
  200,000

  	
   

  	
  Common

  	
   

  	
  0056

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Barnico Drilling, Inc.

  	
   

  	
  5,000

  15,000

  	
   

  	
  Class A Voting

  Class B Voting

  	
   

  	
  A3

  B7

  

 

Deposit
Accounts

 

	
  Grantor

  	
   

  	
  Name
  and Address of Institution

  	
   

  	
  Purpose
  of the Account

  	
   

  	
  Account
  No.

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Bank of America

  500 West 7th Street, 2nd Floor

  Fort Worth, Texas, 76102

  	
   

  	
  Savings account

  	
   

  	
  4884890199

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Bank of America

  500 West 7th Street, 2nd Floor

  Fort Worth, Texas, 76102

  	
   

  	
  Operating account

  	
   

  	
  4880319014

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Canadian Imperial Bank of Commerce

  400 Burrard Street

  Vancouver, British Columbia

  V6C 3A6, Canada

  	
   

  	
  U.S. Dollar

  Operating account

  	
   

  	
  0567914

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Canadian Imperial Bank of Commerce

  400 Burrard Street

  Vancouver, British Columbia

  V6C 3A6, Canada

  	
   

  	
  Canadian dollar operating account

  	
   

  	
  8993718

  

 

 

	
  Wentworth Energy, Inc.

  	
   

  	
  Capital One, N.A.

  519 North Sycamore

  Palestine, Texas 75801

  	
   

  	
  Operating account

  	
   

  	
  3620417326

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Capital One, N.A.

  519 North Sycamore

  Palestine, Texas 75801

  	
   

  	
  Operating account

  	
   

  	
  3620417334

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Capital One, N.A.

  519 North Sycamore

  Palestine, Texas 75801

  	
   

  	
  Production account

  	
   

  	
  3620417822

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Capital One, N.A.

  519 North Sycamore

  Palestine, Texas 75801

  	
   

  	
  Production account

  	
   

  	
  3620417938

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Capital One, N.A.

  519 North Sycamore

  Palestine, Texas 75801

  	
   

  	
  $25,000

  CD required for Texas Railroad Commission Operator License

  	
   

  	
  780781

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Capital One, N.A.

  519 North Sycamore

  Palestine, Texas 75801

  	
   

  	
  $50,000 CD required for Freestone County
  Road Usage as Operator

  	
   

  	
  1068868

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Barnico Drilling, Inc.

  	
   

  	
  Capital One, N.A.

  519 North Sycamore

  Palestine,
  Texas 75801

  	
   

  	
  Operating account

  	
   

  	
  3620417555

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Barnico Drilling, Inc.

  	
   

  	
  East Texas National Bank

  207 W. Spring

   Palestine, Texas, 75801

  	
   

  	
  Operating account

  	
   

  	
  1041002

  

 

Promissory
Notes

 

	
  Grantor

  	
   

  	
  Name
  and Address of Issuer of Promissory Note

  	
   

  	
  Principal
  Sum and Terms

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Green Gold Incorporated

  115 West 7th Street, Suite 1415

  Fort Worth, Texas 76102

  	
   

  	
  $300,000 principal at 10% per annum rate of
  interest. Due on November 1, 2007

  

 

 

SCHEDULE V

 

FINANCING
STATEMENTS

 

	
  Grantors

  	
   

  	
  Jurisdictions
  For Filing Financing Statements

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Oklahoma, Texas, and
  Anderson, Freestone, Jones and Leon Counties, Texas

  
	
   

  	
   

  	
   

  
	
  Barnico Drilling, Inc.

  	
   

  	
  Texas

  

 

 

SCHEDULE VI

 

COMMERCIAL TORT CLAIMS

 

None.

 

 

EXHIBIT
A

 

ASSIGNMENT FOR SECURITY

[TRADEMARKS] [PATENTS] [COPYRIGHTS]

 

WHEREAS,                                                              
(the “Assignor”) [has adopted, used and is using, and holds all right,
title and interest in and to, the trademarks and service marks listed on the
annexed Schedule 1A, which trademarks and service marks are
registered or applied for in the United States Patent and Trademark Office (the
“Trademarks”)] [holds all right, title and interest in the letter
patents, design patents and utility patents listed on the annexed Schedule 1A,
which patents are issued or applied for in the United States Patent and
Trademark Office (the “Patents”)] [holds all right, title and interest
in the copyrights listed on the annexed Schedule 1A, which copyrights
are registered in the United States Copyright Office (the “Copyrights”)];

 

WHEREAS, the Assignor has entered into a certain Amended and Restated
Security Agreement, dated as of October 31, 2007 (as amended, restated or
otherwise modified from time to time the “Security Agreement”), in favor
Castlerigg Master Investments Ltd., as collateral agent for certain purchasers
(the “Assignee”);

 

WHEREAS, pursuant to the Security Agreement, the Assignor has assigned
to the Assignee and granted to the Assignee for the benefit of the Buyers (as
defined in the Security Agreement) a continuing security interest in all right,
title and interest of the Assignor in, to and under the [Trademarks, together with,
among other things, the good-will of the business symbolized by the Trademarks]
[Patents] [Copyrights] and the applications and registrations thereof, and all
proceeds thereof, including, without limitation, any and all causes of action
which may exist by reason of infringement thereof and any and all damages
arising from past, present and future violations thereof (the “Collateral”),
to secure the payment, performance and observance of the “Obligations” (as
defined in the Security Agreement);

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Assignor does hereby pledge,
convey, sell, assign, transfer and set over unto the Assignee and grants to the
Assignee for the benefit of the Buyers a continuing security interest in the
Collateral to secure the prompt payment, performance and for the benefit of the
Buyers observance of the Obligations.

 

The Assignor does hereby further acknowledge and affirm that the rights
and remedies of the Assignee with respect to the Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.

 

 

IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of                     ,
20    

 

	
   

  	
  [GRANTOR]

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

STATE OF 

ss.:

COUNTY OF

 

On this           
day of                               ,
20    , before me personally came                               ,
to me known to be the person who executed the foregoing instrument, and who,
being duly sworn by me, did depose and say that s/he is the                               
of                                                                                 ,
a                               ,
and that s/he executed the foregoing instrument in the firm name of                                                             ,
and that s/he had authority to sign the same, and s/he acknowledged to me that
he executed the same as the act and deed of said firm for the uses and purposes
therein mentioned.

 

 

 

SCHEDULE 1A TO ASSIGNMENT FOR SECURITY

 

[Trademarks and Trademark Applications]

[Patent and Patent Applications]

[Copyright and Copyright Applications]

Owned by 

 

Exhibit
B

 

Excluded
Assets

 

 

1.             Excluded
Shares and Excluded Shares Rights (each as defined in the Pledge Agreement).

 

2.                                       Each of Grantor’s
right, title and interest in any personal property located in British Columbia,
Canada, the aggregate fair market value of which is not greater than $50,000.

 

3.                                       Each of Grantor’s
right, title and interest in any equipment which is acquired or leased by
Grantor and permitted under paragraph (iv) of the definition of Permitted
Indebtedness and under paragraph (vi) of the definition of Permitted Liens.

 

Schedule
4(g)

 

Effective
Financing Statements

 

 

Financing statement of record in the office of the Texas Secretary of
State naming Wentworth Energy, Inc., as debtor, and Cornell Capital Partners,
LP, as secured party, which was filed on January 25, 2006 and assigned number
06-0002798749.

 

Financing statement of record in the office of the Oklahoma County
Clerk naming Wentworth Energy, Inc., as debtor, and Cornell Capital Partners,
LP, as secured party, which was filed on January 18, 2006 and assigned number
2006000667431.Exhibit
4.20

 

AMENDED AND RESTATED PLEDGE AGREEMENT

 

AMENDED AND RESTATED PLEDGE AGREEMENT, dated as of
October 31, 2007 (as amended, restated or otherwise modified from time to
time, this “Agreement”), made by
WENTWORTH ENERGY, INC., a company organized under the laws of the State of
Oklahoma (“Pledgor”), in favor of
CASTLERIGG MASTER INVESTMENTS LTD., a company organized under the laws of the
British Virgin Islands, in its capacity as collateral agent (in such capacity,
the “Collateral Agent”) for the benefit of
the Buyers (as defined below).

 

W  I
T  N  E  S  S  E  T  H:

 

A.            Pledgor and each party listed as a “Buyer” on the
Schedule of Buyers attached thereto (collectively, the “Buyers”)
are parties to that certain Securities Purchase Agreement, dated as of July 24,
2006 (as amended, restated or otherwise modified from time to time prior to the
date hereof, the “Existing  Securities Purchase Agreement”), pursuant
to which, among other things, the Buyers purchased from Pledgor an aggregate
original principal amount of $32,350,000 of senior secured convertible notes
(as amended, restated or otherwise modified from time to time prior to the date
hereof, the “Existing Notes”).

 

B.            Contemporaneously with the consummation of the
transactions contemplated by the Existing Securities Purchase Agreement, the
following transactions (among others) occurred: (i) Wentworth Oil & Gas,
Inc., a Nevada corporation and subsidiary of Pledgor (“WOG”),
entered into that certain Guaranty, dated as of July 25, 2006, in favor of the
Collateral Agent for the benefit of the Buyers (said guaranty, as amended,
restated or otherwise modified from time to time prior to the date hereof, the “Existing WOG Guaranty”);
(ii) Pledgor and WOG entered into that certain Security Agreement, dated as of
July 25, 2006, in favor of the Collateral Agent for the benefit of the Buyers,
as subsequently amended by that certain Joinder Agreement, dated as of August
8, 2006 (the “2006 Joinder Agreement”), in favor
of the Collateral Agent for the benefit of the Buyers, to join Barnico
Drilling, Inc., a Texas corporation (“Barnico”), as a
party thereto and collateral grantor thereunder (said security agreement, as
amended by the 2006 Joinder Agreement, and as otherwise amended, restated or
otherwise modified from time to time prior to the date hereof, the “Existing Security
Agreement”); and (iii) Pledgor and WOG entered into that certain
Pledge Agreement, dated as of July 25, 2006, in favor of Collateral Agent for
the benefit of the Buyers, as amended by that certain Pledge Amendment, dated
August 8, 2006 (the “2006 Pledge Amendment”),
to include as collateral thereunder the shares of Barnico capital stock
referenced in the 2006 Pledge Amendment (said pledge agreement, as amended by
the 2006 Pledge Amendment, and as otherwise amended, restated or otherwise
modified from time to time prior to the date hereof, the “Existing
Pledge Agreement”).

 

C.            As contemplated by the Existing Securities Purchase
Agreement, Pledgor entered into certain deeds of trust encumbering certain real
property and personal property of Pledgor (said deeds of trust, as amended,
restated or otherwise modified from time to time prior to the date hereof, the “Existing Deeds of Trust”), in favor of the trustee
referenced therein for the benefit of the Collateral Agent for the benefit of
the Buyers.

 

 

D.            Barnico’s execution and delivery of the 2006 Joinder
Agreement was effected contemporanously with Pledgor’s purchase of all of the
outstanding stock of Barnico.  Also in
conjunction with that acquisition by Pledgor, Barnico entered into that certain
Guaranty, dated as of August 8, 2006 (said guaranty, as amended, restated or
otherwise modified from time to time prior to the date hereof, the “Existing Barnico Guaranty”), in favor of the Collateral
Agent for the benefit of the Buyers.

 

D.            Pledgor and the
Buyers, severally, are entering into those certain Amendment Agreements, each
dated as of the date hereof (the “Amendment Agreements”),
pursuant to which (among other things) Pledgor and the Buyers have agreed to
amend the Existing Securities Purchase Agreement (as so amended, and as
thereafter amended, restated or otherwise modified from time to time, the “Securities Purchase Agreement”) to provide for, among other
things, the following: (i) the amendment and restatement of the Existing
Barnico Guaranty by Barnico’s execution and delivery of that certain Amended
and Restated Barnico Guaranty, in the form attached as an exhibit to the
Amendment Agreements (said amended and restated guaranty, as thereafter
amended, restated or otherwise modified from time to time, the “Barnico Guaranty”); (ii) the amendment and restatement of
all of the Existing Notes by Pledgor’s issuance of amended and restated notes
therefor, in the form attached as an exhibit to the Amendment Agreements (said
amended and restated notes, as executed and delivered, and as thereafter,
amended, restated or otherwise modified from time to time, the “Amended and Restated Notes”); (iii) Pledgor’s issuance and
sale to one of the Buyers of a new senior secured convertible note in the form
attached as an exhibit to the Amendment Agreements (said new note, as executed
and delivered, and as thereafter amended, restated or otherwise modified from
time to time, the “New Note”;
collectively with the Amended and Restated Notes, the “Notes”);
(iv) the amendment and restatement of the Existing Pledge Agreement by the
execution and delivery of this Agreement; (v) the amendment and restatement of
the Existing Security Agreement, in the form attached as an exhibit to the
Amendment Agreements (said amended and restated security agreement, as executed
and delivered, and as thereafter amended, restated or otherwise modified from
time to time, the “Security Agreement”);
(vi) the amendment and restatement of the Existing Deeds of Trust heretofore
filed in Anderson, Freestone, Jones and Leon Counties, Texas, in the form
attached as an exhibit to the Amendment Agreements (said amended and restated
deeds of trust, as executed and delivered, and as thereafter amended, restated or
otherwise modified from time to time, the “Deeds of Trust”);
and (vii) to the extent not heretofore terminated, the termination of the
Existing Deeds of Trust filed in Archer, Pecos and Wichita Counties, Texas.

 

E.             WOG has been
dissolved and, prior hereto or contemporaneously herewith, WOG is being
released from all of its obligations under the Existing WOG Guaranty, the
Existing Pledge Agreement and the Existing Security Agreement.

 

F.             In order to induce
each of the Buyers to execute and deliver its respective Amendment Agreement
and perform its respective obligations under the Securities Purchase Agreement,
Pledgor has agreed to execute and deliver to the Collateral Agent, for the
benefit of the Buyers, this Agreement, which amends, restates and supersedes
the Existing Pledge Agreement.

 

2

 

NOW, THEREFORE, in consideration of the premises and the agreements
herein, and in order to induce each of the Buyers to execute and deliver its
respective Amendment Agreement and to perform its respective obligations under
the Securities Purchase Agreement, Pledgor agrees with the Collateral Agent,
for the benefit of the Buyers, as follows:

 

SECTION 1.           Definitions
and Rules of Interpretation.

 

(a)           Definitions.  Reference is made to the Securities Purchase
Agreement and the Notes for a statement of the terms thereof.  All terms used in this Agreement which are
defined in the Securities Purchase Agreement or the Notes or in Article 8 or
Article 9 of the Uniform Commercial Code as in effect from time to time in the
State of New York (the “Code”),
and which are not otherwise defined herein, shall have the same meanings herein
as set forth therein; provided that terms used herein which are defined
in the Code as in effect in the State of New York on the date hereof shall
continue to have the same meaning notwithstanding any replacement or amendment
of such statute.

 

(b)           Rules of Interpretation.  Except as otherwise expressly provided in
this Agreement, the following rules of interpretation apply to this Agreement:
(i) the singular includes the plural and the plural includes the singular; (ii)
“or” and “any” are not exclusive and “include” and “including” are not
limiting; (iii) a reference to any agreement or other contract includes
permitted supplements and amendments; (iv) a reference to a law includes any
amendment or modification to such law and any rules or regulations issued
thereunder; (v) a reference to a person includes its permitted successors and
assigns; and (vi) a reference in this Agreement to an Article, Section, Annex,
Exhibit or Schedule is to the Article, Section, Annex, Exhibit or Schedule of
this Agreement.

 

SECTION 2.           Pledge
and Grant of Security Interest.

 

(a)           As
collateral security for all of the “Obligations” (as defined in Section 3
hereof), Pledgor hereby pledges and assigns and grants to the Collateral Agent
a continuing security interest in, and Lien on, all of Pledgor’s right, title
and interest in and to the following (collectively, the “Collateral”):

 

(i)            all
present, as set forth in Schedule I, and all future, issued and
outstanding shares of capital stock, or other equity or investment securities
of, or partnership, membership, or joint venture interests in, each Subsidiary
(as defined in the Securities Purchase Agreement) and Redrock Energy (as
defined below), whether now owned or hereafter acquired by Pledgor and whether
or not evidenced or represented by any stock certificate, certificated security
or other instrument, together with the certificates representing such equity
interests, all options and other rights, contractual or otherwise, in respect
thereof and all dividends, distributions, cash, instruments, investment
property and any other property (including, but not limited to, any stock dividend
and any distribution in connection with a stock split) from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing and all cash and noncash proceeds thereof (other
than the Excluded Shares and the Excluded Shares Rights (each as defined
below)) (subject to the foregoing exclusions, collectively the “Pledged Shares”);

 

3

 

(ii)           all
present and future increases, profits, combinations, reclassifications, and
substitutes and replacements for all or part of the foregoing Collateral
heretofore described;

 

(iii)          all
investment property, financial assets, securities, capital stock, other equity
interests, stock options and commodity contracts of Pledgor (other than the
Excluded Shares and the Excluded Shares Rights), all notes, debentures, bonds,
promissory notes or other evidences of indebtedness payable or owing to
Pledgor, and all other assets now or hereafter received or receivable with
respect to the foregoing;

 

(iv)          all
security entitlements of Pledgor in any and all of the foregoing; and

 

(v)           all
proceeds (including proceeds of proceeds) of any and all of the foregoing;

 

in
each case, whether now owned or hereafter acquired by Pledgor and howsoever its
interest therein may arise or appear (whether by ownership, security interest,
Lien, claim or otherwise).

 

(b)           Collateral Agent acknowledges and
agrees individually and as collateral agent for the Buyers that: (i) Pledgor is
not pledging, assigning, or granting to Collateral Agent or the Buyers pursuant
hereto or pursuant to the Security Agreement or any other Security Document the
capital stock of Redrock Energy, Inc. (f.k.a. Redrock Oil Sands, Inc.), a
Nevada corporation (the “Redrock Energy”),
described on Schedule II (the “Excluded Shares”),
or any other shares, rights, or dividends or other proceeds paid or payable to
the holder or holders of the Excluded Shares (collectively, the “Excluded Shares Rights”); and (ii) Pledgor shall hold the
Excluded Shares and Excluded Share Rights free and clear of any security
interest, pledge or other Lien of Collateral Agent or Buyers under this
Agreement, the Security Agreement, or any other Security Document, or
otherwise.  Collateral Agent further
agrees individually and as collateral agent for the Buyers that notwithstanding
any provision to the contrary contained herein, or in the Security Agreement or
any other Security Document or Transaction Document, Pledgor may distribute the
Excluded Shares and Excluded Share Rights to the shareholders of Pledgor in
accordance with Section 14(e) of the Notes.

 

SECTION
3.           Security for Obligations.  The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, whether now existing or hereafter incurred (collectively, the “Obligations”):

 

(a)           for so long as the Notes are
outstanding, the payment by Pledgor, as and when due and payable (by scheduled
maturity, required prepayment, acceleration, demand or otherwise), of all
amounts from time to time owing by it in respect of the Securities Purchase
Agreement, the Notes and the other Transaction
Documents, and (ii) the payment by Barnico, as and when due and payable,
of all “Guaranteed Obligations”
under (as defined in) the Barnico Guaranty, including, without limitation, (A)
all principal of and interest on the Notes (including, without limitation, all
interest that accrues after the commencement of any bankruptcy proceeding of
Pledgor, whether or not the payment of such interest is unenforceable or is not
allowable due to the existence of such bankruptcy proceeding), and (B) all
fees, commissions, 

 

4

 

expense reimbursements, indemnifications and
all other amounts due or to become due under any of the Transaction Documents;
and

 

(b)           for so long as the Notes are
outstanding, the due performance and observance by Pledgor of all of its other
obligations from time to time existing in respect of any of the Transaction
Documents.

 

SECTION 4.           Delivery
of the Collateral.

 

(a)           All certificates currently
representing the Pledged Shares shall be delivered to the Collateral Agent on
or prior to the execution and delivery of this Agreement, and in all cases
shall be deemed to be held pursuant to this Agreement.  All other promissory notes, certificates and
instruments constituting Collateral from time to time or required to be pledged
to the Collateral Agent pursuant to the terms of this Agreement (the “Additional Collateral”) shall be delivered
to the Collateral Agent promptly upon receipt thereof by or on behalf of
Pledgor.  All such promissory notes,
certificates and instruments shall be held by the Collateral Agent pursuant
hereto and shall be delivered in suitable form for transfer by delivery or
shall be accompanied by duly executed instruments of transfer or assignment or
undated stock powers executed in blank, all in form and substance reasonably
satisfactory to the Collateral Agent.  If
any Collateral consists of uncertificated securities, unless the immediately
following sentence is applicable thereto, Pledgor shall cause the Collateral
Agent (or its designated custodian, nominee or other designee) to become the
registered holder thereof, or cause each issuer of such securities to agree
that it will comply with instructions originated by the Collateral Agent (or
its designated custodian, nominee or other designee) with respect to such
securities without further consent by Pledgor. 
If any Collateral consists of security entitlements, Pledgor shall
transfer such security entitlements to the Collateral Agent (or its designated
custodian, nominee or other designee) or cause the applicable securities
intermediary to agree that it will comply with entitlement orders originated by
the Collateral Agent (or its designated custodian, nominee or other designee)
without further consent by Pledgor.

 

(b)           Promptly upon the receipt by Pledgor
of any Additional Collateral, a Pledge Amendment, duly executed by Pledgor, in
substantially the form of Annex I hereto (a “Pledge Amendment”), shall be delivered to the Collateral
Agent, in respect of the Additional Collateral which is or are to be pledged
pursuant to this Agreement, which Pledge Amendment shall from and after
delivery thereof constitute part of Schedule I hereto.  Pledgor hereby authorizes the Collateral
Agent to attach each Pledge Amendment to this Agreement and agrees that all
promissory notes, certificates or instruments listed on any Pledge Amendment
shall for all purposes hereunder constitute Collateral and Pledgor shall be
deemed upon delivery thereof to have made the representations and warranties
set forth in Section 5 hereof with respect to such Additional Collateral
as of the date of the Pledge Amendment.

 

(c)           If Pledgor shall receive, by virtue
of such Pledgor’s being or having been an owner of any Collateral, any (i)
stock certificate (including, without limitation, any certificate representing
a stock dividend or distribution in connection with any increase or reduction of
capital, reclassification, merger, consolidation, sale of assets, combination
of shares, stock split, spin-off or split-off), promissory note or other
instrument, (ii) option or right, whether as an addition to, substitution for,
or in exchange for, any Collateral, or otherwise, (iii) dividends 

 

5

 

payable in cash (except such dividends
permitted to be retained by Pledgor pursuant to Section 7 hereof) or in
securities or other property or (iv) dividends, distributions, cash,
instruments, investment property and other property in connection with a
partial or total liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in surplus, Pledgor shall receive such
stock certificate, promissory note, instrument, option, right, payment or
distribution in trust for the benefit of the Collateral Agent, shall segregate
it from Pledgor’s other property and shall deliver it forthwith to the
Collateral Agent in the exact form received, with any necessary endorsement
and/or appropriate stock powers duly executed in blank, to be held by the
Collateral Agent as Collateral and as further collateral security for the
Obligations.

 

SECTION 5.           Representations
and Warranties.  Pledgor represents
and warrants as of the date of this Agreement as follows:

 

(a)           Pledgor (i) is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its organization, and (ii) has all corporate power and authority to execute,
deliver and perform this Agreement.

 

(b)           The execution, delivery and
performance by Pledgor of this Agreement (i) have been duly authorized by all
necessary corporate action, (ii) do not and will not contravene its charter or
bylaws, or any applicable law or any contractual restriction binding on or
affecting it or any of its properties, and (iii) do not and will not result in
or require the creation of any Lien upon or with respect to any of its
properties other than pursuant to this Agreement.

 

(c)           The issuers of the Pledged Shares set
forth in Schedule I hereto are Pledgor’s only Subsidiaries existing on
the date hereof, provided that Redrock Energy is not a Subsidiary.  The Pledged Shares have been duly authorized
and validly issued, are fully paid and nonassessable and the holders thereof
are not entitled to any preemptive first refusal or other similar rights.  Except as noted in Schedule I hereto,
the Pledged Shares constitute 100% of the issued shares of capital stock,
partnership interests or membership or other equity interests, as applicable,
of the Subsidiaries.  All other shares of
stock constituting Collateral will be, when issued, duly authorized and validly
issued, fully paid and nonassessable.

 

(d)           Pledgor is and will be at all times
the legal and beneficial owners of the Collateral free and clear of any Lien,
other than Permitted Liens.

 

(e)           The exercise by the Collateral Agent
of any of its rights and remedies hereunder will not contravene any law or any
contractual restriction binding on or affecting Pledgor or any of the
properties of Pledgor and will not result in or require the creation of any
Lien upon or with respect to any of the properties of Pledgor other than
pursuant to this Agreement and the other Transaction Documents.

 

(f)            No authorization or approval or
other action by, and no notice to or filing with, any governmental authority is
required to be obtained by Pledgor for (i) the due execution, delivery and
performance by Pledgor of this Agreement, (ii) the grant by Pledgor, or subject
to the Collateral Agent’s having possession of certificates, instruments,
securities entitlements and cash constituting Collateral, the perfection of the
security interest and Lien 

 

6

 

purported to be created hereby in the
Collateral or (iii) the exercise by the Collateral Agent of any of its rights
and remedies hereunder, except as may be required in connection with any sale
of any Collateral by laws affecting the offering and sale of securities generally.

 

(g)           This Agreement creates a valid
security interest and Lien in favor of the Collateral Agent in the Collateral,
as security for the Obligations.  The
Collateral Agent’s having possession of the promissory notes included in the
Collateral, the certificates representing the Pledged Shares and all other
certificates, instruments and cash constituting Collateral from time to time
results in the perfection of the security interest in such Collateral.  Such security interest and Lien is, or in the
case of Collateral in which Pledgor obtains rights after the date hereof, will
be, a perfected Lien in such Collateral if the Collateral Agent has possession
of such Collateral.  All action necessary
to perfect and protect such security interest and Lien has been duly taken,
except for the Collateral Agent’s having possession of certificates,
instruments, securities entitlements and cash constituting Collateral after the
date hereof.

 

SECTION 6.           Covenants as to the Collateral.  So long as any Obligations (other than
inchoate indemnity obligations) shall remain outstanding, Pledgor will, unless
the Collateral Agent shall otherwise consent in writing:

 

(a)           keep adequate records concerning the
Collateral owned or purported to be owned by it, and permit the Collateral Agent,
or any designees or representatives thereof at any time or from time to time to
examine and make copies of and abstracts from such records;

 

(b)           at the Pledgor’s expense, promptly
deliver to the Collateral Agent a copy of each material notice or other
material communication received by Pledgor in respect of the Collateral;

 

(c)           at Pledgor’s expense, defend the
Collateral Agent’s right, title and security interest in and to the Collateral
against the claims of any Person (other than the holders of Permitted Liens);

 

(d)           at Pledgor’s expense, at any time and
from time to time, promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or that the
Collateral Agent may reasonably request in order to (i) perfect and
protect, or maintain the perfection of, the security interest and Lien
purported to be created hereby, (ii) enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder in respect of the Collateral or
(iii) otherwise effect the purposes of this Agreement, including, without
limitation, delivering to the Collateral Agent irrevocable proxies in respect
of the Collateral registered in the name of Pledgor, except for Collateral
which Pledgor is entitled to vote under the terms of Section 7 hereof;

 

(e)           not sell, assign (by operation of law
or otherwise), exchange or otherwise dispose of any Collateral or any interest
therein except in the ordinary course of business or as expressly permitted by
the Securities Purchase Agreement or the Notes;

 

(f)            not create or suffer to exist any
Lien, upon or with respect to any Collateral except for Permitted Liens;

 

7

 

(g)           not make or consent to any amendment
or other modification or waiver with respect to any Collateral or enter into
any agreement or permit to exist any restriction with respect to any Collateral
other than pursuant to the Transaction Documents;

 

(h)           except as expressly permitted by the
Securities Purchase Agreement, not permit the issuance of (i) any additional
shares of any class of capital stock, partnership interests, member interests
or other equity of any Subsidiary, (ii) any securities convertible voluntarily
by the holder thereof or automatically upon the occurrence or non-occurrence of
any event or condition into, or exchangeable for, any such shares of capital
stock or (iii) any warrants, options, contracts or other commitments entitling
any Person to purchase or otherwise acquire any such shares of capital stock;

 

(i)            not issue any stock certificate,
certificated security or other instrument to evidence or represent any shares
of capital stock, any partnership interest or membership interest described in Schedule
I hereto, unless such stock certificate, certificated security or other
instrument is delivered to the Collateral Agent to be held as Collateral
pursuant hereto; and

 

(j)            not take or fail to take any action
which would in any manner impair the validity or enforceability of the
Collateral Agent’s security interest in and Lien on any Collateral.

 

SECTION 7.           Voting Rights, Dividends, Etc. in
Respect of the Collateral.

 

(a)           So long as no Event of Default (as
defined in the Notes) (an “Event of Default”)  shall have occurred and be continuing:

 

(i)            Pledgor may exercise any and all voting and other
consensual rights pertaining to any Collateral for any purpose not inconsistent
with the terms of this Agreement, the Securities Purchase Agreement or the
other Transaction Documents; provided, however, that
(A) Pledgor will not exercise or refrain from exercising any such right,
as the case may be, if the Collateral Agent gives it notice that, in the
Collateral Agent’s judgment, such action (or inaction) is reasonably likely to
have a Material Adverse Effect and (B) Pledgor will give the Collateral
Agent at least five (5) Business Days’ notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such right
which is reasonably likely to have a Material Adverse Effect;

 

(ii)           Pledgor may receive and retain any and all dividends,
interest or other distributions paid in respect of the Collateral to the extent
permitted by the Securities Purchase Agreement; provided, however,
that any and all (A) dividends and interest paid or payable other than in cash
in respect of, and instruments (other than checks) and other property received,
receivable or otherwise distributed in respect of or in exchange for, any
Collateral, (B) dividends and other distributions paid or payable in cash in
respect of any Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus, and (C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Collateral, together with any dividend,
distribution, interest or 

 

8

 

other payment which at the time of such dividend,
distribution, interest or other payment was not permitted by the Securities
Purchase Agreement, shall be, and shall forthwith be delivered to the
Collateral Agent to hold as, Collateral and shall, if received by Pledgor, be
received in trust for the benefit of the Collateral Agent, shall be segregated
from the other property or funds of Pledgor, and shall be forthwith delivered
to the Collateral Agent in the exact form received with any necessary
indorsement and/or appropriate stock powers duly executed in blank, to be held
by the Collateral Agent as Collateral and as further collateral security for
the Obligations; and

 

(iii)          the Collateral Agent will execute and deliver (or cause to
be executed and delivered) to Pledgor all such proxies and other instruments as
Pledgor may reasonably request for the purpose of enabling Pledgor to exercise
the voting and other rights which it is entitled to exercise pursuant to
paragraph (i) of this Section 7(a) and to receive the dividends,
distributions, interest and other payments which it is authorized to receive
and retain pursuant to paragraph (ii) of this Section 7(a), in each
case, to the extent that the Collateral Agent has possession of such
Collateral.

 

(b)           Upon the occurrence and during the
continuance of an Event of Default:

 

(i)            all rights of Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
paragraph (i) of subsection (a) of this Section 7, and to receive
the dividends, distributions, interest and other payments which it would
otherwise be authorized to receive and retain pursuant to paragraph
(ii) of subsection (a) of this Section 7, shall cease, and all
such rights shall thereupon become vested in the Collateral Agent which shall
thereupon have the sole right to exercise such voting and other consensual
rights and to receive and hold as Collateral such dividends, distributions,
interest and other payments;

 

(ii)           without limiting the generality of the foregoing, the
Collateral Agent may at its option exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
any of the Collateral as if it were the absolute owner thereof, including,
without limitation, the right to exchange, in its discretion, any and all of
the Collateral upon the merger, consolidation, reorganization, recapitalization
or other adjustment of any issuer of the Collateral or upon the exercise by any
issuer of the Collateral of any right, privilege or option pertaining to any
Collateral, and, in connection therewith, to deposit and deliver any and all of
the Collateral with any committee, depository, transfer collateral agent,
registrar or other designated collateral agent upon such terms and conditions
as it may determine; and

 

(iii)          all dividends, distributions, interest and other payments
which are received by Pledgor contrary to the provisions of paragraph (i) of
this Section 7(b) shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of Pledgor, and shall be
forthwith paid over to the Collateral Agent as Collateral in the exact form
received with any necessary indorsement and/or appropriate stock powers duly
executed in blank, to be held by the Collateral Agent as Collateral and as
further collateral security for the Obligations.

 

9

SECTION 8.           Additional
Provisions Concerning the Collateral.

 

(a)           Pledgor hereby (i) authorizes the Collateral Agent to file
one or more financing or continuation statements, and amendments thereto,
relating to the Collateral, without the signature of Pledgor where permitted by
law, (ii) ratifies such authorization to the extent that the Collateral Agent
has filed any such financing or continuation statements, or amendments thereto,
without the signature of Pledgor prior to the date hereof and (iii) authorizes
the Collateral Agent to execute any agreements, instruments or other documents
in Pledgor’s name and to file such agreements, instruments or other documents
that perfect, protect or enforce the security interest and Lien of the
Collateral Agent in the Collateral or as provided under Article 8 or Article 9
of the UCC in any appropriate filing office. 
Without limiting the generality of the foregoing, Pledgor hereby
ratifies and confirms the filing of any and all financing statements filed by
the Collateral Agent as secured party in connection with the transactions
contemplated by the Existing Pledge Agreement, and Pledgor agrees that any and
all such financing statements also shall apply to perfect the security interest
in the Collateral granted under this Agreement.

 

(b)           Pledgor hereby irrevocably appoints the Collateral Agent
as its attorney-in-fact and proxy, with full authority in the place and stead
and in its name or otherwise, from time to time in the Collateral Agent’s
discretion to take any action and to execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement (subject to the rights of Pledgor under Section 7(a)
hereof), including, without limitation, to receive, indorse and collect all
instruments made payable to Pledgor representing any dividend, interest payment
or other distribution in respect of any Collateral and to give full discharge
for the same.  This power is coupled with
an interest and is irrevocable until the termination of this Agreement in
accordance with Section 13(e) hereof.

 

(c)           If Pledgor fails to perform any agreement or obligation
contained herein, the Collateral Agent itself may perform, or cause performance
of, such agreement or obligation, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by Pledgor pursuant to Section
10 hereof and shall be secured by the Collateral.

 

(d)           Other than the exercise of reasonable care to assure the
safe custody of the Collateral while held hereunder, the Collateral Agent shall
have no duty or liability to preserve rights pertaining thereto and shall be
relieved of all responsibility for the Collateral upon surrendering it or
tendering surrender of it to Pledgor. 
The Collateral Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the
Collateral Agent accords its own property, it being understood that the
Collateral Agent shall not have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Collateral, whether or not the Collateral Agent
has or is deemed to have knowledge of such matters, or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Collateral.

 

(e)           The powers conferred on the Collateral Agent hereunder are
solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. 
Except for the safe custody of any Collateral in its possession and the
accounting for 

 

10

 

monies actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.

 

(f)            Upon the occurrence and during the continuation of any
Event of Default, the Collateral Agent may at any time in its discretion (i)
without notice to Pledgor, transfer or register in the name of the Collateral
Agent or any of its nominees any or all of the Collateral, subject only to the
revocable rights of Pledgor under Section 7(a) hereof, and (ii) exchange
certificates or instruments constituting Collateral for certificates or
instruments of smaller or larger denominations.

 

SECTION 9.           Remedies Upon Default.  If any Event of Default shall have occurred
and be continuing:

 

(a)           The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all of the rights and remedies of a secured party on
default under the Code then in effect in the State of New York; and, without
limiting the generality of the foregoing and without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange or broker’s board or elsewhere, at such price
or prices and on such other terms as the Collateral Agent may deem commercially
reasonable.  Pledgor agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days’ notice
to Pledgor 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.  The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been
given.  The Collateral 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.

 

(b)           Pledgor recognizes that it may be impracticable to effect
a public sale of all or any part of the Pledged Shares or any other securities
constituting Collateral and that the Collateral Agent may, therefore, determine
to make one or more private sales of any such securities to a restricted group
of purchasers who will be obligated to agree, among other things, to acquire
such securities for its own account, for investment and not with a view to the
distribution or resale thereof.  Pledgor
acknowledges that any such private sale may be at prices and on terms less
favorable to the seller than the prices and other terms which might have been
obtained at a public sale and, notwithstanding the foregoing, agrees that such
private sales shall be deemed to have been made in a commercially reasonable
manner and that the Collateral Agent shall have no obligation to delay sale of
any such securities for the period of time necessary to permit the issuer of
such securities to register such securities for public sale under the
Securities Act of 1933, as amended (the “Securities
Act”).  Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
(i) publicly advertised on a bona fide basis in a newspaper or other
publication of general circulation in the financial community of New York, New
York (to the extent that such an offer may be so advertised without prior
registration under the Securities Act) or (ii) made privately in the manner
described above to not less than fifteen (15) bona  fide offerees
shall be deemed to involve a “public disposition” for the purposes of Section
9-610 of the Code (or any successor or similar, applicable statutory 

 

11

 

provision) as then in effect in the State of New
York, notwithstanding that such sale may not constitute a “public offering”
under the Securities Act, and that the Collateral Agent may, in such event, bid
for the purchase of such securities.

 

(c)           Any cash held by the Collateral Agent as Collateral and
all cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon, all or any part of the Collateral
shall be applied (after payment of any amounts payable to the Collateral Agent
pursuant to Section 10 hereof) by the Collateral Agent against all or
any part of the Obligations in such order as the Collateral Agent shall elect
consistent with the provisions of the Securities Purchase Agreement.

 

(d)           In the event that the proceeds of any such sale,
collection or realization are insufficient to pay all amounts to which the
Collateral Agent is legally entitled, Pledgor shall be liable for the
deficiency, together with interest thereon at the highest rate specified in the
Notes for interest on overdue principal thereof or such other rate as shall be
fixed by applicable law, together with the costs of collection and the
reasonable fees, costs and expenses of any attorneys employed by the Collateral
Agent to collect such deficiency.

 

SECTION 10.         Indemnity and Expenses.

 

(a)           Pledgor hereby agrees to indemnify and hold the Collateral
Agent (and all of its officers, directors, employees, attorneys, and
consultants) harmless from and against any and all claims, damages, losses,
liabilities, obligations, penalties, fees, costs and expenses (including,
without limitation, reasonable legal fees and disbursements of counsel) to the
extent that they arise out of or otherwise result from this Agreement
(including, without limitation, enforcement of this Agreement), except such
claims, damages, losses, liabilities, obligations, penalties, fees, costs and
expenses resulting from such Person’s gross negligence or willful misconduct as
determined by a court of competent jurisdiction.

 

(b)           Pledgor shall be obligated for, and will upon demand pay
to the Collateral Agent the reasonable amount of any and all out-of-pocket
costs and expenses, including the reasonable fees and disbursements of the
Collateral Agent’s counsel and of any experts which the Collateral Agent may
incur in connection with (i) the preparation, negotiation, execution, delivery,
recordation, administration, amendment, waiver or other modification or
termination 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 the Collateral Agent
hereunder, or (iv) the failure by Pledgor to perform or observe any of the
provisions hereof.

 

SECTION 11.         Notices,
Etc.  All notices and other
communications provided for hereunder shall be in writing and shall be mailed
(by certified mail, postage prepaid and return receipt requested), sent by
Federal Express or other recognized courier service (return receipt requested),
telecopied or delivered by hand, if to Pledgor, to it at the address specified
for Pledgor in the Securities Purchase Agreement or if to the Collateral Agent,
to it at the address specified in the Securities Purchase Agreement; or as to
either such Person at such other address as shall be designated by such Person
in a written notice to such other Person complying as to delivery with the
terms of this Section 11.  All
such notices and other communications shall be 

 

 

12

 

effective (i) if sent by certified mail,
postage prepaid, return receipt requested, when received or three (3) Business
Days after mailing, whichever first occurs, (ii) if telecopied, when
transmitted and confirmation is received, provided same is on a Business Day
and, if not, on the next Business Day or (iii) if delivered by hand or sent by
Federal Express or other recognized courier service (return receipt requested),
upon delivery, provided same is on a Business Day and, if not, on the next
Business Day.  

 

SECTION 12.         Security Interest Absolute.  All rights of the Collateral Agent, all Liens
and all obligations of Pledgor hereunder shall be absolute and unconditional
irrespective of:  (i) any lack of
validity or enforceability of the Securities Purchase Agreement or any other Transaction
Document, (ii) any change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Obligations, or any other amendment
or waiver of or consent to any departure from the Securities Purchase Agreement
or any other Transaction Document, (iii) any exchange or release of, or
non-perfection of any Lien on any Collateral, or any release or amendment or
waiver of or consent to departure from any guaranty, for all or any of the
Obligations, or (iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Pledgor in respect of the Obligations
(other than the payment in full of the Obligations).  All authorizations and agencies contained
herein with respect to any of the Collateral are irrevocable and powers coupled
with an interest.

 

SECTION 13.         Miscellaneous.

 

(a)           No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by Pledgor and the Collateral
Agent.  No waiver of any provision of
this Agreement, and no consent to any departure therefrom by Pledgor or the
Collateral Agent, shall be effective unless it is in writing and signed by
Pledgor and the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

 

(b)           No failure on the part of the Collateral Agent to
exercise, and no delay in exercising, any right hereunder or under any other
Transaction Document shall operate as a waiver hereof or thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise hereof or thereof or the exercise of any other right.  The rights and remedies of the Collateral
Agent provided herein and in the other Transaction Documents are cumulative and
are in addition to, and not exclusive of, any rights or remedies provided by
law.  The rights of the Collateral Agent
under any Transaction Document against any party thereto are not conditional or
contingent on any attempt by the Collateral Agent to exercise any of its rights
under any other Transaction Document against such party or against any other
Person.

 

(c)           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 unenforceability without
invalidating the remaining portions hereof in such jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.

 

(d)           This Agreement shall create a continuing security interest
in and Lien on the Collateral and shall (i) remain in full force and effect
until the termination of this 

 

13

 

Agreement in accordance with Section 13(e)
hereof and (ii) be binding on Pledgor and its successors and assigns and shall
inure, together with all rights and remedies of the Collateral Agent, to the
benefit of the Collateral Agent and its successors, transferees and assigns.  Without limiting the generality of clause
(ii) of the immediately preceding sentence, the Collateral Agent may assign or
otherwise transfer its rights and obligations under this Agreement and any
other Transaction Document to any other Person pursuant to the terms of the
Securities Purchase Agreement, and such other Person shall thereupon become
vested with all of the benefits in respect thereof granted to the Collateral
Agent herein or otherwise.  Upon any such
assignment or transfer, all references in this Agreement to the Collateral Agent
shall mean the assignee of the Collateral Agent.  None of the rights or obligations of Pledgor
hereunder may be assigned or otherwise transferred without the prior written
consent of the Collateral Agent, and any such assignment or transfer without the
consent of the Collateral Agent shall be null and void.

 

(e)           Notwithstanding anything to the contrary in this
Agreement, (i) this Agreement (along with all powers of attorney granted
hereunder) and the security interests and Lien created hereby shall terminate
and all rights to the Collateral shall revert to Pledgor upon the repayment in
full and /or complete conversion to equity securities of Pledgor of all
indebtedness obligations owed by Pledgor to the Buyers under the Notes
(including, without limitation, all principal, interest and fees related to the
Notes), and (ii) the Collateral Agent will, upon Pledgor’s request and at
Pledgor’s expense, (A) return to Pledgor such of the Collateral (to the extent
delivered to the Collateral Agent) as shall not have been sold or otherwise
disposed of or applied pursuant to the terms hereof, and (B) execute and
deliver to Pledgor, without recourse, representation or warranty, such
documents as Pledgor shall reasonably request to evidence such termination.

 

(f)            The internal laws, and not the laws of conflicts (to the
extent the application thereof would defer to the substantive laws of another
jurisdiction), of the State of New York shall govern the enforceability and
validity of this Agreement, the construction of its terms and the
interpretation of the rights and duties of the parties, except as required by
mandatory provisions of law and except to the extent that the perfection and
the effect of perfection or non-perfection of the security interest and Lien
created hereby, or remedies hereunder, in respect of any particular Collateral
are governed by the law of a jurisdiction other than the State of New York.

 

(g)           Each party to this Agreement hereby irrevocably and
unconditionally submits, for itself and its property, to the jurisdiction of
the United States District Court for the Southern District of New York sitting
in Manhattan or the Commercial Division, Civil Branch of the Supreme Court of
the State of New York sitting in New York County in connection with any suit,
action or proceeding directly or indirectly arising out of, under or in
connection with this Agreement or the other Transaction Documents or the
transactions contemplated hereby or thereby. 
No party to this Agreement may move to (i) transfer any such suit,
action or proceeding brought in such New York court or federal court to another
jurisdiction, (ii) consolidate any such suit, action or proceeding brought in
such New York court or federal court with a suit, action or proceeding in
another jurisdiction or (iii) dismiss any such suit, action or proceeding
brought in such New York court or federal court for the purpose of bringing the
same in another jurisdiction.  Each party
to this Agreement agrees that a final judgment in any such suit, action or proceeding
shall be conclusive and may be 

 

14

 

enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law.  Each party to this Agreement hereby
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or the other Transaction Documents, in any New York court
sitting in the County of New York or any federal court sitting in the Southern
District of New York.

 

(h)           Pledgor irrevocably consents to the service of process of
any of the aforesaid courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to Pledgor at its address determined in
accordance with Section 11 hereof, such service to become effective when
received or 10 days after such mailing, whichever first occurs.

 

(i)            Nothing contained herein shall affect the right of the
Collateral Agent to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against Pledgor or any property
of Pledgor in any other jurisdiction.

 

(j)            Pledgor irrevocably and unconditionally waives any right
it may have to claim or recover in any legal action, suit or proceeding
referred to in this Section any special, exemplary, punitive or consequential
damages.

 

(k)           EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR OTHER TRANSACTION DOCUMENTS.

 

(l)            The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.  The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction
will be applied against any party.

 

(m)          This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.

 

(n)           This Agreement reflects
the entire understanding of Pledgor and the Collateral Agent with respect to
the transactions contemplated hereby and shall not be contradicted or qualified
by any other agreement, oral or written, entered into before the date
hereof.  Without limiting the generality
of the foregoing, Pledgor and the Collateral Agent hereby agree that this
Agreement does hereby amend and restate, and completely replace, the Existing
Pledge Agreement, which shall have no further force or effect; and that WOG is
hereby released as a party under the Existing Pledge Agreement as amended and
restated hereby and discharged from any and all obligations and liabilities
thereunder.

 

[Signature Page Follows]

 

15

 

IN WITNESS WHEREOF, Pledgor has caused this Agreement to be executed
and delivered by its officer thereunto duly authorized, as of the date first
above written.

 

	
   

  	
  WENTWORTH
  ENERGY, INC

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  John Punzo

  	
   

  
	
   

  	
  Name:
  John Punzo

  
	
   

  	
  Title:
  Chief Executive Officer

  
	
   

  	
  Address:
  112 E. Oak Street, Suite 200

  
	
   

  	
  Palestine, Texas 75801

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  817.288.0903

  

 

 

 

ACCEPTED
AND AGREED:

 

CASTLERIGG MASTER INVESTMENTS LTD.,

as Collateral Agent

By: SANDELL ASSET MANAGEMENT CORP.

 

 

	
  By:
  

  	
  /s/
  Patrick T. Burke

  	
   

  	
   

  
	
  Name:
  Patrick T. Burke

  
	
  Title:
  Senior Managing Director

  

 

 

SCHEDULE I
TO PLEDGE AGREEMENT

 

Pledged Shares

 

	
  Pledgor

  	
   

  	
  Name of
  Issuer

  	
   

  	
  Number
  of Shares

  	
   

  	
  % of
  Issuer’s Issued Shares

  	
   

  	
  Class

  	
   

  	
  Certificate

  No.(s)

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Barnico Drilling, Inc.

  	
   

  	
  5,000

  	
   

  	
  100%

  	
   

  	
  Class A Voting

  	
   

  	
  A3

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  15,000

  	
   

  	
  100%

  	
   

  	
  Class B Non-Voting

  	
   

  	
  B7

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wentworth Energy, Inc.

  	
   

  	
  Redrock Energy, Inc. (f./k./a.
  Redrock Oil Sands, Inc.)

  	
   

  	
  2,300,000

  	
   

  	
  23%

  	
   

  	
  Common

  	
   

  	
  71

  

 

 

 

SCHEDULE II
TO PLEDGE AGREEMENT

 

Excluded Shares

 

200,000 shares of the $0.001 par value common
stock of Redrock Energy, Inc. (f.k.a. Redrock Oil Sands, Inc. and Wentworth Oil
Sands, Inc.) represented by share certificate no. 0055.

 

 

ANNEX I

 

TO

 

PLEDGE
AGREEMENT

 

 

PLEDGE
AMENDMENT

 

This Pledge Amendment, dated •, 20•, is delivered pursuant
to Section 4 of the Amended and Restated Pledge Agreement referred to
below.  The undersigned hereby agrees
that this Pledge Amendment may be attached to the Amended and Restated Pledge
Agreement, dated as of October 31, 2007, made by Wentworth Energy, Inc. in
favor of CASTLERIGG MASTER INVESTMENTS LTD., as Collateral Agent for the Buyers
(the “Collateral Agent”), as said Amended and Restated Pledge Agreement may
heretofore have been or hereafter may be amended or otherwise modified or
supplemented from time to time and that the promissory notes [and/or] shares or
other equity interests listed on this Pledge Amendment shall be hereby pledged
and assigned to the Collateral Agent and become part of the Collateral referred
to in such Amended and Restated Pledge Agreement and shall secure all of the
Obligations referred to in such Amended and Restated Pledge Agreement.

 

Pledged
Shares

 

	
  Pledgor

  	
   

  	
  Name of
  Issuer

  	
   

  	
  Number
  of Shares or Other Equity Interests

  	
   

  	
  Class

  	
   

  	
  Certificate
  No(s)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  WENTWORTH
  ENERGY, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00131-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00131-of-00352.parquet"}]]