Document:

EX-10.8

FORM OF GUARANTY AGREEMENT

This Guaranty Agreement is made as of May   , 2010, by       , an individual (the
“Guarantor”), in favor of AMERICAN STATE BANK, a Texas banking association (the “Bank”).

NOTICE IS TAKEN OF THE FOLLOWING:

	A.	 	Of even date herewith, BARON ENERGY, INC., a Nevada corporation, as Borrower (the
“Borrower”); the Guarantor,       , as Guarantors; and the Bank, as the
Lender, entered into that certain Loan Agreement (such loan agreement, as the same may be
amended, restated, modified, or supplemented from time to time, being hereinafter called the
“Loan Agreement”). Pursuant to the Loan Agreement, the Bank has agreed to extend loans to the
Borrower on the terms and conditions set forth in the Loan Agreement.

	B.	 	One of the terms and conditions stated in the Loan Agreement for the making of the loans as
provided therein is the execution and delivery to the Bank of this Guaranty Agreement;

NOW, THEREFORE, (i) in order to comply with the terms and conditions of the Loan Agreement,
(ii) to induce the Bank, at any time and from time to time, to loan monies with or without security
to or for the account of the Borrower in accordance with the terms of the Loan Agreement, (iii) at
the special insistence and request of the Bank, and (iv) for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby agrees as
follows:

ARTICLE 1

General Terms

Section 1.01 Terms Defined Above. As used herein, the terms “Bank,” “Borrower,”
“Guarantor” and “Loan Agreement” shall have the meanings indicated above.

Section 1.02 Certain Definitions. As used herein, the following terms shall have the
following meanings, unless the context otherwise requires:

“Financial Statement” shall have the meaning indicated in Subsection 3.01(e)
hereof.

“Guaranty Agreement” shall mean this Guaranty Agreement, as the same may be
amended, restated, modified or supplemented from time to time.

“Indebtedness” shall have the meaning indicated in Section 2.01 hereof.

“Lien” shall mean any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, and including, without limitation, the
lien or security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term “Lien” shall include reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting Property. For purposes of
this Guaranty Agreement, the Guarantor shall be deemed to be the owner of any
Property which he has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person for security purposes.

“Note” shall collectively mean the promissory notes described in Subsection
2.01(a), (b), and (c) hereof.

“Person” shall mean any individual, corporation, partnership, limited
partnership, joint venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof, or any
other form of entity.

“Property” shall mean any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

ARTICLE 2

The Guaranty

Section 2.01 Indebtedness Guaranteed. The Guarantor hereby irrevocably and
unconditionally guarantees the prompt payment when due, whether at maturity or otherwise of the
following (hereinafter collectively called the “Indebtedness”):

All indebtedness, obligations and liabilities of the Borrower to the Bank (and
also to others to the extent of participations granted them by the Bank) arising out
of and pursuant to the Loan Agreement, now outstanding or owing or which may be
existing or incurred, directly between the Borrower and the Bank, absolute or
contingent, jointly and/or severally, secured or unsecured, arising by operation of
law or otherwise, or direct or indirect, including, without limitation, the
following:

	 	a.	 	That certain Term Note, of even date herewith, in the
original principal amount of $550,000.00, executed by the Borrower and
payable to the order of the Bank, together with any and all renewals,
extensions for any period, increases and rearrangements thereof;	 

	 	b.	 	That certain Term Note, of even date herewith, in the
original principal amount of $450,000.00, executed by the Borrower and
payable to the order of the Bank, together with any and all renewals,
extensions for any period, increases and rearrangements thereof;	 

	 	c.	 	That certain Letter of Credit, issued by the Bank at
the request of the Borrower, for the benefit of the Texas Railroad
Commission, in the original principal amount of $50,000.00, together
with any and all renewals, extensions for any period, increases and
rearrangements thereof;	 

	 	d.	 	All liabilities of Borrower for future advances,
extensions of credit, or other value at any time advanced, given, or
made by the Bank to Borrower; and	 

	 	e.	 	The indebtedness, covenants and obligations of the
Borrower contained or referred to in the Loan Agreement, including,
without limitation, the reimbursement of reasonable expenses, all
reasonable attorneys’ fees, commitment fees, and other liabilities,
obligations, and indebtedness of the Borrower to the Bank arising
pursuant to the provisions of the Loan Agreement, or any other
instrument executed in connection with or as security for the Note.	 

Section 2.02 Nature of Guaranty. This Guaranty Agreement is an absolute,
irrevocable, complete and continuing guaranty of payment and not a guaranty of collection, and no
notice of the Indebtedness need be given to the Guarantor. This Guaranty Agreement may not be
revoked by the Guarantor and shall continue to be effective with respect to debt under the
Indebtedness arising or created after any attempted revocation by the Guarantor and after the
Guarantor’s dissolution. The Bank and the Borrower may modify, alter, rearrange, extend for any
period and/or renew from time to time, the Indebtedness and the Bank may waive any Event of Default
(as defined in the Loan Agreement) without notice to the Guarantor and in such event the Guarantor
will remain fully bound hereunder on the Indebtedness. This Guaranty Agreement shall continue to
be effective or be reinstated, as the case may be, if at any time any payment of the Indebtedness
is rescinded or must otherwise be returned by the Bank upon the insolvency, bankruptcy or
reorganization of the Borrower or otherwise, all as though such payment had not been made. This
Guaranty Agreement may be enforced by the Bank and any subsequent holder of the Indebtedness and
shall not be discharged by the assignment or negotiation of all or part of the Indebtedness. The
Guarantor hereby expressly waives presentment for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, notice of intent to accelerate maturity, notice of acceleration of
maturity and any other notice in connection with the Indebtedness, and also notice of acceptance of
this Guaranty Agreement, acceptance on the part of the Bank being conclusively presumed by its
request for this Guaranty Agreement and delivery of the same to it. This Guaranty Agreement may
require the Guarantor to make multiple payments to the Bank with respect to the Indebtedness.

Section 2.03 Bank’s Rights. The Guarantor authorizes the Bank, without notice or
demand and without affecting the Guarantor’s liability hereunder, to take and hold security for the
payment of this Guaranty Agreement and/or the Indebtedness, and exchange, enforce, waive and
release any such security; and to apply such security and direct the order or manner of sale
thereof as the Bank in its discretion may determine; and to obtain a guaranty of the Indebtedness
from any one or more Persons and at any time or times to enforce, waive, rearrange, modify, limit
or release any of such other Persons from their obligations under such guaranties.

Section 2.04 Guarantor’s Waivers. The Guarantor waives any right to require the Bank
to (a) proceed against the Borrower or any other Person liable on the Indebtedness, (b) enforce its
rights against any other guarantor of any portion of the Indebtedness, (c) proceed or enforce its
rights against or exhaust any security given to secure any portion of the Indebtedness, (d) have
the Borrower joined with the Guarantor in any suit arising out of this Guaranty Agreement and/or
the Indebtedness, or (e) pursue any other remedy in the Bank’s power whatsoever. The Bank shall
not be required to mitigate damages or take any action to reduce, collect or enforce the
Indebtedness. The Guarantor waives any defense arising by reason of any disability, lack of
corporate authority or power, or other defense of the Borrower or any other guarantor of any
portion of the Indebtedness, and shall remain liable hereon regardless of whether the Borrower or
any other guarantor be found not liable thereon for any reason. Until the Indebtedness shall have
been paid in full, the Guarantor shall not have any right of subrogation. Until the Indebtedness
shall have been paid in full, the Guarantor waives any right to enforce any remedy which the Bank
now has or may hereafter have against the Borrower, and waives any benefit of any right to
participate in any security now or hereafter held by the Bank.

Section 2.05 Maturity of Indebtedness and Payment. The Guarantor agrees that if the
maturity of any portion of the Indebtedness is accelerated by bankruptcy or otherwise, such
maturity shall also be deemed accelerated for the purpose of this Guaranty Agreement without demand
or notice to the Guarantor. The Guarantor will, forthwith upon notice from the Bank of the
Borrower’s failure to pay any of the Indebtedness at maturity, pay to the Bank at its banking
headquarters, the amount due and unpaid by the Borrower and guaranteed hereby. The failure of the
Bank to give this notice shall not in any way release the Guarantor hereunder.

Section 2.06 Bank’s Expenses. If the Guarantor fails to pay any of the Indebtedness
after notice from the Bank of the Borrower’s failure to pay such Indebtedness, and if the Bank
obtains the services of an attorney for collection of amounts owing by the Guarantor hereunder, or
if suit is filed to enforce this Guaranty Agreement, or if proceedings are had in any bankruptcy,
probate, receivership or other judicial proceedings for the establishment or collection of any
amount owing by the Guarantor hereunder, or if any amount owing by the Guarantor hereunder is
collected through such proceedings, the Guarantor agrees to pay to the Bank its reasonable
attorneys’ fees.

Section 2.07 Liability. It is expressly agreed that the liability of the Guarantor
for the payment of the Indebtedness guaranteed hereby shall be primary not secondary.

Section 2.08 Events and Circumstances Not Reducing or Discharging Guarantor’s
Obligations. The Guarantor hereby consents and agrees to each of the following to the fullest
extent permitted by law, and agrees that its obligations under this Guaranty Agreement shall not be
released, diminished, impaired, reduced or adversely affected by any of the following, and waives
any rights (including without limitation rights to notice) which he might otherwise have as a
result of or in connection with any of the following:

	 	a.	 	Modifications, Etc. Any renewal, extension, modification, increase,
decrease, alteration or re-arrangement of all or any part of the Indebtedness, or of
the Note, or the Loan Agreement or any instrument executed in connection therewith, or
any contract or other agreement between the Borrower and the Bank, or any other
Person, pertaining to any portion of the Indebtedness;

	 	b.	 	Adjustment, Etc. Any adjustment, indulgence,
forbearance or compromise that might be granted or given by the Bank to the
Borrower or the Guarantor or any Person liable on any portion of the
Indebtedness;

	 	c.	 	Condition of Borrower or Guarantor. The insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation, disability,
dissolution, death or lack of power of the Borrower or of the Guarantor or of
any other Person at any time liable for the payment of all or any part of the
Indebtedness; or any dissolution of the Borrower, or any sale, lease or
transfer of any or all of the assets of the Borrower or of the Guarantor, or
any changes in the owners, partners, shareholders or equity holders of the
Borrower or any reorganization of the Borrower;

	 	d.	 	Invalidity of Indebtedness. The invalidity,
illegality or unenforceability of all or any part of the Indebtedness, or any
document or agreement executed in connection with any portion of the
Indebtedness, for any reason whatsoever, including, without limitation, the
fact that the Indebtedness, or any part thereof, exceeds the amount permitted
by law, the act of creating the Indebtedness or any part thereof is
ultra vires, the individuals, officers or representatives
executing the documents or otherwise creating the Indebtedness acted in excess
of their authority, the Indebtedness violates applicable usury laws, the
Borrower has valid defenses, claims or offsets (whether at law, in equity or
by agreement) which render the Indebtedness wholly or partially uncollectible,
the creation, performance or repayment of all or any portion of the
Indebtedness (or the execution, delivery and performance of any document or
instrument representing part of the Indebtedness or executed in connection
with the Indebtedness, or given to secure the repayment of any portion of the
Indebtedness) is illegal, uncollectible, legally impossible or unenforceable,
or the Loan Agreement or other documents or instruments pertaining to any
portion of the Indebtedness have been forged or otherwise are irregular or not
genuine or authentic;

	 	e.	 	Release of Obligors. Any full or partial release of
the liability of the Borrower on the Indebtedness or any part thereof, of any
co-guarantors, or any other Person now or hereafter liable, whether directly
or indirectly, jointly, severally, or jointly and severally, to pay, perform,
guarantee or assure the payment of the Indebtedness or any part thereof, it
being recognized, acknowledged and agreed by the Guarantor that he may be
required to pay the Indebtedness without assistance or support of any other
Person, and the Guarantor has not been induced to enter into this Guaranty
Agreement on the basis of a contemplation, belief, understanding or agreement
that any Person other than the Borrower will be liable to perform any portion
of the Indebtedness, or the Bank will look to any other Person to perform any
portion of the Indebtedness. Notwithstanding the foregoing, the Guarantor
does not hereby waive or release (expressly or impliedly) any rights of
subrogation, reimbursement or contribution which he may have, after payment in
full of the Indebtedness, against others liable on the Indebtedness. The
Guarantor’s rights of subrogation and reimbursement are, however, subordinate
to the rights and claims of the Bank;

	 	f.	 	Other Security. The taking or accepting of any other
security, collateral or guaranty, or other assurance of payment, for all or
any part of the Indebtedness;

	 	g.	 	Release of Collateral, Etc. Any release, surrender,
exchange, subordination, deterioration, waste, loss or impairment (including
without limitation negligent, willful, unreasonable or unjustifiable
impairment) of any collateral, property or security, at any time existing in
connection with, or assuring or securing payment of, all or any part of the
Indebtedness;

	 	h.	 	Care and Diligence. The failure of the Bank or any
other Person to exercise diligence or reasonable care in the preservation,
protection, enforcement, sale or other handling or treatment of all or any
part of any collateral, property or security, at any time existing in
connection with, or assuring or securing payment of, all or any part of the
Indebtedness;

	 	i.	 	Status of Liens. The fact that any collateral,
security, security interest or Lien contemplated or intended to be given,
created or granted as security for the repayment of any portion of the
Indebtedness shall not be properly perfected or created, or shall prove to be
unenforceable or subordinate to any other security interest or Lien, it being
recognized and agreed by the Guarantor that he is not entering into this
Guaranty Agreement in reliance on, or in contemplation of the benefits of, the
validity, enforceability, collectibility or value of any of the collateral for
any portion of the Indebtedness. Notwithstanding the foregoing, the Guarantor
does not hereby waive or release (expressly or impliedly) any right to be
subrogated to the rights of the Bank in any collateral or security for any
portion of the Indebtedness, after payment in full of the Indebtedness. The
Guarantor’s rights of subrogation are, however, subordinate to the rights,
claims, Liens and security interests of the Bank;

	 	j.	 	Payments Rescinded. Any payment by the Borrower to
the Bank is held to constitute a preference under the bankruptcy laws, or for
any reason the Bank is required to refund such payment or pay such amount to
the Borrower or someone else; or

	 	k.	 	Other Actions Taken or Omitted. Any other action
taken or omitted to be taken with respect to the Loan Agreement, the
Indebtedness or any part thereof, or the security and collateral therefor,
whether or not such action or omission prejudices the Guarantor or increases
the likelihood that he will be required to pay the Indebtedness pursuant to
the terms hereof; it being the unambiguous and unequivocal intention of the
Guarantor that he shall be obligated to pay the Indebtedness guaranteed hereby
when due, notwithstanding any occurrence, circumstance, event, action, or
omission whatsoever, whether contemplated or uncontemplated, and whether or
not otherwise or particularly described herein, except for the full and final
payment and satisfaction of the Indebtedness.

ARTICLE 3

Representations and Warranties

Section 3.01 By Guarantor. In order to induce the Bank to accept this Guaranty
Agreement, the Guarantor represents and warrants to the Bank (which representations and warranties
will survive the creation of the Indebtedness and any extension of credit thereunder) that:

	 	a.	 	Benefit. The Guarantor’s guaranty pursuant to this
Guaranty Agreement reasonably may be expected to benefit, directly or
indirectly, the Guarantor.

	 	b.	 	Binding Obligations. This Guaranty Agreement
constitutes the valid and binding obligation of the Guarantor, enforceable in
accordance with its terms (except that enforcement may be subject to any
applicable bankruptcy, insolvency or similar laws generally affecting the
enforcement of creditor’s rights).

	 	c.	 	No Legal Bar or Resultant Lien. This Guaranty
Agreement will not violate any provisions of any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which the Guarantor
is subject, or result in the creation or imposition of any Lien upon any
Property of the Guarantor.

	 	d.	 	No Consent. The Guarantor’s execution, delivery and
performance of this Guaranty Agreement does not require the consent or approval
of any other Person, including without limitation any regulatory authority or
governmental body of the United States or any state thereof or any political
subdivision of the United States or any state thereof.

	 	e.	 	Financial Statement. The financial statement (the
“Financial Statement”) most recently submitted to the Bank by the Guarantor is
true and correct and presents fairly the financial condition of the Guarantor
at such date.

	 	f.	 	No Litigation. As of the date hereof, there is no
litigation, legal, administrative or arbitral proceeding, investigation or
other action of any nature pending, or, to the knowledge of the Guarantor,
threatened against or affecting the Guarantor or any of its Property.

Section 3.02 No Representations by Bank. Neither the Bank nor any other Person has
made any representation, warranty or statement to the Guarantor in order to induce him to execute
this Guaranty Agreement.

ARTICLE 4

Miscellaneous

Section 4.01 Successors and Assigns. This Guaranty Agreement is and shall be in
every particular available to the successors and assigns of the Bank and is and shall always be
fully binding upon the heirs, personal representatives, successors and assigns of the Guarantor,
notwithstanding that some or all of the monies, the repayment of which this Guaranty Agreement
applies, may be actually advanced after any bankruptcy, receivership, reorganization or other event
affecting the Guarantor.

Section 4.02 Notices. Any notice or demand to the Guarantor under or in connection
with this Guaranty Agreement may be given and shall conclusively be deemed and considered to have
been given and received upon the deposit thereof, in writing, duly stamped and addressed to the
Guarantor at the address appearing on the last page of this Guaranty Agreement or at such other
address of which the Guarantor shall have notified the Bank in writing, in the United States mail,
but actual notice, however given or received, shall always be effective.

Section 4.03 Construction. THIS GUARANTY AGREEMENT IS A CONTRACT MADE UNDER AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

Section 4.04 Entire Agreement. THIS GUARANTY AGREEMENT REPRESENTS THE FINAL AGREEMENT
OF THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN OR ORAL AGREEMENTS OF THE PARTIES.

{The remainder of this page is intentionally blank; signature page follows.}

EXECUTED as of the        day of May 2010.

Address:

	 	 	      

      

      

MAKEREX-10.9

FORM OF STOCK PLEDGE AGREEMENT AND SECURITY AGREEMENT

This Stock Pledge Agreement and Security Agreement (the “Agreement”) is made and entered into
as of the        day of May 2010, by and between       , an individual, whose address is
     (the “Debtor”), and AMERICAN STATE BANK, a Texas banking
association, whose address is 620 N. Grant, Odessa, Texas 79761-4797 (alternatively, the “Secured
Party” or the “Bank”).

NOTICE IS TAKEN OF THE FOLLOWING:

	A.	 	Reference is made to that certain Loan Agreement, of even date herewith, by and among Baron
Energy, Inc., as Borrower (“Borrower”);       , as Guarantors
(collectively, the “Guarantors”); and the Secured Party, as Lender (the “Loan Agreement”).
Pursuant to the terms of the Loan Agreement, the Secured Party has agreed to extend loans to
the Borrower, from time to time, said indebtedness being evidenced by: (i) that certain Term
Note, of even date herewith, in the original principal amount of Five Hundred Fifty Thousand
and No/100 Dollars ($550,000.00); (ii) that certain Term Note, of even date herewith, in the
original principal amount of Four Hundred Fifty Thousand and No/100 Dollars ($450,000.00); and
(iii) that certain Letter of Credit, issued by the Bank at the request of Debtor, for the
benefit of the Texas Railroad Commission, with the most recent version of that letter of
credit being dated as of May 1, 2010, and terminating as of August 1, 2011 (collectively, the
“Notes”). The Loan Agreement, the Notes, and all documents executed by the parties
simultaneously therewith, as any of the same may be amended, extended or replaced from time to
time are collectively referred to herein as the “Credit Documents”. Capitalized terms not
otherwise defined herein are used with the same meanings as in the Credit Documents.

	B.	 	As consideration to the Bank for its agreement to make advances to the Borrower under the
Notes, and as required under the terms of the Loan Agreement, in order to further secure its
own performance under the Guaranty Agreement, the Debtor has agreed to pledge to the Bank
certain negotiable securities (as further described below, the “Pledged Securities”).

	C.	 	To fulfill the commitment of the Debtor under the Loan Agreement to pledge the Pledged
Securities to the Bank in further support of the Guaranty Agreement, the Debtor and the Bank
have agreed to enter into this Agreement to evidence their agreement concerning the Debtor’s
pledge of the Pledged Securities as contemplated above.

NOW THEREFORE, for and in consideration of the foregoing and of other good and valuable
consideration in hand tendered by the Bank to the Debtor, the receipt and sufficiency of which is
hereby acknowledged, the Bank and the Debtor hereby agree as follows:

	1.	 	Grant of Security Interest. Debtor does hereby pledge, hypothecate, deliver, and
grant a security interest to the Bank in those securities that are described on the Exhibit
“A” that is attached hereto and made a part hereof (the “Pledged Securities”), with the
understanding that such Pledged Securities will now be held for the benefit of the Bank,
pursuant to the terms of this Agreement, to secure payment and performance of the obligations
described in Section 3 (collectively and severally, the “Obligations”). Debtor will confirm
the grant of a security interest in and to the Pledged Securities to the Bank in any manner
reasonably required by the Bank.

	2.	 	Collateral. As so pledged, the Pledged Securities will be referred to herein, from
time to time, as the “Collateral”. If so required by the Bank, the Debtor will execute
appropriate stock powers simultaneously with the execution of this Agreement.

	3.	 	Obligations. The Obligations secured by this Security Agreement shall consist of any
and all debts, obligations, and liabilities of Borrower or the Debtor to Secured Party arising
out of or related to the Guaranty Agreement (whether principal, interest, fees, or otherwise,
whether now existing or thereafter arising, whether voluntary or involuntary, whether or not
jointly owed by Debtor with others, whether direct or indirect, absolute or contingent,
contractual or tortious, liquidated or unliquidated, arising by operation of law, or
otherwise, whether or not from time to time decreased or extinguished and later increased,
created incurred, and whether or not extended, modified, rearranged, restructured, refinanced,
or replaced, including without limitation, modifications to interest rates or other payment
terms of such debts, obligations, or liabilities).

	4.	 	Holding of Collateral and Rights. Debtor acknowledges and agrees that Bank shall
hold the Collateral, together with all right, title, interest, powers, privileges, and
preferences pertaining or incidental thereto forever, subject, however, to return of the
Collateral (or such portion thereof as may exist from time to time hereafter after giving
effect to the terms hereof) by Bank to Debtor upon payment in full of all the Obligations and
termination by Bank in writing of any and all credit commitments with respect thereto.

	5.	 	Representations and Warranties. In order to induce Bank to accept this Agreement,
Debtor hereby represents and warrants to Bank: (a) that Debtor has the complete and
unconditional authority to pledge the Collateral, holds (or will hold on date of pledge
thereof) the Collateral free and clear of any and all liens, charges, encumbrances and
security interests thereon (other than in favor of Bank subject to federal and state
securities laws), and has (or will have on date of pledge thereof) good right, title and legal
authority to pledge the Collateral in manner contemplated herein; (b) that all stock now owned
or hereafter owned by Debtor and constituting or which will constitute Collateral hereunder
is, or will be, on date of pledge thereof, validly issued, fully paid and non-assessable; and
(c) that no authorization, approval, or other action by, any governmental authority or
regulatory body is required either (i) for the pledge by Debtor of the Collateral pursuant to
this Agreement or for the execution, delivery or performance of this Agreement by Debtor, or
(ii) for the exercise by Bank of other rights provided for in this Agreement or remedies in
respect of the Collateral pursuant to this Agreement (except as may be required in connection
with such disposition by laws affecting the offering and sale of securities generally).

	6.	 	Name in Which Collateral Held. Debtor further acknowledges and agrees that, upon the
occurrence of an Event of Default, Bank may hold any of the Collateral in its own name,
endorsed or assigned in blank or in the name of any nominee or nominees, and that Bank may
deliver any or all of the Collateral to the issuer or issuers thereof for the purpose of
making denominational exchanges or registrations or transfer or for such other purposes in
furtherance of this Agreement as Bank may deem advisable.

	7.	 	Transactions involving Pledged Securities. Bank shall have the right to enter into
the following transactions in connection with the Pledged Securities, subject to federal and
state securities laws:

	 	a.	 	To sell and trade the securities in the Pledged Securities in the ordinary course
of management of such accounts, with the advice, and, in the advance of an Event of
Default, upon the consent, of Debtor;

	 	b.	 	Prior to the occurrence of an Event of Default, to sell any or all securities
in the Pledged Accounts with the consent of Debtor; and

	 	c.	 	To retain the proceeds of sale of any shares from the Pledged Securities and to
re-direct the reinvestment of such proceeds in the purchase of additional shares.

	8.	 	Reasonable Care. Bank shall be deemed to have exercised reasonable care in the
custody and prevention of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which Bank accords its own property, it being understood
that Bank shall not have responsibility for: (a) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders, or other matters relative to any
Collateral, whether or not Bank has or is deemed to have knowledge of such matters, unless
reasonably requested to do so by Debtor, or (b) taking any necessary steps to preserve rights
against any parties with respect to any Collateral.

	9.	 	Events of Default. Events of Default are defined in the Loan Agreement.

10. Remedies. If any Event of Default occurs and continues:

	 	a.	 	Bank may exercise (in compliance with all applicable securities laws) in
respect of the Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured party on default
under the Texas Business and Commerce Code at that time, and Bank may also, without
notice except as specified below, sell (in compliance with all applicable securities
law) the Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, over the counter or at any of Bank’s offices or elsewhere, for
cash, on credit or for future delivery, and at such price or prices and upon such other
terms as Bank may deem commercially reasonable or otherwise in such manner as necessary
to comply with applicable federal and state securities laws. Bank shall be authorized
at any such sale (if it seems it advisable to do so) to restrict the prospective
bidders or purchasers to persons who will represent and agree that they are purchasing
the Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale Bank shall have
the right to assign, transfer and deliver to the purchaser or purchasers at any such
sale and such purchasers shall hold the property sold absolutely, free from any claim
or right on the part of Debtor, and Debtor hereby waives (to the extent permitted by
law) all rights of redemption, stay and/or appraisal which it now has or may at any
time in the future have under any rule of law or statute now existing or hereafter
enacted. To the extent notice of sale shall be required by law, Bank shall give Debtor
at least ten days’ notice of the time and place of any public sale or the time after
which any private sale is to be made, which Debtor agrees shall constitute reasonable
notification. At any such sale, Bank may bid (which bid may be, in whole or in part,
in the form of cancellation of Obligations) for and purchase the whole or any part of
the Collateral. Bank shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. Bank 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. If
sale of all or any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by Bank until the sale price is paid by the
purchaser or purchasers thereof, but Bank shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like notice.
Debtor agrees that any sale of the Collateral conducted by Bank in accordance with the
foregoing provisions of this Section 12 shall be deemed to be a commercially reasonable
sale under Section 9.504 of the Texas Business and Commerce Code. As an alternative to
exercising the power of sale herein conferred upon it, Bank may proceed by a suit or
suits at law or in equity to foreclose the security interest granted under this
Agreement and to sell the Collateral, or any portion thereof, pursuant to a judgment or
decree of a court or courts of competent jurisdiction.

	 	b.	 	Any cash held by Bank as Collateral and all cash proceeds received by Bank in
respect of any sale of, collection from, or other realization upon or any part of the
Collateral following the occurrence of an Event of Default may, in the discretion of
Bank, be held as collateral for, and/or then or at any time thereafter applied against
all or any part of the Obligations, in such order of application as Bank shall select.

	 	c.	 	Any surplus of such cash or cash proceeds held by Bank and remaining after
payment in full of all the Obligations shall be paid over to Debtor or to whomsoever
may be lawfully entitled to receive such surplus.

	11.	 	Security Interest Absolute. All rights of Bank hereunder, the security interest
granted to Bank hereunder, and all obligations of Debtor hereunder, shall be absolute and
unconditional irrespective of any of the following, and Debtor expressly consents to the
occurrence of any of such events and waives any defense arising therefrom:

	 	a.	 	any lack of validity or enforceability of the Standstill Agreement or other
agreement or instrument relating thereto;

	 	b.	 	any change in the time, manner or place of payment of, or in any other term of,
all or any of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Standstill Agreement, any other agreement or instrument relating
thereto;

	 	c.	 	any exchange, release or non-perfection of any other collateral, or any release
or amendment or waiver of or consent to or departure from the Standstill Agreement or
any guaranty, for all or any of the Obligations; or

	 	d.	 	any other circumstance which might otherwise constitute a defense available to,
or a discharge of, the Debtor in respect of the Obligations or in respect of this
Agreement.

	12.	 	Amendments, Etc. No amendment or waiver of any provision of this Agreement nor
consent to any departure by Debtor herefrom shall in any event be effective unless the same
shall be in writing and signed by Bank and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

	13.	 	No Waiver, Cumulative Remedies. No failure on the part of Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or remedy by Bank preclude
any other or further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other remedies provided by
law.

	14.	 	Severability. If any provision of any of this Agreement or the application thereof
to any party hereto or circumstances shall be invalid or unenforceable, the remainder of this
Agreement and the application of such provisions to any other party thereto or circumstances
shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

	15.	 	Notices. All notices, requests and demands to or upon the respective parties hereto
shall be deemed to have been given or made when personally delivered or deposited in the mail,
registered or certified mail, postage prepaid, addressed as follows or to such other address
as may be designated hereafter in writing by the respective parties hereto:

Debtor:       

     

     

	 	 	 
	Bank:
	 	American State Bank

620 N. Grant Avenue

Odessa, Texas 79761

	 	 	Attention: Mike Marshall, Executive Vice President

except in cases where it is expressly provided herein or by applicable law that such notice,
demand or request is not effective until received by the party to whom it is addressed.

	16.	 	Time is of the Essence. Time is of the essence in this Agreement.

	17.	 	Interpretation. No provision of this Agreement shall be construed against or
interpreted to the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having or being deemed to have structured or
dictated such provision.

	18.	 	Bank Not a Joint Venturer. Neither this Agreement nor any agreements, instruments,
documents or transactions contemplated hereby (including the Standstill Agreement) shall in
any respect be interpreted, deemed or construed as making Bank a partner or joint venturer
with Debtor or as creating any similar relationship or entity, and Debtor agrees that it will
not make any contrary assertion, contention, claim or counterclaim in any action, suit or
other legal proceeding involving Bank and Debtor.

	19.	 	Jurisdiction. Debtor agrees that any legal action or proceeding with respect to this
Agreement may be brought in the courts of the State of Texas or the United States of America
for the Western District of Texas, all as Bank may elect. By execution of this Agreement,
Debtor hereby submits to each such jurisdiction, hereby expressly waiving whatever rights may
correspond to it by reason of its present or future domicile. Nothing herein shall affect the
right of Bank to commence legal proceedings or otherwise proceed against Debtor in any other
jurisdiction or to serve process in any manner permitted or required by law. In furtherance
of the foregoing, Debtor hereby appoints the Secretary of State of the State of Texas as its
agent for service of process.

	20.	 	Acceptance. This Agreement shall not become effective unless and until delivered to
Bank at its principal office in Midland, Midland County, Texas and accepted in writing by Bank
thereafter at such office as evidenced by its execution hereof (notice of which delivery and
acceptance are hereby waived by Debtor).

	21.	 	Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas and shall inure to the benefit of and be binding upon the
successors and assigns of the parties hereto.

	22.	 	Satisfaction of Obligations. Upon the satisfaction in full of all obligations
contemplated between Bank and Borrower under the Standstill Agreement, the Bank shall release
the Pledged Securities to the Debtor.

This agreement is executed as of the        day of May 2010.

	 	 	 
	DEBTOR	 	BANK
	 	 	AMERICAN STATE BANK

	 	 	 	       By:      

	 	 	 	 	 
	 	 	 	 	MIKE MARSHALL
	I	 	 	 	Executive Vice President

1

	 	 	 	 	 
	 	 	 	 	MIKE MARSHALL
	I	 	 	 	Executive Vice President
	STATE OF TEXAS

COUNTY OF       

	 	)

)

)
	 	

This instrument was acknowledged before me this        day of May 2010 by
      , an individual.

      

Notary Public

	 	 	 
	STATE OF TEXAS

	 	)

)

COUNTY OF        )

This instrument was acknowledged before me this        day of May 2010 by Mike Marshall, Executive
Vice President of American State Bank, a state banking association, on behalf of said association.

      

Notary Public

EXHIBIT A

 

	 	 	 	 	 	 	 
	STOCK
	 	NUMBER

OF SHARES

	 	OWNER
	 	CERTIFICATE

NUMBER
	 
	 	 

	 	 
	 	 

2

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