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	EXHIBIT 10.4

	REGISTRATION RIGHTS AGREEMENT

                This Registration Rights Agreement (this “Agreement”) is made and entered into as of October 5, 2007, by and among TATONKA OIL AND GAS, INC., a Colorado corporation (the “Company”), and the persons and entities listed on Exhibit A hereto (each, a “Purchaser” and, collectively, the “Purchasers”).

                WHEREAS, upon the terms and subject to the conditions of the Securities Purchase Agreement, dated as of October 5, 2007 (the “Purchase Agreement”), Tatonka Oil and Gas Company, Inc. (the “Subsidiary”) has agreed to issue and sell to the Purchasers the Subsidiary’s Senior Secured Notes Due 2008 (the “Notes”) and the Company has agreed to issue and sell to Purchasers the Warrants to purchase shares of its Common Stock (the “Warrants”); and

                WHEREAS, to induce the Purchasers to execute and deliver the Purchase Agreement and to purchase the Notes and the Warrants, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, with respect to the Warrant Shares.

                NOW, THEREFORE, in consideration of the representations, warranties and agreements contained herein and other good and valuable consideration, the receipt and legal adequacy of which are hereby acknowledged by the parties, the Company and the Purchasers hereby agree as follows:

	 	      1. Definitions.

                Capitalized terms used but not otherwise defined herein shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

                “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, “control,” when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms “affiliated,” “controlling” and “controlled” have meanings correlative to the foregoing.

                “Blackout Period” shall have the meaning set forth in Section 3(m).

                “Board” shall have the meaning set forth in Section 3(m).

                “Business Day” means any day except Saturday, Sunday and any day which is a legal holiday or a day on which banking institutions in the state of California generally are authorized or required by law or other government actions to close.

                “Commission” means the Securities and Exchange Commission.

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                “Common Stock” means the Company’s Common Stock, $0.001 par value.

                “Event” shall have the meaning set forth in Section 8(d).

                “Exchange Act” means the Securities Exchange Act of 1934, as amended.

                “Holder” means, collectively, each holder from time to time of Registrable Securities including, without limitation, each Purchaser and its assignees. To the extent this Agreement refers to an election, consent, waiver, request or approval of or by the Holder, such reference shall mean an election, consent, waiver, request or approval by the holders of a majority in interest of the then-outstanding Registrable Securities (on an as exercised basis).

                “Indemnified Party” shall have the meaning set forth in Section 6(c). “Indemnifying Party” shall have the meaning set forth in Section 6(c). “Liquidated Damages” shall have the meaning set forth in Section 8(d). “Losses” shall have the meaning set forth in Section 6(a).

                “Person” means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind.

                “Piggyback Registration” shall have the meaning set forth in Section 2(b).

                 “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

                “Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference in such Prospectus.

                “Registrable Securities” means the shares of Common Stock issued and issuable pursuant to the exercise of the Warrants, and upon any stock split, stock dividend, recapitalization or similar event with respect to such shares of Common Stock and any other securities issued in exchange of or replacement of such shares of Common Stock (collectively, the “Warrant Shares”); until in the case of any of the Warrant Shares (a) a Registration Statement covering such Warrant Share has been declared effective by the Commission and continues to be effective, or (b) such Warrant Share is sold in compliance with Rule 144 or may be sold pursuant to Rule 144(k), after which time such Warrant Share shall not be a Registrable Security.

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                “Registration Statement” means any registration statement, including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference in such registration statement, for the Warrant Shares required to be filed by the Company with the Commission pursuant to this Agreement or required to include the Warrant Shares.

                “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

                 “Rule 158” means Rule 158 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

                “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

                “Securities Act” means the Securities Act of 1933, as amended.

                “Special Counsel” means any special counsel to Holder, for which Holder will be reimbursed by the Company pursuant to Section 5 of this Agreement and Section 8.1 of the Purchase Agreement.

                “Warrant Shares” shall have the meaning set forth in the definition of “Registrable Securities”.

                2. Registration. If at any time while any Registrable Securities are outstanding (without any obligation to do so) the Company proposes to file a registration statement under the Securities Act with respect to an offering of Common Stock solely for cash (other than a registration statement (i) on Form S-8 or any successor form to such Form or in connection with any employee or director welfare, benefit or compensation plan, (ii) on Form S-4 or any successor form to such Form or in connection with an exchange offer, (iii) in connection with a rights offering exclusively to existing holders of Common Stock, (iv) in connection with an offering solely to employees of the Company or its Subsidiaries, or (v) relating to a transaction pursuant to Rule 145 of the Securities Act or any other “business combination” transaction), whether or not for its own account, the Company shall give prompt written notice of such proposed filing to the Holders. The notice referred to in the preceding sentence shall offer Holders the opportunity to register such amount of Registrable Securities as each Holder may request (a “Piggyback Registration”); provided that such request shall be subject to a pro rata cutback if requested by the underwriter or lead investor or if required by Commission regulation. The Company shall include in such Piggyback Registration, in the registration and qualification for sale under the “blue sky” or securities laws of the various states and in any underwriting in connection therewith all Registrable Securities for which the Company has received written requests for inclusion therein within 15 calendar days after the notice referred to above has been given by the Company to the Holders. Holders of Registrable Securities shall be permitted to

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withdraw all or part of the Registrable Securities from a Piggyback Registration at any time prior to the effective date of such Piggyback Registration. If a Piggyback Registration is an underwritten primary registration on behalf of the Company and the managing underwriter advises the Company that the total number of shares of Common Stock requested to be included in such registration exceeds the number of shares of Common Stock which can be sold in such offering, the Company will include in such registration in the following priority: (i) first, all shares of Common Stock the Company proposes to sell; and (ii) second, up to the full number of applicable Registrable Securities requested to be included in such registration by any Holders which, in the opinion of such managing underwriter, can be sold without adversely affecting the price range or probability of success of such offering (with Registrable Securities allocated pro rata among the Holders on the basis of the total number of Registrable Securities requested to be included in such registration by all Holders).

                3. Registration Procedures; Company’s Obligations.

                In connection with the registration of the Registrable Securities, the Company shall:

                                (a) not less than three (3) Business Days prior to the filing of the Registration Statement or any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated therein by reference), the Company shall (A) furnish to the Holder and any Special Counsel, copies of all such documents proposed to be filed, which documents (other than those incorporated by reference) will be subject to the timely review of and comment by such Special Counsel, and (B) at the request of the Holder cause its officers and directors, counsel and independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of such Special Counsel, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file any Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holder or any Special Counsel shall reasonably object in writing within three (3) Business Days of their receipt thereof.

                                (b) (i) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424 (or any similar provisions then in force) promulgated under the Securities Act; (ii) respond promptly to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and promptly provide the Holder true and complete copies of all correspondence from and to the Commission relating to the Registration Statement; and (iii) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the Holder set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.

                                (c) Notify the Holder of Registrable Securities to be sold and any Special Counsel promptly (and, in the case of (i)(A) below, not less than three (3) Business Days prior to such filing and, in the case of (i)(C) below, no later than the first Business Day following the date on which the Registration Statement becomes effective) and (if requested by any such Person)

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confirm such notice in writing no later than three (3) Business Days following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event that makes any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

                                The Company shall promptly furnish to the Special Counsel, without charge, (i) any correspondence from the Commission or the Commission’s staff to the Company or its representatives relating to any Registration Statement, and (ii) promptly after the same is prepared and filed with the Commission, a copy of any written response to the correspondence received from the Commission.

                                (d) Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of, (i) any order suspending the effectiveness of the Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any U.S. jurisdiction, at the earliest practicable moment.

                                (e) If requested by the Holder, (i) promptly incorporate in a Prospectus supplement or post-effective amendment to the Registration Statement such information as the Company reasonably agrees should be included therein, and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in such Prospectus supplement or post-effective amendment.

                                (f) Furnish to the Holder and any Special Counsel, without charge, at least one conformed copy of each Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission.

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                                (g) Promptly deliver to the Holder and any Special Counsel, without charge, as many copies of the Registration Statement, Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request; and the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by the selling Holder in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto. Should the Holder offer or sell the Registrable Securities, such Holder agrees to comply with all applicable securities laws.

                                (h) Prior to any public offering of Registrable Securities, use its best efforts to register or qualify or cooperate with the selling Holder and any Special Counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as the Holder reasonably requests in writing, to keep each such registration or qualification (or exemption therefrom) effective and to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or subject the Company to any tax in any such jurisdiction where it is not then so subject.

                                (i) Cooperate with the Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to a Registration Statement and to enable such Registrable Securities to be in such denominations and registered in such names as the Holder may request at least two (2) Business Days prior to any sale of Registrable Securities.

                                (j) Upon the occurrence of any event contemplated by Section 3(c)(v), promptly prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

                                (k) Use its best efforts to cause all Registrable Securities relating to such Registration Statement to be listed on any securities exchange, quotation system, market or over-the-counter bulletin board, if any, on which the same securities issued by the Company are then listed as and when required pursuant to the Purchase Agreement.

                                (l) Comply in all material respects with all applicable rules and regulations of the Commission and make generally available to its security holders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 not later than forty-five (45) days after the end of any twelve (12) month period (or ninety (90) days after the end of any twelve (12) month period if such period is a fiscal year) commencing on the first day of the

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first fiscal quarter of the Company after the effective date of the Registration Statement, which statement shall conform to the requirements of Rule 158.

                                (m) If (i) there is material non-public information regarding the Company which the Company’s Board of Directors (the “Board”) reasonably determines not to be in the Company’s best interest to disclose and which the Company is not otherwise required to disclose, or (ii) there is a significant business opportunity (including, but not limited to, the acquisition or disposition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer or other similar transaction) available to the Company which the Board reasonably determines not to be in the Company’s best interest to disclose and which the Company would be required to disclose under the Registration Statement, then the Company may suspend effectiveness of a Registration Statement and suspend the sale of Registrable Securities under a Registration Statement, provided that the Company may not suspend its obligation for more than thirty (30) days in the aggregate in any twelve month period if suspension is for any of the reasons listed above or sixty (60) days in the aggregate in any twelve month period for any other reason (each, a “Blackout Period”); provided, however, that no such suspension shall be permitted for more than twenty (20) consecutive days, arising out of the same set of facts, circumstances or transactions.

                                (n) Within two (2) Business Days after the Registration Statement which includes the Registrable Securities is ordered effective by the Commission, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Holder whose Registrable Securities are included in such Registration Statement) confirmation that the Registration Statement has been declared effective by the Commission in the form attached hereto as Exhibit B.

                4. Registration Procedures; Holder’s Obligations.

In connection with the registration of the Registrable Securities, the Holder shall:

                                (a) If the Registration Statement refers to the Holder by name or otherwise as the holder of any securities of the Company, have the right to require (if such reference to the Holder by name or otherwise is not required by the Securities Act or any similar federal statute then in force) the deletion of the reference to the Holder in any amendment or supplement to the Registration Statement that will be filed or prepared subsequent to the time that such reference ceases to be required.

                                (b) (i) not sell any Registrable Securities under the Registration Statement until it has received copies of the Prospectus as then amended or supplemented as contemplated in Section 3(g) and notice from the Company that such Registration Statement and any post-effective amendments thereto have become effective as contemplated by Section 3(c), (ii) comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement, and (iii) furnish to the Company information regarding such Holder and the distribution of such Registrable Securities as is required by law to be disclosed in the Registration Statement, and the Company may exclude from such registration the Registrable Securities of the Holder if it fails

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to furnish such information within a reasonable time prior to the filing of each Registration Statement, supplemented Prospectus and/or amended Registration Statement.

                                (c) upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(m), forthwith discontinue disposition of such Registrable Securities under the Registration Statement until the Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 3(j), or until it is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement.

                5. Registration Expenses.

                    All reasonable fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not the Registration Statement is filed or becomes effective and whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, the following: (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with each securities exchange or other market on which Registrable Securities are required hereunder to be listed, (B) with respect to filings required to be made with the Commission or with the NASD pursuant to NASD Conduct Rule 2710, if required, and (C) in compliance with state securities or Blue Sky laws); (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is requested by the holders of a majority of the Registrable Securities included in the Registration Statement); (iii) messenger, telephone and delivery expenses of the Company; (iv) fees and disbursements of counsel for the Company; and (v) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, including, without limitation, the Company’s independent public accountants (including the expenses of any comfort letters or costs associated with the delivery by independent public accountants of a comfort letter or comfort letters). In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.

                6. Indemnification.

                                (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Purchaser, its permitted assignees, officers, directors, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees, each Person who controls any such Purchaser or permitted assignee (within the meaning of Section 15 of the Securities Act or

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Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, and the respective successors, assigns, estate and personal representatives of each of the foregoing, to the fullest extent permitted by applicable law, from and against any and all claims, losses, damages, liabilities, penalties, judgments, costs (including, without limitation, costs of investigation) and expenses (including, without limitation, reasonable attorneys’ fees and expenses) (collectively, “Losses”), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus, as supplemented or amended, if applicable, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except (i) to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding the Holder furnished in writing to the Company by the Holder expressly for use therein, which information was reviewed and expressly approved by the Holder or Special Counsel expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto, or (ii) as a result of the failure of the Holder to deliver a Prospectus, as amended or supplemented, to a purchaser in connection with an offer or sale. The Company shall notify the Holder promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an Indemnified Party (as defined in Section 6(c) hereof) and shall survive the transfer of the Registrable Securities by the Holder.

                                (b) Indemnification by Purchaser. Each Purchaser and its permitted assignees shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, and the respective successors, assigns, estate and personal representatives of each of the foregoing, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus, as supplemented or amended, if applicable, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that (i) such untrue statement or omission is contained in or omitted from any information so furnished in writing by the Holder or the Special Counsel to the Company specifically for inclusion in the Registration Statement or such Prospectus, and (ii) such information was reasonably relied upon by the Company for use in the Registration Statement, such Prospectus or such form of prospectus or, to the extent that such information relates to the Holder or the Holder’s proposed method of distribution of Registrable Securities, was reviewed and expressly approved in writing by the Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus Supplement. Notwithstanding anything to the contrary contained herein, the Holder shall be liable under this Section 6(b) for only that amount as does not exceed the net proceeds to the Holder as a result of the sale of Registrable Securities pursuant to such Registration Statement.

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                                (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity pursuant to Section 6(a) or 6(b) hereunder (an “Indemnified Party”), such Indemnified Party promptly shall notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.

                                An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld, conditioned or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, which consent shall not unreasonably be withheld, conditioned or delayed, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

                                All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Business Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder or pursuant to applicable law).

                                (d) Contribution. If a claim for indemnification under Section 6(a) or 6(b) is unavailable to an Indemnified Party because of a failure or refusal of a governmental authority to enforce such indemnification in accordance with its terms (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall

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contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 6(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for under Section 6(a) or 6(b) was available to such party in accordance with its terms. Notwithstanding anything to the contrary contained herein, the Holder shall be liable or required to contribute under this Section 6(d) for only that amount as does not exceed the net proceeds to the Holder as a result of the sale of Registrable Securities pursuant to the Registration Statement.

                                The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

                                The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

                7.    Rule 144.

                                As long as the Holder owns Registrable Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as the Holder owns Registrable Securities, if the Company is not required to file reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare and furnish to the Holder and make publicly available in accordance with Rule 144(c) promulgated under the Securities Act annual and quarterly financial statements, together with a discussion and analysis of such financial statements in form and substance substantially similar to those that would otherwise be required to be included in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as any other information required thereby, in the time period that such filings would have been required to have been made under the Exchange Act. The Company further covenants that it will take such further action as the Holder may reasonably request, all to the extent required from time to time to enable the Holder to sell Warrant Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act, including providing any legal opinions of counsel to the Company referred to in the Purchase Agreement. Upon the request of any Holder,

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the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.

                8. Miscellaneous.

                                (a) Remedies. The remedies provided in this Agreement and the Purchase Agreement are cumulative and not exclusive of any remedies provided by law. In the event of a breach by the Company or by the Holder of any of their obligations under this Agreement, the Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and the Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.

                                (b) No Inconsistent Agreements. Neither the Company nor any of its Affiliates has as of the date hereof entered into, nor shall the Company or any of its Affiliates, on or after the date of this Agreement, enter into, any agreement with respect to its securities that is inconsistent with the rights granted to the Holder in this Agreement or otherwise conflicts with the provisions hereof. Without limiting the generality of the foregoing, without the written consent of the Holder, the Company shall not grant to any Person the right to request the Company to register any securities of the Company under the Securities Act if the rights so granted are inconsistent with the rights granted to the Holder set forth herein, or otherwise prevent the Company with complying with all of its obligations hereunder.

                                (c) Intentionally Omitted.

                                (d) Intentionally Omitted.

                                (e) Consent to Jurisdiction; Waiver of Jury Trial. The Company and each Purchaser (i) hereby irrevocably submit to the exclusive jurisdiction of the United States District Court for the Northern District of Texas and the courts of the State of Texas located in Dallas County for the purposes of any suit, action or proceeding arising out of or relating to this Agreement or the Purchase Agreement, (ii) hereby waive, and agree not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper, and (iii) hereby waive any and all rights they may have to a trial by jury with respect to any suit, action or proceeding based on, or arising out of, under, or in connection with, this Agreement. The Company and each Purchaser consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 8(e) shall affect or limit any right to serve process in any other manner permitted by law.

                                (f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or 

12

consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Purchasers.

                                (g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earlier of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., Central Time, on a Business Day, (ii) the first Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified for notice later than 5:00 p.m., Central Time, on any date and earlier than 11:59 p.m., Central Time, on such date, (iii) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) actual receipt by the party to whom such notice is required to be given.

	(x)  	  	if to the Company:  
	  
	  	  	Tatonka Oil and Gas, Inc.  
	  	  	950 Seventeenth Street  
	  	  	Suite 2300  	  	  
	  	  	Denver, Colorado 80202  
	  	  	Attention:  	  	Dirck Tromp  
	  	  	Telecopier:  	  	303.476.4101  
	  
	  
	  	  	with a copy to:  	  	  
	  
	  	  	Welborn, Sullivan, Meck & Tooley, P.C.  
	  	  	821 Seventeenth Street  
	  	  	Suite 500  	  	  
	  	  	Denver, Colorado 80202  
	  	  	Attention:  	  	Jeffrey J. Peterson, Esq.  
	  	  	Telecopier:  	  	303.832.2366  
	  
	(y)  	  	if to any Purchaser:  
	  
	  	  	At the address of such Purchaser set forth on Exhibit A to this  
	  	  	Agreement.  	  	  

or to such other address or addresses or facsimile number or numbers as any such party may most recently have designated in writing to the other parties hereto by such notice.

                                (h) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns and shall inure to the benefit of the Holder and its successors and assigns. The Company may not assign this Agreement or any of its respective rights or obligations hereunder without the prior written consent of the Purchasers. Each Purchaser may assign its rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement.

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                                (i) Assignment of Registration Rights. The rights of the Holder hereunder, including the right to have the Company register for resale Registrable Securities in accordance with the terms of this Agreement, shall be assignable by each Holder to any transferee of the Holder of all or a portion of the shares of Registrable Securities if: (i) the Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (A) the name and address of such transferee or assignee, and (B) the securities with respect to which such registration rights are being transferred or assigned; (iii) following such transfer or assignment the further disposition of such securities by the transferee or assignees is restricted under the Securities Act and applicable state securities laws; (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this Section, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions of this Agreement; and (v) such transfer shall have been made in accordance with the applicable requirements of the Purchase Agreement and shall be for no less than 10% of the Registrable Securities. In addition, the Holder shall have the right to assign its rights hereunder to any other Person with the prior written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed. The rights to assignment shall apply to the Holder (and to subsequent) successors and assigns. In the event of an assignment pursuant to this Section 8(i), the Purchaser shall pay all incremental costs and expenses incurred by the Company in connection with filing a Registration Statement (or an amendment to the Registration Statement) to register the shares of Registrable Securities assigned to any assignee or transferee of the Purchaser.

                                (j) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

                                (k) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to principles of conflicts of law thereof. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted.

                                (l) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

                                (m) Termination. This Agreement shall terminate on the date on which all remaining Registrable Securities may be sold without restriction pursuant to Rule 144(k) of the Securities Act.

                                (n) Severability. If any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable in any respect, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use

14

their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

                                (o) Headings. 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.

[Remainder of page intentionally left blank. Signature pages to follow.]

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               IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized persons as of the date first indicated above.

	TATONKA OIL AND GAS, INC.  
	  
	  
	  
	By:  _____________________________________________________
	Name:  ___________________________________________________
	Title:  _____________________________________________________

[Signatures of Purchasers to follow on next pages.]

16

	PURCHASERS:  
	  
	ENERGY CAPITAL SOLUTIONS, L.P.  
	  
	By:  
		

	Name:  
	 	

	Title: Authorized Signatory  

17

   EXHIBIT A 

PURCHASERS

	Energy Capital Solutions, L.P.

2651 North Harwood

410 Rolex Building

Dallas, Texas 75201

Fax No.: (214) 219-8206

Attn: Keith J. Behrens

	With a copy to:

	Patton Boggs LLP

2001 Ross Avenue, Suite 3000

Dallas, Texas 75201

Fax No.: (214) 758-1550

Attn: Fred S. Stovall

	A-1

	EXHIBIT B

	FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

	[Name and address of Transfer Agent]

_________________

_________________

_________________

Attn: ____________

	 	Re:    Tatonka Oil and Gas, Inc.

	Ladies and Gentlemen:

                We are counsel to Tatonka Oil and Gas, Inc., a Colorado corporation (the “Company”), and have represented the Company in connection with that certain Securities Purchase Agreement (the “Purchase Agreement”), dated as of October 5, 2007, by and among the Company and the purchasers (the “Purchasers” and the “Holders”) named therein pursuant to which the Company issued to the Purchasers its Senior Secured Notes Due 2008, and other securities. Pursuant to the Purchase Agreement, the Company has also entered into a Registration Rights Agreement with the Purchasers (the “Registration Rights Agreement”), dated as of October 5, 2007, pursuant to which the Company agreed, among other things, to register the Registrable Securities (as defined in the Registration Rights Agreement), under the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the Registration Rights Agreement, on _________  __,  _____ , the Company filed a Registration Statement on Form S-3 (File No. 333-________) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the resale of the Registrable Securities which names the Holders as selling stockholders thereunder.

                In connection with the foregoing, we advise you that a member of the SEC’s staff has advised us by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and, accordingly, the Registrable Securities are available for resale under the 1933 Act in the manner specified in, and pursuant to the terms of, the Registration Statement.

	Very truly yours,

	By:

	cc: [PURCHASERS]

C-1tog8k_ex10-5.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

	EXHIBIT 10.5

	SECURITY AGREEMENT

                This Security Agreement (this “Agreement”) is executed as of October 5, 2007, by and among TATONKA OIL AND GAS COMPANY, INC., a Colorado corporation (the “Company”), TATONKA OIL AND GAS, INC., a Colorado corporation (the “Parent” and together with the Company, the “Debtors” and individually, a “Debtor”), and ENERGY CAPITAL SOLUTIONS, L.P., a Texas limited partnership, as collateral agent for the Secured Parties (the “Collateral Agent”).

                FOR VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby acknowledged, each Debtor hereby covenants and agrees with the Collateral Agent, for the benefit of the Secured Parties, as follows:

                1. Reference to Purchase Agreement and Notes. This Agreement is being executed and delivered in connection with that certain Securities Purchase Agreement (the “Purchase Agreement”), of even date herewith, by and among the Parent, the Company and the Purchasers named therein (each, together with their successors and permitted assigns, a “Secured Party” and collectively, the “Secured Parties”), and in connection with the issuance by the Company of the Notes pursuant to the Purchase Agreement. Capitalized terms used in this Agreement but not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.

                2. Incorporation of Purchase Agreement and Notes. The terms, conditions, and provisions of the Purchase Agreement and the Notes are incorporated herein by reference, the same as if set forth herein verbatim, which terms, conditions, and provisions shall continue to be in full force and effect hereunder until each Note is paid and performed in full.

                3. Certain Definitions. As used herein, the following terms have the meanings indicated:

                                Collateral shall mean all of the following property (including all right, title and interest of the Debtors therein):

                                (i) All present and future accounts, chattel paper, documents, instruments, deposit accounts, general intangibles (including any right to payment for goods sold or services rendered arising out of the sale or delivery of personal property or work done or labor performed by the Debtors) and investment property, now or hereafter owned, held or acquired by the Debtors, together with any and all books of account, customer lists and other records relating in any way to the foregoing (including, without limitation, computer software, whether on tape, disk, card, strip, cartridge or any other form), and in any case where an account arises from the sale of goods, the interest of the Debtors in such goods;

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                                (ii) All present and hereafter acquired inventory (including, without limitation, all raw materials, work in process and finished goods) held, possessed, owned, held on consignment or held for sale, lease, return or to be furnished under contracts of services, in whole or in part, by the Debtors wherever located, and all records relating in any way to the foregoing (including, without limitation, any computer software, whether on tape, disk, card, strip, cartridge or any other form);

                                (iii) All equipment and fixtures of whatsoever kind and character now or hereafter possessed, held, acquired, leased or owned by the Debtors and used or usable in the Debtors’ business, together with all replacements, accessories, additions, substitutions and accessions to all of the foregoing, all records relating in any way to the foregoing (including, without limitation, any computer software, whether on tape, disk, card, strip, cartridge or any other form). To the extent that the foregoing property is located on, attached to, annexed to, related to, or used in connection with, or otherwise made a part of, and is or shall become fixtures upon, real property, such real property and the record owner thereof is described on Exhibit “A” attached hereto and made a part hereof; and

                                (iv) All interest, increase, additions, renewals, substitutions, products and proceeds, in cash or otherwise, of any of the property described in the foregoing clauses (i) through (iii) and all liens, security, rights, remedies and claims of the Debtors with respect thereto.

                The term Collateral, as used herein, shall also include all PRODUCTS and PROCEEDS of all of the foregoing (including, without limitation, insurance payable by reason of loss or damage to the foregoing property) and any property, securities, guaranties or monies of the Debtors which may at any time come into the possession of the Secured Party (as hereinafter defined). The designation of proceeds does not authorize the Debtors to sell, transfer or otherwise convey any of the foregoing property except hydrocarbons or finished goods intended for sale in the ordinary course of the Debtors’ business or as otherwise provided herein.

                Default means the occurrence of any one or more of the following events, which in the case of clause (ii) below continues for a period of 5 days after the Collateral Agent gives written notice thereof: (i) an Event of Default (as defined in the Notes); (ii) except as otherwise provided in this definition, the failure of any Debtor to perform any material covenant, agreement, or condition contained herein; (iii) the levy against the Collateral, or any part thereof, or any execution, attachment, sequestration, or other writ; (iv) the appointment of a receiver with respect to the Collateral, or any part thereof; (v) the filing by any Debtor, by way of petition or answer, of any petition or other pleading seeking relief as a debtor, or an adjustment of any Debtor’s debts, or any other relief under any bankruptcy, reorganization, or insolvency laws now or hereafter existing; or (vi) the receipt by the Collateral Agent of information establishing that any representation or warranty made by any Debtor herein is false, misleading, or erroneous in any material respect.

                Obligations means each Debtor’s payment and performance under this Agreement, the Purchase Agreement and the Notes, together with any and all renewals,

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extensions, and modifications of the same, whether on account of principal, interest, fees, indemnities, costs, expenses, costs of collection thereunder or otherwise.

                Obligor means any person obligated with respect to any of the Collateral, whether as an account debtor, obligor on an instrument, issuer of securities, or otherwise.

                 Security Interest means the security interest granted and the pledge and assignment made under Paragraph 4.

                UCC means the Uniform Commercial Code as enacted in the State of Colorado, or other applicable jurisdiction, as amended at the time in question.

                4. Security Interest. In order to secure the full and complete payment and performance of the Obligations when due, each Debtor hereby grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in and to the Collateral and pledges and assigns the Collateral to the Collateral Agent, for the ratable benefit of the Secured Parties. Such security interest is granted and such pledge and assignment are made as security only and shall not subject the Collateral Agent to, or transfer or in any way affect or modify, any obligation of any Debtor with respect to any of the Collateral or any transaction involving or giving rise thereto.

                5. Representations, Warranties and Covenants of Debtors

                                 (a) Representations and Warranties with Respect to the Collateral. Each Debtor represents and warrants that (i) it has all requisite power and authority to enter into this Agreement; (ii) except for any financing statement that may be filed by the Collateral Agent, for the ratable benefit of the Secured Parties, with respect to the Collateral, no financing statement covering the Collateral, or any part thereof, has been filed with any filing officer or agency; (iii) no other security agreement covering the Collateral, or any part thereof, has been made and other than (A) a statement of lien filed by James T. Priestley d/b/a Black Diamond Mud in the books and records of Moffat County, Colorado (Ref. No. 20073107), and (B) the one created herein, no security interest has attached to or been perfected in the Collateral or in any part thereof; (iv) on the date hereof each Debtor’s business address, jurisdiction of organization and identification number from such jurisdiction of organization is specified on Schedule 1 hereto, and (v) no dispute, right of setoff, counterclaim, or defense exists with respect to any part of the Collateral.

                                 (b) Affirmative Covenants of Debtors. Each Debtor covenants and agrees to each and all of the following: (i) to execute and deliver promptly to the Collateral Agent all such other assignments, certificates, and supplemental writings, and to do all other acts or things, as the Collateral Agent may reasonably request in order more fully to evidence and perfect the security interest created herein; (ii) to furnish the Collateral Agent promptly with any information or writing that the Collateral Agent may reasonably request concerning the Collateral; (iii) to allow the Collateral Agent to inspect all books and records of any Debtor relating to the Collateral or the Notes; (iv) to notify the Collateral Agent promptly of any change in any material fact or circumstance warranted or represented by any Debtor in this Agreement or in any other writings furnished by any Debtor to the Collateral Agent in connection with the Collateral; (v) to notify the Collateral Agent promptly of any claim, action, or proceeding

3

affecting title to the Collateral, or any part thereof, or the security interest therein, and at the request of the Collateral Agent, to appear in and defend, at Debtors’ sole cost and expense, any such action or proceeding; (vi) to maintain insurance customarily obtained by similar businesses and (vii) to pay to the Collateral Agent promptly the amount of all costs and expenses (including reasonable attorney’s fees) incurred by the Collateral Agent in the enforcement of their rights hereunder.

                                (c) Negative Covenants of Debtors. Each Debtor covenants and agrees that, without the prior written consent of the Collateral Agent (which consent may be granted or withheld in the sole and absolute discretion of the Collateral Agent), such Debtor will not (i) except for sales of inventory in the ordinary course of business consistent with past practice, sell, assign, or transfer the Collateral or any of its rights therein, (ii) create any other security interest in, mortgage, or otherwise encumber the Collateral or any part thereof, or permit the Collateral to be or become subject to any lien, attachment, execution, sequestration, other legal or equitable process, or any encumbrance of any kind or character, except the security interest created herein or disclosed herein, or (iii) change its jurisdiction of organization, name or corporate structure.

                6. Default; Remedies. Should a Default occur and be continuing, the Collateral Agent may, at its election, exercise any and all rights available to the Collateral Agent and the Secured Parties under the UCC, in addition to any and all other rights afforded by this Agreement, at law, in equity, or otherwise, including, without limitation, (a) to the extent practicable, requiring any Debtor to assemble all or part of the Collateral and make it available to the Collateral Agent at a place to be designated by the Collateral Agent which is reasonably convenient to such Debtor and the Collateral Agent, (b) applying by appropriate judicial proceedings for appointment of an independent receiver for all or part of the Collateral (and each Debtor hereby consents to any such appointment), and (d) applying to the Obligations any cash held by the Collateral Agent under this Agreement. 

                                (a) Notice. Reasonable notification of the time and place of any public sale of the Collateral, or reasonable notification of the time after which any private sale or other intended disposition of the Collateral is to be made, shall be sent to Debtors and to any other person entitled to notice under the UCC; provided that if any of the Collateral threatens to decline speedily in value or is of the type customarily sold on a recognized market, the Collateral Agent may sell or otherwise dispose of the Collateral in a commercially reasonable transaction without notification, advertisement, or other notice of any kind. It is agreed that notice sent or given not less than five calendar days prior to the taking of the action to which the notice relates is reasonable notification and notice for the purposes of this subparagraph.

                                (b) Sales of Securities. In connection with the sale of any Collateral that is securities, the Collateral Agent is authorized, but not obligated, to limit prospective purchasers to the extent deemed necessary or desirable by the Collateral Agent to render such sale exempt from the registration requirements of the Securities Act of 1933, as amended, and any applicable state securities laws, and no sale so made in good faith by the Collateral Agent shall be deemed not to be “commercially reasonable” because so made.

                                (c) Application of Proceeds. The Collateral Agent shall apply the proceeds of any sale or other disposition of the Collateral under this Paragraph 6 in the following order: first,

4

to the payment of all its reasonable expenses incurred in retaking, holding, and preparing any of the Collateral for sale(s) or other disposition, in arranging for such sale(s) or other disposition, and in actually selling or disposing of the same (all of which are part of the Obligations); second, toward repayment of any other amounts reasonably expended by the Collateral Agent under this Agreement; and third, toward payment of the balance of the Obligations on a pro rata basis. Any surplus remaining shall be delivered to Debtors or as a court of competent jurisdiction may direct.

                7. Other Rights.

                                (a) Performance. In the event any Debtor shall fail to pay when due all taxes on any of the Collateral, or to preserve the priority of the Security Interest in any of the Collateral, or otherwise fail to perform any of its obligations under this Agreement with respect to the Collateral, then the Collateral Agent may, at its option, but without being required to do so, pay such taxes, prosecute or defend any suits in relation to the Collateral, or take all such other action which any Debtor is required, but has failed or refused, to take under this Agreement. Any sum which may be expended or paid by the Collateral Agent under this subparagraph (including, without limitation, court costs and attorneys’ fees) shall bear interest from the dates of expenditure or payment at the Interest Rate pursuant to the Note until paid and, together with such interest, shall be payable by each Debtor to the Collateral Agent upon demand and shall be part of the Obligations.

                                (b) Collection. If there exists an uncured Event of Default, then upon notice from the Collateral Agent, each Obligor with respect to any payments on any of the Collateral (including, without limitation, dividends and other distributions with respect to securities and insurance proceeds payable by reason of loss or damage to any of the Collateral) is hereby authorized and directed by each Debtor to make payment directly to the Collateral Agent, for the benefit of the Secured Parties, regardless of whether any Debtor was previously making collections thereon. Subject to Paragraph 7(e) hereof, until such notice is given, each Debtor is authorized to retain and expend all payments made on the Collateral. If there exists an uncured Event of Default, then the Collateral Agent shall have the right in its own name or in the name of any Debtor to compromise or extend time of payment with respect to all or any portion of the Collateral for such amounts and upon such terms as the Collateral Agent may reasonably determine; to demand, collect, receive, receipt for, sue for, compound, and give acquittances for any and all amounts due or to become due with respect to the Collateral; to take control of cash and other proceeds of any Collateral; to endorse the name of any Debtor on any notes, acceptances, checks, drafts, money orders, or other evidences of payment on the Collateral that may come into the possession of the Collateral Agent; to sign the name of any Debtor on any invoice or bill of lading relating to any Collateral, on any drafts against Obligors or other persons making payment with respect to the Collateral, on assignments and verifications of accounts or other Collateral and on notices to Obligors making payment with respect to the Collateral; to send requests for verification of obligations to any Obligor; and to do all other acts and things necessary to carry out the intent of this Agreement. If there exists an uncured Event of Default, then if any Obligor fails or refuses to make payment on any Collateral when due, the Collateral Agent is authorized, in its sole discretion, either in its own name or in the name of any Debtor, to take such action as the Collateral Agent shall deem appropriate for the collection of any amounts owed with respect to the Collateral or upon which a delinquency exists. Regardless of any other

5

provision hereof, however, the Collateral Agent shall never be liable for its failure to collect, or for its failure to exercise diligence in the collection of, any amounts owed with respect to the Collateral, nor shall it be under any duty whatever to anyone except Debtors to account for funds that they shall actually receive hereunder. Without limiting the generality of the foregoing, the Collateral Agent shall have no responsibility for ascertaining any maturities, calls, conversions, exchanges, offers, tenders, or similar matters relating to any Collateral, or for informing any Debtor with respect to any of such matters (irrespective of whether the Collateral Agent actually has, or may be deemed to have, knowledge thereof). The rights granted to the Collateral Agent under this subparagraph may be exercised at any time, whether or not a Default has occurred and is continuing.

                                (c) Voting of Securities. As long as a Default has not occurred and is not continuing, Debtors shall be entitled to exercise all voting rights pertaining to any Collateral that is securities. After the occurrence and during the continuance of a Default, the right to vote any Collateral that is securities shall be vested exclusively in the Collateral Agent. To this end, each Debtor hereby irrevocably constitutes and appoints the Collateral Agent the proxy and attorney-in-fact of such Debtor, with full power of substitution, to vote, and to act with respect to, any and all Collateral that is securities standing in the name of such Debtor or with respect to which such Debtor is entitled to vote and act, subject to the understanding that such proxy may not be exercised unless a Default has occurred and is continuing. The proxy herein granted is coupled with an interest, is irrevocable, and shall continue until the Obligations have been paid and performed in full.

                                (d) Certain Proceeds. Notwithstanding any provision of this Agreement to the contrary, any and all stock dividends or distributions in property made on or in respect of any Collateral that is securities, and any proceeds of any Collateral that is securities, whether such dividends, distributions, or proceeds result from a subdivision, combination, or reclassification of the outstanding capital stock of any issuer thereof or as a result of any merger, consolidation, acquisition, or other exchange of assets to which any issuer may be a party, or otherwise, shall be part of the Collateral hereunder, and shall, if received by any Debtor, be held in trust for the Collateral Agent, for the benefit of the Secured Parties. Upon notice from the Collateral Agent, such dividends, distributions or other proceeds shall forthwith be delivered to the Collateral Agent (accompanied by proper instruments of assignment and/or stock and/or bond powers executed by such Debtor in accordance with the Collateral Agent’s instructions) to be held subject to the terms of this Agreement. Any cash proceeds of Collateral which come into the possession of the Collateral Agent (including, without limitation, insurance proceeds) may, at the Collateral Agent’s option, be applied in whole or in part to the Obligations (to the extent then due), be released in whole or in part to or on the written instructions of Debtors for any general or specific purpose, or be retained in whole or in part by the Collateral Agent as additional Collateral. Any cash Collateral in the possession of the Collateral Agent may be invested by the Collateral Agent in certificates of deposit of a term of 12 months or less issued by any state or national bank having combined capital and surplus greater than $100,000,000, or in securities issued or guaranteed by the United States of America or any agency thereof that mature within a year of the date of acquisition thereof. The Collateral Agent shall never be obligated to make any such investment and shall never have any liability to any Debtor for any loss that may result therefrom. All interest and other amounts earned from any investment of Collateral may be dealt

6

with by the Collateral Agent in the same manner as other cash Collateral. The provisions of this subparagraph shall be applicable whether or not a Default has occurred and is continuing.

                                (e) Subrogation. If any of the Obligations is given in renewal or extension or applied toward the payment of indebtedness secured by any lien, the Collateral Agent, for the ratable benefit of the Secured Parties shall be, and is hereby, subrogated to all of the rights, titles, interests, and liens securing the indebtedness so renewed, extended, or paid.

                                (f) Indemnification. Each Debtor, jointly and severally, agrees to indemnify, save, and hold the Collateral Agent and the Secured Parties harmless from and against, and covenants to defend the Collateral Agent and the Secured Parties against, any and all losses, damages, claims, costs, penalties, liabilities, and expenses, including, without limitation, court costs and attorneys’ fees, howsoever arising or incurred because of, incident to, or with respect to the Collateral or any use, possession, maintenance, or management thereof and the execution, delivery, enforcement, performance and administration of this Agreement other than to the extent such losses, damages, claims, costs, penalties, liabilities, and expenses are caused by such person’s gross negligence or willful misconduct.

                                (g) Duty of Collateral Agent. The Collateral Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the UCC or otherwise, shall be to deal with it in the same manner as the Collateral Agent deals with similar property for its own account. Neither the Collateral Agent, any Secured Party nor any of their respective officers, directors, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Debtor or any other person or to take any other action whatsoever with regard to the Collateral or any part thereof. The power conferred on the Collateral Agent and the Secured Parties hereunder are solely to protect the Collateral Agent’s and the Secured Parties’ interests in the Collateral and shall not impose any duty upon the Collateral Agent or any Secured Party to exercise any such powers. The Collateral Agent and the Secured Parties shall be accountable only to the Debtors and only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, employees or agents shall be responsible to any Debtor for any act or failure to act hereunder, except for their own gross negligence or willful misconduct.

                8. Miscellaneous.

                                (a) Term. Upon full and final payment in cash and performance of the Obligations, this Agreement (other than Paragraph 7(g) hereof) shall thereafter terminate upon receipt by the Collateral Agent of the Company’s written notice of such termination.

                                (b) Actions Not Releases. The Security Interest and each Debtor’s Obligations and the Collateral Agent’s and the Secured Parties’ rights hereunder shall not be released, diminished, impaired, or adversely affected by the occurrence of any one or more of the following events: (i) the taking or accepting of any other security or assurance for any or all of the Obligations; (ii) any release, surrender, exchange, subordination, or loss of any security or assurance at any time existing in connection with any or all of the Obligations; (iii) the

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modification of, amendment to, or waiver of compliance with any terms of this Agreement without the notification or consent of any Debtor, except as required herein; (iv) the insolvency, bankruptcy, or lack of corporate, partnership or trust power of any party at any time liable for the payment of any or all of the Obligations, whether now existing or hereafter occurring; (v) any renewal, extension, or rearrangement of the payment of any or all of the Obligations, either with or without notice to or consent of any Debtor, or any adjustment, indulgence, forbearance, or compromise that may be granted or given by the Collateral Agent to any Debtor; (vi) any neglect, delay, omission, failure, or refusal of the Collateral Agent to take or prosecute any action in connection with this Agreement or any other agreement, document, guaranty, or instrument evidencing, securing, or assuring the payment of all or any of the Obligations; (vii) any failure of the Collateral Agent to notify any Debtor of any renewal, extension, or assignment of the Obligations or any part thereof, or the release of any security, or of any other action taken or refrained from being taken by the Collateral Agent against any Debtor or any new agreement between Secured Parties and any Debtor, it being understood that the Collateral Agent shall not be required to give Debtor any notice of any kind under any circumstances whatsoever with respect to or in connection with the Obligations, including, without limitation, notice of acceptance of this Agreement or any Collateral ever delivered to or for the account of the Collateral Agent hereunder; (viii) the illegality, invalidity, or unenforceability of all or any part of the Obligations against any party obligated with respect thereto by reason of the fact that the Obligations, or the interest paid or payable with respect thereto, exceeds the amount permitted by law, the act of creating the Obligations, or any part thereof, is ultra vires, or the officers, partners, or trustees creating same acted in excess of their authority, or for any other reason; or (ix) if any payment by any party obligated with respect thereto is held to constitute a preference under applicable laws or for any other reason the Collateral Agent is required to refund such payment or pay the amount thereof to someone else.

                                (c) Waivers. Except to the extent expressly otherwise provided herein, each Debtor waives (i) any right to require the Collateral Agent or Secured Parties to proceed against any other person, to exhaust their rights in the Collateral, or to pursue any other right which the Collateral Agent or Secured Parties may have; (ii) with respect to the Obligations, presentment and demand for payment, protest, notice of protest and nonpayment, and notice of the intention to accelerate; and (iii) all rights of marshaling in respect of any and all of the Collateral.

                                (d) Financing Statement. The Collateral Agent shall be entitled at any time to file this Agreement or a carbon, photographic, or other reproduction of this Agreement, as a financing statement, but the failure of the Collateral Agent to do so shall not impair the validity or enforceability of this Agreement.

                                (e) Amendments. This instrument may be amended only by an instrument in writing executed jointly by each Debtor and the Collateral Agent, and supplemented only by documents delivered or to be delivered in accordance with the express terms hereof; provided that the Collateral Agent shall only be permitted to enter into any amendment that releases all or substantially all of the Collateral or releases any Debtor from its obligations hereunder upon the written direction of the holders of more than 50% of the then outstanding aggregate principal amount of the Notes.

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                                (f) Multiple Counterparts. This Agreement has been executed in a number of identical counterparts, each of which shall be deemed an original for all purposes and all of which constitute, collectively, one agreement; but, in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.

                                (g) Parties Bound; Assignment. This Agreement shall be binding on Debtors each of their successors and permitted assigns and shall inure to the benefit of the Collateral Agent and the Secured Parties and their respective successors and assigns. No Debtor may, without the prior written consent of the Collateral Agent, assign any rights, duties, or obligations hereunder. In the event of an assignment of all or part of the Obligations, the Security Interest and other rights and benefits hereunder, to the extent applicable to the part of the Obligations so assigned, shall be transferred therewith.

                                (h) Governing Law; Exclusive Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Colorado, without giving effect to the choice of law provisions. This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted. Each Debtor, the Collateral Agent and each Secured Party (i) hereby irrevocably submit to the exclusive jurisdiction of the United States District Court sitting in the Northern District of Texas and the courts of the State of Texas located in Dallas, Texas, for the purposes of any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, and (ii) hereby waive, and agree not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper.

                                (i) Complete Agreement. This Agreement, the Purchase Agreement, the Notes, and all other agreements, instruments or documents executed and/or delivered in connection therewith are intended by Debtors and the Collateral Agent as a final expression of their agreement with respect to the subject matter hereof and thereof, and supersede all prior agreements and understandings whether oral or written with respect to the subject matter hereof and thereof.

	[Remainder of page intentionally left blank.]

9

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

	“Debtors”:  
	  
	TATONKA OIL AND GAS, INC.  
	  
	  
	  
	By:  ____________________________________________________________
	Name:  _________________________________________________________
	Title:  ___________________________________________________________
	  
	  
	TATONKA OIL AND GAS COMPANY,  
	INC.  
	  
	  
	  
	By:  ____________________________________________________________
	Name:  _________________________________________________________
	Title:  ___________________________________________________________
	  
	  
	“Collateral Agent”:  
	  
	ENERGY CAPITAL SOLUTIONS, L.P.  
	  
	  
	  
	  
	By:  ____________________________________________________________
	Name:  __________________________________________________________
	Title: Authorized Signatory  

	10

	
Schedule 1
	
	

	
	
 
	
	
 
	
	
 
	
	
 
		
 		
 
		
 		
Jurisdiction of 
		
 		
Organization 
	
	
Name of Debtor 
		
 		
Address 
		
 		
Organization 
		
 		
Number 
	
	

		
		

		
		

		
		

	
	
 
	
	
Tatonka Oil and Gas Company, Inc. 
		
 		
950 Seventeenth Street, Suite 2300 
		
 		
Colorado 
		
 		
20041083534 
	
	
 
		
 		
Denver, CO 80202 
		
 		
 
		
 		
 
	
	

		
		

		
		

		
		

	
	
 
	
	
Tatonka Oil and Gas, Inc. 
		
 		
950 Seventeenth Street, Suite 2300 
		
 		
Colorado 
		
 		
20011104066 
	
	
 
		
 		
Denver, CO 80202

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