Document:

Unassociated Document

    Exhibit
      10.31

     

    PLEDGE
      AND SECURITY AGREEMENT

     

    dated
      as of May 11, 2007

     

    between

     

    EACH
      OF THE GRANTORS PARTY HERETO

     

    and

     

    J.
      ARON & COMPANY, as Agent,

     

    as
      the Secured Party

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

    

      
        	 	 	
                Page

              
	
                SECTION
                  1

              	
                DEFINITIONS

              	
                1

              
	
                1.1

              	
                General
                  Definitions

              	
                1

              
	
                1.2

              	
                Definitions;
                  Interpretation

              	
                7

              
	
                SECTION
                  2

              	
                GRANT
                  OF SECURITY

              	
                7

              
	
                2.1

              	
                Grant
                  of Security

              	
                7

              
	
                2.2

              	
                Certain
                  Limited Exclusions

              	
                8

              
	
                SECTION
                  3

              	
                SECURITY
                  FOR OBLIGATIONS; GRANTORS REMAIN LIABLE

              	
                8

              
	
                3.1

              	
                Security
                  for Obligations

              	
                8

              
	
                3.2

              	
                Continuing
                  Liability Under Collateral

              	
                9

              
	
                SECTION
                  4

              	
                REPRESENTATIONS
                  AND WARRANTIES AND COVENANTS

              	
                9

              
	
                4.1

              	
                Generally

              	
                9

              
	
                4.2

              	
                Investment
                  Related Property; Investment Related Property Generally

              	
                11

              
	
                4.3

              	
                Pledged
                  Equity Interests

              	
                13

              
	
                4.4

              	
                Investment
                  Accounts

              	
                15

              
	
                4.5

              	
                Letter
                  of Credit Rights

              	
                16

              
	
                4.6

              	
                Commercial
                  Tort Claims

              	
                16

              
	
                4.7

              	
                Vessels;
                  Certificates of Title Equipment

              	
                16

              
	
                SECTION
                  5

              	
                ACCESS;
                  RIGHT OF INSPECTION AND FURTHER ASSURANCES;

              	 
	 	
                ADDITIONAL
                  GRANTORS

              	
                17

              
	
                5.1

              	
                Access;
                  Right of Inspection

              	
                17

              
	
                5.2

              	
                Further
                  Assurances

              	
                17

              
	
                5.3

              	
                Additional
                  Grantors

              	
                18

              
	
                SECTION
                  6

              	
                SECURED
                  PARTY APPOINTED ATTORNEY-IN-FACT

              	
                18

              
	
                6.1

              	
                Power
                  of Attorney

              	
                18

              
	
                6.2

              	
                No
                  Duty on the Part of Secured Party or Beneficiaries

              	
                19

              
	
                SECTION
                  7

              	
                REMEDIES

              	
                20

              
	
                7.1

              	
                Generally

              	
                20

              
	
                7.2

              	
                Application
                  of Proceeds

              	
                21

              
	
                7.3

              	
                Sales
                  on Credit

              	
                22

              
	
                7.4

              	
                Deposit
                  Accounts

              	
                22

              
	
                7.5

              	
                Investment
                  Related Property

              	
                22

              

      

    

    

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

    
       

      TABLE
        OF CONTENTS

      (continued)

    

    

      
        	 	 	
                Page

              
	
                7.6

              	
                Intellectual
                  Property

              	
                22

              
	
                7.7

              	
                Cash
                  Proceeds

              	
                24

              
	
                SECTION
                  8

              	
                AGENT

              	
                25

              
	
                SECTION
                  9

              	
                CONTINUING
                  SECURITY INTEREST; TRANSFER OF LOANS

              	
                25

              
	
                SECTION
                  10

              	
                STANDARD
                  OF CARE; SECURED PARTY MAY PERFORM

              	
                26

              
	
                SECTION
                  11

              	
                MISCELLANEOUS

              	
                26

              

      

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    
       

      TABLE
        OF CONTENTS

      (continued)

       

      
        	SCHEDULES:	 	4.1 — General Information
	 	 	4.3 — Investment Related
                Property
	 	 	4.5 — Description of Letters of
                Credit
	 	 	4.6 — Commercial Tort Claims
	 	 	4.7 — Vessels and Certificates of Title
                Equipment
	 	 	 
	EXHIBITS:	 	A — Pledge Supplement
	 	 	B-1 — Default Deposit Account Control
                Agreement
	 	 	B-2 — Blocked Deposit Account Control
                Agreement

      

       

    

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    PLEDGE
      AND SECURITY AGREEMENT

     

    This
      PLEDGE
      AND SECURITY AGREEMENT,
      dated
      as of May 11, 2007 (this "Agreement"),
      by
      and among TEKOIL
      AND GAS GULF COAST, LLC, a
      Delaware limited liability company (the "Company"),
      each
      of the undersigned affiliates of the Company, whether as an original signatory
      hereto or as an Additional Grantor (as herein defined) (together with the
      Company, collectively, the "Grantors"
      and
      individually, a "Grantor"),
      and
J.
      ARON & COMPANY, as
      administrative agent for the Beneficiaries (as herein defined) (in such
      capacity, the "Secured
      Party").

     

    RECITALS:

     

    WHEREAS,
      reference is made to that certain Credit and Guaranty Agreement, dated as of
      the
      date hereof (as it may be amended, restated, supplemented or otherwise modified
      from time to time, the "Credit
      Agreement")
      by and
      among the Company, TEKOIL
      & GAS CORPORATION,
      a
      Delaware corporation, and
      the
      other guarantors party thereto, J.
      ARON & COMPANY,
      individually and in its capacity as Administrative Agent (the "Agent")
      for
      the benefit of the lenders from time to time parties thereto (the "Lenders"),
      Lead
      Arranger, Syndication Agent, and Secured Party, and such Lenders;

     

    WHEREAS,
      subject
      to the terms and conditions of the Credit Agreement, certain Grantors may enter
      into one or more Hedging Contracts with one or more Lender
      Counterparties;

     

    WHEREAS,
      in
      consideration of the extensions of credit and other accommodations of Lenders
      and Lender Counterparties as set forth in the Credit Agreement and the Hedging
      Contracts, respectively, each Grantor has agreed to secure the Company's and
      the
      other Obligors' obligations under the Transaction Documents and the Hedging
      Contracts as set forth herein; and

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the agreements, provisions and covenants
      herein contained, each Grantor and the Secured Party agree as
      follows:

     

    SECTION
      1

    DEFINITIONS

     

    1.1 General
      Definitions.
      In this
      Agreement, the following terms shall have the following meanings:

     

    "Account
      Debtor"
      shall
      mean each Person who is obligated on a Receivable or any Supporting Obligation
      related thereto.

     

    "Accounts"
      shall
      mean all "accounts" as defined in Article 9 of the UCC.

     

    "Agreement"
      shall
      have the meaning set forth in the preamble.

     

    "Additional
      Grantors"
      shall
      have the meaning assigned in Section 5.3.

     

    "Assigned
      Agreements"
      shall
      mean all agreements and contracts to which such Grantor is a party as of the
      date hereof, or to which such Grantor becomes a party after the date hereof,
      including each Material Contract, as each such agreement may be amended,
      supplemented or otherwise modified from time to time.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

       

    

    "Beneficiaries"
      means
      the Agent, the Lenders and the Lender Counterparties and shall include, without
      limitation, all former Lenders and Lender Counterparties to the extent that
      any
      Obligations owing to such Persons were incurred while such Persons were Lenders
      or Lender Counterparties and such Obligations have not been paid or satisfied
      in
      full.

     

    "Cash
      Proceeds"
      shall
      have the meaning assigned in Section 7.7.

     

    "Chattel
      Paper"
      shall
      mean all "chattel paper" as defined in Article 9 of the UCC, including
      "electronic chattel paper" or "tangible chattel paper", as each term is defined
      in Article 9 of the UCC.

     

    "Collateral"
      shall
      have the meaning assigned in Section 2.1 and shall not include the Excluded
      Collateral, other than to the extent such Excluded Collateral becomes Collateral
      as provided in Section 2.2.

     

    "Collateral
      Records"
      shall
      mean books, records, ledger cards, files, correspondence, customer lists,
      blueprints, technical specifications, manuals, computer software, computer
      printouts, tapes, disks and related data processing software and similar items
      that at any time evidence or contain information relating to any of the
      Collateral or are otherwise necessary or helpful in the collection thereof
      or
      realization thereupon.

     

    "Collateral
      Support"
      shall
      mean all property (real or personal) assigned, hypothecated or otherwise
      securing any Collateral and shall include any security agreement or other
      agreement granting a lien or security interest in such real or personal
      property.

     

    "Commercial
      Tort Claims"
      shall
      mean all "commercial tort claims" as defined in Article 9 of the UCC,
      including all commercial tort claims listed on Schedule 4.6 (as such schedule
      may be amended or supplemented from time to time).

     

    "Commodities
      Accounts"
      shall
      mean all "commodity accounts" as defined in Article 9 of the UCC.

     

    "Copyright
      Licenses"
      shall
      mean any and all agreements providing for the granting of any right in or to
      Copyrights (whether such Grantor is licensee or licensor
      thereunder).

     

    "Copyrights"
      shall
      mean all United States and foreign copyrights, all mask works fixed in
      semi-conductor chip products (as defined under 17 U.S.C. 901 of the U.S.
      Copyright Act), whether registered or unregistered, now or hereafter in force
      throughout the world, all registrations and applications therefor, all rights
      corresponding thereto throughout the world, all extensions and renewals of
      any
      thereof, the right to sue for past, present and future infringements of any
      of
      the foregoing, and all proceeds of the foregoing, including licenses, royalties,
      income, payments, claims, damages, and proceeds of suit.

     

    "Credit
      Agreement"
      shall
      have the meaning set forth in the recitals.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

       

    

    "Deposit
      Accounts"
      (i)
      shall mean all "deposit accounts" as defined in Article 9 of the UCC and (ii)
      shall include, without limitation, all of the accounts listed on Schedule 4.3
      under the heading "Deposit Accounts" (as such schedule may be amended or
      supplemented from time to time).

     

    "Documents"
      shall
      mean all "documents" as defined in Article 9 of the UCC.

     

    "Equipment"
      shall
      mean: (i) all "equipment" as defined in Article 9 of the UCC, (ii) all
      machinery, manufacturing equipment, data processing equipment, computers, office
      equipment, furnishings, furniture, appliances, fixtures and tools (in each
      case,
      regardless of whether characterized as equipment under the UCC) and (iii) all
      accessions or additions thereto, all parts thereof, whether or not at any time
      of determination incorporated or installed therein or attached thereto, and
      all
      replacements therefor, wherever located, now or hereafter existing, including
      any fixtures.

     

    "Excluded
      Collateral" shall
      have the meaning set forth in Section 2.2 but shall not include any such rights,
      properties or assets that become Collateral as provided in Section
      2.2.

     

    "General
      Intangibles"
      (i)
      shall mean all "general intangibles" as defined in Article 9 of the UCC,
      including "payment intangibles" also as defined in Article 9 of the UCC and
      (ii)
      shall include, without limitation, all interest rate or currency protection
      or
      hedging arrangements, all tax refunds, all licenses, permits, concessions and
      authorizations, all Assigned Agreements and all Intellectual Property (in each
      case, regardless of whether characterized as general intangibles under the
      UCC).

     

    "Goods"
      (i)
      shall mean all "goods" as defined in Article 9 of the UCC and (ii) shall
      include, without limitation, all Inventory and Equipment (in each case,
      regardless of whether characterized as goods under the UCC).

     

    "Grantors"
      shall
      have the meaning set forth in the preamble.

     

    "Instruments"
      shall
      mean all "instruments" as defined in Article 9 of the UCC.

     

    "Insurance"
      shall
      mean all insurance policies covering any or all of the Collateral (regardless
      of
      whether the Secured Party is the loss payee thereof.

     

    "Intellectual
      Property"
      shall
      mean, collectively, the Copyrights, the Copyright Licenses, the Patents, the
      Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets,
      and
      the Trade Secret Licenses.

     

    "Inventory"
      shall
      mean: (i) all "inventory" as defined in Article 9 of the UCC and (ii) all goods
      held for sale or lease or to be furnished under contracts of service or so
      leased or furnished, all raw materials, work in process, finished goods, and
      materials used or consumed in the manufacture, packing, shipping, advertising,
      selling, leasing, furnishing or production of such inventory or otherwise used
      or consumed in any Grantor's business; all goods in which any Grantor has an
      interest in mass or a joint or other interest or right of any kind; and all
      goods which are returned to or repossessed by any Grantor, all computer programs
      embedded in any goods and all accessions thereto and products thereof (in each
      case, regardless of whether characterized as inventory under the
      UCC).

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

       

    

    "Investment
      Accounts"
      shall
      mean the Securities Accounts, Commodities Accounts and Deposit
      Accounts.

     

    "Investment
      Related Property"
      shall
      mean: (i) all "investment property" (as such term is defined in Article 9 of
      the
      UCC) and (ii) all of the following (regardless of whether classified as
      investment property under the UCC): all Pledged Equity Interests, the Investment
      Accounts, and certificates of deposit.

     

    "Lender"
      shall
      have the meaning set forth in the recitals.

     

    "Letter
      of Credit Right"
      shall
      mean "letter-of-credit right" as defined in Article 9 of the UCC.

     

    "Money"
      shall
      mean "money" as defined in the UCC.

     

    "Patent
      Licenses"
      shall
      mean all agreements providing for the granting of any right in or to Patents
      (whether such Grantor is licensee or licensor thereunder).

     

    "Patents"
      shall
      mean all United States and foreign patents and applications for letters patent
      throughout the world, all reissues, divisions, continuations,
      continuations-in-part, extensions, renewals, and reexaminations of any of the
      foregoing, all rights corresponding thereto throughout the world, and all
      proceeds of the foregoing, including licenses, royalties, income, payments,
      claims, damages, and proceeds of suit and the right to sue for past, present
      and
      future infringements of any of the foregoing.

     

    "Payment
      Intangible"
      shall
      have the meaning specified in Article 9 of the UCC.

     

    "Pledge
      Supplement"
      shall
      mean any supplement to this agreement in substantially the form of Exhibit
      A.

     

    "Pledged
      Debt"
      shall
      mean all Indebtedness owed to such Grantor issued by the obligors named
      thereunder, the instruments evidencing such Indebtedness, and all interest,
      cash, instruments and other property or proceeds from time to time received,
      receivable or otherwise distributed in respect of or in exchange for any or
      all
      of such Indebtedness.

     

    "Pledged
      Equity Interests"
      shall
      mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests
      and
      Pledged Trust Interests.

     

    "Pledged
      LLC Interests"
      shall
      mean all interests in any limited liability company, including all limited
      liability company interests listed on Schedule 4.3 under the heading "Pledged
      LLC Interests" (as such schedule may be amended or supplemented from time to
      time) and the certificates, if any, representing such limited liability company
      interests and any interest of such Grantor on the books and records of such
      limited liability company or on the books and records of any securities
      intermediary pertaining to such interest and all dividends, distributions,
      cash,
      warrants, rights, options, instruments, securities and other property or
      proceeds from time to time received, receivable or otherwise distributed in
      respect of or in exchange for any or all of such limited liability company
      interests.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

       

    

    "Pledged
      Partnership Interests"
      shall
      mean all interests in any general partnership, limited partnership, limited
      liability partnership or other partnership, including all partnership interests
      listed on Schedule 4.3 under the heading "Pledged Partnership Interests" (as
      such schedule may be amended or supplemented from time to time) and the
      certificates, if any, representing such partnership interests and any interest
      of such Grantor on the books and records of such partnership or on the books
      and
      records of any securities intermediary pertaining to such interest and all
      dividends, distributions, cash, warrants, rights, options, instruments,
      securities and other property or proceeds from time to time received, receivable
      or otherwise distributed in respect of or in exchange for any or all of such
      partnership interests.

     

    "Pledged
      Stock"
      shall
      mean all shares of capital stock owned by such Grantor, including all shares
      of
      capital stock described on Schedule 4.3 under the heading "Pledged Stock" (as
      such schedule may be amended or supplemented from time to time), and the
      certificates, if any, representing such shares and any interest of such Grantor
      in the entries on the books of the issuer of such shares or on the books of
      any
      securities intermediary pertaining to such shares, and all dividends,
      distributions, cash, warrants, rights, options, instruments, securities and
      other property or proceeds from time to time received, receivable or otherwise
      distributed in respect of or in exchange for any or all of such
      shares.

     

    "Pledged
      Trust Interests"
      shall
      mean all interests in a Delaware statutory trust or other trust, including
      all
      trust interests listed on Schedule 4.3 under the heading "Pledged Trust
      Interests" (as such schedule may be amended or supplemented from time to time)
      and the certificates, if any, representing such trust interests and any interest
      of such Grantor on the books and records of such trust or on the books and
      records of any securities intermediary pertaining to such interest and all
      dividends, distributions, cash, warrants, rights, options, instruments,
      securities and other property or proceeds from time to time received, receivable
      or otherwise distributed in respect of or in exchange for any or all of such
      trust interests.

     

    "Proceeds"
      shall
      mean: (i) all "proceeds" as defined in Article 9 of the UCC, (ii) payments
      or
      distributions made with respect to any Investment Related Property and (iii)
      whatever is receivable or received when Collateral or proceeds are sold,
      exchanged, collected or otherwise disposed of, whether such disposition is
      voluntary or involuntary.

     

    "Receivables"
      shall
      mean all rights to payment, whether or not earned by performance, for goods
      or
      other property sold, leased, licensed, assigned or otherwise disposed of, or
      services rendered or to be rendered, including all such rights constituting
      or
      evidenced by any Account, Chattel Paper, Instrument, General Intangible or
      Investment Related Property, together with all of Grantor's rights, if any,
      in
      any goods or other property giving rise to such right to payment and all
      Collateral Support and Supporting Obligations related thereto and all
      Receivables Records.

     

    "Receivables
      Records"
      shall
      mean (i) all original copies of all documents, instruments or other writings
      or
      electronic records or other Records evidencing the Receivables, (ii) all
      books, correspondence, credit or other files, Records, ledger sheets or cards,
      invoices, and other papers relating to Receivables, including all tapes, cards,
      computer tapes, computer discs, computer runs, record keeping systems and other
      papers and documents relating to the Receivables, whether in the possession
      or
      under the control of Grantor or any computer bureau or agent from time to time
      acting for Grantor or otherwise, (iii) all evidences of the filing of financing
      statements and the registration of other instruments in connection therewith,
      and amendments, supplements or other modifications thereto, notices to other
      creditors or Beneficiaries, and certificates, acknowledgments, or other
      writings, including lien search reports, from filing or other registration
      officers, (iv) all credit information, reports and memoranda relating thereto
      and (v) all other written or nonwritten forms of information related in any
      way
      to the foregoing or any Receivable.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

       

    

    "Record"
      shall
      have the meaning specified in Article 9 of the UCC.

     

    "Secured
      Obligations"
      shall
      have the meaning assigned in Section 3.1.

     

    "Secured
      Party"
      shall
      have the meaning set forth in the preamble.

     

    "Securities"
      shall
      mean any stock, shares, partnership interests, voting trust certificates,
      certificates of interest or participation in any profit-sharing agreement or
      arrangement, options, warrants, bonds, debentures, notes, or other evidences
      of
      indebtedness, secured or unsecured, convertible, subordinated or otherwise,
      or
      in general any instruments commonly known as "securities" or any certificates
      of
      interest, shares or participations in temporary or interim certificates for
      the
      purchase or acquisition of, or any right to subscribe to, purchase or acquire,
      any of the foregoing.

     

    "Securities
      Accounts"
      shall
      mean all "securities accounts" as defined in Article 8 of the UCC.

     

    "Supporting
      Obligation"
      shall
      mean all "supporting obligations" as defined in Article 9 of the
      UCC.

     

    "Trade
      Secret Licenses"
      shall
      mean any and all agreements providing for the granting of any right in or to
      Trade Secrets (whether such Grantor is licensee or licensor
      thereunder).

     

    "Trade
      Secrets"
      shall
      mean all trade secrets and all other confidential or proprietary information
      and
      know-how now or hereafter owned or used in, or contemplated at any time for
      use
      in, the business of such Grantor (all of the foregoing being collectively called
      a "Trade Secret"), whether or not such Trade Secret has been reduced to a
      writing or other tangible form, including all documents and things embodying,
      incorporating, or referring in any way to such Trade Secret, the right to sue
      for past, present and future infringement of any Trade Secret, and all proceeds
      of the foregoing, including licenses, royalties, income, payments, claims,
      damages, and proceeds of suit.

     

    "Trademark
      Licenses"
      shall
      mean any and all agreements providing for the granting of any right in or to
      Trademarks (whether such Grantor is licensee or licensor
      thereunder).

     

    "Trademarks"
      shall
      mean all United States, state and foreign trademarks, trade names, corporate
      names, company names, business names, fictitious business names, internet domain
      names, trade styles, service marks, certification marks, collective marks,
      logos, other source or business identifiers, designs and general intangibles
      of
      a like nature, all registrations and applications for any of the foregoing,
      all
      extensions or renewals of any of the foregoing, all of the goodwill of the
      business connected with the use of and symbolized by the foregoing, the right
      to
      sue for past, present and future infringement or dilution of any of the
      foregoing or for any injury to goodwill, and all proceeds of the foregoing,
      including licenses, royalties, income, payments, claims, damages, and proceeds
      of suit.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

       

    

    "UCC"
      shall
      mean the Uniform Commercial Code as in effect from time to time in the State
      of
      New York or, when the context implies, the Uniform Commercial Code as in effect
      from time to time in any other applicable jurisdiction.

     

    "United
      States"
      shall
      mean the United States of America.

     

    1.2 Definitions;
      Interpretation.
      All
      capitalized terms used herein (including the preamble and recitals hereto)
      and
      not otherwise defined herein shall have the meanings ascribed thereto in the
      Credit Agreement or, if not defined therein, in the UCC. References to
      "Sections," "Exhibits" and "Schedules" shall be to Sections, Exhibits and
      Schedules, as the case may be, of this Agreement unless otherwise specifically
      provided. Section headings in this Agreement are included herein for convenience
      of reference only and shall not constitute a part of this Agreement for any
      other purpose or be given any substantive effect. Any of the terms defined
      herein may, unless the context otherwise requires, be used in the singular
      or
      the plural, depending on the reference. The use herein of the word "include"
      or
      "including", when following any general statement, term or matter, shall not
      be
      construed to limit such statement, term or matter to the specific items or
      matters set forth immediately following such word or to similar items or
      matters, whether or not nonlimiting language (such as "without limitation"
      or
      "but not limited to" or words of similar import) is used with reference thereto,
      but rather shall be deemed to refer to all other items or matters that fall
      within the broadest possible scope of such general statement, term or matter.
      If
      any conflict or inconsistency exists between this Agreement and the Credit
      Agreement, the Credit Agreement shall govern. All references herein to
      provisions of the UCC shall include all successor provisions under any
      subsequent version or amendment to any Article of the UCC.

     

    SECTION
      2

    GRANT
      OF SECURITY

     

    2.1 Grant
      of Security.
      Subject
      to Section 2.2, each Grantor hereby grants to the Secured Party a security
      interest and continuing lien on all of such Grantor's right, title and interest
      in, to and under all personal property of such Grantor including, but not
      limited to the following, in each case whether now owned or existing or
      hereafter acquired or arising and wherever located (all of which being
      hereinafter collectively referred to as the "Collateral"):

     

    (a) Accounts;

     

    (b) Chattel
      Paper;

     

    (c) Documents;

     

    (d) General
      Intangibles;

     

    
      
        
        

      

      
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    (e) Goods;

     

    (f) Instruments;

     

    (g) Insurance;

     

    (h) Intellectual
      Property;

     

    (i) Investment
      Related Property;

     

    (j) Letter
      of
      Credit Rights;

     

    (k) Money;

     

    (l) Receivables
      and Receivable Records;

     

    (m) Commercial
      Tort Claims;

     

    (n) to
      the
      extent not otherwise included above, all Collateral Records, Collateral Support
      and Supporting Obligations relating to any of the foregoing; and

     

    (o) to
      the
      extent not otherwise included above, all Proceeds, products, accessions, rents
      and profits of or in respect of any of the foregoing.

     

    2.2 Certain
      Limited Exclusions.
      Notwithstanding anything herein to the contrary, in no event shall the security
      interest granted under Section 2.1 hereof attach to any lease, license,
      contract, property rights or agreement to which any Grantor is a party or any
      of
      its rights or interests thereunder if and for so long as the grant of such
      security interest shall constitute or result in (i) the abandonment,
      invalidation or unenforceability of any right, title or interest of any Grantor
      therein or (ii) in a breach or termination pursuant to the terms of, or a
      default under, any such lease, license, contract property rights or agreement
      (other than to the extent that any such term would be rendered ineffective
      pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor
      provision or provisions) of any relevant jurisdiction or any other applicable
      law (including the Bankruptcy Code) or principles of equity)(collectively,
      the
      "Excluded
      Collateral"),
      provided however that such security interest shall attach immediately at such
      time as the condition causing such abandonment, invalidation or unenforceability
      shall be remedied and to the extent severable, shall attach immediately to
      any
      portion of such lease, license, contract, property rights or agreement that
      does
      not result in any of the consequences specified in (i) or (ii) above (and all
      of
      Grantors' rights, title and interest in such lease, license, contract, property
      rights or agreements, or portion thereof, shall automatically be included in
      and
      considered as "Collateral").

     

    SECTION
      3

    SECURITY
      FOR OBLIGATIONS; GRANTORS REMAIN LIABLE

     

    3.1 Security
      for Obligations.
      This
      Agreement secures, and the Collateral is collateral security for, the prompt
      and
      complete payment or performance in full when due, whether at stated maturity,
      by
      required prepayment, declaration, acceleration, demand or otherwise (including
      the payment of amounts that would become due but for the operation of the
      automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
§362(a) (and any successor provision thereof)), of all Obligations (the
      "Secured
      Obligations").

     

    
      
        
        

      

      
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    3.2 Continuing
      Liability Under Collateral.
      Notwithstanding anything herein to the contrary, (i) each Grantor shall remain
      liable for all obligations under the Collateral and nothing contained herein
      is
      intended or shall be a delegation of duties to the Secured Party or any
      Beneficiary and (ii) each Grantor shall remain liable under each of the
      agreements included in the Collateral, including any agreements relating to
      Pledged Partnership Interests or Pledged LLC Interests, to perform all of the
      obligations undertaken by it thereunder all in accordance with and pursuant
      to
      the terms and provisions thereof and neither the Secured Party nor any
      Beneficiary shall have any obligation or liability under any of such agreements
      by reason of or arising out of this Agreement or any other document related
      thereto nor shall the Secured Party nor any Beneficiary have any obligation
      to
      make any inquiry as to the nature or sufficiency of any payment received by
      it
      or have any obligation to take any action to collect or enforce any rights
      under
      any agreement included in the Collateral, including any agreements relating
      to
      Pledged Partnership Interests or Pledged LLC Interests, (iii) the exercise
      by
      the Secured Party of any of its rights hereunder shall not release any Grantor
      from any of its duties or obligations under the contracts and agreements
      included in the Collateral.

     

    SECTION
      4

    REPRESENTATIONS
      AND WARRANTIES AND COVENANTS

     

    4.1 Generally.
      

     

    (a) Representations
      and Warranties.
      Each
      Grantor hereby represents and warrants that:

     

    (i) it
      owns
      the Collateral purported to be owned by it or otherwise has the rights it
      purports to have in each item of Collateral and, as to all Collateral whether
      now existing or hereafter acquired, will continue to own or have such rights
      in
      each item of the Collateral, in each case free and clear of any and all Liens,
      rights or claims of all other Persons other than Permitted Liens;

     

    (ii) it
      has
      indicated on Schedule 4.1(A)(as such schedule may be amended or supplemented
      from time to time): (w) the type of organization of such Grantor, (x) the
      jurisdiction of organization of such Grantor, (y) its organizational
      identification number and (z) the jurisdiction where the chief executive office
      or its sole place of business is (or the principal residence if such Grantor
      is
      a natural person), and for the one-year period preceding the date hereof has
      been, located.

     

    (iii) the
      full
      legal name of such Grantor is as set forth on Schedule 4.1(A) and it has not
      done in the last five (5) years, and does not do, business under any other
      name
      (including any trade-name or fictitious business name) except for those names
      set forth on Schedule 4.1(B) (as such schedule may be amended or supplemented
      from time to time);

     

    
      
        
        

      

      
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    (iv) except
      as
      provided on Schedule 4.1(C), it has not changed its name, jurisdiction of
      organization, chief executive office or sole place of business (or principal
      residence if such Grantor is a natural person) or its corporate structure in
      any
      way (e.g., by merger, consolidation, change in corporate form or otherwise)
      within the past five (5) years;

     

    (v) it
      has
      not within the last five (5) years become bound (whether as a result of merger
      or otherwise) as debtor under a security agreement entered into by another
      Person, which has not heretofore or contemporaneously herewith been
      terminated;

     

    (vi) upon
      the
      filing of all UCC financing statements naming each Grantor as "debtor" and
      the
      Secured Party as "secured party" and describing the Collateral in the filing
      offices set forth opposite such Grantor's name on Schedule 4.1(D) hereof (as
      such schedule may be amended or supplemented from time to time) and other
      filings delivered by each Grantor, upon execution of a control agreement
      substantially in the form of Exhibit B-1 or Exhibit B-2 hereto (as required
      by
      the Secured Party), with respect to any Deposit Account, and upon consent of
      the
      issuer with respect to Letter of Credit Rights, the security interests granted
      to the Secured Party hereunder constitute valid and perfected first priority
      Liens (subject in the case of priority only to Permitted Liens) on all of the
      Collateral;

     

    (vii) all
      actions and consents, including all filings, notices, registrations and
      recordings necessary for the exercise by the Secured Party of the voting or
      other rights provided for in this Agreement or the exercise of remedies in
      respect of the Collateral have been made or obtained;

     

    (viii) other
      than the financing statements filed in favor of the Secured Party, no effective
      UCC financing statement, fixture filing or other instrument similar in effect
      under any applicable law covering all or any part of the Collateral is on file
      in any filing or recording office except for financing statements for which
      proper termination statements have been delivered to the Secured Party for
      filing;

     

    (ix) no
      authorization, approval or other action by, and no notice to or filing with,
      any
      Governmental Authority or regulatory body is required for either (i) the pledge
      or grant by any Grantor of the Liens purported to be created in favor of the
      Secured Party hereunder or (ii) the exercise by Secured Party of any rights
      or
      remedies in respect of any Collateral (whether specifically granted or created
      hereunder or created or provided for by applicable law), except (A) for the
      filings contemplated by clause (vii) above and (B) as may be required, in
      connection with the disposition of any Investment Related Property, by laws
      generally affecting the offering and sale of Securities;

     

    (x) each
      Receivable (a) is and will be the legal, valid and binding obligation of the
      Account Debtor in respect thereof, representing an unsatisfied obligation of
      such Account Debtor, (b) is and will be enforceable in accordance with its
      terms, (c) is not and will not be subject to any setoffs, defenses, taxes,
      counterclaims (except with respect to refunds, returns and allowances in the
      ordinary course of business with respect to damaged merchandise) and (d) is
      and
      will be in compliance with all applicable laws, whether federal, state, local
      or
      foreign;

     

    
      
        
        

      

      
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    (xi) none
      of
      the Account Debtors in respect of any Receivable is the government of the United
      States, any agency or instrumentality thereof, any state or municipality or
      any
      foreign sovereign; and

     

    (xii) no
      Receivable is evidenced by, or constitutes, an Instrument or Chattel Paper
      which
      has not been delivered to, or otherwise subjected to the control of, the Secured
      Party.

     

    (b) Covenants
      and Agreements.
      Each
      Grantor hereby covenants and agrees that:

     

    (i) except
      for the security interest created by this Agreement, it shall not create or
      suffer to exist any Lien upon or with respect to any of the Collateral, except
      Permitted Liens, and such Grantor shall defend the Collateral against all
      Persons at any time claiming any interest therein;

     

    (ii) it
      shall
      not produce, use or permit any Collateral to be used unlawfully or in violation
      of any provision of this Agreement or any applicable statute, regulation or
      ordinance or any policy of insurance covering the Collateral;

     

    (iii) it
      shall
      not take or permit any action which could reasonably be expected to impair
      the
      Secured Party's rights in the Collateral; and

     

    (iv) it
      shall
      keep and maintain at its own cost and expense satisfactory and complete records
      of the Collateral.

     

    4.2 Investment
      Related Property; Investment Related Property Generally.
      

     

    (a) Covenants
      and Agreements.
      Each
      Grantor hereby covenants and agrees that:

     

    (i) in
      the
      event it acquires rights in any Investment Related Property after the date
      hereof, it shall deliver to the Secured Party a completed Pledge Supplement,
      substantially in the form of Exhibit A attached hereto, together with all
      Supplements to Schedules thereto, reflecting such new Investment Related
      Property and all other Investment Related Property. Notwithstanding the
      foregoing, it is understood and agreed that the security interest of the Secured
      Party shall attach to all Investment Related Property immediately upon any
      Grantor's acquisition of rights therein and shall not be affected by the failure
      of any Grantor to deliver a supplement as required hereby;

     

    (ii) except
      as
      provided in the next sentence, in the event such Grantor receives any dividends,
      interest or distributions on any Investment Related Property, or any securities
      or other property upon the merger, consolidation, liquidation or dissolution
      of
      any issuer of any Investment Related Property, then (a) such dividends, interest
      or distributions and securities or other property shall be included in the
      definition of Collateral without further action and (b) such Grantor shall
      immediately take all steps, if any, necessary or advisable to ensure the
      validity, perfection, priority and, if applicable, control of the Secured Party
      over such Investment Related Property (including delivery thereof to the Secured
      Party) and pending any such action such Grantor shall be deemed to hold such
      dividends, interest, distributions, securities or other property in trust for
      the benefit of the Secured Party and shall be segregated from all other property
      of such Grantor. Notwithstanding the foregoing, so long as no Event of Default
      shall have occurred and be continuing, the Secured Party authorizes each Grantor
      to retain all ordinary cash dividends and distributions permitted to be paid
      to
      such Grantor under the Credit Agreement and all scheduled payments of interest
      permitted to be paid to such Grantor under the Credit Agreement;
      and

     

    
      
        
        

      

      
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    (iii) each
      Grantor consents to the grant by each other Grantor of a Security Interest
      in
      all Investment Related Property to the Secured Party.

     

    (b) Delivery
      and Control.
      Each
      Grantor agrees that with respect to any Investment Related Property in which
      it
      currently has rights it shall comply with the provisions of this Section on
      or
      before the Closing Date and with respect to any Investment Related Property
      hereafter acquired by such Grantor it shall comply with the provisions of this
      Section immediately upon acquiring rights therein, in each case in form and
      substance satisfactory to the Secured Party. With respect to any Investment
      Related Property that is represented by a certificate or that is an "instrument"
      (other than any Investment Related Property credited to a Securities Account)
      it
      shall cause such certificate or instrument to be delivered to the Secured Party,
      indorsed in blank by an "effective indorsement" (as defined in
      Section 8-107 of the UCC), regardless of whether such certificate
      constitutes a "certificated security" for purposes of the UCC. With respect
      to
      any Investment Related Property that is an "uncertificated security" for
      purposes of the UCC (other than any "uncertificated securities" credited to
      a
      Securities Account), it shall cause the issuer of such uncertificated security
      to either (i) register the Secured Party as the registered owner thereof on
      the
      books and records of the issuer or (ii) execute an agreement in form and
      substance satisfactory to the Secured Party, pursuant to which such issuer
      agrees to comply with the Secured Party's instructions with respect to such
      uncertificated security without further consent by such Grantor.

     

    (c) Voting
      and Distributions.

     

    (i) So
      long
      as no Event of Default shall have occurred and be continuing:

     

    (1) except
      as
      otherwise provided under the covenants and agreements relating to Investment
      Related Property in this Agreement or elsewhere herein or in the Credit
      Agreement, each Grantor shall be entitled to exercise or refrain from exercising
      any and all voting and other consensual rights pertaining to the Investment
      Related Property or any part thereof for any purpose not inconsistent with
      the
      terms of this Agreement or the Credit Agreement; provided, no Grantor shall
      exercise or refrain from exercising any such right if the Secured Party shall
      have notified such Grantor that, in the Secured Party's reasonable judgment,
      such action would have a Material Adverse Effect on the value of the Investment
      Related Property or any part thereof; and provided further, such Grantor shall
      give the Secured Party at least five (5) Business Days prior written notice
      of
      the manner in which it intends to exercise, or the reasons for refraining from
      exercising, any such right; it being understood, however, that neither the
      voting by such Grantor of any Pledged Stock for, or such Grantor's consent
      to,
      the election of directors (or similar governing body) at a regularly scheduled
      annual or other meeting of stockholders or with respect to incidental matters
      at
      any such meeting, nor such Grantor's consent to or approval of any action
      otherwise permitted under this Agreement and the Credit Agreement, shall be
      deemed inconsistent with the terms of this Agreement or the Credit Agreement
      within the meaning of this Section 4.2(c)(i)(1), and no notice of any such
      voting or consent need be given to the Secured Party; and

     

    
      
        
        

      

      
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    (2) the
      Secured Party shall promptly execute and deliver (or cause to be executed and
      delivered) to each Grantor all proxies, and other instruments as such Grantor
      may from time to time reasonably request for the purpose of enabling such
      Grantor to exercise the voting and other consensual rights when and to the
      extent which it is entitled to exercise pursuant to clause (1)
      above;

     

    (3) Upon
      the
      occurrence and during the continuation of an Event of Default:

     

    (A) all
      rights of each Grantor to exercise or refrain from exercising the voting and
      other consensual rights which it would otherwise be entitled to exercise
      pursuant hereto shall cease and all such rights shall thereupon become vested
      in
      the Secured Party who shall thereupon have the sole right to exercise such
      voting and other consensual rights; and

     

    (B) in
      order
      to permit the Secured Party to exercise the voting and other consensual rights
      which it may be entitled to exercise pursuant hereto and to receive all
      dividends and other distributions which it may be entitled to receive hereunder:
      (1) each Grantor shall promptly execute and deliver (or cause to be executed
      and
      delivered) to the Secured Party all proxies, dividend payment orders and other
      instruments as the Secured Party may from time to time reasonably request and
      (2) the each Grantor acknowledges that the Secured Party may utilize the power
      of attorney set forth in Section 6.

     

    4.3 Pledged
      Equity Interests.
      

     

    (a) Representations
      and Warranties.
      Each
      Grantor hereby represents and warrants that:

     

    (i) Schedule
      4.3 (as such schedule may be amended or supplemented from time to time) sets
      forth under the headings "Pledged Stock", "Pledged LLC Interests," "Pledged
      Partnership Interests" and "Pledged Trust Interests," respectively, all of
      the
      Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged
      Trust Interests owned by any Grantor and such Pledged Equity Interests
      constitute the percentage of issued and outstanding shares of stock, percentage
      of membership interests, percentage of partnership interests or percentage
      of
      beneficial interest of the respective issuers thereof indicated on such
      Schedule;

    
       

      
        
          
          

        

        
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    (ii) except
      as
      provided on Schedule 4.3, it has not acquired any equity interests of another
      entity or substantially all the assets of another entity within the past five
      (5) years;

     

    (iii) it
      is the
      record and beneficial owner of the Pledged Equity Interests free of all Liens,
      rights or claims of other Persons other than Permitted Liens and there are
      no
      outstanding warrants, options or other rights to purchase, or shareholder,
      voting trust or similar agreements outstanding with respect to, or property
      that
      is convertible into, or that requires the issuance or sale of, any Pledged
      Equity Interests;

     

    (iv) without
      limiting any other provision hereof, no consent of any Person including any
      other general or limited partner, any other member of a limited liability
      company, any other shareholder or any other trust beneficiary is necessary
      or
      desirable in connection with the creation, perfection or first priority status
      of the security interest of the Secured Party in any Pledged Equity Interests
      or
      the exercise by the Secured Party of the voting or other rights provided for
      in
      this Agreement or the exercise of remedies in respect thereof;

     

    (v) none
      of
      the Pledged LLC Interests nor Pledged Partnership Interests are or represent
      interests in issuers that are: (a) registered as investment companies, (b)
      are
      dealt in or traded on securities exchanges or markets or (c) have opted to
      be
      treated as securities under the uniform commercial code of any
      jurisdiction;

     

    (b) Covenants
      and Agreements.
      Each
      Grantor hereby covenants and agrees that:

     

    (i) without
      the prior written consent of the Secured Party, it shall not vote to enable
      or
      take any other action to: (a) amend or terminate any partnership agreement,
      limited liability company agreement, certificate of incorporation, by-laws
      or
      other organizational documents in any way that materially changes the rights
      of
      such Grantor with respect to any Investment Related Property or adversely
      affects the validity, perfection or priority of the Secured Party's security
      interest, (b) permit any issuer of any Pledged Equity Interest to issue any
      additional stock, partnership interests, limited liability company interests
      or
      other equity interests of any nature or to issue securities convertible into
      or
      granting the right of purchase or exchange for any stock or other equity
      interest of any nature of such issuer, (c) other than as permitted under the
      Credit Agreement, permit any issuer of any Pledged Equity Interest to dispose
      of
      all or a material portion of their assets, (d) waive any default under or breach
      of any terms of any organizational document relating to the issuer of any
      Pledged Equity Interest or the terms of any Pledged Debt, or (e) cause any
      issuer of any Pledged Partnership Interests or Pledged LLC Interests which
      are
      not securities (for purposes of the UCC) on the date hereof to elect or
      otherwise take any action to cause such Pledged Partnership Interests or Pledged
      LLC Interests to be treated as securities for purposes of the UCC; provided,
      however, notwithstanding the foregoing, if any issuer of any Pledged Partnership
      Interests or Pledged LLC Interests takes any such action in violation of the
      foregoing in this clause (e), such Grantor shall promptly notify the Secured
      Party in writing of any such election or action and, in such event, shall take
      all steps necessary or advisable to establish the Secured Party's "control"
      thereof;

     

    
      
        
        

      

      
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    (ii) it
      shall
      comply with all of its obligations under any partnership agreement or limited
      liability company agreement relating to Pledged Partnership Interests or Pledged
      LLC Interests and shall enforce all of its rights with respect to any Investment
      Related Property;

     

    (iii) each
      Grantor consents to the grant by each other Grantor of a security interest
      in
      all Investment Related Property to the Secured Party and, without limiting
      the
      foregoing, consents to the transfer of any Pledged Partnership Interest and
      any
      Pledged LLC Interest to the Secured Party or its nominee following an Event
      of
      Default and to the substitution of the Secured Party or its nominee as a partner
      in any partnership or as a member in any limited liability company with all
      the
      rights and powers related thereto; and

     

    (iv) it
      shall
      notify the Secured Party of any default under any Pledged Debt that has caused,
      either in any case or in the aggregate, a Material Adverse Effect.

     

    4.4 Investment
      Accounts.
      

     

    (a) Covenants
      and Agreements.
      Each
      Grantor hereby covenants and agrees that:

     

    (i) With
      respect to any Investment Related Property consisting of Securities Accounts
      or
      Securities Entitlements, it shall cause the securities intermediary maintaining
      such Securities Account or Securities Entitlement to enter into an agreement
      substantially in form and substance satisfactory to the Secured Party pursuant
      to which it shall agree to comply with the Secured Party's "entitlement orders"
      without further consent by such Grantor. With respect to any Investment Related
      Property that is a "Deposit Account," it shall cause the depositary institution
      maintaining such account to enter into an agreement substantially in the form
      of
      Exhibit B-1 or Exhibit B-2 hereto (or such other form satisfactory to the
      Secured Party), pursuant to which the Secured Party shall have both sole
      dominion and control over such Deposit Account (within the meaning of the common
      law) and "control" (within the meaning of Section 9-104 of the UCC) over such
      Deposit Account.

     

    (ii) In
      addition to the foregoing, if any issuer of any Investment Related Property
      is
      located in a jurisdiction outside of the United States, each Grantor shall
      take
      such additional actions, including causing the issuer to register the pledge
      on
      its books and records or making such filings or recordings, in each case as
      may
      be necessary or advisable, under the laws of such issuer's jurisdiction to
      insure the validity, perfection and priority of the security interest of the
      Secured Party. Upon the occurrence of an Event of Default, the Secured Party
      shall have the right, without notice to any Grantor, to transfer all or any
      portion of the Investment Related Property to its name or the name of its
      nominee or agent. In addition, the Secured Party shall have the right at any
      time, without notice to any Grantor, to exchange any certificates or instruments
      representing any Investment Related Property for certificates or instruments
      of
      smaller or larger denominations.

     

    
      
        
        

      

      
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    4.5 Letter
      of Credit Rights.
      

     

    (a) Representations
      and Warranties.
      Each
      Grantor hereby represents and warrants that:

     

    (i) all
      material letters of credit to which such Grantor has rights are listed on
      Schedule 4.5 (as such schedule may be amended or supplemented from time to
      time)
      hereto; and

     

    (ii) it
      has
      obtained the consent of each issuer of any material letter of credit to the
      assignment of the proceeds of the letter of credit to the Secured
      Party.

     

    (b) Covenants
      and Agreements.
      Each
      Grantor hereby covenants and agrees that with respect to any material letter
      of
      credit hereafter arising it shall obtain the consent of the issuer thereof
      to
      the assignment of the proceeds of the letter of credit to the Secured Party
      and
      shall deliver to the Secured Party a completed Pledge Supplement, substantially
      in the form of Exhibit A attached hereto, together with all Supplements to
      Schedules thereto.

     

    4.6 Commercial
      Tort Claims.
      

     

    (a) Representations
      and Warranties.
      Each
      Grantor hereby represents and warrants that Schedule 4.6 (as such schedule
      may
      be amended or supplemented from time to time) sets forth all Commercial Tort
      Claims of each Grantor; and

     

    (b) Covenants
      and Agreements.
      Each
      Grantor hereby covenants and agrees that with respect to any Commercial Tort
      Claim hereafter arising it shall deliver to the Secured Party a completed Pledge
      Supplement, substantially in the form of Exhibit A attached hereto, together
      with all Supplements to Schedules thereto, identifying such new Commercial
      Tort
      Claims.

     

    4.7 Vessels;
      Certificate of Title Equipment.
      

     

    (a) Representations
      and Warranties.
      Each
      Grantor hereby represents and warrants that Schedule 4.7 (as such schedule
      may
      be amended or supplemented from time to time) sets forth all vessels and
      certificates of title Equipment of each Grantor; and

     

    
      
        
        

      

      
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    (b) Covenants
      and Agreements.
      Each
      Grantor hereby covenants and agrees that with respect to any vessel(s) or
      Equipment subject to certificate of title requirements hereafter acquired it
      shall promptly notify the Secured Party thereof and it shall deliver such
      documentation and other items as Agent requests to grant and/or perfect Secured
      Party's lien on and secured interest in such asset, together with all
      supplements to any schedules thereto, identifying any such new vessel(s) and
      Equipment.

     

    SECTION
      5

    ACCESS;
      RIGHT OF INSPECTION AND FURTHER ASSURANCES;

    ADDITIONAL
      GRANTORS

     

    5.1 Access;
      Right of Inspection.
      The
      Secured Party shall at all times have full and free access during normal
      business hours to all the books, correspondence and records of each Grantor,
      and
      the Secured Party and its representatives may examine the same, take extracts
      therefrom and make photocopies thereof,
      and
      each Grantor agrees to render to the Secured Party, at such Grantor's cost
      and
      expense, such clerical and other assistance as may be reasonably requested
      with
      regard thereto. Upon reasonably prior notice from the Secured Party to the
      Grantor, the Secured Party and its representatives shall at all times also
      have
      the right to enter any premises of such Grantor and inspect any property of
      each
      Grantor where any of the Collateral of such Grantor granted pursuant to this
      Agreement is located for the purpose of inspecting the same, observing its
      use
      or otherwise protecting its interests therein.

     

    5.2 Further
      Assurances.
      

     

    (a) Each
      Grantor agrees that from time to time, at the expense of such Grantor, that
      it
      shall promptly execute and deliver all further instruments and documents, and
      take all further action, that may be necessary or desirable, or that the Secured
      Party may reasonably request, in order to create and/or maintain the validity,
      perfection or priority of and protect any security interest granted or purported
      to be granted hereby or to enable the Secured Party to exercise and enforce
      its
      rights and remedies hereunder with respect to any Collateral. Without limiting
      the generality of the foregoing, each Grantor shall:

     

    (i) file
      such
      financing or continuation statements, or amendments thereto, and execute and
      deliver such other agreements, instruments, endorsements, powers of attorney
      or
      notices, as may be necessary or desirable, or as the Secured Party may
      reasonably request, in order to perfect and preserve the security interests
      granted or purported to be granted hereby;

     

    (ii) take
      all
      actions necessary to ensure the recordation of appropriate evidence of the
      liens
      and security interest granted hereunder in the Intellectual Property with any
      intellectual property registry in which said Intellectual Property is registered
      or in which an application for registration is pending, including the United
      States Patent and Trademark Office, the United States Copyright Office, the
      various Secretaries of State, and the foreign counterparts on any of the
      foregoing;

     

    
      
        
        

      

      
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    (iii) at
      any
      reasonable time, upon request by the Secured Party, assemble the Collateral
      and
      allow inspection of the Collateral by the Secured Party, or persons designated
      by the Secured Party; and

     

    (iv) at
      the
      Secured Party's request, appear in and defend any action or proceeding that
      may
      affect such Grantor's title to or the Secured Party's security interest in
      all
      or any part of the Collateral.

     

    (b) Each
      Grantor hereby authorizes the Secured Party to file a Record or Records,
      including financing or continuation statements, and amendments thereto, in
      any
      jurisdictions and with any filing offices as the Secured Party may determine,
      in
      its sole discretion, are necessary or advisable to perfect the security interest
      granted to the Secured Party herein. Such financing statements may describe
      the
      Collateral in the same manner as described herein or may contain an indication
      or description of collateral that describes such property in any other manner
      as
      the Secured Party may determine is necessary, advisable or prudent to ensure
      the
      perfection of the security interest in the Collateral granted to the Secured
      Party herein, including describing such property as "all assets" or "all
      personal property, whether now owned or hereafter acquired". Each Grantor shall
      furnish to the Secured Party from time to time statements and schedules further
      identifying and describing the Collateral and such other reports in connection
      with the Collateral as the Secured Party may reasonably request, all in
      reasonable detail.

     

    5.3 Additional
      Grantors.
      From
      time to time subsequent to the date hereof, additional Persons may become
      parties hereto as additional Grantors (each, an "Additional
      Grantor"),
      by
      executing a Counterpart Agreement. Upon delivery of any such Counterpart
      Agreement to the Secured Party, notice of which is hereby waived by Grantors,
      each Additional Grantor shall be a Grantor and shall be as fully a party hereto
      as if Additional Grantor were an original signatory hereto. Each Grantor
      expressly agrees that its obligations arising hereunder shall not be affected
      or
      diminished by the addition or release of any other Grantor hereunder, nor by
      any
      election of Secured Party not to cause any Subsidiary of Company to become
      an
      Additional Grantor hereunder. This Agreement shall be fully effective as to
      any
      Grantor that is or becomes a party hereto regardless of whether any other Person
      becomes or fails to become or ceases to be a Grantor hereunder.

     

    SECTION
      6

    SECURED
      PARTY APPOINTED ATTORNEY-IN-FACT

     

    6.1 Power
      of Attorney.
      Each
      Grantor hereby irrevocably appoints the Secured Party (such appointment being
      coupled with an interest) as such Grantor's attorney-in-fact, with full
      authority in the place and stead of such Grantor and in the name of such
      Grantor, the Secured Party or otherwise, from time to time in the Secured
      Party's discretion to take any action and to execute any instrument that the
      Secured Party may deem reasonably necessary or advisable to accomplish the
      purposes of this Agreement, including the following:

     

    (a) upon
      the
      occurrence and during the continuance of any Event of Default, to obtain and
      adjust insurance required to be maintained by such Grantor pursuant to the
      Credit Agreement or paid to the Secured Party pursuant to the Credit
      Agreement;

     

    
      
        
        

      

      
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    (b) upon
      the
      occurrence and during the continuance of any Event of Default, to ask for,
      demand, collect, sue for, recover, compound, receive and give acquittance and
      receipts for moneys due and to become due under or in respect of any of the
      Collateral;

     

    (c) upon
      the
      occurrence and during the continuance of any Event of Default, to receive,
      endorse and collect any drafts or other instruments, documents and chattel
      paper
      in connection with clause (b) above;

     

    (d) upon
      the
      occurrence and during the continuance of any Event of Default, to file any
      claims or take any action or institute any proceedings that the Secured Party
      may deem necessary or desirable for the collection of any of the Collateral
      or
      otherwise to enforce the rights of the Secured Party with respect to any of
      the
      Collateral;

     

    (e) Subject
      to Section 5.2(b), to prepare and file any UCC financing statements against
      such
      Grantor as debtor covering the Collateral;

     

    (f) to
      prepare, sign, and file for recordation in any intellectual property registry,
      appropriate evidence of the lien and security interest granted herein in the
      Intellectual Property in the name of such Grantor as assignor;

     

    (g) to
      take
      or cause to be taken all actions necessary to perform or comply or cause
      performance or compliance with the terms of this Agreement, including access
      to
      pay or discharge taxes or Liens (other than Permitted Liens) levied or placed
      upon or threatened against the Collateral, the legality or validity thereof
      and
      the amounts necessary to discharge the same to be determined by the Secured
      Party in its sole discretion, any such payments made by the Secured Party to
      become obligations of such Grantor to the Secured Party, due and payable
      immediately without demand; and

     

    (h) generally
      to sell, transfer, pledge, make any agreement with respect to or otherwise
      deal
      with any of the Collateral as fully and completely as though the Secured Party
      were the absolute owner thereof for all purposes, and to do, at the Secured
      Party's option and such Grantor's expense, at any time or from time to time,
      all
      acts and things that the Secured Party deems reasonably necessary to protect,
      preserve or realize upon the Collateral and the Secured Party's security
      interest therein in order to effect the intent of this Agreement, all as fully
      and effectively as such Grantor might do.

     

    6.2 No
      Duty on the Part of Secured Party or Beneficiaries.
      The
      powers conferred on the Secured Party hereunder are solely to protect the
      interests of the Beneficiaries in the Collateral and shall not impose any duty
      upon the Secured Party or any Beneficiary to exercise any such powers. The
      Secured Party and the Beneficiaries shall be accountable 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 Grantor for any act or failure to act hereunder, except
      for
      their own gross negligence or willful misconduct.

     

    
      
        
        

      

      
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    SECTION
      7

    REMEDIES

     

    7.1 Generally.

     

    (a) If
      any
      Event of Default shall have occurred and be continuing, the Secured Party may
      exercise in respect of the Collateral, in addition to all other rights and
      remedies provided for herein or otherwise available to it at law or in equity,
      all the rights and remedies of the Secured Party on default under the UCC
      (whether or not the UCC applies to the affected Collateral) to collect, enforce
      or satisfy any Secured Obligations then owing, whether by acceleration or
      otherwise, and also may pursue any of the following separately, successively
      or
      simultaneously:

     

    (i) require
      any Grantor to, and each Grantor hereby agrees that it shall at its expense
      and
      promptly upon request of the Secured Party forthwith, assemble all or part
      of
      the Collateral as directed by the Secured Party and make it available to the
      Secured Party at a place to be designated by the Secured Party that is
      reasonably convenient to both parties;

     

    (ii) enter
      onto the property where any Collateral is located and take possession thereof
      with or without judicial process;

     

    (iii) prior
      to
      the disposition of the Collateral, store, process, repair or recondition the
      Collateral or otherwise prepare the Collateral for disposition in any manner
      to
      the extent the Secured Party deems appropriate; and

     

    (iv) without
      notice except as specified below or under the UCC, sell, assign, lease, license
      (on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral
      or any part thereof in one or more parcels at public or private sale, at any
      of
      the Secured Party's offices or elsewhere, for cash, on credit or for future
      delivery, at such time or times and at such price or prices and upon such other
      terms as the Secured Party may deem commercially reasonable.

     

    (b) The
      Secured Party or any Beneficiary may be the purchaser of any or all of the
      Collateral at any public or private sale (to the extent to portion of the
      Collateral being privately sold is of a kind that is customarily sold on a
      recognized market or the subject of widely distributed standard price
      quotations) in accordance with the UCC and the Secured Party, as collateral
      agent for and representative of the Beneficiaries, shall be entitled, for the
      purpose of bidding and making settlement or payment of the purchase price for
      all or any portion of the Collateral sold at any such sale made in accordance
      with the UCC, to use and apply any of the Secured Obligations as a credit on
      account of the purchase price for any Collateral payable by the Secured Party
      at
      such sale. Each purchaser at any such sale shall hold the property sold
      absolutely free from any claim or right on the part of any Grantor, and each
      Grantor hereby waives (to the extent permitted by applicable 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.
      Each Grantor agrees that, to the extent notice of sale shall be required by
      law,
      at least ten (10) days notice to such Grantor of the time and place of any
      public sale or the time after which any private sale is to be made shall
      constitute reasonable notification. The Secured Party shall not be obligated
      to
      make any sale of Collateral regardless of notice of sale having been given.
      The
      Secured Party may adjourn any public or private sale from time to time by
      announcement at the time and place fixed therefor, and such sale may, without
      further notice, be made at the time and place to which it was so adjourned.
      Each
      Grantor agrees that it would not be commercially unreasonable for the Secured
      Party to dispose of the Collateral or any portion thereof by using Internet
      sites that provide for the auction of assets of the types included in the
      Collateral or that have the reasonable capability of doing so, or that match
      buyers and sellers of assets. Each Grantor hereby waives any claims against
      the
      Secured Party arising by reason of the fact that the price at which any
      Collateral may have been sold at such a private sale was less than the price
      which might have been obtained at a public sale, even if the Secured Party
      accepts the first offer received and does not offer such Collateral to more
      than
      one offeree. If the proceeds of any sale or other disposition of the Collateral
      are insufficient to pay all the Secured Obligations, Grantors shall be liable
      for the deficiency and the fees of any attorneys employed by the Secured Party
      to collect such deficiency. Each Grantor further agrees that a breach of any
      of
      the covenants contained in this Section will cause irreparable injury to the
      Secured Party, that the Secured Party has no adequate remedy at law in respect
      of such breach and, as a consequence, that each and every covenant contained
      in
      this Section shall be specifically enforceable against such Grantor, and such
      Grantor hereby waives and agrees not to assert any defenses against an action
      for specific performance of such covenants except for a defense that no default
      has occurred giving rise to the Secured Obligations becoming due and payable
      prior to their stated maturities. Nothing in this Section shall in any way
      alter
      the rights of the Secured Party hereunder.

     

    
      
        
        

      

      
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    (c) The
      Secured Party may sell the Collateral without giving any warranties as to the
      Collateral. The Secured Party may specifically disclaim or modify any warranties
      of title or the like. This procedure will not be considered to adversely affect
      the commercial reasonableness of any sale of the Collateral.

     

    (d) The
      Secured Party shall have no obligation to marshal any of the
      Collateral.

     

    7.2 Application
      of Proceeds.
      Except
      as expressly provided elsewhere in this Agreement, all proceeds received by
      the
      Secured Party in respect of any sale, any collection from, or other realization
      upon all or any part of the Collateral shall be applied in full or in part
      by
      the Secured Party against, the Secured Obligations in the following order of
      priority: first, to the payment of all costs and expenses of such sale,
      collection or other realization, including reasonable compensation to the
      Secured Party and its agents and counsel, and all other expenses, liabilities
      and advances made or incurred by the Secured Party in connection therewith,
      and
      all amounts for which the Secured Party is entitled to indemnification hereunder
      (in its capacity as the Secured Party and not as a Lender) and all advances
      made
      by the Secured Party hereunder for the account of the applicable Grantor, and
      to
      the payment of all costs and expenses paid or incurred by the Secured Party
      in
      connection with the exercise of any right or remedy hereunder or under the
      Credit Agreement, all in accordance with the terms hereof or thereof; second,
      to
      the extent of any excess of such proceeds, to the payment of all other Secured
      Obligations for the ratable benefit of the Lenders and the Lender
      Counterparties; and third, to the extent of any excess of such proceeds, to
      the
      payment to or upon the order of such Grantor or to whosoever may be lawfully
      entitled to receive the same or as a court of competent jurisdiction may
      direct.

     

    
      
        
        

      

      
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    7.3 Sales
      on Credit.
      If
      Secured Party sells any of the Collateral upon credit, Grantor will be credited
      only with payments actually made by purchaser and received by Secured Party
      and
      applied to indebtedness of the Purchaser. In the event the purchaser fails
      to
      pay for the Collateral, Secured Party may resell the Collateral and Grantor
      shall be credited with proceeds of the sale.

     

    7.4 Deposit
      Accounts.
      If any
      Event of Default shall have occurred and be continuing, the Secured Party may
      apply the balance from any Deposit Account or instruct the bank at which any
      Deposit Account is maintained to pay the balance of any Deposit Account to
      or
      for the benefit of the Secured Party.

     

    7.5 Investment
      Related Property. Each
      Grantor recognizes that, by reason of certain prohibitions contained in the
      Securities Act and applicable state securities laws, the Secured Party may
      be
      compelled, with respect to any sale of all or any part of the Investment Related
      Property conducted without prior registration or qualification of such
      Investment Related Property under the Securities Act and/or such state
      securities laws, to limit purchasers to those who will agree, among other
      things, to acquire the Investment Related Property for their own account, for
      investment and not with a view to the distribution or resale thereof. Each
      Grantor acknowledges that any such private sale may be at prices and on terms
      less favorable than those obtainable through a public sale without such
      restrictions (including a public offering made pursuant to a registration
      statement under the Securities Act) and, notwithstanding such circumstances,
      each Grantor agrees that any such private sale shall be deemed to have been
      made
      in a commercially reasonable manner and that the Secured Party shall have no
      obligation to engage in public sales and no obligation to delay the sale of
      any
      Investment Related Property for the period of time necessary to permit the
      issuer thereof to register it for a form of public sale requiring registration
      under the Securities Act or under applicable state securities laws, even if
      such
      issuer would, or should, agree to so register it. If the Secured Party
      determines to exercise its right to sell any or all of the Investment Related
      Property, upon written request, each Grantor shall and shall cause each issuer
      of any Pledged Stock to be sold hereunder, each partnership and each limited
      liability company from time to time to furnish to the Secured Party all such
      information as the Secured Party may request in order to determine the number
      and nature of interest, shares or other instruments included in the Investment
      Related Property which may be sold by the Secured Party in exempt transactions
      under the Securities Act and the rules and regulations of the Securities and
      Exchange Commission thereunder, as the same are from time to time in
      effect.

     

    7.6 Intellectual
      Property.
      

     

    (a) Anything
      contained herein to the contrary notwithstanding, upon the occurrence and during
      the continuation of an Event of Default:

     

    (i) the
      Secured Party shall have the right (but not the obligation) to bring suit or
      otherwise commence any action or proceeding in the name of any Grantor, the
      Secured Party or otherwise, in the Secured Party's sole discretion, to enforce
      any Intellectual Property, in which event such Grantor shall, at the request
      of
      the Secured Party, do any and all lawful acts and execute any and all documents
      required by the Secured Party in aid of such enforcement and such Grantor shall
      promptly, upon demand, reimburse and indemnify the Secured Party as provided
      in
      Section 10 of the Credit Agreement in connection with the exercise of its rights
      under this Section, and, to the extent that the Secured Party shall elect not
      to
      bring suit to enforce any Intellectual Property as provided in this Section,
      each Grantor agrees to use all reasonable measures, whether by action, suit,
      proceeding or otherwise, to prevent the infringement of any of the Intellectual
      Property by others and for that purpose agrees to diligently maintain any
      action, suit or proceeding against any Person so infringing as shall be
      necessary to prevent such infringement;

     

    
      
        
        

      

      
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    (ii) upon
      written demand from the Secured Party, each Grantor shall grant, assign, convey
      or otherwise transfer to the Secured Party an absolute assignment of all of
      such
      Grantor's right, title and interest in and to the Intellectual Property and
      shall execute and deliver to the Secured Party such documents as are necessary
      or appropriate to carry out the intent and purposes of this
      Agreement;

     

    (iii) each
      Grantor agrees that such an assignment and/or recording shall be applied to
      reduce the Secured Obligations outstanding only to the extent that the Secured
      Party (or any Beneficiary) receives Cash Proceeds in respect of the sale of,
      or
      other realization upon, the Intellectual Property;

     

    (iv) within
      five (5) Business Days after written notice from the Secured Party, each Grantor
      shall make available to the Secured Party, to the extent within such Grantor's
      power and authority, such personnel in such Grantor's employ on the date of
      such
      Event of Default as the Secured Party may reasonably designate, by name, title
      or job responsibility, to permit such Grantor to continue, directly or
      indirectly, to produce, advertise and sell the products and services sold or
      delivered by such Grantor under or in connection with the Trademarks, Trademark
      Licenses, such persons to be available to perform their prior functions on
      the
      Secured Party's behalf and to be compensated by the Secured Party at such
      Grantor's expense on a per diem, pro-rata basis consistent with the salary
      and
      benefit structure applicable to each as of the date of such Event of Default;
      and

     

    (v) the
      Secured Party shall have the right to notify, or require each Grantor to notify,
      any obligors with respect to amounts due or to become due to such Grantor in
      respect of the Intellectual Property, of the existence of the security interest
      created herein, to direct such obligors to make payment of all such amounts
      directly to the Secured Party, and, upon such notification and at the expense
      of
      such Grantor, to enforce collection of any such amounts and to adjust, settle
      or
      compromise the amount or payment thereof, in the same manner and to the same
      extent as such Grantor might have done;

     

    (1) all
      amounts and proceeds (including checks and other instruments) received by
      Grantor in respect of amounts due to such Grantor in respect of the Collateral
      or any portion thereof shall be received in trust for the benefit of the Secured
      Party hereunder, shall be segregated from other funds of such Grantor and shall
      be forthwith paid over or delivered to the Secured Party in the same form as
      so
      received (with any necessary endorsement) to be held as cash Collateral and
      applied as provided by Section 7.7 hereof; and

    
      
        
        

      

      
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    (2) Grantor
      shall not adjust, settle or compromise the amount or payment of any such amount
      or release wholly or partly any obligor with respect thereto or allow any credit
      or discount thereon.

     

    (b) If
      (i) an
      Event of Default shall have occurred and, by reason of cure, waiver,
      modification, amendment or otherwise, no longer be continuing, (ii) no other
      Event of Default shall have occurred and be continuing, (iii) an assignment
      or
      other transfer to the Secured Party of any rights, title and interests in and
      to
      the Intellectual Property shall have been previously made and shall have become
      absolute and effective, and (iv) the Secured Obligations shall not have become
      immediately due and payable, upon the written request of any Grantor, the
      Secured Party shall promptly execute and deliver to such Grantor, at such
      Grantor's sole cost and expense, such assignments or other transfer as may
      be
      necessary to reassign to such Grantor any such rights, title and interests
      as
      may have been assigned to the Secured Party as aforesaid, subject to any
      disposition thereof that may have been made by the Secured Party; provided,
      after giving effect to such reassignment, the Secured Party's security interest
      granted pursuant hereto, as well as all other rights and remedies of the Secured
      Party granted hereunder, shall continue to be in full force and effect; and
      provided further, the rights, title and interests so reassigned shall be free
      and clear of any Liens granted by or on behalf of the Secured Party and the
      Beneficiaries.

     

    (c) Solely
      for the purpose of enabling the Secured Party to exercise rights and remedies
      under this Section 7.6 and at such time as the Secured Party shall be lawfully
      entitled to exercise such rights and remedies, each Grantor hereby grants to
      the
      Secured Party, to the extent it has the right to do so, an irrevocable,
      nonexclusive license (exercisable without payment of royalty or other
      compensation to such Grantor), subject, in the case of Trademarks, to sufficient
      rights to quality control and inspection in favor of such Grantor to avoid
      the
      risk of invalidation of said Trademarks, to use, operate under, license, or
      sublicense any Intellectual Property now owned or hereafter acquired by such
      Grantor, and wherever the same may be located.

     

    7.7 Cash
      Proceeds.
      All
      proceeds of any Collateral received by any Grantor consisting of cash, checks
      and other near-cash items (collectively, "Cash
      Proceeds")
      shall
      be held by such Grantor in trust for the Secured Party, segregated from other
      funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
      turned over to the Secured Party in the exact form received by such Grantor
      (duly indorsed by such Grantor to the Secured Party, if required) and held
      by
      the Secured Party. Any Cash Proceeds received by the Secured Party (whether
      from
      a Grantor or otherwise): (i) if no Event of Default shall have occurred and
      be
      continuing, shall be held by the Secured Party for the ratable benefit of the
      Beneficiaries, as collateral security for the Secured Obligations (whether
      matured or unmatured) and (ii) if an Event of Default shall have occurred and
      be
      continuing, may, in the sole discretion of the Secured Party, (A) be held by
      the
      Secured Party for the ratable benefit of the Beneficiaries, as collateral
      security for the Secured Obligations (whether matured or unmatured) and/or
      (B)
      then or at any time thereafter may be applied by the Secured Party against
      the
      Secured Obligations then due and owing.

     

    
      
        
        

      

      
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    SECTION
      8

    AGENT

     

    The
      Secured Party has been appointed to act as secured party hereunder by Lenders
      and, by their acceptance of the benefits hereof, the other Beneficiaries. The
      Secured Party shall be obligated, and shall have the right hereunder, to make
      demands, to give notices, to exercise or refrain from exercising any rights,
      and
      to take or refrain from taking any action (including the release or substitution
      of Collateral), solely in accordance with this Agreement and the Credit
      Agreement. In furtherance of the foregoing provisions of this Section, each
      Beneficiary, by its acceptance of the benefits hereof, agrees that it shall
      have
      no right individually to realize upon any of the Collateral hereunder, it being
      understood and agreed by such Beneficiary that all rights and remedies hereunder
      may be exercised solely by the Secured Party for the benefit of Lenders and
      Lender Counterparties in accordance with the terms of this Section. Secured
      Party may resign at any time by giving thirty (30) days' prior written notice
      thereof to Lenders and the Grantors, and Secured Party may be removed at any
      time with or without cause by an instrument or concurrent instruments in writing
      delivered to the Grantors and Secured Party signed by the Required Lenders.
      Upon
      any such notice of resignation or any such removal, Required Lenders shall
      have
      the right, upon five (5) Business Days' notice to the Secured Party, following
      receipt of the Grantors' consent (which shall not be unreasonable withheld
      or
      delayed and which shall not be required while an Event of Default exists),
      to
      appoint a successor Secured Party. Upon the acceptance of any appointment as
      Secured Party hereunder by a successor Secured Party, that successor Secured
      Party shall thereby be deemed the successor Secured Party under this Agreement.
      Upon the acceptance of any appointment as Administrative Agent under the terms
      of the Credit Agreement by a successor Administrative Agent, that successor
      Administrative Agent shall thereby also be deemed the successor Secured Party
      and such successor Secured Party shall thereupon succeed to and become vested
      with all the rights, powers, privileges and duties of the retiring or removed
      Secured Party under this Agreement, and the retiring or removed Secured Party
      under this Agreement shall promptly (i) transfer to such successor Secured
      Party all sums, Securities and other items of Collateral held hereunder,
      together with all records and other documents necessary or appropriate in
      connection with the performance of the duties of the successor Secured Party
      under this Agreement, and (ii) execute and deliver to such successor
      Secured Party such amendments to financing statements, and take such other
      actions, as may be necessary or appropriate in connection with the assignment
      to
      such successor Secured Party of the security interests created hereunder,
      whereupon such retiring or removed Secured Party shall be discharged from its
      duties and obligations under this Agreement. After any retiring or removed
      Secured Party's resignation or removal hereunder as the Secured Party, the
      provisions of this Agreement shall inure to its benefit as to any actions taken
      or omitted to be taken by it under this Agreement while it was the Secured
      Party
      hereunder.

     

    SECTION
      9

    CONTINUING
      SECURITY INTEREST; TRANSFER OF LOANS

     

    This
      Agreement shall create a continuing security interest in the Collateral and
      shall remain in full force and effect until the payment in full of all Secured
      Obligations, the cancellation or termination of the Commitments, be binding
      upon
      each Grantor, its successors and assigns, and inure, together with the rights
      and remedies of the Secured Party hereunder, to the benefit of the Secured
      Party
      and its successors, transferees and assigns. Without limiting the generality
      of
      the foregoing, but subject to the terms of the Credit Agreement, any Lender
      may
      assign or otherwise transfer any Loans held by it to any other Person, and
      such
      other Person shall thereupon become vested with all the benefits in respect
      thereof granted to Lenders herein or otherwise. Upon the payment in full of
      all
      Secured Obligations, the cancellation or termination of the Commitments, the
      security interest granted hereby shall terminate hereunder and of record and
      all
      rights to the Collateral shall revert to Grantors. Upon any such termination
      the
      Secured Party shall, at Grantors' expense, execute and deliver to Grantors
      such
      documents as Grantors shall reasonably request to evidence such
      termination.

     

    
      
        
        

      

      
        -25-

        
          

        

      

       

    

     

    SECTION
      10

    STANDARD
      OF CARE; SECURED PARTY MAY PERFORM

     

    Except
      for the exercise of reasonable care in the custody of any Collateral in its
      possession and the accounting for moneys actually received by it hereunder,
      the
      Secured Party shall have no duty as to any Collateral or as to the taking of
      any
      necessary steps to preserve rights against prior parties or any other rights
      pertaining to any Collateral. The Secured Party shall be deemed to have
      exercised reasonable care in the custody and preservation of Collateral in
      its
      possession if such Collateral is accorded treatment substantially equal to
      that
      which the Secured Party accords its own property. Neither the Secured Party
      nor
      any of its directors, officers, employees or agents shall be liable for failure
      to demand, collect or realize upon all or any part 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 Grantor or otherwise. If any Grantor
      fails to perform any agreement contained herein, the Secured Party may itself
      perform, or cause performance of, such agreement, and the expenses of the
      Secured Party incurred in connection therewith shall be payable by each Grantor
      under Section 10.2 of the Credit Agreement.

     

    SECTION
      11

    MISCELLANEOUS

     

    Any
      notice required or permitted to be given under this Agreement shall be given
      in
      accordance with Section 10.1 of the Credit Agreement. No failure or delay on
      the
      part of the Secured Party in the exercise of any power, right or privilege
      hereunder or under any other Transaction Document shall impair such power,
      right
      or privilege or be construed to be a waiver of any default or acquiescence
      therein, nor shall any single or partial exercise of any such power, right
      or
      privilege preclude other or further exercise thereof or of any other power,
      right or privilege. All rights and remedies existing under this Agreement and
      the other Transaction Documents are cumulative to, and not exclusive of, any
      rights or remedies otherwise available. In case any provision in or obligation
      under this Agreement shall be invalid, illegal or unenforceable in any
      jurisdiction, the validity, legality and enforceability of the remaining
      provisions or obligations, or of such provision or obligation in any other
      jurisdiction, shall not in any way be affected or impaired thereby. All
      covenants hereunder shall be given independent effect so that if a particular
      action or condition is not permitted by any of such covenants, the fact that
      it
      would be permitted by an exception to, or would otherwise be within the
      limitations of, another covenant shall not avoid the occurrence of a Default
      or
      an Event of Default if such action is taken or condition exists. This Agreement
      shall be binding upon and inure to the benefit of the Secured Party and Grantors
      and their respective successors and assigns. No Grantor shall, without the
      prior
      written consent of the Secured Party given in accordance with the Credit
      Agreement, assign any right, duty or obligation hereunder. This Agreement and
      the other Transaction Documents embody the entire agreement and understanding
      between Grantors and the Secured Party and supersede all prior agreements and
      understandings between such parties relating to the subject matter hereof and
      thereof. Accordingly, the Transaction Documents may not be contradicted by
      evidence of prior, contemporaneous or subsequent oral agreements of the parties.
      There are no unwritten oral agreements between the parties. This Agreement
      may
      be executed in one or more counterparts and by different parties hereto in
      separate counterparts, each of which when so executed and delivered shall be
      deemed an original, but all such counterparts together shall constitute but
      one
      and the same instrument; signature pages may be detached from multiple separate
      counterparts and attached to a single counterpart so that all signature pages
      are physically attached to the same document.

     

    
      
        
        

      

      
        -26-

        
          

        

      

       

    

     

    THIS
      AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
      GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
      OF
      THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS (OTHER
      THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
      LAW).

     

    [Remainder
      of page intentionally left blank.]

    
      
        
        

      

      
        -27-

        
          

        

      

       

    

    IN
      WITNESS WHEREOF, each Grantor and the Secured Party have caused this Agreement
      to be duly executed and delivered by their respective officers thereunto duly
      authorized as of the date first written above.

     

    
      	 	 	 
	 	
              GRANTORS:

               

              
                TEKOIL
                  AND GAS GULF COAST, LLC, 
a
                  Delaware limited liability company

              

            
	 	 
	 	
              By:
                Tekoil & Gas Corporation, its Managing

              Member

            
	 
 	 
 	 
 
	
            	By:  	/s/
              Mark
              S. Western
	 	
              

              Name:
                Mark Western

            
	 	
              Title:
                CEO and Chairman of the Board of Directors

            

    

     

    
      Signature
        Page to Pledge and Security Agreement

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    
       

      
        	 	 	 
	 	
                
                  SECURED
                    PARTY:

                   

                

                
                  
                    J.
                      ARON & COMPANY,
                      as Administrative Agent

                  

                

              
	 	 
	 	 
	
              	By:  	/s/
                Colleen Foster
	 	
                

                
                  Authorized
                    Signatory

                  Colleen
                    Foster

                  Managing
                    Director

                

              

      

       

      
        Signature
          Page to Pledge and Security Agreement

        
          
            
            

          

          
            
            

            
              

            

          

           

        

      

    

    

    SCHEDULE
      4.1

     

    TO
      PLEDGE AND SECURITY AGREEMENT

    

    GENERAL
      INFORMATION

     

    
      	
              (A)

            	
              Full
                Legal Name, Type of Organization, Jurisdiction of Organization, Chief
                Executive Office/Sole Place of Business and Organizational Identification
                Number of each Grantor:

            

    

     

    
      	
              Full

              Legal
                Name

            	 	
              Type
                of 
Organization

            	 	
              Jurisdiction
                of 
Organization

            	 	
              Chief
                Executive Office

            	 	
              Organization
                
I.D.#

            
	
              Tekoil
                and Gas Gulf Coast, LLC

            	 	
              Limited
                liability company

            	 	
              Delaware

            	 	
              25050
                I-45 North, Ste 525

              The
                Woodlands, Texas 77380

            	 	
              4286069

            

    

    

    (B) Other
      Names (including any Trade-Name or Fictitious Business Name) under which each
      Grantor has conducted business for the past five (5) years:

     

    Masters
      Acquisition Co., LLC, a Delaware limited liability company

     

    (C) Changes
      in Name, Jurisdiction of Organization, Chief Executive Office and Corporate
      Structure within past five (5) years:

     

    Masters
      Acquisition Co., LLC, a Delaware limited liability company 

     

    
      	
              (D)

            	
              Filing
                Offices:

            

    

     

    
      	
              Name
                of Grantor

            	
              Filing
                Jurisdiction(s)

            
	
              Tekoil
                and Gas Gulf Coast, LLC

            	
              Delaware

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      4.3

     

    TO
      PLEDGE AND SECURITY AGREEMENT

    

    INVESTMENT
      RELATED PROPERTY

     

    Pledged
      Stock:
      None.

     

    Pledged
      LLC Interests:
      None.

     

    Pledged
      Partnership Interests:
      None.

     

    Pledged
      Trust Interests:
      None.

     

    Acquisitions:
      None.

     

    Deposit
      Accounts:

     

    
      	
              Grantor

            	 	
              Name
                of

              Depositary
                Bank

            	 	
              Account
                Number

            	 	
              Account
                Name

            
	
              Tekoil
                and Gas Gulf Coast LLC

            	 	
              Amegy
                Bank National Association

            	 	
              XXXXXXX

            	 	
              Blocked
                Receivable Account

            
	
              Tekoil
                and Gas Gulf Coast LLC

            	 	
              Amegy
                Bank National Association

            	 	
              XXXXXXX

            	 	
              Master/Operating
                Account

            
	
              Tekoil
                and Gas Gulf Coast LLC

            	 	
              Amegy
                Bank National Association

            	 	
              XXXXXXXXX

            	 	
              Controlled
                Disbursement/

              Check
                Disbursements

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      4.5

     

    TO
      PLEDGE AND SECURITY AGREEMENT

    

    LETTER
      OF CREDIT RIGHTS

     

    None.

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      4.6

     

    TO
      PLEDGE AND SECURITY AGREEMENT

    

    COMMERCIAL
      TORT CLAIMS

     

    None.

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      4.7

     

    TO
      PLEDGE AND SECURITY AGREEMENT

    

    VESSELS
      AND CERTIFICATES OF TITLE EQUIPMENT

     

    
      	
              Equipment/Vessel

            	 	
              ID
                No.

            	 	
              Location

            	 	
              Year
                Built

            	 	
              Length

            	 	
              Depth

            	 	
              Width

            
	
              Masters
                Rig #1

              (Slotted
                Key Way Barge

            	 	
              No
                Hull #

            	 	 	 	
              2005

            	 	
              200’

            	 	
              3’

            	 	
              53’

            
	
              Manitowoc
                (30 ton) Crane

            	 	
              Inline
                4 Cycl Detroit 150 HP

            	 	 	 	 	 	 	 	 	 	 
	
              Miss
                Tracy

            	 	
              LAFCO1224

            	 	
              Oak
                Island

            	 	
              1974

            	 	
              29’

            	 	
              3”

            	 	
              10”

            
	
              Miss
                Susie

            	 	
              JBC19893G495

            	 	 	 	
              1994

            	 	
              18’

            	 	
              1”

            	 	
              6”

            
	
              Miss
                Rhea

            	 	
              1138953

            	 	
              Oak
                Island

            	 	
              1972

            	 	
              39’

            	 	
              6.5”

            	 	
              14”

            
	
              Airboat

            	 	
              MPH00196B494

            	 	
              Oak
                Island

            	 	
              1994

            	 	
              15’

            	 	
              0

            	 	
              8”

            
	
              Kabota
                Tractor 8200

            	 	 	 	
              Pt.
                Barrow

            	 	 	 	 	 	 	 	 
	
              Kabota
                Tractor B21

            	 	 	 	
              Goat
                Island

            	 	 	 	 	 	 	 	 
	
              1998
                Chevrolet S-10 Pickup Truck

            	 	
              1GCCS14XXW8213584

            	 	
              Pt.
                Barrow

            	 	 	 	 	 	 	 	 
	
              2006
                Ford F150 Pickup Truck

            	 	
              1FTPW145X6KB15212

            	 	
              Pt.
                Barrow

            	 	 	 	 	 	 	 	 
	
              2006
                Ford F350 Pickup Truck

            	 	
              1FTWW31P96ED61003

            	 	
              Pt.
                Barrow

            	 	 	 	 	 	 	 	 

    

     

    
      
        
        

      

      
        -1-

        
          

        

      

       

    

    EXHIBIT
      A

     

    TO
      PLEDGE AND SECURITY AGREEMENT

    

    PLEDGE
      SUPPLEMENT

     

    This
      PLEDGE
      SUPPLEMENT,
      dated
      [mm/dd/yy],
      is
      delivered pursuant to the Pledge and Security Agreement, dated as of May 11,
      2007 (as it may be from time to time amended, restated, modified or
      supplemented, the "Security
      Agreement"),
      among
TEKOIL
      AND GAS GULF COAST, LLC,
      a
Delaware
      limited liability company,
      the
      other Grantors named therein, and J.
      ARON & COMPANY,
      as the
      Secured Party. Capitalized terms used herein not otherwise defined herein shall
      have the meanings ascribed thereto in the Security Agreement.

     

    Grantor
      hereby confirms the grant to the Secured Party set forth in the Security
      Agreement of, and does hereby grant to the Secured Party, a security interest
      in
      all of Grantor's right, title and interest in and to all Collateral to secure
      the Secured Obligations, in each case whether now or hereafter existing or
      in
      which Grantor now has or hereafter acquires an interest and wherever the same
      may be located. Grantor represents and warrants that the attached Supplements
      to
      Schedules accurately and completely set forth all additional information
      required pursuant to the Security Agreement and hereby agrees that such
      Supplements to Schedules shall constitute part of the Schedules to the Security
      Agreement.

     

    IN
      WITNESS WHEREOF,
      Grantor
      has caused this Pledge Supplement to be duly executed and delivered by its
      duly
      authorized officer as of [mm/dd/yy].

     

    
      	 	 	 
	 	
              TEKOIL
                AND GAS GULF COAST, LLC

            
	 
 	 
 	 
 
	
            	By:   
              	
            
	 	
               

              Name:   
                

            	
              
 
	 	
               

              
                Title:  
                  

              

            	
              
 
	 	
              
 

    

     

    
      
        
        

      

      
        -1-

        
          

        

      

       

    

    SUPPLEMENTS
      TO SCHEDULES

     

    TO
      PLEDGE AND SECURITY AGREEMENT

     

    [Insert
      Required Information]

    
      
        
        

      

      
        -2-

        
          

        

      

       

    

     

    EXHIBIT
      B-1

     

    TO
      PLEDGE AND SECURITY AGREEMENT

    

    DEFAULT
      DEPOSIT ACCOUNT CONTROL AGREEMENT

    

    This
      Default Deposit Account Default Control Agreement dated as of May 11, 2007
      (this
“Agreement”)
      among
TEKOIL
      AND GAS GULF COAST, LLC,
      a
      Delaware limited liability company (the “Debtor”),
      J.
      ARON & COMPANY,
      as
      administrative agent for the beneficiaries (the “Secured
      Party”)
      and
AMEGY
      BANK NATIONAL ASSOCIATION,
      a
      national banking association, in its capacity as a “bank” as defined in Section
      9-102 of the UCC (in such capacity, the “Financial
      Institution”).
      Capitalized terms used but not defined herein shall have the meaning assigned
      thereto in the Pledge and Security Agreement, dated as of May 11, 2007, among
      the Debtor, the other Grantors party thereto, and the Secured Party (as amended,
      restated, supplemented or otherwise modified from time to time, the
“Security
      Agreement”).
      Capitalized terms used but not otherwise defined herein or in the Security
      Agreement shall have the meaning assigned thereto in the Credit and Guaranty
      Agreement, dated as of May 11, 2007, among the Debtor, Tekoil & Gas
      Corporation, other guarantors party thereto, various lenders, and the Secured
      Party, as administrative agent for the various lenders. All references herein
      to
      the “UCC” shall mean the Uniform Commercial Code as in effect in the State of
      New York.

     

    Section
      1. Establishment
      of Deposit Account.
      The
      Financial Institution hereby confirms and agrees that:

     

(a) The
  Financial Institution has established account number XXXXXXX
  in the name “Tekoil
  and Gas Gulf Coast - Master/Operating Account”
  and account number XXXXXXXXin
  the name of “Tekoil
  and Gas Gulf Coast - Controlled Disbursement/Check Disbursements”
  (each such account and any successor account to each such account, a “Deposit
  Account”,
  and collectively, the “Deposit
  Accounts”)
  and the Financial Institution shall not change the name or account number of
  the Deposit Accounts without the prior written consent of the Secured Party;
  and

     

    (b) Each
      Deposit Account is a “deposit account” within the meaning of Section
      9-102(a)(29) of the UCC.

     

    Section
      2. Control
      of the Deposit Account.

     

    (a) The
      Deposit Accounts shall be under the control of the Secured Party. The Secured
      Party shall at all times have "control" (as defined in Section 9-104 of the
      Uniform Commercial Code as adopted in the state of Texas) of the Deposit
      Accounts. The Financial Institution shall comply with instructions originated
      by
      the Secured Party directing disposition of funds in the Depository Account
      without further consent by the Debtor.

     

    (b) Unless
      the Financial Institution shall have received written notice of a default from
      the Secured Party (a "Default Notice") that an "event of default" has occurred
      under the loan documents between the Debtor and the Secured Party (an "Event
      of
      Default"), the Debtor shall have full right of access to and withdrawal from
      the
      Deposit Accounts.

    
       

      Default
        Deposit Account Control Agreement

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) Subject
      to paragraph (d) below, from and after the receipt by the Financial Institution
      of a Default Notice (and until the Financial Institution receives a written
      withdrawal of such notice), (i) the Secured Party shall have exclusive dominion
      and control over the Deposit Accounts, (ii) neither the Debtor nor any person
      acting through or on behalf of the Debtor shall have any right of access to
      or
      withdrawal from the Deposit Accounts, and (iii) the Financial Institution shall
      not comply with any instructions originated by the Debtor or any such person
      directing disposition of funds in the Deposit Accounts.

     

    (d) Any
      Default Notice shall be in writing, shall refer to this Agreement and shall
      include clear and specific instruction with respect to the disposition of funds
      in the Deposit Accounts. The Financial Institution shall have a period of time,
      not exceeding [three
      (3) Business Days]
      (hereinafter defined) following the date on which the Financial Institution
      receives a Default Notice to act on such Default Notice. The Financial
      Institution may rely on a Default Notice notwithstanding any other or
      conflicting information it may receive from the Debtor. With limiting the
      foregoing, upon receipt of a Default Notice, the Financial Institution shall
      have no obligation to determine whether an Event of Default has occurred. As
      used in this Agreement, the term "Business Day" means any day on which the
      Financial Institution and the Secured Party are not authorized or required
      to
      close.

     

    Section
      3. Subordination
      of Lien; Waiver of Set-Off.
      In the
      event that the Financial Institution has or subsequently obtains by agreement,
      by operation of law or otherwise a security interest in the Deposit Accounts
      or
      any funds credited thereto, the Financial Institution hereby agrees that such
      security interest shall be subordinate to the security interest of the Secured
      Party. Money and other items credited to the Deposit Accounts will not be
      subject to deduction, set-off, banker’s lien, or any other right in favor of any
      person other than the Secured Party (except that the Financial Institution
      may
      set off (i) all amounts due to the Financial Institution in respect of customary
      fees and expenses for the routine maintenance and operation of the Deposit
      Accounts and (ii) the face amount of any checks which have been credited to
      such
      Deposit Accounts but are subsequently returned unpaid because of uncollected
      or
      insufficient funds).

     

    Section
      4. Choice
      of Law.
      This
      Agreement and each Deposit Account shall each be governed by the laws of the
      State of New York. Regardless of any provision in any other agreement, for
      purposes of the UCC, New York shall be deemed to be the Financial Institution’s
      jurisdiction (within the meaning of Section 9-304 of the UCC) and each Deposit
      Account shall be governed by the laws of the State of New York.

     

    Section
      5. Conflict
      with Other Agreements.
      

     

    (a) In
      the
      event of any conflict between this Agreement (or any portion thereof) and any
      other agreement now existing or hereafter entered into, the terms of this
      Agreement shall prevail;

    

    (b) No
      amendment or modification of this Agreement or waiver of any right hereunder
      shall be binding on any party hereto unless it is in writing and is signed
      by
      all of the parties hereto; and

    
      
         

        Default
          Deposit Account Control Agreement

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    (c) The
      Financial Institution hereby confirms and agrees that: 

     

    (i) There
      are
      no other agreements entered into between the Financial Institution and the
      Debtor with respect to the Deposit Accounts; and

     

    (ii) It
      has
      not entered into, and until the termination of this Agreement, will not enter
      into, any agreement with any other person relating the Deposit Accounts and/or
      any funds credited thereto pursuant to which it has agreed to comply with
      instructions originated by such persons as contemplated by Section 9-104 of
      the
      UCC.

     

    Section
      6. Adverse
      Claims.
      The
      Financial Institution does not know of any liens, claims or encumbrances
      relating to the Deposit Accounts. If any person asserts any lien, encumbrance
      or
      adverse claim (including any writ, garnishment, judgment, warrant of attachment,
      execution or similar process) against the Deposit Accounts, the Financial
      Institution will promptly notify the Secured Party and the Debtor thereof.
      

     

    Section
      7. Maintenance
      of Deposit Account.
      In
      addition to, and not in lieu of, the obligation of the Financial Institution
      to
      honor instructions as set forth in Section 2 hereof, the Financial Institution
      agrees to maintain the Deposit Accounts as follows:

     

    (a) Statements
      and Confirmations.
      Upon
      receipt of a written request by Secured Party, the Financial Institution will
      promptly send copies of all statements, confirmations and other correspondence
      concerning the Deposit Accounts simultaneously to each of the Debtor and the
      Secured Party at the address for each set forth in Section 11 of this Agreement;
      and

    

    (b) Tax
      Reporting.
      All
      interest, if any, relating to the Deposit Accounts, shall be reported to the
      Internal Revenue Service and all state and local taxing authorities under the
      name and taxpayer identification number of the Debtor. 

    

    Section
      8. Representations,
      Warranties and Covenants of the Financial Institution.
      The
      Financial Institution hereby makes the following representations, warranties
      and
      covenants:

     

    (a) The
      Deposit Accounts have been established as set forth in Section 1 and each such
      Deposit Account will be maintained in the manner set forth herein until
      termination of this Agreement; and 

    

    (b) This
      Agreement is the valid and legally binding obligation of the Financial
      Institution.

    

    Section
      9. Indemnification
      of Financial Institution.
      The
      Debtor and the Secured Party hereby agree that (a) the Financial Institution
      is
      released from any and all liabilities to the Debtor and the Secured Party
      arising from the terms of this Agreement and the compliance of the Financial
      Institution with the terms hereof, except to the extent that such liabilities
      arise from the Financial Institution’s negligence and (b) the Debtor, its
      successors and assigns shall at all times indemnify and save harmless the
      Financial Institution from and against any and all claims, actions and suits
      of
      others arising out of the terms of this Agreement or the compliance of the
      Financial Institution with the terms hereof, except to the extent that such
      arises from the Financial Institution’s negligence, and from and against any and
      all liabilities, losses, damages, costs, charges, counsel fees and other
      expenses of every nature and character arising by reason of the same, until
      the
      termination of this Agreement.

    
      
         

        Default
          Deposit Account Control Agreement

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    Section
      10. Successors;
      Assignment.
      The
      terms of this Agreement shall be binding upon, and shall inure to the benefit
      of, the parties hereto and their respective corporate successors or heirs and
      personal representatives who obtain such rights solely by operation of law.
      The
      Secured Party may assign its rights hereunder only with the express written
      consent of the Financial Institution and by sending written notice of such
      assignment to the Debtor.

     

    Section
      11. Notices.
      Any
      notice, request or other communication required or permitted to be given under
      this Agreement shall be in writing and deemed to have been properly given when
      delivered in person, or when sent by telecopy or other electronic means and
      electronic confirmation of error free receipt is received or two (2) days after
      being sent by certified or registered United States mail, return receipt
      requested, postage prepaid, addressed to the party at the address set forth
      below.

    

      
        	 	
                Debtor:

              	 	
                Tekoil
                  and Gas Gulf Coast, LLC

              
	 	 	 	
                25045
                  I-45 North, Suite 525

              
	 	 	 	
                The
                  Woodlands, Texas 77380

              
	 	 	 	
                Attention:
                  Mark Western

              
	 	 	 	
                Telecopier:
                  281-364-8007

              
	 	 	 	 
	 	
                Secured
                  Party:

              	 	
                J.
                  Aron & Company

              
	 	 	 	
                85
                  Broad Street

              
	 	 	 	
                New
                  York, New York 10004

              
	 	 	 	
                Attention:
                  Steve Bunkin

              
	 	 	 	
                Telecopier:
                  212-428-3675

              
	 	 	 	 
	 	
                with
                  a copy to:

              	 	
                Goldman
                  Sachs E&P Capital

              
	 	 	 	
                1000
                  Louisiana, Suite 550

              
	 	 	 	
                Houston,
                  Texas 77002

              
	 	 	 	
                Attention:
                  John K. Howie

              
	 	 	 	
                Telecopier:
                  713-658-2603

              
	 	 	 	 
	 	 	 	 
	 	
                Financial
                  Institution:

              	 	
                Amegy
                  Bank National Association

              
	 	 	 	
                Five
                  Post Oak Park

              
	 	 	 	
                4400
                  Post Oak Parkway

              
	 	 	 	
                Houston,
                  TX 77027

              
	 	 	 	
                Attention:
                  W. Bryan Chapman

              
	 	 	 	
                Telecopier:
                  (713) 561-0345

              

      

    

    

    Any
      party
      may change its address for notices in the manner set forth above.

    
      
        
           

          Default
            Deposit Account Control Agreement

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

      

    

    Section
      12. Termination.
      The
      obligations of the Financial Institution to the Secured Party pursuant to this
      Agreement shall continue in effect until the security interest of the Secured
      Party in each Deposit Account has been terminated pursuant to the terms of
      the
      Security Agreement and the Secured Party has notified the Financial Institution
      of such termination in writing. The Secured Party agrees to provide Notice
      of
      Termination in substantially the form of Exhibit
      A
      hereto
      to the Financial Institution upon the request of the Debtor on or after the
      termination of the Secured Party’s security interest in each Deposit Account
      pursuant to the terms of the Security Agreement. The termination of this
      Agreement shall not terminate the Deposit Accounts or alter the obligations
      of
      the Financial Institution to the Debtor pursuant to any other agreement with
      respect to the Deposit Accounts.

     

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

     

    [Remainder
      of page intentionally left blank.]

    
      
        
           

          Default
            Deposit Account Control Agreement

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

           

        

      

    

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

     

    
      	 	 	 
	 	
              TEKOIL
                AND GAS GULF COAST, LLC

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	 	
              

            
	 	Name: 	 
	 	
            	
              

            
	 	Title:	
            
	 	
            	
              

            

    

    
      	 	 	 
	 	
              J.
                ARON & COMPANY,

              as
                Secured Party

            
	 
 	 
 	 
 
	
            	By:      
              	
            
	 	 	
              

            
	 	Name: 	 
	 	 	
              

            
	 	Title: 	 
	 	
              
                
    

            

    

    
      	 	 	 
	 	
              AMEGY
                BANK NATIONAL ASSOCIATION

              
                as
                  Financial Institution

              

            
	 
 	 
 	 
 
	
            	By:     
               	
            
	 	
              

              Name:
                W. Bryan Chapman

              
                Title:
                  Senior Vice President, Energy
                  Lending

              

            

    

    

    
      Signature
        page to Default Deposit Account Control Agreement

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    EXHIBIT
      A

     

    TO
      DEFAULT DEPOSIT ACCOUNT CONTROL AGREEMENT

     

    [Letterhead
      of the Secured Party]

     

    [Date]

     

    [Name
      and
      Address of the Financial Institution]

     

    Attention:

     

    
      	 	
              Re:

            	
              Termination
                of Default Deposit Account Control
                Agreement

            

    

     

    You
      are
      hereby notified that the Default Deposit Account Control Agreement dated as
      of
      May 11, 2007 among Tekoil and Gas Gulf Coast, LLC, you and the undersigned
      (a
      copy of which is attached) is terminated and you have no further obligations
      to
      the undersigned pursuant to such Agreement. Notwithstanding any previous
      instructions to you, you are hereby instructed to accept all future directions
      with respect to account number(s) __________________from Tekoil and Gas Gulf
      Coast, LLC. This notice terminates any obligations you may have to the
      undersigned with respect to such account, however nothing contained in this
      notice shall alter any obligations which you may otherwise owe to Tekoil and
      Gas
      Gulf Coast, LLC pursuant to any other agreement.

     

    You
      are
      instructed to deliver a copy of this notice by facsimile transmission to Tekoil
      and Gas Gulf Coast, LLC.

     

    
      	 	 	 
	 	
              Very
                truly yours,

               

              
                J.
                  ARON & COMPANY,

                as
                  Secured Party

              

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	 	
              

            
	 	
              Name: 
                

            	 
	 	 	
              

            
	 	
              Title:
                

            	 
	 	
              
                

              

            

    

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B-2

     

    TO
      PLEDGE AND SECURITY AGREEMENT

    

    BLOCKED
      DEPOSIT ACCOUNT CONTROL AGREEMENT

     

    This
      Blocked Deposit Account Control Agreement dated as of May 11, 2007 (this
“Agreement”)
      among
TEKOIL
      AND GAS GULF COAST, LLC,
      a
      Delaware limited liability company (the “Debtor”),
      J.
      ARON & COMPANY,
      as
      administrative agent for the beneficiaries (the “Secured
      Party”)
      and
AMEGY
      BANK NATIONAL ASSOCIATION,
      a
      national banking association, in its capacity as a “bank” as defined in Section
      9-102 of the UCC (in such capacity, the “Financial
      Institution”).
      Capitalized terms used but not defined herein shall have the meaning assigned
      thereto in the Pledge and Security Agreement, dated as of May 11, 2007, among
      the Debtor, the other Grantors party thereto, and the Secured Party (as amended,
      restated, supplemented or otherwise modified from time to time, the
“Security
      Agreement”).
      Capitalized terms used but not otherwise defined herein or in the Security
      Agreement shall have the meaning assigned thereto in the Credit and Guaranty
      Agreement, dated as of May 11, 2007, among the Debtor, Tekoil & Gas
      Corporation, other guarantors party thereto, various lenders, and the Secured
      Party, as administrative agent for the various lenders. All references herein
      to
      the “UCC” shall mean the Uniform Commercial Code as in effect in the State of
      New York.

     

    Section
      1. Establishment
      of Deposit Account.
      The
      Financial Institution hereby confirms and agrees that:

     

(a) The
  Financial Institution has established account number XXXXXXX
  in the name “Tekoil
  and Gas Gulf Coast - Blocked Receivable Account”
  (such account and any successor account, the “Deposit
  Account”)
  and the Financial Institution shall not change the name or account number of
  the Deposit Account without the prior written consent of the Secured Party;
  and

     

    (b) The
      Deposit Account is a “deposit account” within the meaning of Section
      9-102(a)(29) of the UCC.

    

    Section
      2. Control
      of the Deposit Account.

     

    (a) The
      Deposit Account shall be under the control of the Secured Party. The Secured
      Party shall at all times have "control" (as defined in Section 9-104 of the
      Uniform Commercial Code as adopted in the state of New York) of the Deposit
      Account. The Financial Institution shall comply with instructions originated
      by
      the Secured Party directing disposition of funds in the Depository Account
      without further consent by the Debtor.

     

    (b) The
      Secured Party shall have exclusive dominion and control over the Deposit
      Account. Neither the Debtor nor any person acting through or on behalf of the
      Debtor shall have any right of access to or withdrawal from the Deposit Account,
      and the Financial Institution shall not comply with any instructions originated
      by the Debtor or any such person directing disposition of funds in the Deposit
      Account.

     

    (c) On
      each
      Business Day the Financial Institution will initiate a federal funds wire
      transfer of all collected funds (subject to the Financial Institution's funds
      availability policy) in the Deposit Account to the following account of the
      Secured Party (or such other account as may be designed in writing by the
      Secured Party) (the "Secured
      Party's Account"):

     

    Account
      Number: ______________________________________

     

    Account
      Name: ________________________________________

     

    Receiving
      Financial Institution Name:  _______________________

     

    Receiving
      Financial Institution ABA Number: _________________

     

    Attention:
      ____________________________________________

     

    Reference:
      ___________________________________________

     

    
      Blocked
        Deposit Account Control Agreement

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d) The
      Financial Institution has established a unique U.S. Postal Service address,
      P.O.
      Box ____________, Houston, Texas 77210-_________ (the "Lockbox").
      The
      Debtor will cause its account debtors to remit payment of the Debtor's accounts
      receivable to the Lockbox. The Financial Institution shall have exclusive and
      unrestricted access to, and use of, the Lockbox for purposes of handling such
      remittances. The Financial Institution will collect, open and process for
      deposit into the Deposit Account all mail received in the Lockbox in accordance
      with the procedures set forth on Exhibit
      A
      attached
      hereto.

     

    Section
      3. Subordination
      of Lien; Waiver of Set-Off.
      In the
      event that the Financial Institution has or subsequently obtains by agreement,
      by operation of law or otherwise a security interest in the Deposit Account
      or
      any funds credited thereto, the Financial Institution hereby agrees that such
      security interest shall be subordinate to the security interest of the Secured
      Party. Money and other items credited to the Deposit Account will not be subject
      to deduction, set-off, banker’s lien, or any other right in favor of any person
      other than the Secured Party (except that the Financial Institution may set
      off
      (i) all amounts due to the Financial Institution in respect of customary fees
      and expenses for the routine maintenance and operation of the Deposit Account
      and (ii) the face amount of any checks which have been credited to such Deposit
      Account but are subsequently returned unpaid because of uncollected or
      insufficient funds).

     

    Section
      4. Choice
      of Law.
      This
      Agreement and the Deposit Account shall each be governed by the laws of the
      State of New York. Regardless of any provision in any other agreement, for
      purposes of the UCC, New York shall be deemed to be the Financial Institution’s
      jurisdiction (within the meaning of Section 9-304 of the UCC) and the Deposit
      Account shall be governed by the laws of the State of New York.

     

    Section
      5. Conflict
      with Other Agreements.
      

     

    (a) In
      the
      event of any conflict between this Agreement (or any portion thereof) and any
      other agreement now existing or hereafter entered into, the terms of this
      Agreement shall prevail;

    

    (b) No
      amendment or modification of this Agreement or waiver of any right hereunder
      shall be binding on any party hereto unless it is in writing and is signed
      by
      all of the parties hereto; and

    

    (c) The
      Financial Institution hereby confirms and agrees that: 

     

    (i) There
      are
      no other agreements entered into between the Financial Institution and the
      Debtor with respect to the Deposit Account; and

    
       

      
        Blocked
          Deposit Account Control Agreement

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    (ii) It
      has
      not entered into, and until the termination of this Agreement, will not enter
      into, any agreement with any other person relating the Deposit Account and/or
      any funds credited thereto pursuant to which it has agreed to comply with
      instructions originated by such persons as contemplated by Section 9-104 of
      the
      UCC.

     

    Section
      6. Adverse
      Claims.
      The
      Financial Institution does not know of any liens, claims or encumbrances
      relating to the Deposit Account. If any person asserts any lien, encumbrance
      or
      adverse claim (including any writ, garnishment, judgment, warrant of attachment,
      execution or similar process) against the Deposit Account, the Financial
      Institution will promptly notify the Secured Party and the Debtor thereof.
      

     

    Section
      7. Maintenance
      of Deposit Account.
      In
      addition to, and not in lieu of, the obligation of the Financial Institution
      to
      honor instructions as set forth in Section 2 hereof, the Financial Institution
      agrees to maintain the Deposit Account as follows:

     

    (a) Statements
      and Confirmations.
      Upon
      receipt of a written request by Secured Party, the Financial Institution will
      promptly send copies of all statements, confirmations and other correspondence
      concerning the Deposit Account simultaneously to each of the Debtor and the
      Secured Party at the address for each set forth in Section 11 of this Agreement;
      and

    

    (b) Tax
      Reporting.
      All
      interest, if any, relating to the Deposit Account, shall be reported to the
      Internal Revenue Service and all state and local taxing authorities under the
      name and taxpayer identification number of the Debtor.

    

    Section
      8. Representations,
      Warranties and Covenants of the Financial Institution.
      The
      Financial Institution hereby makes the following representations, warranties
      and
      covenants:

     

    (a) The
      Deposit Account has been established as set forth in Section 1 and such Deposit
      Account will be maintained in the manner set forth herein until termination
      of
      this Agreement; and 

    

    (b) This
      Agreement is the valid and legally binding obligation of the Financial
      Institution.

    

    Section
      9. Indemnification
      of Financial Institution.
      The
      Debtor and the Secured Party hereby agree that (a) the Financial Institution
      is
      released from any and all liabilities to the Debtor and the Secured Party
      arising from the terms of this Agreement and the compliance of the Financial
      Institution with the terms hereof, except to the extent that such liabilities
      arise from the Financial Institution’s negligence and (b) the Debtor, its
      successors and assigns shall at all times indemnify and save harmless the
      Financial Institution from and against any and all claims, actions and suits
      of
      others arising out of the terms of this Agreement or the compliance of the
      Financial Institution with the terms hereof, except to the extent that such
      arises from the Financial Institution’s negligence, and from and against any and
      all liabilities, losses, damages, costs, charges, counsel fees and other
      expenses of every nature and character arising by reason of the same, until
      the
      termination of this Agreement.

    
       

      
        Blocked
          Deposit Account Control Agreement

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    Section
      10. Successors;
      Assignment.
      The
      terms of this Agreement shall be binding upon, and shall inure to the benefit
      of, the parties hereto and their respective corporate successors or heirs and
      personal representatives who obtain such rights solely by operation of law.
      The
      Secured Party may assign its rights hereunder only with the express written
      consent of the Financial Institution and by sending written notice of such
      assignment to the Debtor.

     

    Section
      11. Notices.
      Any
      notice, request or other communication required or permitted to be given under
      this Agreement shall be in writing and deemed to have been properly given when
      delivered in person, or when sent by telecopy or other electronic means and
      electronic confirmation of error free receipt is received or two (2) days after
      being sent by certified or registered United States mail, return receipt
      requested, postage prepaid, addressed to the party at the address set forth
      below.

    

      
        	 	
                Debtor:

              	 	
                Tekoil
                  and Gas Gulf Coast, LLC

              
	 	 	 	
                25045
                  I-45 North, Suite 525

              
	 	 	 	
                The
                  Woodlands, Texas 77380

              
	 	 	 	
                Attention:
                  Mark Western

              
	 	 	 	
                Telecopier:
                  281-364-8007

              
	 	 	 	 
	 	
                Secured
                  Party:

              	 	
                J.
                  Aron & Company

              
	 	 	 	
                85
                  Broad Street

              
	 	 	 	
                New
                  York, New York 10004

              
	 	 	 	
                Attention:
                  Steve Bunkin

              
	 	 	 	
                Telecopier:
                  212-428-3675

              
	 	 	 	 
	 	
                with
                  a copy to:

              	 	
                Goldman
                  Sachs E&P Capital

              
	 	 	 	
                1000
                  Louisiana, Suite 550

              
	 	 	 	
                Houston,
                  Texas 77002

              
	 	 	 	
                Attention:
                  John K. Howie

              
	 	 	 	
                Telecopier:
                  713-658-2603

              
	 	 	 	 
	 	
                Financial
                  Institution:

              	 	
                Amegy
                  Bank National Association

              
	 	 	 	
                Five
                  Post Oak Park

              
	 	 	 	
                4400
                  Post Oak Parkway

              
	 	 	 	
                Houston,
                  TX 77027

              
	 	 	 	
                Attention:
                  W. Bryan Chapman

              
	 	 	 	
                Telecopier:
                  (713) 561-0345

              

      

    

    

    Any
      party
      may change its address for notices in the manner set forth above.

     

    Section
      12. Termination.
      The
      obligations of the Financial Institution to the Secured Party pursuant to this
      Agreement shall continue in effect until the security interest of the Secured
      Party in the Deposit Account has been terminated pursuant to the terms of the
      Security Agreement and the Secured Party has notified the Financial Institution
      of such termination in writing. The Secured Party agrees to provide Notice
      of
      Termination in substantially the form of Exhibit
      B
      hereto
      to the Financial Institution upon the request of the Debtor on or after the
      termination of the Secured Party’s security interest in the Deposit Account
      pursuant to the terms of the Security Agreement. The termination of this
      Agreement shall not terminate the Deposit Account or alter the obligations
      of
      the Financial Institution to the Debtor pursuant to any other agreement with
      respect to the Deposit Account.

    
      
         

        
          Blocked
            Deposit Account Control Agreement

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

      

    

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

     

    [Remainder
      of page intentionally left blank.]

    
      
         

        
          Blocked
            Deposit Account Control Agreement

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

           

        

      

    

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

     

    
      	 	 	 
	 	
              TEKOIL
                AND GAS GULF COAST, LLC

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	 	
              

            
	 	Name: 	
            
	 	 	
              

            
	 	Title: 	
            
	 	
              
                
 

            

    

    
      	 	 	 
	 	
              J.
                ARON & COMPANY,

              as
                Secured Party

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	 	
              

            
	 	Name: 	
            
	 	 	
              

            
	 	
              Title:
                

            	
            
	 	 	
              

            

      	 	 	 
	 	
              AMEGY
                BANK NATIONAL ASSOCIATION

              as
                Financial Institution

            
	 
 	 
 	 
 
	
            	By:     
              	
            
	 	
              

              Name:
                W. Bryan Chapman

              Title:
                Senior Vice President, Energy
                Lending

            

    
       

      Signature
        page to Blocked Deposit Account Control Agreement

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

    

    EXHIBIT
      A

     

    TO
      BLOCKED DEPOSIT ACCOUNT CONTROL AGREEMENT

    

    EXHIBIT
      A

    

    Financial
      Institution Procedures for Lockbox Management:

    

    (Capitalized
      terms used in this Exhibit
      A
      have the
      same meaning stated in the Agreement to which this Exhibit
      A
      is
      attached.)

    

    1) Mail
      from Lockbox.
      The
      Financial Institution will retrieve mail from the Lockbox from time to time
      in
      accordance with the Financial Institution's regular lockbox collection
      schedules.

    

    2) Inspections
      of Items.
      Items
      contained in the envelopes recovered from the Lockbox will be inspected and
      handled as follows:

    

    
      	
              (a)

            	
              Payees.
                An item not bearing an acceptable payee designation, as set forth
                in the
                specifications, or a reasonable variation thereof, will not be deposited
                in the Deposit Account. If a necessary endorsement of a payee other
                than
                the Debtor is missing, the item will not be deposited into the Deposit
                Account.

            

    

    

    
      	
              (b)

            	
              Dates.
                An item will be deposited into the Deposit Account whether it is
                stale-dated, post dated or does not bear a
                date.

            

    

    

    
      	
              (c)

            	
              Amounts.
                If the written and numeric amounts of an item differ, the written
                amount
                shall control over the numeric amount unless the written amount is
                ambiguous. If the amount of an item cannot be determined from application
                of the preceding sentence, or if the amount is missing altogether,
                the
                item will not be deposited into the Deposit
                Account.

            

    

    

    
      	
              (d)

            	
              Drawer's
                Signatures.
                For an item in which the drawer's signature is missing, the Financial
                Institution will deposit it into the Deposit Account and affix a
                stamp
                requesting the drawee bank or other payor to contact the drawer for
                authority to pay the item.

            

    

    

    
      	
              (e)

            	
              Alterations.
                An item which appears to the Financial Institution to have been materially
                altered will not be deposited into the Deposit
                Account.

            

    

    

    
      	
              (f)

            	
              Other
                Language.
                The Financial Institution will not examine the front and back sides
                of
                items to detect handwritten or typed "paid in full" or similar language.
                Such items will be deposited into the Deposit Account and the Financial
                Institution shall have no liability to the Debtor or the Secured
                Party for
                depositing such items.

            

    

    

    
      	
              (g)

            	
              International
                Payments.
                An item denominated in foreign currency and drawn on a foreign bank
                will
                not be deposited into the Deposit Account but will be submitted for
                collection only. An appropriate advice will be forwarded to the Debtor.
                The Financial Institution shall not be responsible for fluctuation
                in
                exchange rates.

            

    

    
       

      Exhibit
        A
        to Blocked Deposit Account Control Agreement

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

    

    3) Processing
      Procedures.
      Items
      found acceptable for deposit under Section 2 of this Exhibit
      A
      will be
      encoded, photocopied, endorsed and deposited into the Deposit Account. The
      endorsement will be the standard endorsement for lockbox items as used by the
      Financial Institution from time to time, and this endorsement will function
      as
      the endorsement of the payee of the item. In order to maximize daily receipts
      and funds availability, the Financial Institution will make deposits throughout
      the day in anticipation of major check clearing deadlines. The Financial
      Institution will send the following to the Debtor in accordance with the
      Financial Institution's customary and standard practices for maintenance of
      a
      Deposit Account:

    

    
      	(a)	
              photocopies
                of deposited items and the original accompanying
                papers.

            

    

    

    
      	(b)	
              one
                deposit ticket copy for each
                deposit.

            

    

    

    
      	
              (c)

            	
              except
                as set forth in Section 2(g) of this Exhibit
                A,
                original items unacceptable for deposit under Section 2 of this
                Exhibit
                A,
                accompanying papers and other miscellaneous written communications
                received through the lockbox.

            

    

    

    4) Microfilm.
      All
      deposited items will be microfilmed in processing sequence for reference
      purposes. The Financial Institution will retain such microfilm for at least
      two
      years and will provide photocopies of deposited items to the Debtor within
      said
      time upon request and payment of the Financial Institution's retrieval and
      photocopying charges.

    
      
         

        Exhibit
          A
          to Blocked Deposit Account Control Agreement

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

           

        

      

    

    EXHIBIT
      B

     

    TO
      BLOCKED DEPOSIT ACCOUNT CONTROL AGREEMENT

     

    [Letterhead
      of the Secured Party]

     

    [Date]

     

    [Name
      and
      Address of the Financial Institution]

     

    Attention:

     

    
      	 	
              Re:

            	
              Termination
                of Blocked Deposit Account Control
                Agreement

            

    

     

    You
      are
      hereby notified that the Blocked Deposit Account Control Agreement dated as
      of
      May 11, 2007 among Tekoil and Gas Gulf Coast, LLC, you and the undersigned
      (a
      copy of which is attached) is terminated and you have no further obligations
      to
      the undersigned pursuant to such Agreement. Notwithstanding any previous
      instructions to you, you are hereby instructed to accept all future directions
      with respect to account number(s) __________________from Tekoil and Gas Gulf
      Coast, LLC. This notice terminates any obligations you may have to the
      undersigned with respect to such account, however nothing contained in this
      notice shall alter any obligations which you may otherwise owe to Tekoil and
      Gas
      Gulf Coast, LLC pursuant to any other agreement.

     

    You
      are
      instructed to deliver a copy of this notice by facsimile transmission to Tekoil
      and Gas Gulf Coast, LLC.

     

    
      	 	 	 
	 	
              Very
                truly yours,

              

              J.
                ARON & COMPANY,

              as
                Secured Party

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	 	
              

            
	 	
              Name: 

            	
            
	 	 	
              

            
	 	
              Title:
                

            	
            
	 	
              

            

    

    
       

      Exhibit
        A
        to Blocked Deposit Account Control AgreementUnassociated Document

    Exhibit
      10.32

    
 

    PLEDGE
      AGREEMENT

     

    dated
      as of May 11, 2007

     

    between

     

    TEKOIL
      & GAS CORPORATION

     

    and

     

    J.
      ARON & COMPANY, as Agent,

     

    as
      the Secured Party

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

     

    
      	 	 	
              Page

            
	
              SECTION
                1

            	
              DEFINITIONS

            	
              1

            
	 	 	 
	
              1.1

            	
              General
                Definitions

            	
              1

            
	 	 	 
	
              1.2

            	
              Definitions;
                Interpretation

            	
              2

            
	 	 	 
	
              SECTION
                2

            	
              GRANT
                OF SECURITY

            	
              3

            
	 	 	 
	
              SECTION
                3

            	
              SECURITY
                FOR OBLIGATIONS; GRANTOR REMAINS LIABLE

            	
              3

            
	 	 	 
	
              3.1

            	
              Security
                for Obligations

            	
              3

            
	 	 	 
	
              3.2

            	
              Continuing
                Liability Under Collateral

            	
              3

            
	 	 	 
	
              3.3

            	
              Limitation
                on Liability

            	
              3

            
	 	 	 
	
              SECTION
                4

            	
              REPRESENTATIONS
                AND WARRANTIES AND COVENANTS

            	
              4

            
	 	 	 
	
              4.1

            	
              Representations
                and Warranties

            	
              4

            
	 	 	 
	
              4.2

            	
              Covenants

            	
              6

            
	 	 	 
	
              4.3

            	
              Additional
                Covenants

            	
              7

            
	 	 	 
	
              4.4

            	
              Grantor's
                Consent

            	
              9

            
	 	 	 
	
              SECTION
                5

            	
              ACCESS;
                RIGHT OF INSPECTION AND FURTHER ASSURANCES

            	
              9

            
	 	 	 
	
              5.1

            	
              Access;
                Right of Inspection

            	
              9

            
	 	 	 
	
              5.2

            	
              Further
                Assurances

            	
              9

            
	 	 	 
	
              SECTION
                6

            	
              SECURED
                PARTY APPOINTED ATTORNEY-IN-FACT

            	
              10

            
	 	 	 
	
              6.1

            	
              Power
                of Attorney

            	
              10

            
	 	 	 
	
              6.2

            	
              No
                Duty on the Part of Secured Party or Beneficiaries

            	
              10

            
	 	 	 
	
              SECTION
                7

            	
              REMEDIES

            	
              11

            
	 	 	 
	
              7.1

            	
              Generally

            	
              11

            
	 	 	 
	
              7.2

            	
              Application
                of Proceeds

            	
              12

            
	 	 	 
	
              7.3

            	
              Sales
                on Credit

            	
              13

            
	 	 	 
	
              7.4

            	
              Pledged
                Membership Interests

            	
              13

            
	 	 	 
	
              7.5

            	
              Cash
                Proceeds

            	
              13

            
	 	 	 
	
              SECTION
                8

            	
              AGENT

            	
              14

            
	 	 	 
	
              SECTION
                9

            	
              CONTINUING
                SECURITY INTEREST; TRANSFER OF LOANS

            	
              14

            
	 	 	 
	
              SECTION
                10

            	
              STANDARD
                OF CARE; SECURED PARTY MAY PERFORM

            	
              15

            
	 	 	 
	
              SECTION
                11

            	
              MISCELLANEOUS

            	
              15

            

    

     

    
      
        
        

      

      
        -i-

        
          

        

      

       

    

    TABLE
      OF CONTENTS

     

    
      	SCHEDULES:	
              4.1
                — General Information

              
                4.3
                  — Pledged Membership Interests

              

            

    

     

    
      	EXHIBITS:	
              A
—
                Pledge Supplement

            

    

     

    
      
        
        

      

      
        -ii-

        
          

        

      

       

    

    PLEDGE
      AGREEMENT

     

    This
      PLEDGE
      AGREEMENT,
      dated
      May 11, 2007 (this "Agreement"),
      is
      entered into by and between TEKOIL
      & GAS CORPORATION, a
      Delaware corporation (the "Grantor"),
      and
J.
      ARON & COMPANY, as
      administrative agent for the Beneficiaries (as herein defined) (in such
      capacity, the "Secured
      Party").

     

    RECITALS:

     

    WHEREAS,
      reference is made to that certain Credit and Guaranty Agreement, dated May
      11,
      2007 (as it may be amended, restated, supplemented or otherwise modified, the
      "Credit
      Agreement"),
      by
      and among
      Tekoil and Gas Gulf Coast, LLC, a
      Delaware limited liability company ("Company"),
      Tekoil
      & Gas Corporation,
      a
      Delaware corporation, and
      the
      other guarantors party thereto, J.
      Aron & Company,
      individually and in its capacity as Administrative Agent (the "Agent")
      for
      the benefit the lenders from time to time parties thereto (the "Lenders"),
      and
      such Lenders;

     

    WHEREAS,
      in
      consideration of the extensions of credit and other accommodations of Lenders
      and Lender Counterparties as set forth in the Credit Agreement and the Hedging
      Contracts, respectively, the Grantor has agreed to secure Company's obligations
      under the Transaction Documents and the Hedging Contracts as set forth
      herein;

     

    WHEREAS,
      the
      Lenders have required the execution of this Agreement as a condition to entering
      into the Credit Agreement; and

     

    WHEREAS,
      the
      Grantor will receive benefit from Company entering into the Credit
      Agreement.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the agreements, provisions and covenants
      herein contained, the Grantor and the Secured Party agree as
      follows:

     

    SECTION
      1

    DEFINITIONS

     

    1.1 General
      Definitions.
      In this
      Agreement, the following terms shall have the following meanings:

     

    "Agreement"
      shall
      have the meaning set forth in the preamble.

     

    "Beneficiaries"
      shall
      mean the Agent, the Lenders and the Lender Counterparties and shall include,
      without limitation, all former Lenders and Lender Counterparties to the extent
      that any Obligations owing to such Persons were incurred while such Persons
      were
      Lenders or Lender Counterparties and such Obligations have not been paid or
      satisfied in full

     

    "Cash
      Proceeds"
      shall
      have the meaning assigned in Section 7.5.

     

    "Collateral"
      shall
      have the meaning assigned in Section 2.

    
      
        
        

      

      
        
        

        
          

        

      

       

    

     

    "Credit
      Agreement"
      shall
      have the meaning set forth in the recitals.

     

    "Grantor"
      shall
      have the meaning set forth in the preamble.

     

    "Lender"
      shall
      have the meaning set forth in the recitals.

     

    "Pledge
      Supplement"
      shall
      mean any supplement to this agreement in substantially the form of Exhibit
      A.

     

    "Pledged
      Membership Interests"
      shall
      mean all membership interest in Company, whether now outstanding or issued
      hereafter including as listed on Schedule 4.3 (as such schedule may be amended
      or supplemented from time to time) and the certificates, if any, representing
      such membership interests and any interest of the Grantor on the books and
      records of such limited liability company or on the books and records of any
      securities intermediary pertaining to such interest and all dividends,
      distributions, cash, warrants, rights, options, instruments, securities and
      other property or proceeds from time to time received, receivable or otherwise
      distributed in respect of or in exchange for any or all of such membership
      interests.

     

    "Proceeds"
      shall
      mean: (i) all "proceeds" as defined in Article 9 of the UCC, (ii) payments
      or
      distributions made with respect to any Pledged Membership Interest and (iii)
      whatever is receivable or received when Collateral or proceeds are sold,
      exchanged, collected or otherwise disposed of, whether such disposition is
      voluntary or involuntary.

     

    "Record"
      shall
      have the meaning specified in Article 9 of the UCC.

     

    "Secured
      Obligations"
      shall
      have the meaning assigned in Section 3.1.

     

    "Secured
      Party"
      shall
      have the meaning set forth in the preamble.

     

    "UCC"
      shall
      mean the Uniform Commercial Code as in effect from time to time in the State
      of
      New York or, when the context implies, the Uniform Commercial Code as in effect
      from time to time in any other applicable jurisdiction.

     

    "United
      States"
      shall
      mean the United States of America.

     

    1.2 Definitions;
      Interpretation.
      All
      capitalized terms used herein (including the preamble and recitals hereto)
      and
      not otherwise defined herein shall have the meanings ascribed thereto in the
      Credit Agreement or, if not defined therein, in the UCC. References to
      "Sections," "Exhibits" and "Schedules" shall be to Sections, Exhibits and
      Schedules, as the case may be, of this Agreement unless otherwise specifically
      provided. Section headings in this Agreement are included herein for convenience
      of reference only and shall not constitute a part of this Agreement for any
      other purpose or be given any substantive effect. Any of the terms defined
      herein may, unless the context otherwise requires, be used in the singular
      or
      the plural, depending on the reference. The use herein of the word "include"
      or
      "including", when following any general statement, term or matter, shall not
      be
      construed to limit such statement, term or matter to the specific items or
      matters set forth immediately following such word or to similar items or
      matters, whether or not nonlimiting language (such as "without limitation"
      or
      "but not limited to" or words of similar import) is used with reference thereto,
      but rather shall be deemed to refer to all other items or matters that fall
      within the broadest possible scope of such general statement, term or matter.
      If
      any conflict or inconsistency exists between this Agreement and the Credit
      Agreement, the Credit Agreement shall govern. All references herein to
      provisions of the UCC shall include all successor provisions under any
      subsequent version or amendment to any Article of the UCC.

     

    
      
        
        

      

      
        -2-

        
          

        

      

       

    

     

    SECTION
      2

    GRANT
      OF SECURITY

     

    The
      Grantor hereby grants to the Secured Party a security interest and continuing
      lien on all of the Grantor's right, title and interest in, to and under the
      following, in each case whether now owned or existing or hereafter acquired
      or
      arising and wherever located (all of which being hereinafter collectively
      referred to as the "Collateral"):

     

    (a) Pledged
      Membership Interests; and

     

    (b) all
      Proceeds, products, accessions, and profits of or in respect of any of the
      foregoing.

     

    SECTION
      3

    SECURITY
      FOR OBLIGATIONS; GRANTOR REMAINS LIABLE

     

    3.1 Security
      for Obligations.
      This
      Agreement secures, and the Collateral is collateral security for, the prompt
      and
      complete payment or performance in full when due, whether at stated maturity,
      by
      required prepayment, declaration, acceleration, demand or otherwise (including
      the payment of amounts that would become due but for the operation of the
      automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
§362(a) (and any successor provision thereof)), of all Obligations (the
      "Secured
      Obligations").

     

    3.2 Continuing
      Liability Under Collateral.
      Notwithstanding anything herein to the contrary, (i) the Grantor shall remain
      liable for all obligations under this Agreement with respect to the Collateral
      owned by the Grantor and nothing contained herein is intended or shall be a
      delegation of duties to the Secured Party or any Beneficiary, (ii) the Grantor
      shall remain liable under each of the agreements included in the Collateral,
      including any agreements relating to the Pledged Membership Interests, to
      perform all of the obligations undertaken by him thereunder all in accordance
      with and pursuant to the terms and provisions thereof and neither the Secured
      Party nor any Beneficiary shall have any obligation or liability under any
      of
      such agreements by reason of or arising out of this Agreement or any other
      document related thereto nor shall the Secured Party or any Beneficiary have
      any
      obligation to make any inquiry as to the nature or sufficiency of any payment
      received by it or have any obligation to take any action to collect or enforce
      any rights under any agreement included in the Collateral, including any
      agreements relating to the Pledged Membership Interests, and (iii) the exercise
      by the Secured Party of any of its rights hereunder shall not release the
      Grantor from any of his duties or obligations under the contracts and agreements
      included in the Collateral.

     

    3.3 Limitation
      on Liability.
      Notwithstanding anything in this Agreement to the contrary, the liability of
      the
      Grantor for the Secured Obligations is limited to the interests of the Grantor
      in the Collateral and, upon the occurrence of an Event of Default, any
      obligations of the Grantor under this Agreement shall be satisfied by recourse
      only to the Collateral and not by recourse directly to the Grantor or any of
      its
      other assets or property. The Administrative Agent may join the Grantor as
      a
      defendant in any legal action it undertakes to enforce its rights and remedies
      under this Agreement, provided that, except as provided in the immediately
      succeeding sentence, any judgment against the Grantor in such action may be
      satisfied by recourse only to the Collateral and not by recourse directly to
      the
      Grantor or any of its other assets or property. The foregoing notwithstanding,
      the Administrative Agent shall have full recourse against the Grantor for the
      full payment of the amount of any loss suffered by the Administrative Agent
      or
      any other Beneficiary as a result of any gross negligence, willful misconduct
      or
      fraud by or on behalf of the Grantor. The provisions of this paragraph shall
      apply to this Agreement given by the Grantor only and shall not (a) apply to
      any
      Security Document given by any other Person, (b) be deemed to be a release
      or
      impairment of any part of the Obligations or of the liens and security interests
      created by the Security Documents, or (c) limit or otherwise prejudice in any
      way the rights of the Administrative Agent or any other Person to enforce any
      of
      its rights and remedies under any other Loan Documents.

     

    
      
        
        

      

      
        -3-

        
          

        

      

       

    

     

    SECTION
      4

    REPRESENTATIONS
      AND WARRANTIES AND COVENANTS

     

    4.1 Representations
      and Warranties.
      The
      Grantor hereby represents and warrants that:

     

    (a) the
      Grantor is the record and beneficial owner of the Pledged Membership Interests
      free of all Liens, rights or claims of other Persons and it owns all other
      Collateral purported to be owned by it or otherwise has the rights it purports
      to have in each item of Collateral and, as to all Collateral whether now
      existing or hereafter acquired, will continue to own or have such rights in
      each
      item of the Collateral, in each case free and clear of any and all Liens, rights
      or claims of all other Persons;

     

    (b) the
      Grantor has indicated on Schedule 4.1(A)(as such schedule may be amended or
      supplemented from time to time): (i) the type of organization of the Grantor,
      (ii) the jurisdiction of organization of the Grantor, (iii) its organizational
      identification number and (iv) the jurisdiction where its chief executive office
      or its sole place of business is, and for the one-year period preceding the
      date
      hereof has been, located;

     

    (c) the
      full
      legal name of the Grantor is as set forth on Schedule 4.1(A) and the Grantor
      has
      not done in the last five (5) years, and does not do, business under any other
      name (including any trade-name or fictitious business name) except for those
      names set forth on Schedule 4.1(B) (as such schedule may be amended or
      supplemented from time to time);

     

    (d) except
      as
      provided on Schedule 4.1(C), the Grantor has not changed its name, jurisdiction
      of organization, chief executive office or sole place of business or its
      corporate structure in any way (e.g., by merger, consolidation, change in
      corporate form or otherwise) within the past five (5) years;

     

    (e) upon
      the
      filing of all UCC financing statements naming the Grantor as "debtor" and
the
      Secured
      Party as "secured party" and describing the Collateral in the filing offices
      set
      forth opposite the Grantor's name on Schedule 4.1(D) hereof (as such schedule
      may be amended or supplemented from time to time) and other filings delivered
      by
      the Grantor, the security interests granted to the Secured Party hereunder
      constitute valid and perfected first priority Liens on all of the Collateral
      owned by the Grantor;

     

    
      
        
        

      

      
        -4-

        
          

        

      

       

    

     

    (f) all
      actions and consents relating to the Grantor, including all filings, notices,
      registrations and recordings necessary for the exercise by the Secured Party
      of
      the voting or other rights provided for in this Agreement
      or the
      exercise of remedies in respect of the Collateral owned by the Grantor have
      been
      made or obtained;

     

    (g) other
      than the financing statements filed in favor of the Secured Party, no effective
      UCC financing statement, fixture
      filing
      or other instrument similar in effect under any applicable law covering all
      or
      any part of the Collateral owned by the Grantor is on file in any filing or
      recording office except for financing statements for which proper termination
      statements have been delivered to the Secured Party for filing;

     

    (h) no
      authorization, approval or other action by, and no notice to or filing with,
      any
      Governmental Authority
      or
      regulatory body is required for either (i) the pledge or grant by the Grantor
      of
      the Liens purported to be created in favor of the Secured Party hereunder or
      (ii) the exercise by Secured Party of any rights or remedies in respect of
      any
      Collateral (whether specifically granted or created hereunder or created or
      provided for by applicable law), except (A) for the filings contemplated by
      Section 4.1(e) above and (B) as may be required, in connection with the
      disposition of any Pledged Membership Interests, by laws generally affecting
      the
      offering and sale of Securities; and

     

    (i) Schedule
      4.3 (as such schedule may be amended or supplemented from time to time) sets
      forth all of the Pledged Membership Interests owned by the Grantor and such
      Pledged Membership Interests constitute the percentage of issued and outstanding
      percentage of membership interests or percentage of beneficial interest of
      Company owned by the Grantor;

     

    (j) there
      are
      no outstanding warrants, options or other rights to purchase, or shareholder,
      voting trust or similar agreements outstanding with respect to, or property
      that
      is convertible into, or that requires the issuance or sale of, any Pledged
      Membership Interests;

     

    (k) without
      limiting any other provision hereof, no consent of any Person, including any
      other general or limited partner, any other member of a limited liability
      company, any other shareholder or any other trust beneficiary, is necessary
      or
      desirable in connection with the creation, perfection or first priority status
      of the security interest of the Secured Party in any Pledged Membership
      Interests owned by the Grantor or the exercise by the Secured Party of the
      voting or other rights provided for in this Agreement or the exercise of
      remedies in respect thereof; and

     

    (l) none
      of
      the Pledged Membership Interests owned by the Grantor are or represent interests
      in issuers that: (a) are registered as investment companies, (b) are dealt
      in or
      traded on securities exchanges or markets or (c) have opted to be treated as
      securities under the uniform commercial code of any jurisdiction

     

    
      
        
        

      

      
        -5-

        
          

        

      

       

    

     

    4.2 Covenants.
      The
      Grantor hereby covenants and agrees that:

     

    (a) except
      for the security interest created by this Agreement, the Grantor shall not
      create or suffer to exist any Lien upon or with respect to any of the Collateral
      owned by the Grantor and the Grantor shall defend the Collateral owned by the
      Grantor against all Persons at any time claiming any interest
      therein;

     

    (b) the
      Grantor shall not produce, use or permit any Collateral owned by the Grantor
      to
      be used unlawfully or in violation of any provision of this Agreement or any
      applicable statute, regulation or ordinance or any policy of insurance covering
      the Collateral owned by the Grantor;

     

    (c) the
      Grantor shall not take or permit any action which could reasonably be expected
      to impair the Secured Party's rights in the Collateral owned by the
      Grantor;

     

    (d) the
      Grantor shall keep and maintain at his own cost and expense satisfactory and
      complete records of the Collateral owned by the Grantor;

     

    (e) in
      the
      event the Grantor acquires rights in any Pledged Membership Interests after
      the
      date hereof, the Grantor shall deliver to the Secured Party a completed Pledge
      Supplement, substantially in the form of Exhibit A attached hereto, together
      with all Supplements to Schedules thereto, reflecting such new Pledged
      Membership Interests and all other Pledged Membership Interests. Notwithstanding
      the foregoing, it is understood and agreed that the security interest of the
      Secured Party shall attach to all Pledged Membership Interests immediately
      upon
      the Grantor's acquisition of rights therein and shall not be affected by the
      failure of the Grantor to deliver a supplement as required hereby;

     

    (f) except
      as
      provided in the next sentence, in the event the Grantor receives any dividends,
      interest or distributions on any Pledged Membership Interests, or any securities
      or other property upon the merger, consolidation, liquidation or dissolution
      of
      any issuer of any Pledged Membership Interests, then (i) such dividends,
      interest or distributions and securities or other property shall be included
      in
      the definition of Collateral without further action and (ii) the Grantor shall
      immediately take all steps, if any, necessary or advisable to ensure the
      validity, perfection, priority and, if applicable, control of the Secured Party
      over such Pledged Membership Interests (including delivery thereof to the
      Secured Party) and pending any such action the Grantor shall be deemed to hold
      such dividends, interest, distributions, securities or other property in trust
      for the benefit of the Secured Party and shall be segregated from all other
      property of the Grantor. Notwithstanding the foregoing, so long as no Event
      of
      Default shall have occurred and be continuing, the Secured Party authorizes
      the
      Grantor to retain all ordinary cash dividends and distributions permitted to
      be
      paid to the Grantor under the Credit Agreement (or the payment of which is
      not
      otherwise restricted by the Credit Agreement) and all scheduled payments of
      interest permitted to be paid to the Grantor under the Credit Agreement (or
      the
      payment of which is not otherwise restricted by the Credit
      Agreement);

     

    (g) without
      the prior written consent of the Secured Party, the Grantor shall not vote
      to
      enable or take any other action to: (i) amend or terminate any partnership
      agreement, limited liability company agreement, certificate of incorporation,
      by-laws or other organizational documents in any way that materially changes
      the
      rights of the Grantor with respect to any Pledged Membership Interests or
      adversely affects the validity, perfection or priority of the Secured Party's
      security interest, (ii) other than as allowed by the Credit Agreement, permit
      any issuer of any Pledged Membership Interests to issue any membership interests
      or other equity interests of any nature or to issue securities convertible
      into
      or granting the right of purchase or exchange for any membership interests
      or
      other equity interest of any nature of such issuer, (iii) other than as
      permitted under the Credit Agreement, permit any issuer of any Pledged
      Membership Interests to dispose of all or a material portion of their assets,
      (iv) waive any default under or breach of any terms of any organizational
      document relating to the issuer of any Pledged Membership Interests, or (v)
      cause any issuer of any Pledged Membership Interests that are not securities
      (for purposes of the UCC) on the date hereof to elect or otherwise take any
      action to cause such Pledged Membership Interests to be treated as securities
      for purposes of the UCC; provided, however, notwithstanding the foregoing,
      if
      any issuer of any Pledged Membership Interests takes any such action known
      to
      the Grantor in violation of the foregoing in this clause (v), the Grantor shall
      promptly notify the Secured Party in writing of any such election or action
      and,
      in such event, shall take all reasonable steps necessary or advisable within
      his
      power to establish the Secured Party's "control" thereof;

     

    
      
        
        

      

      
        -6-

        
          

        

      

       

    

     

    (h) the
      Grantor shall comply with all of his obligations under any limited liability
      company agreement relating to Pledged Membership Interests and shall enforce
      all
      of its rights with respect to any Pledged Membership Interests; and

     

    (i) the
      Grantor shall notify the Secured Party of any event, either in any case or
      in
      the aggregate, known to the Grantor that could reasonably be expected to cause
      a
      Material Adverse Effect.

     

    4.3 Additional
      Covenants.
      

     

    (a) Delivery
      and Control.
      The
      Grantor agrees that with respect to any Pledged Membership Interests in which
      the Grantor currently has rights, it shall comply with the provisions of this
      Section on or before the Closing Date and with respect to any Pledged Membership
      Interests hereafter acquired by the Grantor, it shall comply with the provisions
      of this Section immediately upon acquiring rights therein, in each case in
      form
      and substance satisfactory to the Secured Party. With respect to any Pledged
      Membership Interests that is represented by a certificate or that is an
      "instrument" (other than any Pledged Membership Interests credited to a
      Securities Account), the Grantor shall cause such certificate or instrument
      to
      be delivered to the Secured Party, indorsed in blank by an "effective
      indorsement" (as defined in Section 8-107 of the UCC), regardless of
      whether such certificate constitutes a "certificated security" for purposes
      of
      the UCC. With respect to any Pledged Membership Interests that is an
      "uncertificated security" for purposes of the UCC (other than any
      "uncertificated securities" credited to a Securities Account), the Grantor
      shall
      cause the issuer of such uncertificated security to either (i) register the
      Secured Party as the registered owner thereof on the books and records of the
      issuer or (ii) execute an agreement in form and substance satisfactory to the
      Secured Party, pursuant to which such issuer agrees to comply with the Secured
      Party's instructions with respect to such uncertificated security without
      further consent by the Grantor.

     

    
      
        
        

      

      
        -7-

        
          

        

      

       

    

     

    (b) Voting
      and Distributions.

     

    (i) So
      long
      as no Event of Default shall have occurred and be continuing:

     

    (A) except
      as
      otherwise provided under the covenants and agreements relating to Pledged
      Membership Interests in this Agreement or elsewhere herein or in the Credit
      Agreement, the Grantor shall be entitled to exercise or refrain from exercising
      any and all voting and other consensual rights pertaining to the Pledged
      Membership Interests or any part thereof for any purpose not inconsistent with
      the terms of this Agreement or the Credit Agreement; provided, the Grantor
      shall
      not exercise or refrain from exercising any such right if the Secured Party
      shall have notified the Grantor that, in the Secured Party's reasonable
      judgment, such action would have a Material Adverse Effect on the value of
      the
      Pledged Membership Interests or any part thereof; and provided further, the
      Grantor shall give the Secured Party at least five (5) Business Days prior
      written notice of the manner in which it intends to exercise, or the reasons
      for
      refraining from exercising, any such right; it being understood, however, that
      neither the voting by the Grantor of any Pledged Membership Interests for,
      or
      the Grantor's consent to, the election of managers (or similar governing body)
      at a regularly scheduled annual or other meeting of members or with respect
      to
      incidental matters at any such meeting, nor the Grantor's consent to or approval
      of any action otherwise permitted under this Agreement and the Credit Agreement,
      shall be deemed inconsistent with the terms of this Agreement or the Credit
      Agreement within the meaning of this Section, and no notice of any such voting
      or consent need be given to the Secured Party; and

     

    (B) the
      Secured Party shall promptly execute and deliver (or cause to be executed and
      delivered) to the Grantor all proxies, and other instruments as the Grantor
      may
      from time to time reasonably request for the purpose of enabling the Grantor
      to
      exercise the voting and other consensual rights when and to the extent which
      it
      is entitled to exercise pursuant to clause (1) above;

     

    (ii) Upon
      the
      occurrence and during the continuation of an Event of Default:

     

    (A) all
      rights of the Grantor to exercise or refrain from exercising the voting and
      other consensual rights that it would otherwise be entitled to exercise pursuant
      hereto shall cease and all such rights shall thereupon become vested in the
      Secured Party who shall thereupon have the sole right to exercise such voting
      and other consensual rights; and

     

    (B) in
      order
      to permit the Secured Party to exercise the voting and other consensual rights
      that it may be entitled to exercise pursuant hereto and to receive all dividends
      and other distributions that it may be entitled to receive hereunder: (1) the
      Grantor shall promptly execute and deliver (or cause to be executed and
      delivered) to the Secured Party all proxies, dividend payment orders and other
      instruments as the Secured Party may from time to time reasonably request and
      (2) the Grantor acknowledges that the Secured Party may utilize the power of
      attorney set forth in Section 6.

     

    
      
        
        

      

      
        -8-

        
          

        

      

       

    

     

    4.4 Grantor's
      Consent.
      The
      Grantor consents to the transfer of any Pledged Membership Interest to the
      Secured Party or its nominee following an Event of Default and to the
      substitution of the Secured Party or its nominee as a member in any limited
      liability company with all the rights and powers related thereto.

     

    SECTION
      5

    ACCESS;
      RIGHT OF INSPECTION AND FURTHER ASSURANCES

     

    5.1 Access;
      Right of Inspection.
      The
      Secured Party shall at all times have full and free access during normal
      business hours to all the books, correspondence and records of the Grantor,
      and
      the Secured Party and its representatives may examine the same, take extracts
      therefrom and make photocopies thereof,
      and
      the Grantor agrees to render to the Secured Party, at the Grantor's cost and
      expense, such clerical and other assistance as may be reasonably requested
      with
      regard thereto.

     

    5.2 Further
      Assurances.
      

     

    (a) The
      Grantor agrees that from time to time, at the expense of the Grantor, that
      it
      shall promptly execute and deliver all further instruments and documents, and
      take all further action that may be necessary or desirable, or that the Secured
      Party may reasonably request, in order to create and/or maintain the validity,
      perfection or priority of and protect any security interest granted or purported
      to be granted hereby or to enable the Secured Party to exercise and enforce
      its
      rights and remedies hereunder with respect to any Collateral owned by the
      Grantor. Without limiting the generality of the foregoing, the Grantor
      shall:

     

    (i) file
      such
      financing or continuation statements, or amendments thereto, and execute and
      deliver such other agreements, instruments, endorsements, powers of attorney
      or
      notices, as may be necessary or desirable, or as the Secured Party may
      reasonably request, in order to perfect and preserve the security interests
      granted or purported to be granted hereby; and

     

    (ii) at
      the
      Secured Party's request, appear in and defend any action or proceeding that
      may
      affect the Grantor's title to or the Secured Party's security interest in all
      or
      any part of the Collateral owned by the Grantor.

     

    (b) The
      Grantor hereby authorizes the Secured Party to file a Record or Records,
      including financing or continuation statements, and amendments thereto, in
      any
      jurisdictions and with any filing offices as the Secured Party may determine,
      in
      its sole discretion, are necessary or advisable to perfect the security interest
      granted to the Secured Party herein. Such financing statements may describe
      the
      Collateral in the same manner as described herein or may contain an indication
      or description of collateral that describes such property in any other manner
      as
      the Secured Party may determine is necessary, advisable or prudent to ensure
      the
      perfection of the security interest in the Collateral granted to the Secured
      Party herein.

     

    
      
        
        

      

      
        -9-

        
          

        

      

       

    

     

    SECTION
      6

    SECURED
      PARTY APPOINTED ATTORNEY-IN-FACT

     

    6.1 Power
      of Attorney.
      The
      Grantor hereby irrevocably appoints the Secured Party (such appointment being
      coupled with an interest) as the Grantor's attorney-in-fact, with full authority
      in the place and stead of the Grantor and in the name of the Grantor, the
      Secured Party or otherwise, from time to time in the Secured Party's discretion
      to take any action and to execute any instrument that the Secured Party may
      deem
      reasonably necessary or advisable to accomplish the purposes of this Agreement,
      including the following:

     

    (a) upon
      the
      occurrence and during the continuance of any Event of Default, to ask for,
      demand, collect, sue for, recover, compound, receive and give acquittance and
      receipts for moneys due and to become due under or in respect of any of the
      Collateral;

     

    (b) upon
      the
      occurrence and during the continuance of any Event of Default, to receive,
      endorse and collect any drafts or other instruments, documents and chattel
      paper
      in connection with clause (a) above;

     

    (c) upon
      the
      occurrence and during the continuance of any Event of Default, to file any
      claims or take any action or institute any proceedings that the Secured Party
      may deem necessary or desirable for the collection of any of the Collateral
      or
      otherwise to enforce the rights of the Secured Party with respect to any of
      the
      Collateral;

     

    (d) to
      prepare and file any UCC financing statements against the Grantor as debtor
      covering the Collateral;

     

    (e) to
      take
      or cause to be taken all actions necessary to perform or comply or cause
      performance or compliance with the terms of this Agreement, including access
      to
      pay or discharge taxes or Liens levied or placed upon or threatened against
      the
      Collateral, the legality or validity thereof and the amounts necessary to
      discharge the same to be determined by the Secured Party in its sole discretion,
      any such payments made by the Secured Party to become obligations of the Grantor
      to the Secured Party, due and payable immediately without demand;
      and

     

    (f) generally
      to sell, transfer, pledge, make any agreement with respect to or otherwise
      deal
      with any of the Collateral as fully and completely as though the Secured Party
      were the absolute owner thereof for all purposes, and to do, at the Secured
      Party's option and the Grantor's expense, at any time or from time to time,
      all
      acts and things that the Secured Party deems reasonably necessary to protect,
      preserve or realize upon the Collateral and the Secured Party's security
      interest therein in order to effect the intent of this Agreement, all as fully
      and effectively as the Grantor might do.

     

    6.2 No
      Duty on the Part of Secured Party or Beneficiaries.
      The
      powers conferred on the Secured Party hereunder are solely to protect the
      interests of the Beneficiaries in the Collateral and shall not impose any duty
      upon the Secured Party or any Beneficiary to exercise any such powers. The
      Secured Party and the Beneficiaries shall be accountable 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 Grantor for any act or failure to act hereunder, except
      for
      their own gross negligence or willful misconduct.

     

    
      
        
        

      

      
        -10-

        
          

        

      

       

    

     

    SECTION
      7

    REMEDIES

     

    7.1 Generally.
      

     

    (a) If
      any
      Event of Default shall have occurred and be continuing, the Secured Party may
      exercise in respect of the Collateral, in addition to all other rights and
      remedies provided for herein or otherwise available to it at law or in equity,
      all the rights and remedies of the Secured Party on default under the UCC
      (whether or not the UCC applies to the affected Collateral) to collect, enforce
      or satisfy any Secured Obligations then owing, whether by acceleration or
      otherwise, and also may pursue any of the following separately, successively
      or
      simultaneously:

     

    (i) require
      the Grantor to, and the Grantor hereby agrees that it shall at its expense
      and
      promptly upon request of the Secured Party forthwith, assemble all or part
      of
      the Collateral owned by the Grantor as directed by the Secured Party and make
      it
      available to the Secured Party at a place to be designated by the Secured Party
      that is reasonably convenient to both parties;

     

    (ii) enter
      onto the property where any Collateral is located and take possession thereof
      with or without judicial process;

     

    (iii) prior
      to
      the disposition of the Collateral, store, process, repair or recondition the
      Collateral or otherwise prepare the Collateral for disposition in any manner
      to
      the extent the Secured Party deems appropriate; and

     

    (iv) without
      notice except as specified below or under the UCC, sell, assign, lease, license
      (on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral
      or any part thereof in one or more parcels at public or private sale, at any
      of
      the Secured Party's offices or elsewhere, for cash, on credit or for future
      delivery, at such time or times and at such price or prices and upon such other
      terms as the Secured Party may deem commercially reasonable.

     

    (b) The
      Secured Party or any Beneficiary may be the purchaser of any or all of the
      Collateral at any public or private sale (to the extent to portion of the
      Collateral being privately sold is of a kind that is customarily sold on a
      recognized market or the subject of widely distributed standard price
      quotations) in accordance with the UCC and the Secured Party, as collateral
      agent for and representative of the Beneficiaries, shall be entitled, for the
      purpose of bidding and making settlement or payment of the purchase price for
      all or any portion of the Collateral sold at any such sale made in accordance
      with the UCC, to use and apply any of the Secured Obligations as a credit on
      account of the purchase price for any Collateral payable by the Secured Party
      at
      such sale. Each purchaser at any such sale shall hold the property sold
      absolutely free from any claim or right on the part of the Grantor, and the
      Grantor hereby waives (to the extent permitted by applicable 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.
      The Grantor agrees that, to the extent notice of sale shall be required by
      law,
      at least ten (10) days notice to the Grantor of the time and place of any public
      sale or the time after which any private sale is to be made shall constitute
      reasonable notification. The Secured Party shall not be obligated to make any
      sale of Collateral regardless of notice of sale having been given. The Secured
      Party 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. The Grantor agrees
      that it would not be commercially unreasonable for the Secured Party to dispose
      of the Collateral or any portion thereof by using Internet sites that provide
      for the auction of assets of the types included in the Collateral or that have
      the reasonable capability of doing so, or that match buyers and sellers of
      assets. The Grantor hereby waives any claims against the Secured Party arising
      by reason of the fact that the price at which any Collateral may have been
      sold
      at such a private sale was less than the price which might have been obtained
      at
      a public sale, even if the Secured Party accepts the first offer received and
      does not offer such Collateral to more than one offeree. The Grantor further
      agrees that a breach of any of the covenants contained in this Section will
      cause irreparable injury to the Secured Party, that the Secured Party has no
      adequate remedy at law in respect of such breach and, as a consequence, that
      each and every covenant contained in this Section shall be specifically
      enforceable against the Grantor, and the Grantor hereby waives and agrees not
      to
      assert any defenses against an action for specific performance of such covenants
      except for a defense that no default has occurred giving rise to the Secured
      Obligations becoming due and payable prior to their stated maturities or that
      Grantor is not liable because of the limitations on Grantor's liability as
      expressly provided in the Credit Agreement and this Agreement. Nothing in this
      Section shall in any way alter the rights of the Secured Party
      hereunder.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    (c) The
      Secured Party may sell the Collateral without giving any warranties as to the
      Collateral. The Secured Party may specifically disclaim or modify any warranties
      of title or the like. This procedure will not be considered to adversely affect
      the commercial reasonableness of any sale of the Collateral.

     

    (d) The
      Secured Party shall have no obligation to marshal any of the
      Collateral.

     

    7.2 Application
      of Proceeds.
      Except
      as expressly provided elsewhere in this Agreement, all proceeds received by
      the
      Secured Party in respect of any sale, any collection from, or other realization
      upon all or any part of the Collateral shall be applied in full or in part
      by
      the Secured Party against, the Secured Obligations in the following order of
      priority: first, to the payment of all costs and expenses of such sale,
      collection or other realization, including reasonable compensation to the
      Secured Party and its agents and counsel, and all other expenses, liabilities
      and advances made or incurred by the Secured Party in connection therewith,
      and
      all amounts for which the Secured Party is entitled to indemnification hereunder
      (in its capacity as the Secured Party and not as a Lender) and all advances
      made
      by the Secured Party hereunder for the account of the Grantor, and to the
      payment of all costs and expenses paid or incurred by the Secured Party in
      connection with the exercise of any right or remedy hereunder or under the
      Credit Agreement, all in accordance with the terms hereof or thereof; second,
      to
      the extent of any excess of such proceeds, to the payment of all other Secured
      Obligations for the ratable benefit of the Lenders and the Lender
      Counterparties; and third, to the extent of any excess of such proceeds, to
      the
      payment to or upon the order of the Grantor or to whosoever may be lawfully
      entitled to receive the same or as a court of competent jurisdiction may
      direct.

     

    
      
        
        

      

      
        -12-

        
          

        

      

       

    

     

    7.3 Sales
      on Credit.
      If the
      Secured Party sells any of the Collateral upon credit, the Grantor will be
      credited only with payments actually made by purchaser and received by the
      Secured Party and applied to indebtedness of the purchaser. In the event the
      purchaser fails to pay for the Collateral, the Secured Party may resell the
      Collateral and the Grantor shall be credited with proceeds of the
      sale.

     

    7.4 Pledged
      Membership Interests. The
      Grantor recognizes that, by reason of certain prohibitions contained in the
      Securities Act and applicable state securities laws, the Secured Party may
      be
      compelled, with respect to any sale of all or any part of the Pledged Membership
      Interests conducted without prior registration or qualification of such Pledged
      Membership Interests under the Securities Act and/or such state securities
      laws,
      to limit purchasers to those who will agree, among other things, to acquire
      the
      Pledged Membership Interests for their own account, for investment and not
      with
      a view to the distribution or resale thereof. The Grantor acknowledges that
      any
      such private sale may be at prices and on terms less favorable than those
      obtainable through a public sale without such restrictions (including a public
      offering made pursuant to a registration statement under the Securities Act)
      and, notwithstanding such circumstances, the Grantor agrees that any such
      private sale shall be deemed to have been made in a commercially reasonable
      manner and that the Secured Party shall have no obligation to engage in public
      sales and no obligation to delay the sale of any Pledged Membership Interests
      for the period of time necessary to permit the issuer thereof to register it
      for
      a form of public sale requiring registration under the Securities Act or under
      applicable state securities laws, even if such issuer would, or should, agree
      to
      so register it. If the Secured Party determines to exercise its right to sell
      any or all of the Pledged Membership Interests, upon written request, the
      Grantor shall and shall cause each issuer of any Pledged Membership Interests
      to
      be sold hereunder to furnish to the Secured Party all such information as the
      Secured Party may request in order to determine the number and nature of
      interest, shares or other instruments included in the Pledged Membership
      Interests that may be sold by the Secured Party in exempt transactions under
      the
      Securities Act and the rules and regulations of the Securities and Exchange
      Commission thereunder, as the same are from time to time in effect.

     

    7.5 Cash
      Proceeds.
      Except
      those dividends and distributions described in the second sentence of Section
      4.2(f) that are permitted to be retained prior to the occurrence and continuance
      of an Event of Default, all proceeds of any Collateral received by the Grantor
      consisting of cash, checks and other near-cash items (collectively,
      "Cash
      Proceeds")
      shall
      be held by the Grantor in trust for the Secured Party, segregated from other
      funds of the Grantor, and shall, forthwith upon receipt by the Grantor, be
      turned over to the Secured Party in the exact form received by the Grantor
      (duly
      indorsed by the Grantor to the Secured Party, if required) and held by the
      Secured Party. Any Cash Proceeds received by the Secured Party (whether from
      the
      Grantor or otherwise): (i) if no Event of Default shall have occurred and be
      continuing, shall be held by the Secured Party for the ratable benefit of the
      Beneficiaries, as collateral security for the Secured Obligations (whether
      matured or unmatured) and (ii) if an Event of Default shall have occurred and
      be
      continuing, may, in the sole discretion of the Secured Party, (A) be held by
      the
      Secured Party for the ratable benefit of the Beneficiaries, as collateral
      security for the Secured Obligations (whether matured or unmatured) and/or
      (B)
      then or at any time thereafter may be applied by the Secured Party against
      the
      Secured Obligations then due and owing.

     

    
      
        
        

      

      
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    SECTION
      8

    AGENT

     

    The
      Secured Party has been appointed to act as secured party hereunder by Lenders
      and, by their acceptance of the benefits hereof, the other Beneficiaries. The
      Secured Party shall be obligated, and shall have the right hereunder, to make
      demands, to give notices, to exercise or refrain from exercising any rights,
      and
      to take or refrain from taking any action (including the release or substitution
      of Collateral), solely in accordance with this Agreement and the Credit
      Agreement. In furtherance of the foregoing provisions of this Section, each
      Beneficiary, by its acceptance of the benefits hereof, agrees that it shall
      have
      no right individually to realize upon any of the Collateral hereunder, it being
      understood and agreed by such Beneficiary that all rights and remedies hereunder
      may be exercised solely by the Secured Party for the benefit of Lenders and
      Lender Counterparties in accordance with the terms of this Section. Secured
      Party may resign at any time by giving thirty (30) days' prior written notice
      thereof to Lenders and the Grantor, and Secured Party may be removed at any
      time
      with or without cause by an instrument or concurrent instruments in writing
      delivered to the Grantor and Secured Party signed by the Required Lenders.
      Upon
      any such notice of resignation or any such removal, Required Lenders shall
      have
      the right, upon five (5) Business Days' notice to the Secured Party, following
      receipt of the Grantor's consent (which shall not be unreasonable withheld
      or
      delayed and which shall not be required while an Event of Default exists),
      to
      appoint a successor Secured Party. Upon the acceptance of any appointment as
      Administrative Agent under the terms of the Credit Agreement by a successor
      Administrative Agent, that successor Administrative Agent shall thereby also
      be
      deemed the successor Secured Party and such successor Secured Party shall
      thereupon succeed to and become vested with all the rights, powers, privileges
      and duties of the retiring or removed Secured Party under this Agreement, and
      the retiring or removed Secured Party under this Agreement shall promptly
      (i) transfer to such successor Secured Party all sums, Pledged Membership
      Interests and other items of Collateral held hereunder, together with all
      records and other documents necessary or appropriate in connection with the
      performance of the duties of the successor Secured Party under this Agreement
      and (ii) execute and deliver to such successor Secured Party such
      amendments to financing statements, and take such other actions, as may be
      necessary or appropriate in connection with the assignment to such successor
      Secured Party of the security interests created hereunder, whereupon such
      retiring or removed Secured Party shall be discharged from its duties and
      obligations under this Agreement. After any retiring or removed Secured Party's
      resignation or removal hereunder as the Secured Party, the provisions of this
      Agreement shall inure to its benefit as to any actions taken or omitted to
      be
      taken by it under this Agreement while it was the Secured Party
      hereunder.

     

    SECTION
      9

    CONTINUING
      SECURITY INTEREST; TRANSFER OF LOANS

     

    This
      Agreement shall create a continuing security interest in the Collateral and
      shall remain in full force and effect until the payment in full of all Secured
      Obligations, the cancellation or termination of the Commitments, be binding
      upon
      the Grantor, its successors and assigns, and inure, together with the rights
      and
      remedies of the Secured Party hereunder, to the benefit of the Secured Party
      and
      its successors, transferees and assigns. Without limiting the generality of
      the
      foregoing, but subject to the terms of the Credit Agreement, any Lender may
      assign or otherwise transfer any Loans held by it to any other Person, and
      such
      other Person shall thereupon become vested with all the benefits in respect
      thereof granted to Lenders herein or otherwise. Upon the payment in full of
      all
      Secured Obligations and the cancellation or termination of the Commitments,
      the
      security interest granted hereby shall terminate hereunder and of record and
      all
      rights to the Collateral shall revert to the Grantor. Upon any such termination
      the Secured Party shall, at Grantor's expense, execute and deliver to the
      Grantor such documents as the Grantor shall reasonably request to evidence
      such
      termination.

     

    
      
        
        

      

      
        -14-

        
          

        

      

       

    

    SECTION
      10

    STANDARD
      OF CARE; SECURED PARTY MAY PERFORM

     

    Except
      for the exercise of reasonable care in the custody of any Collateral in its
      possession and the accounting for moneys actually received by it hereunder,
      the
      Secured Party shall have no duty as to any Collateral or as to the taking of
      any
      necessary steps to preserve rights against prior parties or any other rights
      pertaining to any Collateral. The Secured Party shall be deemed to have
      exercised reasonable care in the custody and preservation of Collateral in
      its
      possession if such Collateral is accorded treatment substantially equal to
      that
      which the Secured Party accords its own property. Neither the Secured Party
      nor
      any of its directors, officers, employees or agents shall be liable for failure
      to demand, collect or realize upon all or any part 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 the Grantor or otherwise. If the Grantor
      fails to perform any agreement contained herein, the Secured Party may itself
      perform, or cause performance of, such agreement, and the expenses of the
      Secured Party incurred in connection therewith shall be payable by the Grantor
      under Section 10.2 of the Credit Agreement.

     

    SECTION
      11

    MISCELLANEOUS

     

    Any
      notice required or permitted to be given under this Agreement shall be given
      in
      accordance with Section 10.1 of the Credit Agreement. No failure or delay on
      the
      part of the Secured Party in the exercise of any power, right or privilege
      hereunder or under any other Transaction Document shall impair such power,
      right
      or privilege or be construed to be a waiver of any default or acquiescence
      therein, nor shall any single or partial exercise of any such power, right
      or
      privilege preclude other or further exercise thereof or of any other power,
      right or privilege. All rights and remedies existing under this Agreement and
      the other Transaction Documents are cumulative to, and not exclusive of, any
      rights or remedies otherwise available. In case any provision in or obligation
      under this Agreement shall be invalid, illegal or unenforceable in any
      jurisdiction, the validity, legality and enforceability of the remaining
      provisions or obligations, or of such provision or obligation in any other
      jurisdiction, shall not in any way be affected or impaired thereby. All
      covenants hereunder shall be given independent effect so that if a particular
      action or condition is not permitted by any of such covenants, the fact that
      it
      would be permitted by an exception to, or would otherwise be within the
      limitations of, another covenant shall not avoid the occurrence of a Default
      or
      an Event of Default if such action is taken or condition exists. This Agreement
      shall be binding upon and inure to the benefit of the Secured Party and the
      Grantor and their respective successors and assigns. The Grantor shall not,
      without the prior written consent of the Secured Party given in accordance
      with
      the Credit Agreement, assign any right, duty or obligation hereunder. This
      Agreement and the other Transaction Documents embody the entire agreement and
      understanding between the Grantor and the Secured Party and supersede all prior
      agreements and understandings between such parties relating to the subject
      matter hereof and thereof. Accordingly, the Transaction Documents may not be
      contradicted by evidence of prior, contemporaneous or subsequent oral agreements
      of the parties. There are no unwritten oral agreements between the parties.
      This
      Agreement may be executed in one or more counterparts and by different parties
      hereto in separate counterparts, each of which when so executed and delivered
      shall be deemed an original, but all such counterparts together shall constitute
      but one and the same instrument; signature pages may be detached from multiple
      separate counterparts and attached to a single counterpart so that all signature
      pages are physically attached to the same document.

     

    
      
        
        

      

      
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    THIS
      AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
      GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
      OF
      THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS (OTHER
      THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
      LAW).

     

    [Remainder
      of page intentionally left blank.]

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Grantor and the Secured Party have caused this Agreement
      to
      be duly executed and delivered as of the date first written above.

     

    
      	 	 	 
	 	
              GRANTOR:

              

              TEKOIL
                & GAS CORPORATION

            
	 
 	 
 	 
 
	
            	By:  /s/
              Mark
              Western 
	 	
              
                

              

              Name:
                Mark Western

            
	 	
              Title:
                CEO and Chairman of the Board of Directors

            

    

     

    Signature
      Page to Pledge Agreement

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    
       

      
        	 	 	 
	 	
                
                  SECURED
                    PARTY:

                  

                  J.
                    ARON & COMPANY,
                    
as Administrative Agent

                

              
	 
 	 
 	 
 
	
              	By:  /s/
                Colleen
                Foster 
	 	
                
                  

                

                
                  Name:
                    Colleen Foster

                

              
	 	
                
                  Title:
                    Managing Director

                

              

      

      
Signature
        Page to Pledge Agreement

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
      4.1

    TO
      PLEDGE AGREEMENT

    

    GENERAL
      INFORMATION

     

    (A) Full
      Legal Name, Type of Organization, Jurisdiction of Organization, Chief Executive
      Office/Sole Place of Business and Organizational Identification Number of each
      Grantor:

     

    
      	
              Full

              Legal
                Name

            	 	
              Type
                of Organization

            	 	
              Jurisdiction
                of Organization

            	 	
              Chief
                Executive Office

            	 	
              Organization
                I.D.#

            
	
              Tekoil
                & Gas Corporation

            	 	
              Corporation

            	 	
              Delaware

            	 	
              25050
                I-45 North, Ste 525

              The
                Woodlands, TX 77380

            	 	
              4286069

            

    

    

    (B) Other
      Names (including any Trade-Name or Fictitious Business Name) under which the
      Grantor has conducted business for the past five (5) years:

     

    Trailridge
      Holdings, Inc., a Delaware corporation

    Glow
      Bench Systems International, Inc., a Delaware corporation

    Pexcon,
      Inc., a Delaware corporation

    

    (C) Changes
      in Name, Jurisdiction or Principal Residence within past five (5)
      years:

     

    Trailridge
      Holdings, Inc., a Delaware corporation

    Glow
      Bench Systems International, Inc., a Delaware corporation

    Pexcon,
      Inc., a Delaware corporation

     

    [1580
      Sawgrass Corporate Parkway

    Suite
      130

    Sunrise,
      Florida 33323

     

    9101
      W
      Sample Road

    Suite
      606

    Coral
      Springs, FL  33065

     

    5036
      Dr.
      Phillips Boulevard

    Suite
      232

    Orlando,
      Florida 32819

    

    (D) Filing
      Offices:

     

    
      	
              Name
                of Grantor

            	
              Filing
                Jurisdiction(s)

            
	
              Tekoil
                & Gas Corporation

            	
              Delaware

            

    

     

    
      
        
        

      

      
        -1-

        
          

        

      

       

    

    SCHEDULE
      4.3

    TO
      PLEDGE AGREEMENT

    

    PLEDGED
      MEMBERSHIP INTERESTS

     

    Pledged
      Membership Interests:

     

    
      	
              Grantor

            	 	
              Limited
                Liability Company

            	 	
              Certificated
                (Y/N)

            	 	
              Certificate
                No. (if any)

            	 	
              No.
                of Pledged Units

            	 	
              %
                of Outstanding Membership Interests of the Limited Liability
                Company

            
	
              Tekoil
                & Gas Corporation

            	 	
              Tekoil
                and Gas Gulf Coast, LLC

            	 	
              N

            	 	
              N/A

            	 	
              1

            	 	
              100%

            

    

    
      
        
        

      

      
        -1-

        
          

        

      

       

    

    EXHIBIT
      A

    TO
      PLEDGE AGREEMENT

    

    PLEDGE
      SUPPLEMENT

     

    This
      PLEDGE
      SUPPLEMENT,
      dated
      [mm/dd/yy],
      is
      delivered pursuant to the Pledge Agreement, dated as of May 11, 2007 (as it
      may
      be from time to time amended, restated, modified or supplemented, the
      "Security
      Agreement"),
      between TEKOIL
      & GAS CORPORATION,
      a
      Delaware corporation, as the Grantor, and J.
      ARON & COMPANY,
      as
      Agent, as the Secured Party. Capitalized terms used herein not otherwise defined
      herein shall have the meanings ascribed thereto in the Security
      Agreement.

     

    The
      Grantor hereby confirms the grant to the Secured Party set forth in the Security
      Agreement of, and does hereby grant to the Secured Party, a security interest
      in
      all of the Grantor's right, title and interest in and to all Collateral to
      secure the Secured Obligations, in each case whether now or hereafter existing
      or in which the Grantor now has or hereafter acquires an interest and wherever
      the same may be located. The Grantor represents and warrants that the attached
      Supplements to Schedules accurately and completely set forth all additional
      information required pursuant to the Security Agreement and hereby agrees that
      such Supplements to Schedules shall constitute part of the Schedules to the
      Security Agreement.

     

    IN
      WITNESS WHEREOF,
      the
      Grantor has caused this Pledge Supplement to be duly executed and delivered
      by
      its duly authorized officer as of [mm/dd/yy].

    
      
         

        
          	 	 	 
	 	
                  
                    
                      TEKOIL
                        & GAS CORPORATION

                    

                  

                
	 
 	 
 	 
 
	
                	By:  
	 	
                  
                    

                  

                  
                    Name:
                      

                  

                
	 	
                  
                    
                      

                    

                    Title:
                      

                  

                
	 	
                  
                    

                  

                

        

         

         

      

    

    Signature
      Page to Pledge Agreement

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SUPPLEMENTS
      TO SCHEDULES

    TO
      PLEDGE AND SECURITY AGREEMENT

     

    [Insert
      Required Information]

     

    Signature
      Page to Pledge Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00124-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00124-of-00352.parquet"}]]