SUMMER ENERGY HOLDINGS INC (Form: 8-K, Received: 03/05/2015 17:21:09)

SECOND LIEN SECURITY AGREEMENT

This SECOND LIEN SECURITY AGREEMENT (as amended, supplemented or modified from time to time, this “ Security Agreement ”) is dated as of March 2, 2015 and is between SUMMER ENERGY, LLC , a Texas limited liability company (the “ Grantor ”), and BLACK INK ENERGY, LLC , a Delaware limited liability company (the “ Secured Party ”).

The Grantor and the Secured Party have entered into the Second Lien Term Loan Agreement dated as of the date hereof (as the same may be amended, supplemented or modified from time to time, the “ Credit Agreement ”). To induce the Secured Party to enter into the Credit Agreement and to secure its obligations thereunder and hereunder, the Grantor hereby agrees with the Secured Party as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Defined Terms .As used in this Security Agreement, terms defined in the Credit Agreement shall have their defined meanings when used herein, and the following terms shall have the following meanings:

“ Account Debtor ” means, with respect to any Receivable or Other Intangible, any Person obligated to make payment thereunder, including without limitation any account debtor thereon.

“ Collateral ” has the meaning assigned to it in Section 2.1 of this Security Agreement.

“ Commercial Tort Claims ” shall have the meaning set forth in the UCC.

“ Equipment ” means all equipment now owned or hereafter acquired by the Grantor, including all items of machinery, equipment, furnishings and fixtures of every kind, whether affixed to real property or not, as well as all automobiles, trucks and vehicles of every description, trailers, handling and delivery equipment, all additions to, substitutions for, replacements of or accessions to any of the foregoing, all attachments, components, parts (including spare parts) and accessories whether installed thereon or affixed thereto and all fuel for any thereof.

“ Inventory ” means all inventory now owned or hereafter acquired by the Grantor, including (i) personal property which are held for sale or lease or are furnished or are to be furnished under a contract of service or which constitute raw materials, work in process or materials used or consumed or to be used or consumed in the Grantor’s business, (ii) all inventory, wherever located, evidenced by negotiable and non-negotiable documents of title, warehouse receipts and bills of lading, (iii) all of the Grantor’s rights in, to and under all purchase orders now owned or hereafter received or acquired by it for goods or services and (iv) all rights of the Grantor as an unpaid seller, including rescission, replevin, reclamation and stopping in transit.

“ Letter of Credit Rights ” shall have the meaning set forth in the UCC.

“ Obligations ” means (i) all amounts now or hereafter payable by the Grantor to the Secured Party on the Term Loan, (ii) all other obligations or liabilities now or hereafter payable by the Grantor pursuant to the Credit Agreement, (iii) all obligations and liabilities now or hereafter payable by the Grantor under, arising out of or in connection with this Security Agreement, the Pledge Agreement, or any other Collateral Document and (iv) all other indebtedness, obligations and liabilities of the Grantor to the Secured Party, now existing or hereafter arising or incurred, whether or not evidenced by notes or other instruments, and whether such indebtedness, obligations and liabilities are direct or indirect, fixed or contingent, liquidated or unliquidated, due or to become due, secured or unsecured, joint, several or joint and several, arising out of or in connection with any of the Credit Documents.

“ Other Intangibles ” means all accounts, accounts receivable, contract rights, documents, instruments, chattel paper, money and general intangibles now owned or hereafter acquired by the Grantor including, without limitation, all customer lists, permits, federal and state tax refunds, reversionary interests in pension plan assets, trademarks, patents, licenses, copyrights and other rights in intellectual property, other than Receivables.

“ Proceeds ” means all proceeds, including (i) whatever is received upon any collection, exchange, sale or other disposition of any of the Collateral and any property into which any of the Collateral is converted, whether cash or non-cash, (ii) any and all payments or other property (in any form whatsoever) made or due and payable on account of any insurance, indemnity, warranty or guaranty payable to the Grantor with respect to any of the Collateral, (iii) any and all payments (in any form whatsoever) made or due and payable in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental body, authority, bureau or agency (or any person, corporation, agency, authority or other entity acting under color of any governmental authority), (iv) any claim of the Grantor against third parties for past, present or future infringement of any patent or for past, present or future infringement or dilution of any trademark or for injury to the goodwill associated with any trademark or for the breach of any license and (v) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

“ Receivables ” means all accounts receivable, contract rights, documents, instruments or chattel paper representing amounts payable or monies due or to become due to the Grantor, arising from the sale of Inventory or the rendition of services in the ordinary course of business or otherwise (whether or not earned by performance), together with all Inventory returned by or reclaimed from customers wherever such Inventory is located, and all guaranties, securities and liens held for the payment of any such account, account receivable, contract right, document, instrument or chattel paper.

“ Subordination Agreement ” shall have the meaning set forth in the Credit Agreement.

“ UCC ” means at any time the Uniform Commercial Code as the same may from time to time be in effect in the State of New York, provided that, if, by reason of mandatory provisions of law, the validity or perfection of any security interest granted herein is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York then, as to the validity or perfection of such security interest, “ UCC ” shall mean the Uniform Commercial Code in effect in such other jurisdiction.

Section 1.2 UCC Definitions . The uncapitalized terms “account”, “account debtor”, “chattel paper”, “contract right”, “document”, “warehouse receipt”, “bill of lading”, “document of title”, “instrument”, “inventory”, “equipment” “general intangible”, “money”, “proceeds” and “purchase money security interest” as used in Section 1.1 or elsewhere in this Security Agreement have the meanings of such terms as defined in the UCC.

ARTICLE II

SECURITY INTERESTS

Section 2.1 Grant of Security Interests . To secure the due and punctual payment of all Obligations, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing or due or to become due, in accordance with the terms thereof and to secure the due and punctual performance of all of the Obligations and in order to induce the Secured Party to enter into the Credit Agreement and make the loan and extend the credit provided for therein in accordance with the terms thereof, the Grantor hereby grants to the Secured Party a security interest in all of the Grantor’s right, title and interest in, to and under the following, whether now existing or hereafter acquired (all of which are herein collectively called the “ Collateral ”):

(i) all Receivables;

(ii) all Other Intangibles;

(iii) all Equipment;

(iv) all Inventory;

(v) all Letter of Credit Rights;

(vi) Commercial Tort Claims;

(vii) to the extent not included in the foregoing, all other personal property, whether tangible or intangible, and wherever located, including, but not limited to, the balance of every deposit account now or hereafter existing of the Grantor with any bank and all monies of the Grantor and all rights to payment of money of the Grantor;

(viii) to the extent not included in the foregoing, all books, ledgers and records and all computer programs, tapes, discs, punch cards, data processing software, transaction files, master files and related property and rights (including computer and peripheral equipment) necessary or helpful in enforcing, identifying or establishing any item of Collateral; and

(ix) to the extent not otherwise included, all Proceeds and products of any or all of the foregoing, whether existing on the date hereof or arising hereafter.

Section 2.2 Continuing Liability of the Grantor . Anything herein to the contrary notwithstanding, the Grantor shall remain liable to observe and perform all the terms and conditions to be observed and performed by it under any contract, agreement, warranty or other

obligation with respect to the Collateral, and shall do nothing to impair the security interests herein granted. The Secured Party shall not have any obligation or liability under any such contract, agreement, warranty or obligation by reason of or arising out of this Security Agreement or the receipt by the Secured Party of any payment relating to any Collateral, nor shall the Secured Party be required to perform or fulfill any of the obligations of the Grantor with respect to the Collateral, to make any inquiry as to the nature or sufficiency of any payment received by it or the sufficiency of the performance of any party’s obligations with respect to any Collateral. Furthermore, the Secured Party shall not be required to file any claim or demand to collect any amount due or to enforce the performance of any party’s obligations with respect to, the Collateral.

Section 2.3 Sales and Collections .

(a) The Grantor is authorized (i) to sell in the ordinary course of its business for fair value and on an arm’s-length basis any of its Inventory normally held by it for such purpose and (ii) to use and consume, in the ordinary course of its business, any raw materials, supplies and materials normally held by it for such purpose. The Secured Party may upon the occurrence of any Event of Default, without cause or notice, curtail or terminate such authority at any time.

(b) The Grantor shall cause all cash Proceeds collected by it to be deposited into an account designated by Secured Party upon receipt, in the original form in which received (with such endorsements or assignments as may be necessary to permit collection, if applicable, thereof by the Secured Party), and for such purpose the Grantor hereby irrevocably authorizes and empowers the Secured Party, its officers, employees and authorized agents to endorse and sign the name of the Grantor on all checks, drafts, money orders or other media of payment so delivered, and such endorsements or assignments shall, for all purposes, be deemed to have been made by the Grantor prior to any endorsement or assignment thereof by the Secured Party. The Secured Party may use any convenient or customary means for the purpose of collecting such checks, drafts, money orders or other media of payment.

(c) The Grantor shall, and the Secured Party may at any time, regardless of whether an Event of Default shall have occurred, notify Account Debtors obligated to make payments under any or all Receivables or Other Intangibles that the Secured Party has a security interest in such Collateral and that payments shall be made directly to Secured Party. Upon the request of the Secured Party at any time, the Grantor will so notify such account debtors. The Grantor will use all reasonable efforts to cause each account debtor to comply with the foregoing instruction. In furtherance of the foregoing, the Grantor authorizes the Secured Party (i) to ask for, demand, collect, receive and give acquittances and receipts for any and all amounts due and to become due under any Collateral and, in the name of the Grantor or its own name or otherwise, (ii) to take possession of, endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Collateral and (iii) to file any claim or take any other action in any court of law or equity or otherwise which it may deem appropriate for the purpose of collecting any amounts due under any Collateral. The Secured Party shall have no obligation to obtain or record any information relating to the source of such funds or the obligations in respect of which payments have been made.

Section 2.4 Verification of Receivables . The Secured Party shall have the right to make test verifications of Receivables in any manner and through any medium that it considers advisable, and the Grantor agrees to furnish all such assistance and information as the Secured Party may require in connection therewith. The Grantor at its expense will cause its chief financial officer to furnish to the Secured Party at any time and from time to time promptly upon the Secured Party’s request, the following reports: (i) a reconciliation of all Receivables, (ii) an aging of all Receivables, (iii) trial balances and (iv) a test verification of such Receivables as the Secured Party may request.

Section 2.5 Release of Collateral .

(a) The Grantor may sell or realize upon or transfer or otherwise dispose of Collateral as permitted by Section 4.13 , and the security interests of the Secured Party in such Collateral so sold, realized upon or disposed of (but not in the Proceeds arising from such sale, realization or disposition) shall cease immediately upon such sale, realization or disposition, without any further action on the part of the Secured Party. The Secured Party, if requested in writing by the Grantor but at the expense of the Grantor, is hereby authorized and instructed to deliver to the Account Debtor or the purchaser or other transferee of any such Collateral a certificate stating that the Secured Party no longer has a security interest therein, and such Account Debtor or such purchaser or other transferee shall be entitled to rely conclusively on such certificate for any and all purposes.

(b) Upon the payment in full of all of the Obligations and if there is no commitment by the Secured Party to make further advances, incur obligations or otherwise give value, the Secured Party will (as soon as reasonably practicable after receipt of notice from the Grantor requesting the same but at the expense of the Grantor) send the Grantor, for each jurisdiction in which a UCC financing statement is on file to perfect the security interests granted to the Secured Party hereunder, a termination statement to the effect that the Secured Party no longer claims a security interest under such financing statement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Grantor represents and warrants that:

Section 3.1 Validity of Security Agreement; Consents . The execution, delivery and performance of this Security Agreement and the creation of the security interests provided for herein (i) are within the Grantor’s limited liability company power, (ii) have been duly authorized by all necessary limited liability company action, including the consent of interest holders where required, on behalf of the Grantor, (iii) are not in contravention of any provision of the Grantor’s certificate of formation or limited liability company agreement, (iv) do not violate any law or regulation or any order or decree of any court or governmental instrumentality applicable to the Grantor, (v) do not conflict with or result in a breach of, or constitute a default under, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which the Grantor is a party or by which it or any of its properties is bound, (vi) do not result in the creation or imposition of any Lien upon any property of the Grantor other than in favor of the Secured Party and (vii) do not require the consent or approval of any governmental body, agency or

official or other person other than those that have been obtained. This Security Agreement has been duly executed and delivered by the Grantor and constitutes the legal, valid and binding obligation of the Grantor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable Bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforceability of creditors’ rights generally and by general provisions of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 3.2 Title to Collateral . Except for the security interests granted to the Secured Party pursuant to this Security Agreement, the Grantor is the sole owner of each item of the Collateral, having good and marketable title thereto, free and clear of any and all Liens, except for Permitted Liens.

Section 3.3 Validity, Perfection and Priority of Security Interests .

(a) By complying with Section 4.1 , the Grantor will have created a valid security interest in favor of the Secured Party in all existing Collateral and in all identifiable Proceeds of such Collateral, which security interest (except in respect of motor vehicles for which the exclusive manner of perfecting a security interest therein is by noting such security interest in the certificate of title in accordance with local law) would be prior to the claims of a trustee in bankruptcy under Section 544(a) of the United States federal bankruptcy Code. Continuing compliance by the Grantor with the provisions of Section 4.2 will also (i) create valid security interests in all Collateral acquired after the date hereof and in all identifiable Proceeds of such Collateral and (ii) cause such security interests in all Collateral and in all Proceeds which are (A) identifiable cash Proceeds of Collateral covered by financing statements required to be filed hereunder and (B) identifiable Proceeds in which a security interest may be perfected by such filing under the UCC, in each case prior to the claims of a trustee in Bankruptcy under the United States federal Bankruptcy Code.

(b) Other than financing statements or other similar documents evidencing Permitted Liens, no financing statements, deeds of trust, mortgages or similar documents covering all or any part of the Collateral are on file or of record in any government office in any jurisdiction in which such filing or recording would be effective to perfect a security interest in such Collateral, nor is any of the Collateral in the possession of any Person (other than the Grantor and the Senior Lender) asserting any claim thereto or security interest therein.

Section 3.4 Enforceability of Receivables and Other Intangibles . To the best knowledge of the Grantor, each Receivable and Other Intangible is a valid and binding obligation of the related Account Debtor in respect thereof, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general provisions of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), and complies with any applicable legal requirements.

Section 3.5 Place of Business; Location of Collateral . Schedule 1 correctly sets forth the offices of the Grantor where records concerning Receivables and Other Intangibles are

kept. Schedule 2 correctly sets forth the location of all Equipment and Inventory, other than rolling stock, aircraft, goods in transit and Inventory sold in the ordinary course of business as permitted by Section 4.13 of this Security Agreement. All Inventory has been and will be produced in compliance with the Fair Labor Standards Act, 29 U.S.C. §§ 201-219. No Inventory is evidenced by a negotiable document of title, warehouse receipt or bill of lading. No non-negotiable document of title, warehouse receipt or bill of lading has been issued to any person other than the Grantor, and the Grantor has retained possession of all of such non-negotiable documents, warehouse receipts and bills of lading. No amount payable under or in connection with any of the Collateral is evidenced by promissory notes or other instruments.

Section 3.6 Patents and Trademarks . As of the date hereof the Grantor does not have any patents, patent licenses, trademarks or trademarks licenses.

ARTICLE IV

COVENANTS

The Grantor covenants and agrees with the Secured Party that until the payment in full of all Obligations and until there is no commitment by the Secured Party to make further advances, incur obligations or otherwise give value, the Grantor will comply with the following.

Section 4.1 Perfection of Security Interests . The Grantor will, at its expense, cause all filings and recordings and other actions specified on Schedule 3 to have been completed on or prior to the date hereof.

Section 4.2 Further Actions .

(a) At all times after the date hereof, the Grantor will, at its expense, comply with the following:

(i) as to all Receivables, Other Intangibles, Equipment and Inventory, it will cause UCC financing statements and continuation statements to be filed and to be on file in all applicable jurisdictions as required to perfect the security interests granted to the Secured Party hereunder, to the extent that applicable law permits perfection of a security interest by filing under the UCC;

(ii) as to all Proceeds, it will cause all UCC financing statements and continuation statements filed in accordance with clause (i) above to include a statement or a checked box indicating that Proceeds of all items of Collateral described therein are covered;

(iii) upon the request of the Secured Party, it will ensure that the provisions of Section 2.4 are complied with; and

(iv) as to any amount payable under or in connection with any of the Collateral which shall be or shall become evidenced by any promissory note or other instrument, the Grantor will immediately pledge and deliver such note or other instrument to the Secured Party as part of the Collateral, duly endorsed in a manner satisfactory to the Secured Party.

(b) The Grantor will, from time to time and at its expense, execute, deliver, file or record such financing statements pursuant to the UCC, applications for certificates of title and such other statements, assignments, instruments, documents, agreements or other papers and take any other action that may be necessary or desirable, or that the Secured Party may reasonably request, in order to create, preserve, perfect, confirm or validate the security interests, to enable the Secured Party to obtain the full benefits of this Security Agreement or to enable it to exercise and enforce any of its rights, powers and remedies hereunder, including, without limitation, its right to take possession of the Collateral, and will use its best efforts to obtain such waivers from landlords and mortgagees as the Secured Party may request.

(c) The Grantor authorizes the Secured Party to file financing and continuation statements and amendments thereto describing the Collateral as “all assets” or “all personal property of the debtor”, notwithstanding that such wording may be broader in scope than the Collateral described in this Security Agreement.

Section 4.3 Change of Name, Identity or Structure . The Grantor will not change its name, identity or corporate structure in any manner unless it shall have given the Secured Party at least thirty days’ prior written notice thereof and shall have taken all action (or made arrangements to take such action substantially simultaneously with such change if it is impossible to take such action in advance) necessary or reasonably requested by the Secured Party to amend any financing statement or continuation statement relating to the security interests granted hereby in order to preserve such security interests and to effectuate or maintain the priority thereof against all Persons.

Section 4.4 Place of Business and Collateral; Jurisdiction of Incorporation . The Grantor will not change the location of the office or other locations where it keeps or holds any Collateral or any records relating thereto from the applicable location listed on Schedule 1 hereto unless, prior to such change, it notifies the Secured Party of such change, makes any UCC filings required by Section 4.2 and takes all other action necessary or that the Secured Party may reasonably request to preserve, perfect, confirm and protect the security interests granted hereby. The Grantor will in no event change the location of any Collateral if such change would cause the security interest granted hereby in such Collateral to lapse or cease to be perfected. The Grantor will not change the state in which it is incorporated.

Section 4.5 Fixtures . The Grantor will not permit any Equipment to become a fixture unless it shall have given the Secured Party at least ten days’ prior written notice thereof and shall have taken all such action and delivered or caused to be delivered to the Secured Party all instruments and documents, including, without limitation, waivers and subordination agreements by any landlords and mortgagees, and filed all financing statements necessary or reasonably requested by the Secured Party, to preserve and protect the security interest granted herein and to effectuate or maintain the priority thereof against all Persons, subject to Permitted Liens.

Section 4.6 Maintenance of Records . The Grantor will keep and maintain at its own cost and expense complete books and records relating to the Collateral which are satisfactory to the Secured Party including, without limitation, a record of all payments received and all credits granted with respect to the Collateral and all of its other dealings with the Collateral. The Grantor will mark its books and records pertaining to the Collateral to evidence this Security

Agreement and the security interests granted hereby. For the Secured Party’s further security, the Grantor agrees that the Secured Party shall have a special property interest in all of the Grantor’s books and records pertaining to the Collateral and the Grantor shall deliver and turn over any such books and records to the Secured Party or to its representatives at any time on demand of the Secured Party.

Section 4.7 Compliance with Laws, etc . The Grantor will comply, in all material respects, with all acts, rules, regulations, orders, decrees and directions of any governmental body, agency or official applicable to the Collateral or any part thereof or to the operation of the Grantor’s business except to the extent that the failure to comply would not have a material adverse effect on the financial or other condition of the Grantor; provided , however , that the Grantor may contest any act, regulation, order, decree or direction in any reasonable manner which shall not in the sole opinion of the Secured Party adversely affect the Secured Party’s rights or the priority of its security interest in the Collateral.

Section 4.8 Payment of Taxes, etc . The Grantor will pay promptly when due, all taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of its income or profits therefrom, as well as all claims of any kind (including claims for labor, materials and supplies), except that no such charge need be paid if (i) the validity thereof is being contested in good faith by appropriate proceedings and (ii) such charge is adequately reserved against in accordance with GAAP.

Section 4.9 Compliance with Terms of Accounts, Contracts and Licenses . The Grantor will perform and comply in all material respects with all of its obligations under and, all agreements relating to the Collateral to which it is a party or by which it is bound.

Section 4.10 Limitation on Liens on Collateral . The Grantor will not create, permit or suffer to exist, and will defend the Collateral and the Grantor’s rights with respect thereto against and take such other action as is necessary to remove, any Lien, security interest, encumbrance, or claim in or to the Collateral other than the security interests created hereunder, except for Permitted Liens.

Section 4.11 Limitations on Modifications of Receivables and Other Intangibles; No Waivers or Extensions . The Grantor will not (i) amend, modify, terminate or waive any provision of any material Receivable or Other Intangible in any manner which might have a materially adverse effect on the value of such Receivable or Other Intangible as Collateral, (ii) fail to exercise promptly and diligently each and every material right which it may have under each Receivable and Other Intangible or (iii) fail to deliver to the Secured Party a copy of each material demand, notice or document received by it relating in any way to any Receivable or Other Intangible. The Grantor will not, without the Secured Party’s prior written consent, grant any extension of the time of payment of any Receivable or amounts due under any material Other Intangible, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any person liable for the payment thereof or allow any credit or discount whatsoever thereon other than trade discounts granted in the normal course of business, except such as in the reasonable judgment of the Grantor are advisable to enhance the collectibility thereof.

Section 4.12 Maintenance of Insurance . The Grantor will maintain with financially sound insurance companies licensed to do business in Texas insurance policies (i) insuring the Inventory and Equipment against loss by fire, explosion, theft and such other casualties as are usually insured against by companies engaged in the same or similar business for an amount satisfactory to the Secured Party and (ii) insuring the Grantor and the Secured Party against liability for personal injury arising from, and property damage relating to, such Inventory and Equipment, such policies to be in such form and to cover such amounts as may be satisfactory to the Secured Party, with losses payable to the Grantor and the Secured Party as their respective interests may appear. The Grantor shall, if so requested by the Secured Party, deliver to the Secured Party as often as the Secured Party may reasonably request a report of the Grantor or, if requested by the Secured Party, of an insurance broker satisfactory to the Secured Party of the insurance on the Inventory and Equipment. All insurance with respect to the Inventory and the Equipment shall (i) contain a standard mortgagee clause in favor of the Secured Party, (ii) provide that any loss shall be payable in accordance with the terms thereof notwithstanding any act of the Grantor which might otherwise result in forfeiture of such insurance and that the insurer waives all rights of set-off, counterclaim, deduction or subrogation against the Grantor, (iii) provide that no cancellation, reduction in amount or change in coverage therefor shall be effective until at least 30 days after receipt by the Secured Party of written notice thereof and (iv) provide that the Secured Party may, but shall not be obligated to, pay premiums in respect thereof.

Section 4.13 Limitations on Dispositions of Collateral . The Grantor will not directly or indirectly (through the sale of company interest, merger or otherwise) without the prior written consent of the Secured Party sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer or contract to do so except for (i) sales of Inventory in the ordinary course of its business for fair value in arm’s-length transactions and (ii) so long as no Default has occurred and is continuing, dispositions in a commercially reasonable manner of Equipment which has become redundant, worn out or obsolete or which should be replaced so as to improve productivity, so long as the proceeds of any such disposition are (i) used to acquire replacement equipment which has comparable or better utility and equivalent or better value and which is subject to a security interest in favor of the Secured Party therein, except as permitted by Section 4.9 and except for Permitted Liens or (ii) applied to repay the Obligations. The inclusion of Proceeds of the Collateral under the security interests granted hereby shall not be deemed a consent by the Secured Party to any sale or disposition of any Collateral other than as permitted by this Section 4.13 .

Section 4.14 Further Identification of Collateral . The Grantor will 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

Section 4.15 Notices . The Grantor will advise the Secured Party promptly and in reasonable detail, (i) of any Lien, security interest, encumbrance or claim made or asserted against any of the Collateral, other than Permitted Liens, (ii) of any material change in the composition of the Collateral, and (iii) of the occurrence of any other event which would have a material effect on the aggregate value of the Collateral or on the security interests granted to the Secured Party in this Security Agreement.

Section 4.16 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 or its representatives may examine the same, take extracts therefrom, make photocopies thereof and have such discussions with officers, employees and public accountants of the Grantor as the Secured Party may deem necessary, 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. The Secured Party and its representatives shall at all times also have the right to enter into and upon any premises where any of the Inventory or Equipment is located for the purpose of inspecting the same, observing its use or protecting interests of the Secured Party therein.

Section 4.17 Maintenance of Equipment . The Grantor will, at its expense, generally maintain the Equipment in good operating condition, ordinary wear and tear excepted.

Section 4.18 Reimbursement Obligation . Should the Grantor fail to comply with the provisions of Credit Document or any other Collateral Document to which it is a party or any other agreement relating to the Collateral such that the value of any Collateral or the validity, perfection, rank or value of any security interest granted to the Secured Party hereunder or thereunder is thereby diminished or potentially diminished or put at risk (as reasonably determined by the Secured Party), the Secured Party on behalf of the Grantor may, but shall not be required to, effect such compliance on behalf of the Grantor, and the Grantor shall reimburse the Secured Party for the cost thereof on demand, and interest shall accrue on such reimbursement obligation from the date the relevant costs are incurred until reimbursement thereof in full.

ARTICLE V

REMEDIES; RIGHTS UPON DEFAULT

Section 5.1 UCC Rights . lf any Event of Default shall have occurred, the Secured Party may in addition to all other rights and remedies granted to it in this Security Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, exercise all rights and remedies of a secured party under the UCC and all other rights available to the Secured Party at law or in equity.

Section 5.2 Payments on Collateral . Without limiting the rights of the Secured Party under any other provision of this Security Agreement, if an Event of Default shall occur and be continuing:

(i) all payments received by the Grantor under or in connection with any of the Collateral shall be held by the Grantor in trust for the Secured Party, shall be segregated from other funds of the Grantor and shall forthwith upon receipt by the Grantor be turned over to the Secured Party, in the same form as received by the Grantor (duly indorsed by the Grantor to the Secured Party, if required to permit collection thereof by the Secured Party); and

(ii) all such payments received by the Secured Party (whether from the Grantor or otherwise) may, in the sole discretion of the Secured Party, be held by the

Secured Party as collateral security for, and/or then or at any time thereafter applied in whole or in part by the Secured Party to the payment of the expenses and Obligations as set forth in Section 5.10.

Section 5.3 Possession of Collateral . In furtherance of the foregoing, the Grantor expressly agrees that, if an Event of Default shall occur and be continuing, the Secured Party may (i) by judicial powers, or without judicial process if it can be done without breach of the peace, enter any premises where any of such Collateral is or may be located, and without charge or liability to the Secured Party seize and remove such Collateral from such premises and (ii) have access to and use of the Grantor’s books and records relating to such Collateral.

Section 5.4 Sale of Collateral .

(a) The Grantor expressly agrees that if an Event of Default shall occur and be continuing, the Secured Party, without demand of performance or other demand or notice of any kind (except the notice specified below of the time and place of any public or private sale) to the Grantor or any other Person (all of which demands and/or notices are hereby waived by the Grantor), may forthwith collect, receive, appropriate and realize upon the Collateral and/or forthwith sell, lease, assign, give an option or options to purchase or otherwise dispose of and deliver the Collateral (or contract to do so) or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or at any office of the Secured Party or elsewhere in such manner as is commercially reasonable and as the Secured Party may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Secured Party shall have the right upon any such public sale, and, to the extent permitted by law, upon any such private sale, to purchase the whole or any part of the Collateral so sold. The Grantor further agrees, at the Secured Party’s request, to assemble the Collateral, and to make it available to the Secured Party at places which the Secured Party may reasonably select. To the extent permitted by applicable law, the Grantor waives all claims, damages and demands against the Secured Party arising out of the foreclosure, repossession, retention or sale of the Collateral.

(b) Unless the Collateral threatens to decline speedily in value or is of a type customarily sold in a recognized market, the Secured Party shall give the Grantor ten days’ written notice of its intention to make any such public or private sale or sale at a broker’s board or on a securities exchange. Such notice shall (i) in the case of a public sale, state the time and place fixed for such sale, (ii) in the case of a sale at a broker’s board or on a securities exchange, state the board or exchange at which such sale is to be made and the day on which the Collateral, or any portion thereof being sold, will first be offered for sale and (iii) in the case of a private sale, state the day after which such sale may be consummated. The Secured Party shall not be required or obligated to make any such sale pursuant to any such notice. The Secured Party may adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In the case of any sale of all or any part of the Collateral for credit or for future delivery, the Collateral so sold may be retained by the Secured Party until the selling price is paid by the purchaser thereof, but the Secured Party shall not incur any liability in case of failure of such purchaser to pay for the Collateral so sold and, in the case of such failure, such Collateral may again be sold upon like notice.

Section 5.5 Rights of Purchasers

. Upon any sale of the Collateral (whether public or private), the Secured Party shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser (including the Secured Party) at any such sale shall hold the Collateral so sold free from any claim or right of whatever kind, including any equity or right of redemption of the Grantor, and the Grantor, to the extent permitted by law, hereby specifically waives all rights of redemption, including, without limitation, the right to redeem the Collateral under Sections 9-623 and 9-624 of the UCC, and any right to a judicial or other stay or approval which it has or may have under any law now existing or hereafter adopted.

Section 5.6 Additional Rights of the Secured Party .

(a) The Secured Party shall have the right and power to institute and maintain such suits and proceedings as it may deem appropriate to protect and enforce the rights vested in it by this Security Agreement and may proceed by suit or suits at law or in equity to enforce such rights and to foreclose upon and sell the Collateral or any part thereof pursuant to the judgment or decree of a court of competent jurisdiction.

(b) The Secured Party shall, to the extent permitted by law and without regard to the solvency or insolvency at the time of any Person then liable for the payment of any of the Obligations or the then value of the Collateral, and without requiring any bond from any party to such proceedings, be entitled to the appointment of a special receiver or receivers (who may be the Secured Party) for the Collateral or any part thereof and for the rents, issues, tolls, profits, royalties, revenues and other income therefrom, which receiver shall have such powers as the court making such appointment shall confer, and to the entry of an order directing that the rents, issues, tolls, profits, royalties, revenues and other income of the property constituting the whole or any part of the Collateral be segregated, sequestered and impounded for the benefit of the Secured Party, and the Grantor irrevocably consents to the appointment of such receiver or receivers and to the entry of such order.

Section 5.7 Remedies Not Exclusive .

(a) No remedy conferred upon or reserved to the Secured Party in this Security Agreement is intended to be exclusive of any other remedy or remedies, but every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law, in equity or by statute.

(b) If the Secured Party shall have proceeded to enforce any right, remedy or power under this Security Agreement and the proceeding for the enforcement thereof shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Secured Party, the Grantor and the Secured Party shall, subject to any determination in such proceeding, severally and respectively be restored to their former positions and rights under this Security Agreement, and thereafter all rights, remedies and powers of the Secured Party shall continue as though no such proceedings had been taken.

(c) All rights of action under this Security Agreement may be enforced by the Secured Party without the possession of any instrument evidencing any Obligation or the production thereof at any trial or other proceeding relative thereto, and any suit or proceeding

instituted by the Secured Party shall be brought in its name and any judgment shall be held as part of the Collateral.

Section 5.8 Waiver and Estoppel .

(a) The Grantor, to the extent it may lawfully do so, agrees that it will not at any time in any manner whatsoever claim or take the benefit or advantage of any appraisement, valuation, stay, extension, moratorium, turnover or redemption law, or any law now or hereafter in force permitting it to direct the order in which the Collateral shall be sold which may delay, prevent or otherwise affect the performance or enforcement of this Security Agreement and the Grantor hereby waives the benefits or advantage of all such laws, and covenants that it will not hinder, delay or impede the execution of any power granted to the Secured Party in this Security Agreement but will permit the execution of every such power as though no such law were in force; provided that nothing contained in this Section 5.8 shall be construed as a waiver of any rights of the Grantor under any applicable federal bankruptcy law.

(b) The Grantor, to the extent it may lawfully do so, on behalf of itself and all who may claim through or under it, including without limitation any and all subsequent creditors, vendees, assignees and lienors, waives and releases all rights to demand or to have any marshalling of the Collateral upon any sale, whether made under any power of sale granted herein or pursuant to judicial proceedings or upon any foreclosure or any enforcement of this Security Agreement and consents and agrees that all the Collateral may at any such sale be offered and sold as an entirety.

(c) The Grantor, to the extent it may lawfully do so, waives presentment, demand, protest and any notice of any kind (except notices explicitly required hereunder) in connection with this Security Agreement and any action taken by the Secured Party with respect to the Collateral.

Section 5.9 Power of Attorney . The Grantor hereby irrevocably constitutes and appoints the Secured Party, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Grantor and in the name of the Grantor or in its own name, from time to time in the Secured Party’s reasonable discretion for the purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Security Agreement and, without limiting the generality of the foregoing, hereby gives the Secured Party the power and right, on behalf of the Grantor, without notice to or assent by the Grantor to do the following:

(i) to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral;

(ii) to effect any repairs or any insurance called for by the terms of this Security Agreement and to pay all or any part of the premiums therefor and the costs thereof; and

(iii) upon the occurrence and continuance of any Event of Default and otherwise to the extent provided in this Security Agreement, (A) to direct any party liable

for any payment under any of the Collateral to make payment of any and all moneys due and to come due thereunder directly to the Secured Party or as the Secured Party shall direct; (B) to receive payment of and receipt for any and all moneys, claims and other amounts due and to become due at any time in respect of or arising out of any Collateral; (C) to sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with accounts and other documents relating to the Collateral; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any thereof and to enforce any other right in respect of any Collateral; (E) to defend any suit, action or proceeding brought against the Grantor with respect to any Collateral; (F) to settle, compromise and adjust any suit, action or proceeding described above and, in connection therewith, to give such discharges or releases as the Secured Party may deem appropriate; (G) to assign any patent or trademark (along with the goodwill of the business to which such trademark pertains), for such term or terms, on such conditions, and in such manner, as the Secured Party shall in its sole discretion determine; 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 the Grantor’s expense, at any time, or from time to time, all acts and things which the Secured Party deems 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 Security Agreement, all as fully and effectively as the Grantor might do.

The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable.

Section 5.10 Application of Proceeds . The Secured Party shall retain the net proceeds of any collection, recovery, receipt, appropriation, realization or sale of the Collateral and, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care and safekeeping of any or all of the Collateral or in any way relating to the rights of the Secured Party hereunder, including reasonable attorneys’ fees and legal expenses, apply such net proceeds to the payment in whole or in part of the Obligations in such order as the Secured Party may elect, the Grantor remaining liable for any amount remaining unpaid (and any attorneys fees paid by the Secured Party in collecting such deficiency) after such application. Only after applying such net proceeds and after the payment by the Secured Party of any other amount required by any provision of law, including Sections 9-610 and 9-615 of the UCC, need the Secured Party account for the surplus, if any, to the Grantor or to whomsoever may be lawfully entitled to the same.

ARTICLE VI

MISCELLANEOUS

Section 6.1 Notices . Unless otherwise specified herein, all notices, requests or other communications to any party hereunder shall be in writing and shall be given to such party at its address set forth on in the Credit Agreement or any other address or which such party shall have specified for the purpose of communications hereunder by notice to the other parties hereunder.

Each such notice, request or other communication shall be effective (i) if given by mail, three days after such communication is deposited, certified or registered, in the mails with first class postage prepaid, addressed as aforesaid or (ii) if given by other means, when delivered at the address specified in this Section 6.1 .

Section 6.2 No Waivers . No failure on the part of the Secured Party to exercise, no course of dealing with respect to, and no delay in exercising any right, power or privilege under this Security Agreement or any document or agreement contemplated hereby shall operate as a waiver thereof or shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 6.3 Compensation and Expenses of the Secured Party . The Grantor shall pay to the Secured Party from time to time upon demand, all of the fees, costs and expenses incurred by the Secured Party (including, without limitation, the reasonable fees and disbursements of counsel and any amounts payable by the Secured Party to any of its agents, whether on account of fees, indemnities or otherwise) (i) arising in connection with the preparation, administration, modification, amendment, waiver or termination of this Security Agreement or any document or agreement contemplated hereby or any consent or waiver hereunder or thereunder or (ii) incurred in connection with the administration of this Security Agreement, or any document or agreement contemplated hereby, or in connection with the administration, sale or other disposition of Collateral hereunder or under any document or agreement contemplated hereby or the preservation, protection or defense of the rights of the Secured Party in and to the Collateral.

Section 6.4 Indemnification . The Grantor shall at all times hereafter indemnify, hold harmless and, on demand, reimburse the Secured Party, its subsidiaries, affiliates, successors, assigns, officers, directors, employees and agents, and their respective heirs, executors, administrators, successors and assigns (all of the foregoing parties, including, but not limited to, the Secured Party, being hereinafter collectively referred to as the “Indemnities” and individually as an “Indemnitee”) from, against and for any and all liabilities, obligations, claims, damages, actions, penalties, causes of action, losses, judgments, suits, costs, expenses and disbursements, including, without limitation, attorneys’ fees (any and all of the foregoing being hereinafter collectively referred to as the “ Liabilities ” and individually as a “ Liability ”) which the Indemnitees, or any of them, might be or become subjected, by reason of, or arising out of the preparation, execution, delivery, modification, administration or enforcement of, or performance of the Secured Party’s rights under, this Security Agreement or any other document, instrument or agreement contemplated hereby or executed in connection herewith; provided that the Grantor shall not be liable to any Indemnitee for any Liability caused solely by the gross negligence or willful misconduct of such Indemnitee. In no event shall any Indemnitee, as a condition to enforcing its rights under this Section 6.4 or otherwise, be obligated to make a claim against any other Person (including, without limitation, the Secured Party) to enforce its rights under this Section 6.4.

Section 6.5 Amendments, Supplements and Waivers . The parties hereto may, from time to time, enter into written agreements supplemental hereto for the purpose of adding any

provisions to this Security Agreement, waiving any provisions hereof or changing in any manner the rights of the parties.

Section 6.6 Successors and Assigns . This Security Agreement shall be binding upon and inure to the benefit of each of the parties hereto and shall inure to the benefit of the Secured Party’s successors and assigns. Nothing herein is intended or shall be construed to give any other Person any right, remedy or claim under, to or in respect of this Security Agreement or any Collateral.

Section 6.7 Limitation of Law; Severability .

(a) All rights, remedies and powers provided in this Security Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Security Agreement are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Security Agreement invalid, unenforceable in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

(b) If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the parties hereto as nearly as may be possible; and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provisions in any other jurisdiction.

Section 6.8 Governing Law . This Security Agreement shall be governed by and construed in accordance with the laws of the State of New York.

Section 6.9 Counterparts; Effectiveness . This Security Agreement may be signed in any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. This Security Agreement shall become effective when the Secured Party shall receive counterparts executed by itself and the Grantor.

Section 6.10 Termination; Survival . This Security Agreement shall terminate when the security interests granted hereunder have terminated and the Collateral has been released as provided in Section 2.5 , provided that the obligations of the Grantor under any of Sections 4.18 , 6.3 , and 6.4 shall survive any such termination.

Section 6.11 Notice of Subordination . Notwithstanding anything herein to the contrary, the liens and security interests granted to the Secured Party pursuant to this Security Agreement and the exercise of any right or remedy by the Secured Party hereunder are subject to the provisions of the Subordination Agreement. In the event of any conflict or inconsistency between the provisions of the Subordination Agreement and this Security Agreement, the provisions of the Subordination Agreement shall control.

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

SUMMER ENERGY, LLC

By: /s/ Neil Leibman

Name: Neil Leibman

Title: CEO

BLACK INK ENERGY, LLC

By: /s/ Humberto David Sirvent

Name: Humberto David Sirvent

Title: Partner

Schedule 1

LOCATIONS OF RECORDS OF RECEIVABLES

AND OTHER INTANGIBLES

800 Bering Drive, Suite 260

Houston, Texas 77057

Schedule 2

LOCATIONS OF EQUIPMENT AND INVENTORY

800 Bering Drive, Suite 260

Houston, Texas 77057

Schedule 3

REQUIRED FILINGS AND RECORDINGS

UCC Financing Statement filed with the Secretary of State for the State of Texas

SECOND LIEN MEMBERSHIP INTEREST PLEDGE AGREEMENT

THIS SECOND LIEN MEMBERSHIP INTEREST PLEDGE AGREEMENT (as amended, supplemented or modified from time to time, this “ Agreement ”) is dated as of March 2, 2015 and is by Summer Energy Holdings, Inc. (the “ Pledgor ”), in favor of BLACK INK ENERGY, LLC, a Delaware limited liability company (the “ Secured Party ”).

SUMMER ENERGY, LLC, a Texas limited liability company (the “ Borrower ”), proposes to enter into a Second Lien Term Loan Agreement dated as of the date hereof with the Secured Party (as the same may be amended, supplemented or modified from time to time, the “ Credit Agreement ”). In order to induce the Secured Party to enter into the Credit Agreement, the Pledgor desires to enter into this Agreement. Accordingly, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions . All terms defined in the Credit Agreement and not otherwise defined herein shall have, as used herein, the respective meanings provided for therein.

Section 1.02 UCC Terms . Unless otherwise defined herein, or unless the context otherwise requires, all terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York (the “ UCC ”) shall have the meanings therein stated.

ARTICLE II

THE SECURITY INTERESTS

Section 2.01 The Security Interests . The Pledgor hereby pledges to the Secured Party, and grants to the Secured Party a security interest in, the following (the “ Pledged Collateral ”):

(i) the membership interests described on Schedule I hereto (the “ Pledged Membership Interests ”), and all dividends, distributions, cash, instruments and other property and proceeds from time to time received, receivable or otherwise made upon or distributed in respect of or in exchange for any or all of the Pledged Membership Interests;

(ii) all additional membership interests of the Borrower from time to time acquired by the Pledgor in any manner, and the certificates or documents representing such additional membership interests, and all dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise made upon or distributed in respect of or in exchange for any or all of such membership interests; and

(iii) to the extent not otherwise included in the foregoing, all cash and non-cash proceeds thereof.

Section 2.02 Security for Obligations . This Agreement secures the payment of: (i) all amounts now or hereafter payable by the Borrower to the Secured Party on the Term Loan, (ii) all other obligations or liabilities now or hereafter payable by the Borrower pursuant to the Credit Agreement, (iii) all obligations and liabilities now or hereafter payable by the Borrower

under, arising out of or in connection with the Security Agreement, this Agreement or any other Collateral Document and (iv) all other indebtedness, obligations and liabilities of the Borrower to the Secured Party, now existing or hereafter arising or incurred, whether or not evidenced by notes or other instruments, and whether such indebtedness, obligations and liabilities are direct or indirect, fixed or contingent, liquidated or unliquidated, due or to become due, secured or unsecured, joint, several or joint and several, arising out of or in connection with any of the Credit Documents (collectively, the “ Obligations ”). The security interests granted by this Agreement are granted as security only and shall not subject the Secured Party to, or transfer or in any way affect or modify, any obligation or liability of the Pledgor with respect to any of the Pledged Collateral or any transaction in connection therewith.

Section 2.03 Delivery of Pledged Collateral . All certificates or instruments representing or evidencing the Pledged Collateral, if any, shall be delivered to and held by or on behalf of the Secured Party pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, with signatures appropriately guaranteed, and accompanied in each case by any required transfer tax stamps, all in form and substance satisfactory to the Secured Party. The Secured Party shall have the right, at any time in its discretion and without notice to the Pledgor, to cause any or all of the Pledged Membership Interests or other Pledged Collateral to be transferred of record into the name of the Secured Party or its nominee.

Section 2.04 Termination of Security Interests; Release of Pledged Collateral . Upon the full, final and irrevocable payment and performance of all the Obligations, the security interests in the Pledged Collateral shall terminate and all rights to the Pledged Collateral shall revert to the Pledgor. In addition, at any time and from time to time prior to such termination of the security interests, the Secured Party may release any of the Pledged Collateral. Upon any such termination of the security interests or any release of the Pledged Collateral, the Secured Party will, at the Pledgor’s expense, execute and deliver to the Pledgor such documents as the Pledgor shall reasonably request to evidence the termination of the security interests or the release of the Pledged Collateral. Any such documents shall be without recourse to or warranty by the Secured Party.

Section 2.05 Security Interests Absolute . All rights of the Secured Party and security interests hereunder, and all obligations of the Pledgor hereunder, shall be absolute and unconditional and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by:

(i) any extension, renewal, settlement, compromise, waiver or release in respect of any Obligation or any other document evidencing or securing such Obligation, by operation of law or otherwise;

(ii) any modification or amendment or supplement to the Credit Agreement, the Term Loan or any other document evidencing or securing any Obligation;

(iii) any release, non-perfection or invalidity of any direct or indirect security for any Obligation;

(iv) any change in the existence, structure or ownership of the Borrower, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Borrower or its assets or any resulting disallowance, release or discharge of all or any portion of the Obligations;

(v) the existence of any claim, set-off or other right which the Pledgor may have at any time against the Borrower, the Secured Party or any other entity or person, whether in connection herewith or any unrelated transactions; provided , that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim;

(vi) any invalidity or unenforceability relating to or against the Borrower for any reason of any Obligation, or any provision of applicable law or regulation purporting to prohibit the payment by the Borrower of the Obligations;

(vii) any failure by the Secured Party (a) to file or enforce a claim against the Borrower or its estate (in a bankruptcy or other proceeding), (b) to give notice of the existence, creation or incurring by the Borrower of any new or additional indebtedness or obligation under or with respect to the Obligations, (c) to commence any action against the Borrower, (d) to disclose to the Pledgor any facts which the Secured Party may now or hereafter know with regard to the Borrower or (e) to proceed with due diligence in the collection, protection or realization upon any collateral securing the Obligations; or

(viii) any other act or omission to act or delay of any kind by the Borrower or the Secured Party or any other entity or person or any other circumstance whatsoever which might, but for the provisions of this clause, constitute a legal or equitable discharge of the Pledgor’s obligations hereunder.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Pledgor represents and warrants as follows:

Section 3.01 Contravention . The execution, delivery and performance by the Pledgor of this Agreement requires no action by or in respect of, or filing with, any governmental authority and do not contravene, or constitute (with or without the giving of notice or lapse of time or both) a default under, any provision of applicable law or of any agreement, judgment, injunction, order, decree or other instrument binding upon or affecting the Pledgor or result in the creation or imposition of any Lien (other than the Lien of this Agreement) upon any of its assets.

Section 3.02 Binding Effect . This Agreement constitutes a valid and binding agreement of the Pledgor, enforceable against the Pledgor in accordance with its terms, except as the enforceability hereof may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally and by equitable principles of general applicability (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 3.03 Title to Pledged Membership Interests . The Pledgor owns all of the Membership Interests free and clear of any Liens other than the security interests granted hereby and the security interests granted to the Senior Lender pursuant to that certain Membership Interest Pledge Agreement dated as of April 1, 2014, by and between the Pledgor and Senior Lender (the “ Senior Pledge Agreement ”).

Section 3.04 Pledged Membership Interests . All Pledged Membership Interests have been duly authorized and validly issued, and are fully paid and non-assessable, and are subject to no options to purchase or similar rights of any Person. The Pledgor is not and will not become a party to or otherwise bound by any agreement, other than this Agreement and the Senior Pledge Agreement, which restricts in any manner the rights of any present or future holder of any of the Pledged Membership Interests with respect thereto.

Section 3.05 Validitv. Perfection and Priority of Security Interests . Upon filing of a financing statement with the Secretary of State of Texas, the Secured Party will have a valid and perfected security interest in the Pledged Collateral subject to no prior Lien other than the Lien granted pursuant to the Senior Pledge Agreement. Except for such filing of the financing statement, no registration, recordation or filing with any governmental authority is required in connection with the execution or delivery of this Agreement, or necessary for the validity or enforceability hereof or for the perfection of the security interests of the Secured Party granted hereby. The Pledgor has not performed any acts which might prevent the Secured Party from enforcing any of the terms and conditions of this Agreement or which would limit the Secured Party in any such enforcement.

Section 3.06 Outstanding Shares . The Pledged Membership Interests constitute 100% of the issued and outstanding membership interests of the Borrower.

ARTICLE IV

COVENANTS

The Pledgor agrees that so long as any Obligation remains unpaid:

Section 4.01 Filing; Further Assurances . The Pledgor will, at its expense and in such manner and form as the Secured Party may require, execute, deliver, file and record any financing statement, specific assignment or other paper and take any other action that may be necessary or desirable, or that the Secured Party may request, in order to create, preserve, perfect or validate the security interests granted hereby or to enable the Secured Party to exercise and enforce its rights hereunder with respect to any of the Pledged Collateral. To the extent permitted by applicable law, the Pledgor hereby authorizes the Secured Party to execute and file, in the name of the Pledgor or otherwise, Uniform Commercial Code financing statements which the Secured Party in its sole discretion may deem necessary or appropriate to further perfect the security interests.

Section 4.02 Liens on Pledged Collateral . The Pledgor will not sell or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral or create or suffer to exist any Lien (other than security interests in favor of the Secured Party pursuant to this Agreement and security interests in favor of the Senior Lender pursuant to the Senior Pledge

Agreement) on any Pledged Collateral. The Pledgor agrees that it will cause the Borrower not to issue any stock or other securities in addition to or in substitution for the Pledged Membership Interests, except to the Pledgor, and the Pledgor will pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities of the Borrower.

ARTICLE V

DISTRIBUTIONS ON COLLATERAL; VOTING

Section 5.01 Right to Receive Distributions on Pledged Collateral; Voting . So long as no Event of Default shall have occurred and be continuing:

(i) The Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement; provided , however , that the Pledgor shall give the Secured Party at least five days’ written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right and the Pledgor shall not exercise or refrain from exercising any such right if, in the Secured Party’s judgment, such action would have a material adverse effect on the value of the Pledged Collateral or any part thereof.

(ii) The Pledgor shall be entitled to receive and retain any and all distributions, interest and other payments and distributions made upon or with respect to the Pledged Collateral, provided , however , that (A) any and all distributions and interest paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral, (B) distributions paid or payable in cash in respect of any Pledged Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in-surplus, and (C) paid, payable or otherwise distributed in respect of principal of, in redemption of, or in exchange for, any Pledged Collateral, shall be, and shall be forthwith delivered to the Secured Party to hold as, Pledged Collateral and shall, if received by the Pledgor, be received in trust for the benefit of the Secured Party, be segregated from the other property or funds of the Pledgor and be forthwith delivered to the Secured Party as Pledged Collateral in the same form as so received (with any necessary endorsement).

(iii) The Secured Party shall execute and deliver (or cause to be executed and delivered) to the Pledgor all such proxies, powers of attorney, consents, ratifications and waivers and other instruments as the Pledgor may reasonably request for the purpose of enabling the Pledgor to exercise the voting and other rights which it is entitled to exercise pursuant to paragraph (i) above and to receive the distributions or interest payments which it is authorized to receive and retain pursuant to paragraph (ii) above.

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

(i) All rights of the Pledgor to receive the distributions and interest payments which it would otherwise be authorized to receive and retain pursuant to Section

5.01(a)(ii) shall cease, and all such rights shall thereupon become vested in the Secured Party which shall thereupon have the sole right to receive and hold as Pledged Collateral such distributions and interest payments.

(ii) All distributions and interest payments which are received by the Pledgor contrary to the provisions of paragraph (i) of this Section 5.01(b) shall be received in trust for the benefit of the Secured Party, shall be segregated from other funds of the Pledgor and shall be forthwith paid over to the Secured Party as Pledged Collateral in the same form as so received (with any necessary endorsement).

Section 5.02 Exercise of Voting Rights upon Event of Default . Upon the occurrence and during the continuance of an Event of Default and upon notice by the Secured Party to the Pledgor, all rights of the Pledgor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 5.01(a)(i) 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.

ARTICLE VI

GENERAL AUTHORITY; REMEDIES

Section 6.01 General Authority . The Pledgor hereby irrevocably appoints the Secured Party and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact, in the name of the Pledgor or its own name, for the sole use and benefit of the Secured Party, but at the Pledgor’s expense, at any time and from time to time, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to carry out the terms of this Agreement and, without limiting the foregoing, the Pledgor hereby gives the Secured Party the power and right on its behalf, without notice to or further assent by the Pledgor to do the following:

(i) to receive, take, endorse, assign and deliver any and all checks, notes, drafts, acceptances, documents and other negotiable and non-negotiable instruments taken or received by the Pledgor as, or in connection with, the Pledged Collateral;

(ii) to demand, sue for, collect, receive and give acquittance for any and all monies due or to become due upon or in connection with the Pledged Collateral;

(iii) to commence, settle, compromise, compound, prosecute, defend or adjust any claim, suit, action or proceeding with respect to, or in connection with, the Pledged Collateral;

(iv) to sell, transfer, assign or otherwise deal in or with the Pledged Collateral or any part thereof, as fully and effectually as if the Secured Party were the absolute owner thereof; and

(v) to do, at its option, but at the expense of the Pledgor, at any time or from time to time, all acts and things which the Secured Party deems necessary to protect or preserve the Pledged Collateral and to realize upon the Pledged Collateral.

Section 6.02 UCC Rights . If an Event of Default shall have occurred, the Secured Party may in addition to all other rights and remedies granted to it in this Agreement and in any other agreement securing, evidencing or relating to the Obligations, exercise (i) all rights and remedies of a secured party under the UCC (whether or not in effect in the jurisdiction where such rights are exercised) and (ii) all other rights available to the Secured Party at law or equity.

Section 6.03 Application of Cash; Sale of Pledged Collateral .

(a) The Pledgor expressly agrees that if an Event of Default shall occur and be continuing, the Secured Party, without demand of performance or other demand or notice of any kind (except the notice specified below of the time and place of any public or private sale) to or upon the Pledgor or any other Person (all of which demands and/or notices are hereby waived by the Pledgor), may forthwith (i) apply the cash, if any, then held by it as Collateral as specified in Section 6.08 and (ii) if there shall be no such cash or if such cash shall be insufficient to pay the Obligations in full, to collect, receive, appropriate and realize upon the Pledged Collateral, and/or sell, assign, give an option or options to purchase or otherwise dispose of and deliver the Pledged Collateral (or contract to do so) or any part thereof in one or more parcels (which need not be in round lots) at public or private sale, at any office of the Secured Party or elsewhere in such manner is commercially reasonable and, as the Secured Party may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Secured Party shall have the right upon any such public sale, and, if the Pledged Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations, upon any such private sale or sales, to purchase the whole or any part of the Pledged Collateral so sold, and thereafter to hold the same, absolutely and free from any right or claim of any kind. To the extent permitted by applicable law, the Pledgor waives all claims, damages and demands against the Secured Party arising out of the foreclosure, repossession, retention or sale of the Pledged Collateral.

(b) Unless the Pledged Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Secured Party shall give the Pledgor five days’ written notice of its intention to make any such public or private sale or sale at a broker’s board or on a securities exchange. Such notice shall (i) in the case of a public sale, state the time and place fixed for such sale, (ii) in the case of sale at a broker’s board or on a securities exchange, state the board or exchange at which such sale is to be made and the day on which the Pledged Collateral, or the portion thereof being sold, will first be offered for sale and (iii) in the case of a private sale, state the day after which such sale may be consummated. The Secured Party shall not be obligated to make any such sale pursuant to any such notice. The Secured Party may adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In the case of any sale of all or any part of the Pledged Collateral on credit or for future delivery, the Pledged Collateral so sold may be retained by the Secured Party until the selling price is paid by the purchaser thereof, but the Secured Party shall not incur any liability in case of the failure of such purchaser to take up and pay for the Pledged Collateral so sold and, in the case of such failure, such Pledged Collateral may again be sold upon like notice.

Section 6.04 Rights of Purchasers . Upon any sale of the Pledged Collateral (whether public or private), the Secured Party shall have the right to deliver, assign and transfer to the purchaser thereof the Pledged Collateral so sold. Each purchaser (including the Secured Party) at any such sale shall hold the Collateral so sold absolutely, free from any claim or right of whatever kind, including any equity or right of redemption of the Pledgor who, to the extent permitted by law, hereby specifically waives all rights of redemption, including, without limitation, any right to redeem the Pledged Collateral under the UCC, and any right to a judicial or other stay or approval which it has or may have under any law now existing or hereafter adopted.

Section 6.05 Securities Act, etc . In view of the position of the Pledgor in relation to the Pledged Securities, or because of other present or future circumstances, a question may arise under the Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being herein called the “Federal Securities Laws”) with respect to any disposition of the Pledged Collateral permitted hereunder. The Pledgor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Secured Party if the Secured Party were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Secured Party in any attempt to dispose of all or part of the Pledged Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in purpose or effect. Under applicable law, in the absence of an agreement to the contrary, the Secured Party may be held to have certain general duties and obligations to the Pledgor to make some effort toward obtaining a fair price even though the obligations of the Pledgor may be discharged or reduced by the proceeds of a sale at a lesser price. The Pledgor clearly understands that the Secured Party is not to have any such general duty or obligation to the Pledgor, and the Pledgor will not attempt to hold the Secured Party responsible for selling all or any part of the Pledged Collateral at any inadequate price even if the Secured Party shall accept the first offer received or does not approach more than one possible purchaser. Without limiting the generality of the foregoing, the provisions of this Section would apply if, for example, the Secured Party were to place all or any part of the Pledged Collateral for private placement by an investment banking firm, or if such investment Secured Party firm purchased all or any part of the Pledged Collateral for its own account, or if the Secured Party placed all or any part of the Pledged Collateral privately with a purchaser or purchasers.

Accordingly, the Pledgor expressly agrees that the Secured Party is authorized, in connection with any sale of the Pledged Collateral, if it deems it advisable so to do, (i) to restrict the prospective bidders on or purchasers of any of the Pledged Collateral to a limited number of sophisticated investors who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or sale of any of such Pledged Collateral, (ii) to cause to be placed on certificates for any or all of the Pledged Collateral or on any other securities pledged hereunder a legend to the effect that such security has not been registered under the Federal Securities Laws and may not be disposed of in violation of the provision of said Federal Securities Laws and (iii) to impose such other limitations or conditions in connection with any such sale as the Secured Party deems necessary or advisable in order to comply with said Federal Securities Laws or any other law. The Pledgor covenants and agrees

that it will execute and deliver such documents and take such other action as the Secured Party deems necessary or advisable in order to comply with said Federal Securities Laws or any other law. The Pledgor acknowledges and agrees that such limitations may result in prices and other terms less favorable to the seller than if such limitations were not imposed, and, notwithstanding such limitations, agrees that any such sale shall be deemed to have been made in a commercially reasonable manner, it being the agreement of the Pledgor and the Secured Party that the provisions of this Section 6.05 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Secured Party sells the Pledged Collateral. The Secured Party shall under no obligation to delay a sale of any Pledged Collateral for a period of time necessary to permit the issuer of any securities contained therein to register such securities under the Federal Securities Laws, or under applicable state securities laws, even if the issuer would agree to it.

Section 6.06 Other Rights of the Secured Party . The Secured Party (i) shall have the right and power to institute and maintain such suits and proceedings as it may deem appropriate to protect and enforce the rights vested in it by this Agreement and (ii) may proceed by suit or suits at law or in equity to enforce such rights and to foreclose upon the Pledged Collateral and to sell all, or from time to time, any of the Pledged Collateral under the judgment or decree of a court of competent jurisdiction.

(a) The Secured Party shall, to the extent permitted by applicable law, without notice to the Pledgor or any party claiming through it, without regard to the solvency or insolvency at such time of any Person then liable for the payment of any of the Obligations, without regard to the then value of the Pledged Collateral and without requiring any bond from any complainant in such proceedings, be entitled as a matter of right to the appointment of a receiver or receivers (who may be the Secured Party) of the Pledged Collateral or any part thereof, and of the profits, revenues and other income thereof, pending such proceedings, with such powers as the court making such appointment shall confer, and to the entry of an order directing that the profits, revenues and other income of the property constituting the whole or any part of the Pledged Collateral be segregated, sequestered and impounded for the benefit of the Secured Party, and the Pledgor irrevocably consents to the appointment of such receiver or receivers and to the entry of such order.

(b) In no event shall the Secured Party have any duty to exercise any rights or take any steps to preserve the rights of the Secured Party in the Pledged Collateral, nor shall the Secured Party be liable to the Pledgor or any other Person for any loss caused by the Secured Party’s failure to meet any obligation imposed by the UCC. Without limiting the foregoing, the Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equal to that which the Secured Party accords its own property, it being understood that the Secured Party shall not have any duty or responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not the Secured Party has or is deemed to have knowledge of such matters or (ii) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral.

Section 6.07 Waiver and Estoppel .

(a) The Pledgor agrees, to the extent it may lawfully do so, that it will not at any time in any manner whatsoever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, moratorium, turnover or redemption law, or any law permitting it to direct the order in which the Pledged Collateral shall be sold, now or at any time hereafter in force which may delay, prevent or otherwise affect the performance or enforcement of this Agreement, and hereby waives all benefit or advantage of all such laws. The Pledgor covenants that it will not hinder, delay or impede the execution of any power granted to the Secured Party in the Credit Agreement or this Agreement.

(b) The Pledgor, to the extent it may lawfully do so, on behalf of itself and all who claim through or under it, including without limitation any and all subsequent creditors, vendees, assignees and lienors, waives and releases all rights to demand or to have any marshalling of the Pledged Collateral upon any sale, whether made under any power of sale granted herein or pursuant to judicial proceedings or under any foreclosure or any enforcement of this Agreement, and consents and agrees that all of the Pledged Collateral may at any such sale be offered and sold as an entirety.

(c) The Pledgor waives, to the extent permitted by law, presentment, demand, protest and any notice of any kind (except the notices expressly required hereunder) in connection with this Agreement and any action taken by the Secured Party with respect to the Pledged Collateral. The Pledgor waives and agrees not to assert any privileges which it may acquire under Section 9-112 of the UCC.

Section 6.08 Application of Moneys . The proceeds of any sale of, or other realization upon, all or any part of the Pledged Collateral shall be applied by the Secured Party in the following order of priority:

FIRST, to payment of the expenses of such sale or other realization, including reasonable compensation to the Secured Party and its agents and counsel, and all expenses, liabilities and advances incurred or made by the Secured Party, its agents and counsel in connection therewith or in connection with the care, safekeeping or otherwise of any or all of the Pledged Collateral, and any other unreimbursed expenses for which the Secured Party is to be reimbursed pursuant to Section 7.03;

SECOND, to payment of the Obligations; and

FINALLY, any surplus then remaining shall be paid to the Pledgor, or its successors or assigns, or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

ARTICLE VII

MISCELLANEOUS

Section 7.01 Notices . All notices, requests and other communications to any party hereunder shall be in writing and shall be given to such party at its address set forth on the signature page hereof or to such other address as such party may hereafter specify for the purpose by notice to the other. Each such notice, request or other communication shall be effective (i) two days after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (ii) if given by any other means, when delivered at the address specified in this Section. Rejection or refusal to accept, or the inability to deliver because of a changed address of which no notice was given shall not affect the validity of notice given in accordance with this Section.

Section 7.02 Waivers, Non-Exclusive Remedies . No failure on the part of the Secured Party to exercise, and no delay in exercising, no course of dealing with respect to, any right under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise by the Secured Party of any right under this Agreement preclude any other or further exercise thereof or the exercise of any other right. The rights of the Secured Party under this Agreement are cumulative and are not exclusive of any other remedies provided by law.

Section 7.03 Expenses; Documentary Taxes . The Pledgor shall forthwith on demand pay all out-of-pocket expenses incurred by the Secured Party, including fees and disbursements of its counsel and agents, in connection with the preparation and administration of this Agreement or the administration, sale or other disposition of the Pledged Collateral or the preservation, protection or defense of the rights of the Secured Party in and to the Pledged Collateral. The Pledgor shall forthwith pay on demand the amount of any taxes which the Secured Party may have been required to pay by reason of the security interests granted in the Pledged Collateral (including any applicable transfer taxes) or to free any of the Pledged Collateral from the lien thereof.

Section 7.04 Successors and Assigns . This Agreement is for the benefit of the Secured Party and its successors and assigns, and in the event of an assignment of all or any of the Obligations, the rights hereunder, to the extent applicable to the indebtedness so assigned, may be transferred with such indebtedness. This Agreement shall be binding upon the Pledgor and its successors and assigns.

Section 7.05 Amendments and Waivers . Any provision of this Agreement may be amended or waived, if, but only if, such amendment or waiver is in writing and is signed by the Pledgor and the Secured Party.

Section 7.06 New York Law . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.

Section 7.07 Limitation by Law; Severability . All rights, remedies and powers provided in this Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Agreement are intended to be subject to all applicable mandatory provisions of law which may be controlling and be limited to the extent necessary so that they will not render this Agreement invalid, unenforceable in

whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of the Secured Party in order to carry out the intentions of the parties hereto as nearly as may be possible; and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.

Section 7.08 Counterparts; Effectiveness . This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when the Secured Party shall have received counterparts hereof signed by itself and the Pledgor.

Section 7.09 Notice of Subordination . Notwithstanding anything herein to the contrary, the liens and security interests granted to the Secured Party pursuant to this Agreement and the exercise of any right or remedy by the Secured Party hereunder are subject to the provisions of the Subordination Agreement. In the event of any conflict or inconsistency between the provisions of the Subordination Agreement and this Agreement, the provisions of the Subordination Agreement shall control.

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

PLEDGOR :

SUMMER ENERGY HOLDINGS, INC.

/s/ Neil Leibman, CEO
Name:	Summer Energy Holdings, Inc.
Address:	800 Bering Dr., Suite 260
Houston, TX 77057


SECURED PARTY :

BLACK INK ENERGY, LLC


By: /s/ Humberto David Sirvent
Name: Humberto David Sirvent
Title: Partner

Schedule 1

Pledged Membership Interests

Issuer	State of Formation	Number of Membership Units
Summer Energy, LLC	Texas	100 percent

Schedule 1

001-35496	20-2722022
(Commission File Number)	(I.R.S. Employer Identification No.)

Exhibit	Description

10.1	Second Lien Term Loan Agreement

10.2	Second Lien Security Agreement

10.3	Second Lien Membership Interest Pledge Agreement

10.4	Form of Warrant

ARTICLE I. GENERAL DEFINITIONS		1
Section 1.1	Definitions	1
Section 1.2	Accounting Terms and Determinations	3
ARTICLE II. THE CREDITS		3
Section 2.1	Term Loan	3
Section 2.2	Notice of Borrowing	3
Section 2.3	No Note	3
Section 2.4	Reserved	3
Section 2.5	Interest	3
Section 2.6	Repayment of Loans	4
Section 2.7	Optional Prepayments	4
Section 2.8	Prepayment Premium	4
Section 2.9	General Provisions as to Payments	4
Section 2.10	Facility Fee	4
ARTICLE III. CONDITIONS TO EFFECTIVE DATE		4
Section 3.1	Conditions Precedent	4
ARTICLE IV. REPRESENTATIONS AND WARRANTIES		6
Section 4.1	Corporate Existence and Power	6
Section 4.2	Corporate and Governmental Authorization; Contravention	6
Section 4.3	Binding Effect	7
Section 4.4	Financial Information	7
Section 4.5	Litigation	7
Section 4.6	Marketable Title	7
Section 4.7	Filings	7
Section 4.8	Taxes	7
Section 4.9	Compliance with Laws	8
Section 4.10	Public Utility Holding Company Act	8
Section 4.11	Disclosure	8
ARTICLE V. AFFIRMATIVE COVENANTS		8
Section 5.1	Information	8
Section 5.2	Payment of Obligations	9

If to the Lender:	Black Ink Energy, LLC
	7230 Lee Deforest Drive
	Columbia, Maryland 21046
	Attention: Steve Alms
	Fax: 443-283-0495
	Email: salms@blackinkcapital.com

If to the Borrower:	Summer Energy, LLC
	800 Bering Drive, Suite 260
	Houston, Texas 77057
	Attention: Jaleea George, CFO
	Fax: 713-481-8470
	Email: jgeorge@summerenergy.com

Section 5.3	Maintenance of Property, Insurance	9
Section 5.4	Conduct of Business and Maintenance of Existence	9
Section 5.5	Compliance with Laws	9
Section 5.6	Reduction of Need for Commodity Loans	9
Section 5.7	Accounting; Inspection of Property; Books and Records	9
ARTICLE VI. NEGATIVE COVENANTS		10
Section 6.1	Certain Definitions	10
Section 6.2	Debt	10
Section 6.3	Restriction on Liens	11
Section 6.4	Consolidations, Mergers and Sales of Assets	11
Section 6.5	Transactions with Affiliates	12
Section 6.6	Restricted Payments	12
Section 6.7	Investments	12
Section 6.8	Transactions with Other Persons	12
Section 6.9	Use of Proceeds	12
Section 6.10	Independence of Covenants	13
ARTICLE VII. DEFAULTS		13
Section 7.1	Events of Default	13
Section 7.2	Remedies	14
ARTICLE VIII. MISCELLANEOUS		15
Section 8.1	Notices	15
Section 8.2	No Waivers	15
Section 8.3	Expenses	16
Section 8.4	Amendments and Waivers	16
Section 8.5	Successors and Assigns	16
Section 8.6	Governing Law	16
Section 8.7	Counterparts; Effectiveness	16
Section 8.8	Interest Rate Limitation	16
Section 8.9	Subordination Agreement	16
Section 8.10	Entire Agreement	16

With a copy to (which shall not constitute notice):

	Kirton McConkie, PC
	60 E. South Temple, Suite 1800
	Salt Lake City, Utah 84111
	Attn: Alexander N. Pearson, Esq.
	Email: apearson@kmclaw.com

		Page
ARTICLE I DEFINITIONS		1
Section 1.1	Defined Terms	1
Section 1.2	UCC Definitions	3
ARTICLE II SECURITY INTERESTS		3
Section 2.1	Grant of Security Interests	3
Section 2.2	Continuing Liability of the Grantor	3
Section 2.3	Sales and Collections	4
Section 2.4	Verification of Receivables	5
Section 2.5	Release of Collateral	5
ARTICLE III REPRESENTATIONS AND WARRANTIES		5
Section 3.1	Validity of Security Agreement; Consents	5
Section 3.2	Title to Collateral	6
Section 3.3	Validity, Perfection and Priority of Security Interests	6
Section 3.4	Enforceability of Receivables and Other Intangibles	6
Section 3.5	Place of Business; Location of Collateral	6
Section 3.6	Patents and Trademarks	7
ARTICLE IV COVENANTS		7
Section 4.1	Perfection of Security Interests	7
Section 4.2	Further Actions	7
Section 4.3	Change of Name, Identity or Structure	8
Section 4.4	Place of Business and Collateral; Jurisdiction of Incorporation	8
Section 4.5	Fixtures	8
Section 4.6	Maintenance of Records	8
Section 4.7	Compliance with Laws, etc	9
Section 4.8	Payment of Taxes, etc	9
Section 4.9	Compliance with Terms of Accounts, Contracts and Licenses	9
Section 4.10	Limitation on Liens on Collateral	9
Section 4.11	Limitations on Modifications of Receivables and Other Intangibles; No Waivers or Extensions	9
Section 4.12	Maintenance of Insurance	10
Section 4.13	Limitations on Dispositions of Collateral	10
Section 4.14	Further Identification of Collateral	10

Section 4.15	Notices	10
Section 4.16	Right of Inspection	11
Section 4.17	Maintenance of Equipment	11
Section 4.18	Reimbursement Obligation	11
ARTICLE V REMEDIES; RIGHTS UPON DEFAULT		11
Section 5.1	UCC Rights	11
Section 5.2	Payments on Collateral	11
Section 5.3	Possession of Collateral	12
Section 5.4	Sale of Collateral	12
Section 5.5	Rights of Purchasers	13
Section 5.6	Additional Rights of the Secured Party	13
Section 5.7	Remedies Not Exclusive	13
Section 5.8	Waiver and Estoppel	14
Section 5.9	Power of Attorney	14
Section 5.10	Application of Proceeds	15
ARTICLE VI MISCELLANEOUS		15
Section 6.1	Notices	15
Section 6.2	No Waivers	16
Section 6.3	Compensation and Expenses of the Secured Party	16
Section 6.4	Indemnification	16
Section 6.5	Amendments, Supplements and Waivers	16
Section 6.6	Successors and Assigns	17
Section 6.7	Limitation of Law; Severability	17
Section 6.8	Governing Law	17
Section 6.9	Counterparts; Effectiveness	17
Section 6.10	Termination; Survival	17
Section 6.11	Notice of Subordination	17

		Page
ARTICLE I DEFINITIONS		1
Section 1.01	Definitions	1
Section 1.02	UCC Terms	1
ARTICLE II THE SECURITY INTERESTS		1
Section 2.01	The Security Interests	1
Section 2.02	Security for Obligations	1
Section 2.03	Delivery of Pledged Collateral	2
Section 2.04	Termination of Security Interests; Release of Pledged Collateral	2
Section 2.05	Security Interests Absolute	2
ARTICLE III REPRESENTATIONS AND WARRANTIES		3
Section 3.01	Contravention	3
Section 3.02	Binding Effect	3
Section 3.03	Title to Pledged Membership Interests	4
Section 3.04	Pledged Membership Interests	4
Section 3.05	Validitv. Perfection and Priority of Security Interests	4
Section 3.06	Outstanding Shares	4
ARTICLE IV COVENANTS		4
Section 4.01	Filing; Further Assurances	4
Section 4.02	Liens on Pledged Collateral	4
ARTICLE V DISTRIBUTIONS ON COLLATERAL; VOTING		5
Section 5.01	Right to Receive Distributions on Pledged Collateral; Voting	5
Section 5.02	Exercise of Voting Rights upon Event of Default	6
ARTICLE VI GENERAL AUTHORITY; REMEDIES		6
Section 6.01	General Authority	6
Section 6.02	UCC Rights	7
Section 6.03	Application of Cash; Sale of Pledged Collateral	7
Section 6.04	Rights of Purchasers	8
Section 6.05	Securities Act, etc	8
Section 6.06	Other Rights of the Secured Party	9
Section 6.07	Waiver and Estoppel	10
Section 6.08	Application of Moneys	10

ARTICLE VII MISCELLANEOUS		10
Section 7.01	Notices	10
Section 7.02	Waivers, Non-Exclusive Remedies	11
Section 7.03	Expenses; Documentary Taxes	11
Section 7.04	Successors and Assigns	11
Section 7.05	Amendments and Waivers	11
Section 7.06	New York Law	11
Section 7.07	Limitation by Law; Severability	11
Section 7.08	Counterparts; Effectiveness	12
Section 7.09	Notice of Subordination	12

Dated: ______________________________ , ________________________________ Signature Individual or Entity Name (and title, if applicable) ________________________________ ________________________________ Address ________________________________ Federal Identification or Social Security No.	________________________________ Signature of Spouse/Partner (if applicable) ________________________________ Name (please print) ________________________________ ________________________________ Address ________________________________ Federal Identification or Social Security No. Assignee: ________________________________ ________________________________
Note: The signature must correspond with the name of the Warrantholder as written on the first page of the Warrant in every particular, without alteration or enlargement or any change whatever, unless the Warrant has been assigned.