INTERCREDITOR AGREEMENT
EXHIBIT
99.7
This
INTERCREDITOR AGREEMENT (as the same may be amended, restated, supplemented or
otherwise modified from time to time, this “Agreement”), dated as of June
10, 2009 is among SOUTH TEXAS OIL COMPANY,
a Nevada corporation (the “Company”), SOUTHERN TEXAS OIL
COMPANY., a Texas corporation (“Southern Texas”), STO
OPERATING COMPANY, a Texas corporation (“STO Operating”), STO
PROPERTIES LLC, a Texas limited liability company (“STO Properties”), STO DRILLING
COMPANY, a Texas corporation (“STO Drilling”; each of
Company, Southern Texas, STO Operating, STO Properties, STO Drilling and each
other Person (as defined below) who guarantees, or grants a Lien (as defined
below) on its assets to secure “Note Debt” (as defined below) and/or Convertible
Debt (as defined below) is referred to individually as an “Obligor” and collectively as
the “Obligors”), the
Convertible Debt Creditors (as defined below), the Buyers (as defined below),
and VIKING ASSET MANAGEMENT, LLC, a California limited liability company, in its
capacity as collateral agent for itself and for the Buyers (including any
successor agent, hereinafter, the “Collateral
Agent”).
R
E C I T A L S
A. The
Company, The Longview Fund, L.P., a California limited partnership (“Longview”), and Longview
Marquis Master Fund, L.P., a British Virgin Islands limited partnership (“Marquis”) entered into that
certain Securities Purchase Agreement, dated as of April 1, 2008 (as amended,
supplemented, restated or modified and in effect from time to time, the “April Purchase Agreement”),
pursuant to which, among other things, (i) the Company issued to (a) Longview,
among other things, senior secured notes in an aggregate original principal
amount of $23,908,013.11 (such notes, together with any promissory notes or
other securities issued in exchange or substitution therefor or replacement
thereof, and as any of the same may be amended, supplemented, restated or
otherwise modified and in effect from time to time, the “Longview April Notes”), and
(b) Marquis, among other things, senior secured notes in an aggregate original
principal amount of $8,469,337.71 (such notes, together with any promissory
notes or other securities issued in exchange or substitution therefor or
replacement thereof, and as any of the same may be amended, supplemented,
restated or otherwise modified and in effect from time to time, the “Marquis April Notes”), and
(ii) the Warrants (as defined therein) were amended and restated.
B. Pursuant
to that certain Securities Exchange Agreement dated as of February 20, 2009
between the Company and Longview and that certain Asset Purchase and Sale
Agreement dated as of February 20, 2009 between the Company and Longview and
certain of its affiliates, the Company issued to Longview approximately 1.6
million shares of Series A Convertible Preferred Stock of the Company and sold
certain assets of the Company to Longview in exchange for the surrender and
cancellation of the Longview April Notes.
C. The
Company and each of the investors listed on the Schedule of Buyers,
including Marquis (the “Initial
Bridge Buyers”) entered into a Securities Purchase Agreement,
dated as
of September 18, 2008 (as amended, restated, supplemented or otherwise modified
and in effect from time to time, the “Bridge Purchase Agreement”
and, together with the April Purchase Agreement, the “Purchase Agreements”),
pursuant to which, among other things, subject to the terms and conditions set
forth therein, the Company sold, and the Initial Bridge Buyers purchased, senior
secured notes in the aggregate original principal amount of $7,000,000 (such
notes, together with any promissory notes or other securities issued in exchange
or substitution therefor or replacement thereof, and as any of the same may be
amended, supplemented, restated or otherwise modified and in effect from time to
time, the “Initial Bridge Notes”).
D. Pursuant
to that certain Assignment and Assumption Agreement, dated as of May 29, 2009,
Marquis transferred to Xxxxxxxxxx Xxxxxxx Fund, L.P. (“Summerview”; and together with
the Initial Bridge Buyers, the “Buyers”), among other things,
a portion of the Marquis April Notes in the principal amount of $2,252,994.73
(the “Summerview Transferred
April Notes”) and a portion of the Initial Bridge Notes in the principal
amount of $1,759,556.47 (the “Summerview Transferred Bridge
Notes”), with the remainder of the Marquis April Notes in the principal
amount of $6,710,038.53 (the “Marquis Remaining April
Notes”; and together with the Summerview Transferred April Notes and any
promissory notes or other securities issued in exchange or substitution therefor
or replacement thereof, and as any of the same may be amended, supplemented,
restated or otherwise modified and in effect from time to time, the “April Notes”), and the
remainder of the Marquis Bridge Notes in the principal amount of $5,240,433.53
(the “Marquis Remaining Bridge
Notes”; and together with the Summerview Transferred Bridge Notes and any
promissory notes or other securities issued in exchange or substitution therefor
or replacement thereof, and as any of the same may be amended, supplemented,
restated or otherwise modified and in effect from time to time, the “Bridge Notes”; the Bridge
Notes and the April Notes, hereinafter, collectively the “Notes”) continuing to be held
by Marquis.
E. The
Company desires to enter into a Securities Purchase Agreement (as amended,
restated, supplemented or otherwise modified and in effect from time to time as
permitted hereunder, the “Convertible Debt Purchase
Agreement”), by and among the Company and the investors, each of whom is
a signatory to this Agreement pursuant to which, among other things, subject to
the terms and conditions set forth therein and in this Agreement, the Company
will sell, and the Convertible Debt Creditors will purchase, secured convertible
notes in the aggregate original principal amount of up to $5,000,000 (such notes, together
with any promissory notes or other securities issued in addition to such notes
pursuant to the Convertible Debt Purchase Agreement or in exchange or
substitution therefor or replacement thereof, and as any of the same may be
amended, supplemented, restated or otherwise modified and in effect from time to
time as permitted hereunder, the “Convertible Notes”) and
warrants to purchase shares of common stock of the Company.
NOW,
THEREFORE, in reliance upon this Agreement, to induce the Buyers to consent to
the execution by the Company of the Convertible Debt Purchase Agreement and the
issuance of the Convertible Notes and to continue to extend the credit
accommodations under the Purchase
Agreements, and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All
capitalized terms used but not elsewhere defined in this Agreement shall have
the respective meanings ascribed to such terms in the Purchase Agreements and
the Notes. The following terms shall have the following meanings in this
Agreement:
Bankruptcy
Code shall mean the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
Section 101, et seq.), as amended and in effect from time to time, together with
any successor statute thereto, and the regulations issued from time to time
thereunder.
Business
Day shall mean any day that is not a Saturday, a Sunday or a day on which
banks are required or permitted to be closed in the State of New
York.
Collateral
shall mean, subject to the limitations set forth in Section 11.3, those certain
oil and gas properties listed on Exhibit A
hereto.
Collateral
Proceeds shall mean all proceeds (a) acquired upon the exercise of any
Enforcement Action against the Collateral by any Party, (b) acquired upon the
voluntary or involuntary sale, exchange or other disposition of any Collateral
(including a disposition in a Proceeding), or (c) of insurance policy claims and
condemnation awards with respect to any Collateral.
Convertible
Debt Creditor shall mean
each Convertible Debt Creditor which is signatory to this Agreement and any
other holder of a Convertible Note or any other Convertible Debt from time to
time, together with each such Person’s successors and assigns.
Convertible
Debt shall mean all of the obligations and liabilities of Obligors to
Convertible Debt Creditors evidenced by the Convertible Notes and all other
amounts and other obligations and liabilities now or hereafter owed by Obligors
to Convertible Debt Creditors pursuant to the Convertible Debt
Documents.
Convertible
Debt Documents shall mean the Convertible Notes, Convertible Debt
Purchase Agreement and all other documents and instruments evidencing, securing
or pertaining to any portion of the Convertible Debt, as amended, supplemented,
restated or otherwise modified from time to time to the extent permitted
hereunder.
Enforcement
Action shall mean (a) the exercise of any rights and remedies with
respect to the Collateral in respect of the Note Debt or the Convertible Debt by
the applicable holder thereof, (b) any action by any Note Party or any
Convertible Debt Creditor to foreclose on the Collateral, (c) any action by any
Note Party or any Convertible Debt Creditor to take possession of, sell or
otherwise realize (judicially or otherwise) upon the Collateral and/or (d) the
commencement by any Note Party or any Convertible
Debt Creditor of any legal proceedings against any Obligor or with respect to
any Collateral to facilitate the actions described in clauses (a) through (c)
above.
Hydrocarbon shall mean all oil, gas,
casinghead gas, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons and all products refined therefrom and all other minerals in and
under and which may be produced and saved from or attributable to the
Collateral, the lands pooled or unitized therewith and Note Parties’ and
Convertible Debt Creditors’ interests therein.
Lien
shall mean any mortgage, deed of trust, pledge, hypothecation, assignment,
charge or deposit arrangement, encumbrance, lien (statutory or otherwise) or
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever and any contingent or other agreement to provide
any of the foregoing, but not including the interest of a lessor under a lease
which is not a capital lease.
Note
Debt shall mean the obligations, liabilities and other amounts owed under
any Purchase Agreement, any Note or any other Transaction Document including all
interest, fees, expenses, indemnities and enforcements costs, whether before or
after the commencement of a Proceeding and without regard to whether or not an
allowed claim, together with any amendments, restatements, modifications,
renewals or extensions of any thereof.
Note
Default shall mean any “Event of Default” under any Purchase Agreement,
any Note, or any other Note Document.
Note
Documents shall mean the collective reference to the Purchase Agreements,
the Notes, and each of the other agreements to which any Obligor is a party or
is bound in connection with the transactions contemplated under the Purchase
Agreements and the Notes, as the same may be amended, restated, supplemented or
otherwise modified from time to time to the extent permitted
hereunder.
Note
Parties shall mean any holder of Note Debt, including, without
limitation, Collateral Agent and the Buyers.
Obligor
shall have the meaning ascribed to such term in the preamble of this Agreement,
together with any such Person’s successors and assigns, including a receiver,
trustee or debtor-in-possession on behalf of such Person.
Paid in
Full or Payment
in Full shall mean the indefeasible payment in full in cash of all Note
Debt and termination of all commitments to lend under the Note
Documents.
Parties shall mean the Note Parties and the
Convertible Debt Creditors.
Permitted
Convertible Debt Payments means the following
payments in respect of the Convertible Debt, in each instance due and payable on
a non-accelerated basis in accordance with the terms of the Convertible Debt
Documents as in effect on the date hereof or as modified in accordance with the
terms of this Agreement:
(a) regularly
scheduled payments of interest on the Convertible Debt payable in cash at the
non-default cash pay rate of interest of fourteen percent (14%) per
annum;
(b) regularly
scheduled payments of principal on the Convertible Debt; and
(c) accrual
(and not payment in cash) of default interest.
Person
shall mean any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation or other entity whether
governmental (whether federal, state, county, city, municipal, local, foreign,
or otherwise, including any instrumentality, division, agency, body or
department thereof) or otherwise.
Proceeding
shall mean any voluntary or involuntary insolvency, bankruptcy, receivership,
custodianship, liquidation, dissolution, reorganization, assignment for the
benefit of creditors, appointment of a custodian, receiver, trustee or other
officer with similar powers or any other proceeding for the liquidation,
dissolution or other winding up of any Obligor or any of its Subsidiaries or any
of their respective properties, in each case undertaken under any federal,
state, local, foreign or other law, rule, or regulation, including, without
limitation, the Bankruptcy Code.
Pro Rata
Share means, with respect to any Party, the percentage obtained by
dividing (a) the sum of the aggregate outstanding amount of the Note Debt
or the Convertible Debt, as applicable, held by such Party, by (b) the sum
of the aggregate outstanding amount of the Note Debt and the Convertible Debt
held by all Parties.
Requisite
Convertible Debt Creditors shall mean at any time Convertible Debt
Creditors holding more than fifty percent (50%) of the aggregate outstanding
principal balance of the Convertible Debt.
2. Intercreditor
Arrangements.
2.1 Subordination. Except
as expressly set forth in Section 2.5 below, the payment and performance of any
and all of the Convertible Debt is hereby expressly subordinated, to the extent
and in the manner set forth herein, to the Payment in Full of the Note
Debt. Each holder of the Note Debt, whether now outstanding or
hereafter arising, shall be deemed to have acquired Note Debt in reliance upon
the provisions contained herein. The parties hereto intend that this
Agreement be enforceable in any Proceeding.
2.2 Restriction
on Payments. Except as expressly set forth in Section 2.5
below, notwithstanding any provision of the Convertible Debt Documents to the
contrary and in addition to any other limitations set forth herein or therein,
no payment (whether made in cash, securities or other property or by set-off) of
principal, interest or any other amount due with respect
to the Convertible Debt shall be made or received, and no Convertible Debt
Creditor shall exercise any right of set-off or recoupment with respect to any
Convertible Debt, until all of the Note Debt is Paid in Full; provided, however, (a)
Convertible Debt Creditors may at any time (including, but not limited to,
during the existence of a Note Default) convert all or any portion of the
Convertible Debt into common stock of the Company pursuant to the terms and
conditions of the Convertible Notes and (b) except as provided in the
immediately succeeding sentence, Obligors may make and Convertible Debt
Creditors may accept Permitted Convertible Debt Payments. Notwithstanding the
foregoing, no Obligor may make, and no Convertible Debt Creditor may receive,
any payment of principal, interest or any other amount with respect to the
Convertible Debt if, at the time of such payment or immediately after giving
effect thereto a Note Default exists or would arise from the making of such
payment. Obligors may resume Permitted Convertible Debt Payments (and
may make any Permitted Convertible Debt Payments missed due to the application
of this Section 2.2) in respect of the Convertible Debt upon the earlier to
occur of (i) the waiver (as evidenced by a written waiver from the applicable
Note Parties to the applicable Obligors) or cure of such Note Default in
accordance with the terms of the applicable Note Documents or (ii) Payment in
Full of the Note Debt.
2.3 Acknowledgment
of Liens. The Note Parties and the Convertible Debt Creditors
hereby acknowledge that the other Person has been granted Liens upon the
Collateral to secure the Note Debt and the Convertible Debt, as the case may
be. Each of the Collateral Agent and the Convertible Debt Creditors
shall be solely responsible for perfecting and maintaining the perfection of
their respective Liens on the Collateral. The terms of this Agreement
shall continue to govern the relative rights of the Note Parties, on the one
hand, and the Convertible Debt Creditors, on the other hand, (a) even if all or
any part of the Liens in favor of any Party are subordinated, avoided,
disallowed, unperfected, set aside or otherwise invalidated, whether pursuant to
a Proceeding, any other judicial proceeding or otherwise, and (b) regardless of
the relative rank or priority of the Liens securing the Note Debt and the
Convertible Debt. This Agreement shall constitute a
subordination agreement within the meaning of Section 510(a) of the Bankruptcy
Code and this Agreement constitutes an authenticated notification of a claim by
each of the Note Parties and the Convertible Debt Creditors to the other secured
creditor of an interest in the Collateral in accordance with the provisions of
Sections 9-611 and 9-621 of the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York (the “Code”).
2.4 Proceedings. Except
as expressly set forth in Section 2.5 below, in the event of a Proceeding: (a)
all Note Debt first shall be Paid in Full before any payment (whether made in
cash, securities or other property or by set-off, but excluding any conversion
of the Convertible Debt into common stock of the Company pursuant to the terms
and conditions of the Convertible Notes) of or with respect to the Convertible
Debt shall be made; (b) any payment which, but for the terms hereof, otherwise
would be payable or deliverable in respect of the Convertible Debt, shall be
paid or delivered directly to Collateral Agent (to be held and/or applied by
Collateral Agent to the repayment of any and all then outstanding Note Debt in
accordance with the terms of the applicable Purchase Agreement) until all Note
Debt is Paid in Full, and each Convertible Debt Creditor irrevocably authorizes,
empowers and directs all receivers, trustees, liquidators, custodians,
conservators and others having authority in the premises
to effect all such payments and deliveries, and each Convertible Debt Creditor
also irrevocably authorizes, empowers and directs Collateral Agent to demand,
xxx for, collect and receive every such payment or distribution; (c) each
Convertible Debt Creditor agrees to execute and deliver to Collateral Agent or
its representative all such further instruments confirming the authorization
referred to in the foregoing clause (b); and (d) each Convertible Debt Creditor
agrees to execute, verify, deliver and file any proofs of claim in respect of
the Convertible Debt requested by Collateral Agent in connection with any such
Proceeding and hereby irrevocably authorizes, empowers and appoints Collateral
Agent its agent and attorney-in-fact to execute, verify, deliver and file such
proofs of claim upon the failure of such Convertible Debt Creditor promptly to
do so (and in any event prior to fifteen (15) days before the expiration of the
time to file any such proof); provided Collateral
Agent shall have no obligation to execute, verify, deliver, and/or file any such
proof of claim.
2.5 Pro Rata
Payments; Incorrect Payments.
(a) Notwithstanding
any provision of the Convertible Debt Documents or the Note Documents to the
contrary and in addition to any other limitations set forth herein or therein,
all Collateral Proceeds received by the Note Parties or the Convertible Debt
Creditors shall be applied to the Note Debt and the Convertible Debt in
accordance with the Pro Rata Share of the Note Parties and the Convertible Debt
Creditors. In the event that any Collateral Proceeds are received by
any Party in an amount in excess of its Pro Rata Share thereof (whether pursuant
to an Enforcement Action, during a Proceeding, in connection with any insurance
policy claim or condemnation award (or deed in lieu of condemnation), from the
collection or other sale or disposition of, or realization on, the Collateral,
in violation of this Agreement, or otherwise), then such excess Collateral
Proceeds shall not be commingled with any of the assets of such Party, shall be
received and held in trust for the benefit of the other Party and shall be
promptly paid over to the other Party.
(b) If
any payment or distribution (whether made in cash, securities or other property)
not permitted under this Agreement is received by any Convertible Debt Creditor
on account of the Convertible Debt before all Note Debt is Paid in Full, such
payment shall not be commingled with any asset of such Convertible Debt
Creditor, shall be held in trust by such Convertible Debt Creditor for the
benefit of Note Parties and shall immediately be paid over to Collateral Agent,
or its designated representative, for application to the payment of the Note
Debt then remaining unpaid, until all of the Note Debt is Paid in
Full.
(c) Each
Obligor hereby acknowledges that provisions of this Agreement require the
Convertible Debt Creditors to pay over to the Collateral Agent on behalf of the
Note Parties any payments received by the Convertible Debt Creditors in
contravention of this Agreement, and hereby irrevocably authorizes such payment
to the Collateral Agent on behalf of such Note Parties, notwithstanding any
instructions to the contrary that such Obligor may deliver to the Convertible
Debt Creditors after the date hereof. Each Obligor hereby
acknowledges that no such payment shall reduce the amount or otherwise alter the
obligations under the Convertible Debt or the Convertible Debt
Documents.
2.6 Sale, Transfer.
(a) Each
Party agrees that it shall be bound by the terms, provisions and conditions of
this Agreement, in its capacity as a Note Party or a Convertible Debt Creditor,
whether or not such Person has executed a counterpart of this
Agreement.
(b) No
Party shall sell, assign, dispose of or otherwise transfer all or any portion of
the Note Debt or the Convertible Debt, or the Liens on the Collateral securing
same, unless prior to the consummation of any such action, the transferor and
transferee thereof shall execute and deliver a joinder to this Agreement in form
and substance reasonably acceptable to the Note Parties or the Requisite
Convertible Debt Creditors, as applicable, or an agreement substantially
identical to this Agreement, in either case providing for the continued
effectiveness of all of the rights of the Parties arising under this
Agreement.
(c) Notwithstanding
the failure to execute or deliver any such agreement, the terms of this
Agreement effected hereby shall survive any sale, assignment, disposition or
other transfer of all or any portion of the Note Debt or the Convertible Debt,
and the terms of this Agreement shall be binding upon the successors and assigns
of each Party as provided in Section 9 below.
2.7 Restriction
on Actions.
(a) Notwithstanding
anything contained in the Convertible Debt Documents to the contrary, no
Convertible Debt Creditor shall, without the prior written consent of the Note
Parties, agree to any amendment, modification or supplement to the Convertible
Debt Documents.
(b) Neither
the Note Parties nor the Requisite Convertible Debt Creditors shall take any
Enforcement Action without giving the other Party twenty (20) Business Days
prior written notice thereof. Notwithstanding anything contained in
the Convertible Debt Documents to the contrary, no Convertible Debt Creditor
shall take any Enforcement Action unless the Requisite Convertible Debt
Creditors elect in writing to take such Enforcement Action. In the
case of any such prior written notice given by the Requisite Convertible Debt
Creditors to the Note Parties, the Requisite Convertible Debt Creditors shall,
concurrently with the delivery of such notice, provide evidence in form and
substance reasonably satisfactory to the Note Parties of the election of the
Requisite Convertible Debt Creditors to take such Enforcement
Action.
2.8 Release
of Liens. In the event that the Note Parties or Requisite
Convertible Debt Creditors are foreclosing upon or otherwise realizing upon any
Collateral pursuant to an Enforcement Action in accordance with the terms of
this Agreement and the other Party has a Lien on the same asset, such Party
agrees to deliver to the foreclosing (or other realizing) Party such Lien
releases as reasonably requested by the foreclosing (or other realizing) Party
to allow the asset to be transferred free and clean of such Lien and shall be
deemed to have consented under the Note Documents or the Convertible Debt
Documents, as applicable, to such sale, transfer or other disposition free and
clear of all Liens and to have waived the provisions of the Note Documents or
the Convertible Debt Documents, as applicable, to the extent necessary
to permit
such transaction, provided, that the Collateral
Proceeds resulting from such foreclosure or other realization are applied in
accordance with the terms of this Agreement, and the releasing Party retains a
Lien on the Collateral Proceeds of such asset subject to the terms of this
Agreement.
2.9 Waiver of
Certain Rights.
(a) Acceptance. Each Party hereby
waives all notice of the acceptance by the other Party of the provisions of this
Agreement and all the notices not specifically required pursuant to the terms of
this Agreement or under applicable law in connection with foreclosure on or sale
of all or any portion of the Collateral, and each Party expressly consents to
the reliance by the other Party upon the agreements as herein
provided.
(b) Marshalling.
(i) Each
Party hereby waives any rights it may have under applicable law to assert the
doctrine of marshaling or to otherwise require the other Party to marshal any
property of any Obligor for the benefit of such Party. Each Party
further waives any right to demand, request, plead or otherwise assert or
otherwise claim the benefit of any appraisal, valuation or other similar right
that may otherwise be available under applicable law with respect to the
Collateral or any other similar rights such Person may have under applicable
law.
(ii) Each
Convertible Debt Creditor agrees that no Note Party shall have any liability to
any Convertible Debt Creditor, and each such Convertible Debt Creditor hereby
waives any claims against the Note Parties, arising out of any and all actions
that any Note Party may take or permit or omit to take with respect to (i) the
Note Documents, (ii) the collection of the Note Debt, or (iii) the foreclosure
upon, or sale, liquidation or other disposition or realization of, any
Collateral (other than for breach of this Agreement and other than for claims
under Article 9 of the Code that any such foreclosure, sale, liquidation, or
other disposition or realization of any Collateral was not conducted in a
commercially reasonable manner). Each Convertible Debt Creditor
agrees that no Note Party shall not have any duty, express or implied, fiduciary
or otherwise, to it in respect of the maintenance or preservation of any
Collateral or otherwise. No Note Party nor any of its respective
directors, officers, employees or agents will be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so, or
will be under any obligation to sell or otherwise dispose of any Collateral upon
the request of an Obligor, any Convertible Debt Creditor or any other Person or
to take any other action whatsoever with regard to the Collateral or any part
thereof.
(iii) Each
Note Party agrees that no Convertible Debt Creditor shall have any liability to
any Note Party, and each such Note Party hereby waives any claims
against the Convertible Debt Creditors, arising out of any and all actions that
any Convertible Debt Creditor may take or permit or omit to take with respect to
(i) the Convertible Debt Documents, (ii) the collection of the Convertible Debt,
or (iii) the foreclosure upon, or sale, liquidation or other disposition or
realization of, any Collateral (other than for breach of this Agreement and
other than for claims under Article 9 of the Code that any such foreclosure,
sale, liquidation, or other disposition or realization of any Collateral was not
conducted in a commercially reasonable manner). Each Note Party
agrees that no Convertible Debt Creditor shall not have any duty, express or
implied, fiduciary or otherwise, to it in respect of the maintenance or
preservation of any Collateral or otherwise. No Convertible Debt
Creditor nor any of its respective directors, officers, employees or agents will
be liable for failure to demand, collect or realize upon any of the Collateral
or for any delay in doing so, or will be under any obligation to sell or
otherwise dispose of any Collateral upon the request of an Obligor, any Note
Party or any other Person or to take any other action whatsoever with regard to
the Collateral or any part thereof.
3. Continued
Effectiveness of this Agreement. The terms of this Agreement
and the rights and the obligations of Note Parties and Convertible Debt
Creditors arising hereunder, shall not be affected, modified or impaired in any
manner or to any extent by: (i) any amendment or modification of or supplement
to the Note Documents or the Convertible Debt Documents; (ii) the validity or
enforceability of any of such documents; or (iii) any exercise or non-exercise
of any right, power or remedy under or in respect of the Note Debt or the
Convertible Debt or any of the instruments or documents referred to in clause
(i) above.
4. Cumulative
Rights, No Waivers. Each and every right, remedy and power
granted to the Note Parties and the Convertible Debt Creditors hereunder shall
be cumulative and in addition to any other right, remedy or power specifically
granted herein, in the Note Documents or the Convertible Debt Documents or now
or hereafter existing in equity, at law, by virtue of statute or otherwise, and
may be exercised by Note Parties or the Convertible Debt Creditors, from time to
time, concurrently or independently and as often and in such order as Note
Parties or the Convertible Debt Creditors may deem expedient. Any
failure or delay on the part of the Note Parties and the Convertible Debt
Creditors in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
thereof or affect Note Parties’ and the Convertible Debt Creditors’ right
thereafter to exercise the same, and any single or partial exercise of any such
right, remedy or power shall not preclude any other or further exercise thereof
or the exercise of any other right, remedy or power, and no such failure, delay,
abandonment or single or partial exercise of Note Parties’ and the Convertible
Debt Creditors’ rights hereunder shall be deemed to establish a custom or course
of dealing or performance among the parties hereto.
5. Modification. Any
modification or waiver of any provision of this Agreement, or any consent to any
departure by any Party therefrom, shall not be effective in any event unless the
same is in writing and signed by the parties hereto, and then such modification,
waiver or consent shall be effective only in the specific instance and for the
specific instance and for the specific
purpose given. Any notice to or demand on any Party in any event not
specifically required hereunder shall not entitle such Party to any other or
further notice or demand in the same, similar or other circumstances unless
specifically required hereunder.
6. Additional
Documents and Actions. Each Party, at any time, and from time
to time, after the execution and delivery of this Agreement, upon the request of
the other Party and at the expense of Company, promptly will execute and deliver
such further documents and do such further acts and things as the other Party
may reasonably request in order to effect fully the purposes of this
Agreement.
7. Notices. All
notices and communications under this Agreement shall be in writing and shall be
(i) delivered in person, (ii) mailed, postage prepaid, either by registered or
certified mail, return receipt requested, (iii) delivered by overnight express
courier, or (iv) sent by facsimile transmission (with such facsimile
transmission to be confirmed promptly in writing sent in accordance with (i),
(ii) or (iii) above), addressed in each case as follows:
|
If
to any Convertible Debt Creditor:
|
Xxxxxx
Xxxxxx
Convertible
Debt Collateral Agent
00000
Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Facsimile:
000-000-0000
|
|
with a copy to:
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Convertible
Debt Creditors
as
listed in the attached
Schedule
of Buyers
|
|
If
to any Obligor:
|
South
Texas Oil Company
000
X. Xxxxxxxx Xxxx. #0000
Xxx
Xxxxxxx, Xxxxx 00000
Attention:
Xxxxxxx Xxxxxxx
Facsimile:
000-000-0000
|
|
with a copy to:
|
Corporate
Legal Solutions
6
Xxxxxxx’x Point Road
Gloucester,
MA 01930
Attention:
Xxx X. Xxxxxx, Xx
Facsimile:
000-000-0000
|
|
If
to Note Parties:
|
Viking
Asset Management, LLC
000
Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx
Xxxxxxx
Facsimile: (000)
000-0000
|
|
with a copy to:
|
Summerline
Asset Management, LLC
00
Xxxx Xxx Xxx Xxxx, 0xx Xxxxx
Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxxxx
Facsimile:
(000) 000-0000
|
|
with a copy to:
|
Xxxxxx
Xxxxxx Rosenman LLP
000
Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxx 00000-0000
Attn:
Xxxx Xxxx, Esq.
Facsimile:
(000) 000-0000
|
or to any
other address, as to any of the parties hereto, as such party shall designate in
a written notice to the other parties hereto. All notices sent
pursuant to the terms of this Section 7 shall be deemed received (i) if
personally delivered, then on the Business Day of delivery, (ii) if sent by
overnight, express carrier, on the next Business Day immediately following the
day sent, (iii) if sent by registered or certified mail, on the earlier of the
third Business Day following the day sent or when actually received or (iv) if
delivered by facsimile transmission, on the date of transmission if transmitted
on a Business Day before 4:00 p.m. (New York, New York time), otherwise on the
next Business Day.
8. Severability. The
illegality or unenforceability of any provision of this Agreement or any
instrument or agreement required hereunder shall not in any way affect or impair
the legality or enforceability of the remaining provisions of this
Agreement.
9. Successors
and Assigns. This Agreement shall inure to the benefit of the
successors and assigns of the Note Parties and the Convertible Debt Creditors
and shall be binding upon the successors and assigns of Obligors.
10. Counterparts. This
Agreement may be executed in any number of counterparts and by different parties
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement. Signature pages may be detached from multiple separate
counterparts and attached to a single counterpart. Delivery of an
executed signature page of this Agreement (or any notice or agreement delivered
pursuant to the terms hereof) by facsimile transmission or electronic
transmission shall be as effective as delivery of a manually executed
counterpart hereof.
11. No New
Lien; Defines Rights of Creditors; Collateral Limitations;
Subrogation.
11.1 New
Liens. The Parties hereto hereby agree that (i) no Convertible
Debt Creditor shall be permitted to restrict, in any manner, an Obligor from
granting a Lien on any of its real or personal property for the benefit of the
Note Parties and (ii) until the Payment in Full of the Note Debt, no additional
Liens shall be granted or permitted on any real or personal property of an
Obligor to secure any Convertible Debt. To the extent that the
foregoing provisions are not complied with for any reason, without limiting any
other rights and remedies available
to the Note Parties, Convertible Debt Creditors agree that any amounts received
by or distributed to any of them as a result of Liens granted or perfection
achieved in contravention of this Section 11.1 shall be held in trust for the
benefit of the Note Parties and shall be promptly paid to Collateral
Agent.
11.2 Relative
Rights. This Agreement shall define the relative rights of the
Note Parties and the Convertible Debt Creditors,
respectively. Nothing in this Agreement shall (a) impair, as among
the Obligors and the Note Parties, on the one hand, and as between the Obligors
and the Convertible Debt Creditors, on the other hand, the obligations of the
Obligors with respect to the payment of the Note Debt and the Convertible Debt,
as the case may be, in accordance with their respective terms or (b) affect the
relative rights of the Note Parties or the Convertible Debt Creditors with
respect to any other creditors of the Obligors.
11.3 Collateral
Limitations. Each Convertible Debt Creditor acknowledges and
agrees that the Collateral consists solely of the Obligor's fee ownership
interest in and to the xxxxx described on Exhibit A and the
right, title and interest of such Obligors in the Hydrocarbons in such xxxxx
prior to their extraction therefrom. In no event shall Collateral or
Collateral Proceeds include (i) as-extracted collateral, including any
Hydrocarbons that are actually extracted from the subject xxxxx or proceeds
therefrom or (ii) any royalties, receipts, receivables, rents or other rights to
payment on account of the subject xxxxx (unless same arises from an Enforcement
Action or a sale, exchange or other disposition of a subject well) or the
Hydrocarbons extracted therefrom.
11.4 Subrogation. Subject
to the Payment in Full of the Note Debt, in the event and to the extent cash,
property or securities otherwise payable or deliverable to the Convertible Debt
Creditors shall have been applied pursuant to this Agreement to the payment of
Note Debt, then and in each such event, the Convertible Debt Creditors shall be
subrogated to the rights of each Note Party to receive any further payment or
distribution in respect of or applicable to the Note Debt; and, for the purposes
of such subrogation, no payment or distribution to the Note Parties of any cash,
property or securities to which any Convertible Debt Creditor would be entitled
except for the provisions of this Agreement shall, and no payment over pursuant
to the provisions of this Agreement to the Note Parties by the Convertible Debt
Creditors shall, as between any Obligor, its creditors other than the Note
Parties and the Convertible Debt Creditors, be deemed to be a payment by such
Obligor to or on account of Note Debt.
12. Conflict. In
the event of any conflict between any term, covenant or condition of this
Agreement and any term, covenant or condition of any of the Convertible Debt
Documents or the Note Documents, the provisions of this Agreement shall control
and govern.
13. Statements
of Indebtedness. Company will furnish to (a) Collateral Agent
upon demand, a statement of the indebtedness owing from Obligors to Convertible
Debt Creditors, and will give Collateral Agent access to the books of Obligors
in accordance with the Purchase Agreements so that Collateral Agent can make a
full examination of the status of such indebtedness, and (b) each Convertible
Debt Creditor upon demand, a statement of the indebtedness owing from Obligors
to Note Parties, and will give each Convertible Debt Creditor access to the
books of Obligors in accordance with the Convertible Debt Purchase Agreement so
that each
Convertible Debt Creditor can make a full examination of the status of such
indebtedness.
14. Headings;
Section References. The captions and headings of this
Agreement are for convenience of reference only and shall not affect the
interpretation of this Agreement. Unless otherwise indicated herein,
Section references shall be deemed to be references to Sections of this
Agreement.
15. Termination. This
Agreement shall terminate upon the indefeasible Payment in Full of the Note
Debt; provided,
however, this
Agreement shall be reinstated if at any time any payment of any of the Note Debt
is rescinded or must otherwise be returned by any holder of the Note Debt or any
representative of such holder and the Note Debt, or portion thereof, intended to
have been satisfied shall be deemed to be reinstated and outstanding as if such
payment had not occurred.
16. Agreement
Not to Contest. Each Note Party and each Convertible Debt
Creditor hereby agree not to, directly or indirectly, whether in connection with
a Proceeding or otherwise, take any action or vote in any way that would be in
violation of, or inconsistent with, or result in a breach of, this Agreement or
challenge or contest (a) the validity, perfection, priority or enforceability of
any Note Debt or Convertible Debt or the Lien held by the Collateral Agent, for
the benefit of the Note Parties, or the Lien held by the Convertible Debt
Creditors, to secure the payment, performance or observance of all or any part
of the Note Debt or the Convertible Debt, (b) the rights of the Note Parties or
the Convertible Debt Creditors set forth in any of the Note Documents or
Convertible Debt Documents, respectively, with respect to any such Lien, or (c)
the validity or enforceability of any of the Note Documents or any of the
Convertible Debt Documents; provided, that
nothing in this Section 16 is intended or shall be deemed or construed to limit
in any way the ability of the parties hereto to enforce all of the terms and
provisions of this Agreement.
17. Governing
Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted
by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
18. Waiver of
Consolidation. Each Convertible Debt Creditor acknowledges and
agrees that (i) Obligors are each separate and distinct entities; and (ii) it
will not at any time insist upon, plead or seek advantage of any substantive
consolidation, piercing the corporate veil or any other order or judgment that
causes an effective combination of the assets and liabilities of Obligors in any
case or proceeding under Title 11 of the United States Code or other similar
proceeding.
19. Convertible
Debt Collateral Agent. (a) Each of the Convertible
Debt Creditors hereby irrevocably appoints and authorizes Xxxxxx Xxxxxx, an
individual with his principal place of residence at 00000 Xxxxxxxxx Xxxxx, Xxxxx
000, Xxxxxxxxxx, XX 00000, to act as collateral agent under the Convertible Debt
Documents (the “Convertible
Debt Collateral Agent”), to enter into each of the instruments, documents
and agreements, including any guaranty, financing statements, mortgage, account
control agreement or any other security documents (collectively, the “Financing Documents”), to
which it is a party as agent (including as a collateral agent) on Convertible
Debt Creditors’ behalf and to take such actions as Convertible Debt Collateral
Agent on Convertible Debt Creditors’ behalf under the Financing Documents and to
exercise such powers under the Financing Documents as are delegated to
Convertible Debt Collateral Agent (as agent, secured party or otherwise) by the
terms thereof, together with all such powers as are reasonably incidental
thereto. The Convertible Debt Collateral Agent shall take such action
under any Convertible Debt Document as the Convertible Debt Collateral Agent
shall reasonably be directed by Convertible Debt Creditors in accordance with
the terms of the Convertible Debt Documents (and, in any event, as reasonably
directed by written direction of Requisite Convertible Debt
Creditor). Convertible Debt Collateral Agent is authorized and
empowered to amend, modify, or waive any provisions of any Financing Document to
which it is a party or which run in its favor on behalf of the Convertible Debt
Creditors; provided, however, that the parties hereto hereby agree that no such
amendment, modification or waiver shall be effective without the unanimous
written consent of the Convertible Debt Creditors.
(b) Whether
or not the transactions contemplated hereby shall be consummated, upon demand
therefor, the Convertible Debt Creditors shall indemnify the Convertible
Debt Collateral Agent (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), ratably
(based on the ratio of the amount of Convertible Debt a Convertible Debt
Creditor holds to the aggregate Convertible Debt held by all Convertible Debt
Creditors) from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
of any kind whatsoever, including, for purposes of clarification, all taxes,
which may at any time (including at any time following the payment in full of
the Convertible Notes and the termination or resignation of the Convertible Debt
Collateral Agent) be imposed on, incurred by or asserted against the
Convertible
Debt Collateral Agent in any way relating to or arising out of any Convertible
Debt Document or any document contemplated hereby or referred to herein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Convertible Debt Collateral Agent under or in connection with any of the
foregoing; provided, however, that
Convertible Debt Creditors shall not be liable for the payment to the
Convertible Debt Collateral Agent of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Convertible Debt Collateral
Agent’s gross negligence or willful misconduct. In addition,
Convertible Debt Creditors shall reimburse the Convertible Debt Collateral Agent
upon demand for its ratable share (based on the ratio of the amount of
Convertible Debt a Convertible Debt Creditor holds to the aggregate Convertible
Debt held by all Convertible Debt Creditors) of any costs or out-of-pocket
expenses (including attorney costs) incurred by the Convertible Debt Collateral
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, any Convertible Debt Document, or any document
contemplated hereby or referred to herein to the extent that the Convertible
Debt Collateral Agent is not reimbursed for such expenses by or on behalf of the
Company. Without limiting the generality of the foregoing, if any
governmental authority of any jurisdiction asserts a claim that the Convertible
Debt Collateral Agent did not properly withhold tax from amounts paid to or for
the account of a Convertible Debt Creditor (because the appropriate form was not
delivered, was not properly executed, or because such Convertible Debt Creditor
failed to notify the Convertible Debt Collateral Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason), Convertible Debt Creditors shall
indemnify the Convertible Debt Collateral Agent fully for all amounts paid,
directly or indirectly, by the Convertible Debt Collateral Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Convertible Debt Collateral Agent
under this Section
19(b), together with
all related costs and expenses (including attorney
costs). The obligation of Convertible Debt Creditors in this Section 19(b) shall survive the
payment of all Convertible Debt.
(c) The
Convertible Debt Collateral Agent shall not be deemed to have knowledge or
notice of the occurrence of any Event of Default (as defined in any Convertible
Debt Document) (a “Convertible
Debt Default”) or any event that with the giving of notice or passage of
time would constitute a Convertible Debt Default unless the Convertible Debt
Collateral Agent shall have received written notice from Convertible Debt
Creditors describing a Convertible Debt Default or event that with the giving of
notice or passage of time would constitute such a Convertible Debt Default and
stating that such notice is a “notice of default”. Upon the
occurrence and continuance of a Convertible Debt Default, or an event that with
the giving of notice or passage of time would constitute a Convertible Debt
Default, the Convertible Debt Collateral Agent shall take such action under any
Convertible Debt Document with respect to such Convertible Debt Default or
event that with the giving of notice or passage of time would constitute a
Convertible Debt Default as Convertible Debt Collateral Agent shall
reasonably be directed by Convertible Debt Creditors in accordance with the
terms of the Convertible Debt Documents (and, in any event, as reasonably
directed by written direction of Requisite Convertible
Debt Creditors); provided that, unless and until the Convertible Debt Collateral
Agent shall have received such directions, the Convertible Debt Collateral Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Convertible Debt Default or event that
with the giving of notice or passage of time would constitute a Convertible Debt
Default as the Convertible Debt Collateral Agent shall deem advisable in
the best interests of Convertible Debt Creditors. In taking such
action or refraining from taking such action without specific direction from
Convertible Debt Creditors, the Convertible Debt Collateral Agent shall use the
same degree of care and skill as a prudent person would exercise or use under
the circumstances in the conduct of such person’s own affairs.
(d) Nothing
in this Section
19 shall
be deemed to limit or otherwise affect the rights of Convertible Debt Collateral
Agent or Convertible Debt Creditors to exercise any remedy provided in any
Convertible Debt Document.
(e) The
Convertible Debt Collateral Agent may resign from the performance of all of its
functions and duties under this Section
19 and/or under any Convertible Debt Document at any time by giving
thirty (30) Business Days’ prior written notice to Convertible Debt
Creditors. Such resignation shall take effect upon the appointment of
a successor Convertible Debt Collateral Agent pursuant to clause (f) below or as
otherwise provided below.
(f) Upon
(i) Convertible Debt Creditors’ receipt of a notice of resignation by the
Convertible Debt Collateral Agent in accordance with clause (e) above, or (ii)
written notice by Convertible Debt Creditors to Convertible Debt Collateral
Agent of Convertible Debt Creditors’ election to remove the existing Convertible
Debt Collateral Agent and appoint a successor Convertible Debt Collateral Agent,
Convertible Debt Creditors shall have the right to appoint a successor
Convertible Debt Collateral Agent. Upon the acceptance of a
successor's appointment as Convertible Debt Collateral Agent and notice of such
acceptance to the retiring Convertible Debt Collateral Agent, such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring (or retired) Convertible Debt Collateral Agent, the
retiring Convertible Debt Collateral Agent's resignation shall become
immediately effective and the retiring Convertible Debt Collateral Agent shall
be discharged from all of its duties and obligations under this Section 19 and
under the Convertible Debt Documents (if such resignation was not already
effective and such duties and obligations not already discharged, as provided
below in this paragraph). If no such successor shall have been so
appointed by Convertible Debt Creditors and shall have accepted such appointment
within thirty (30) days after the retiring Convertible Debt Collateral Agent
gives notice of its resignation or Convertible Debt Creditors give notice of
their election to replace the retiring Convertible Debt Collateral Agent, then
the retiring Convertible Debt Collateral Agent may, on behalf of Convertible
Debt Creditors (but without any obligation) appoint a successor Convertible Debt
Collateral Agent without the consent of Convertible Debt
Creditors. From and following the expiration of such thirty (30) day
period, Convertible Debt Collateral Agent shall have the exclusive right without
any Person's consent, upon one (1) Business Days' notice to Convertible Debt
Creditors, to make its resignation or removal effective
immediately. From and following the effectiveness of such notice, (i)
the retiring Convertible Debt Collateral Agent shall be discharged from its
duties and obligations under this Section 19 and
under the Convertible Debt Documents and (ii) all actions, payments,
communications and determinations provided to be made by, to or through
Convertible Debt Collateral Agent shall instead be made by or to Convertible
Debt Creditors directly, until such time as Convertible Debt Creditors appoint a
Convertible Debt Collateral Agent as provided for above in this
paragraph. The provisions of this Section 19 shall
continue in effect for the benefit of any retiring Convertible Debt Collateral
Agent and its sub-agents after the effectiveness of its resignation or removal
and under the Convertible Debt Documents in respect of any actions taken or
omitted to be taken by any of them while the retiring Convertible Debt
Collateral Agent was acting or was continuing to act as Convertible Debt
Collateral Agent.
(g) If
pursuant to any Financing Document the Convertible Debt Collateral Agent is
given the discretion to allocate proceeds received by Convertible Debt
Collateral Agent pursuant to the exercise of remedies under the
Financing Documents or at law or in equity (including without limitation with
respect to any secured creditor remedies exercised against the Collateral and
any other collateral security provided for under any Financing Document),
Convertible Debt Collateral Agent shall apply such proceeds to the then
outstanding Convertible Debt in the following order of priority (with amounts
received being applied in the numerical order set forth below until exhausted
prior to the application to the next succeeding category and each of the
Convertible Debt Creditors or other Persons entitled to payment shall receive an
amount equal to its pro rata share of amounts available to be applied pursuant
to clauses second, third and fourth below):
first, to payment of
fees, costs and expenses (including reasonable attorney’s fees) owing to the
Convertible Debt Collateral Agent;
second, to payment of
all accrued unpaid interest and fees (other than fees owing to Convertible Debt
Collateral Agent) on the Convertible Debt;
third, to payment of
principal of the Convertible Debt;
fourth, to payment of
any other amounts owing constituting Convertible Debt; and
fifth, any remainder
shall be for the account of and paid to whoever may be lawfully entitled
thereto.
[remainder
of page intentionally left blank]
IN
WITNESS WHEREOF, Convertible Debt Creditors have caused this Agreement to be
executed as of the date first above written.
CONVERTIBLE
DEBT CREDITORS:
[____________],
as a Convertible Debt Creditor
By:
_______________________________
Name:
____________________________
Title:_____________________________
[____________],
as a Convertible Debt Creditor
By:
_______________________________
Name:
____________________________
Title:
_____________________________
IN
WITNESS WHEREOF, Convertible Debt Collateral Agent has caused this Agreement to
be executed as of the date first above written.
CONVERTIBLE
DEBT COLLATERAL AGENT:
_____________________________________
Xxxxxx
Xxxxxx
IN WITNESS WHEREOF, Obligors have
caused this Agreement to be executed as of the date first above
written.
OBLIGORS:
SOUTH TEXAS OIL
COMPANY,
a Nevada
corporation
By:
_____________________________________
Name:
Xxxxxxx X. Xxxxxxx
Title:
Chief Executive Officer
SOUTHERN TEXAS OIL COMPANY., a
Texas corporation
By:
_____________________________________
Name:
___________________________________
Title:_____________________________________
STO OPERATING COMPANY, a Texas
corporation
By:_____________________________________
Name:___________________________________
Title:____________________________________
STO PROPERTIES LLC, a Texas
limited liability company
By:
_____________________________________
Name:
___________________________________
Title:
_____________________________________
STO DRILLING COMPANY, a Texas
corporation
By:
_____________________________________
Name:_____________________________________
Title:_____________________________________
IN WITNESS WHEREOF, Collateral Agent
and Buyers have caused this Agreement to be executed as of the date first above
written.
COLLATERAL
AGENT:
VIKING ASSET MANAGEMENT, LLC,
a California limited liability company, in its capacity as Collateral Agent for
the Buyers
By:
_____________________________________
Name: S.
Xxxxxxx Xxxxxxx
Title:
Chief Financial Officer
BUYERS:
LONGVIEW
MARQUIS MASTER FUND, L.P.
By:
Summerline Asset Management, LLC
Its:
Investment Advisor
By:
_____________________________________
Name:
Xxxxxx X. Xxxxxxxx
Title:
Co-Managing Member
XXXXXXXXXX
XXXXXXX FUND, L.P.
By:
Summerline Asset Management, LLC
Its:
Investment Advisor
By:
_____________________________________
Name:
Xxxxxx X. Xxxxxxxx
Title:
Co-Managing Member
Schedule
of Buyers
|
First
Closing - June 10, 2009
|
EXHIBIT
A
Oil
and Gas Properties
[To be
inserted]
