INTERCREDITOR AGREEMENT
EXHIBIT
99.9
THIS
INTERCREDITOR AGREEMENT (this “Agreement”), dated as of September 19, 2008, is
by and among (a) Viking Asset Management, LLC, a California limited liability
company, as Bridge Agent (as defined below), (b) the Bridge Buyers (as defined
below), (c) Viking Asset Management, LLC, a California limited liability
company, as Initial Purchase Agent (as defined below), and (d) the Initial
Buyers (as defined below).
R
E C I T
A L S:
A. South
Texas Oil Company, a Nevada corporation (together with its successors and
assigns and any receiver, trustee or debtor-in-possession on its behalf or
on
behalf of any successor or assign, the “Borrower”), and the Bridge Buyers have
entered into that certain Securities Purchase Agreement dated as of the date
hereof (as amended, restated, supplemented, refinanced or otherwise modified
from time to time as permitted hereunder, the “Bridge Purchase Agreement”),
pursuant to which the Bridge Buyers made loans to Borrower secured by liens
on
and security interests in substantially all of the assets and properties of
Borrower and the Obligors (as defined herein).
B. Borrower
and Initial Buyers have entered into that certain Securities Purchase Agreement
dated as of April 1, 2008 (as amended, restated, refinanced, supplemented or
otherwise modified from time to time as permitted hereunder, the “Initial
Purchase Agreement”), pursuant to which Initial Buyers made loans to Borrower
secured by liens on and security interests in substantially all of the assets
and properties of Borrower and the Obligors.
C. Bridge
Agent, on behalf of itself and the Bridge Buyers, the Bridge Buyers, the Initial
Purchase Agent, on behalf of itself and the Initial Buyers, and the Initial
Buyers, desire to enter into this Agreement to, among other things, (i) confirm
the relative priorities of the Liens (as defined herein) of Bridge Agent, on
behalf of itself and the Bridge Buyers, and Initial Purchase Agent, on behalf
of
itself and the Initial Buyers, in the assets and properties of Borrower and
the
Obligors, and (ii) provide for the orderly sharing among them, in
accordance with such priorities, of the Proceeds of such assets and properties
upon any foreclosure thereon or other disposition thereof.
In
consideration of the mutual benefits accruing to Bridge Agent, the Bridge
Buyers, Initial Purchase Agent and the Initial Buyers hereunder and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
Section
1. DEFINITIONS
All
terms
defined in the Uniform Commercial Code as in effect in the State of New York,
unless otherwise defined herein, shall have the meanings set forth therein,
and
all other capitalized terms used herein but not defined shall have the meanings
set forth in the Bridge Purchase Agreement. In addition, as used in this
Agreement (including in the preamble and recitals above), the following terms
shall have the meanings ascribed to them below (all
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references
to any term in the plural shall include the singular and all references to
any
term in the singular shall include the plural):
“Bankruptcy
Code” shall mean Title 11 of the United States Code entitled “Bankruptcy,” as
now and hereafter in effect, or any successor statute.
“Bridge
Agent” shall mean Viking Asset Management, LLC, a California limited liability
company, in its capacity as collateral agent for the Bridge Buyers, and its
successors and assigns in such capacity.
“Bridge
Buyer” shall mean (a) each “Buyer” party to the Bridge Purchase Agreement, (b)
each holder of a Bridge Note (as defined in the Bridge Purchase Agreement)
and
(c) each other holder of all or any portion of the Bridge Debt, and their
respective successors and assigns, in each case in their capacities as such
(including any other lender or group of lenders that at any time succeeds to
or
refinances, replaces or substitutes for all or any portion of the Bridge Debt
at
any time and from time to time).
“Bridge
Debt” shall mean any and all obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower or any Obligor to the Bridge
Agent and/or any Bridge Buyer evidenced by or arising under the Bridge Purchase
Documents, whether direct or indirect, absolute or contingent, joint or several,
due or not due, primary or secondary, liquidated or unliquidated, including
principal, interest, charges, fees, costs, indemnities and expenses, however
evidenced, whether as principal, surety, endorser, guarantor or otherwise,
whether now existing or hereafter arising, whether arising during or after
the
initial or any renewal term of the Bridge Purchase Documents or after the
commencement of any Insolvency Proceeding with respect to Borrower or any
Obligor (and including, without limitation, the payment of interest, fees,
costs
and other charges which would accrue and become due but for the commencement
of
such Insolvency Proceeding whether or not such amount is allowed or allowable
in
whole or in part in any such Insolvency Proceeding), and in each case, whether
or not allowed or allowable in an Insolvency Proceeding.
“Bridge
Default” shall mean a Default under any Bridge Purchase Document.
“Bridge
Purchase Documents” shall mean the Bridge Purchase Agreement, the Bridge Notes,
each of the Bridge Security Documents (as
defined in the Bridge Purchase Agreement),
the
Conveyances of Limited Overriding Royalty Interests (as defined in the Bridge
Purchase Agreement), this Agreement and all other agreements, documents and
instruments at any time executed and/or delivered by Borrower or any Obligor
or
any other Person with, to or in favor of Bridge Agent or any Bridge Buyer in
connection therewith or related thereto, as all of the foregoing now exist
or
may hereafter be amended, modified, supplemented, extended, replaced, renewed,
refinanced or restated, except in violation of Section 2.9 hereof.
“Business
Day” shall mean any day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to
close.
“Buyer
Party” and “Buyer Parties” shall mean, individually or collectively as the
context may require, Bridge Agent, the Bridge Buyers, Initial Purchase Agent
and
the Initial Buyers, and their respective successors and assigns.
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“Cash
Proceeds” shall mean all Proceeds of any Collateral received by any Grantor or
Buyer Party consisting of cash, checks or the like.
“Collateral”
shall mean all assets and properties of any kind whatsoever, real or personal,
tangible or intangible and wherever located, whether now owned or hereafter
acquired, of Borrower or any Obligor on which a Lien is granted under any of
the
Purchase Documents.
“Default”
shall mean an “Event of Default” or similar term, as such terms are defined in
the Bridge Notes, and an “Event of Default” or similar term, as such terms are
defined in the Notes (as defined in the Initial Purchase Agreement), so long
as
any such Purchase Document is in effect.
“Discharge
of Bridge Debt” shall mean the payment in full in cash or any other form of
consideration that is expressly acceptable to each Bridge Buyer (provided that
the acceptance in any one instance by a Bridge Buyer of such other form of
consideration shall not be deemed to be a waiver or relinquishment of such
Bridge Buyer’s right to decline such other form of consideration at any other
time) of the Bridge Debt (other than contingent indemnification obligations
to
the extent no claim giving rise thereto has been asserted). If after receipt
of
any payment of, or Proceeds applied to the payment of, the Bridge Debt, Bridge
Agent or any Bridge Buyer is required to surrender or return such payment or
Proceeds to any Person for any reason, then the Bridge Debt intended to be
satisfied by such payment or Proceeds shall be reinstated and continue and
this
Agreement shall continue in full force and effect as if such payment or Proceeds
had not been received by Bridge Agent or any Bridge Buyer, as the case may
be,
and no Discharge of Bridge Debt shall be deemed to have occurred.
“Discharge
of Initial Purchase Debt” shall mean the payment in full in cash or any other
form of consideration that is expressly acceptable to each Initial Buyer
(provided that the acceptance in any one instance by an Initial Buyer of such
other form of consideration shall not be deemed to be a waiver or relinquishment
of such Initial Buyer’s right to decline such other form of consideration at any
other time) of the Initial Purchase Debt (other than contingent indemnification
obligations to the extent no claim giving rise thereto has been asserted).
If
after receipt of any payment of, or Proceeds applied to the payment of, the
Initial Purchase Debt, Initial Purchase Agent or any Initial Buyer is required
to surrender or return such payment or Proceeds to any person for any reason,
then the Initial Purchase Debt intended to be satisfied by such payment or
Proceeds shall be reinstated and continue and this Agreement shall continue
in
full force and effect as if such payment or Proceeds had not been received
by
Initial Purchase Agent or any Initial Buyer, as the case may be, and no
Discharge of Initial Purchase Debt shall be deemed to have
occurred.
“Discharge
of Senior Debt” shall mean the payment in full in cash of the Senior Debt (other
than contingent indemnification obligations to the extent no claim giving rise
thereto has been asserted). If after receipt of any payment of, or Proceeds
applied to the payment of, the Senior Debt, any holder of Senior Debt is
required to surrender or return such payment or Proceeds to any Person for
any
reason, then the Senior Debt intended to be satisfied by such payment or
Proceeds shall be reinstated and continue and this Agreement shall continue
in
full force and effect as if such payment or Proceeds had not been received
by
such holder of Senior Debt, and no Discharge of Senior Debt shall be deemed
to
have occurred.
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“Enforcement
Action” shall mean (i) the exercise of any rights and remedies in respect
of the Collateral by the applicable Buyer Party or Buyer Parties (other than
demand for payment of any Bridge Debt or Initial Purchase Debt or acceleration
thereof), (ii) any action by any Buyer Party to foreclose on the Lien of such
Person in any Collateral, (iii) any action by any Buyer Party to take
possession of, sell or otherwise realize (judicially or non-judicially) upon
any
Collateral (including, without limitation, by setoff or notification of account
debtors), and/or (iv) the commencement by any Buyer Party of any legal
proceedings against or with respect to any Collateral to facilitate the actions
described in clauses (i) through (iii) above, including the commencement of
any
Insolvency Proceeding. In addition, solely with respect to Initial Purchase
Debt
held by Initial Buyers other than Marquis, “Enforcement Action” shall also mean
(a) taking from or for the account of any Obligor or any Person, by set-off
or
in any other manner, the whole or any part of any moneys which may now or
hereafter be owing by such Obligor with respect to such portion of the Initial
Purchase Debt, (b) suing for payment of, or initiating or participating with
others in any suit, action or proceeding against any Obligor to (1) enforce
payment of or to collect the whole or any part of such portion of the Initial
Purchase Debt or (2) commence judicial enforcement of any of the rights and
remedies under the Initial Purchase Documents or applicable law with respect
to
such portion of the Initial Purchase Debt, including, without limitation,
commencing an Insolvency Proceeding, (c) accelerating such portion of the
Initial Purchase Debt, (d) exercising any put option or to cause any Obligor
to
honor any redemption or mandatory prepayment obligation under any Initial
Purchase Document, (d) notifying account debtors or directly collect accounts
receivable or other payment rights of any Obligor, or (e) exercising in any
other manner any remedies with respect to such portion of the Initial Purchase
Debt set forth in any Initial Purchase Document or that otherwise might be
available to such Initial Buyer at law, in equity, pursuant to judicial
proceeding or otherwise.
“Grantors”
shall mean Borrower and each Obligor.
“Initial
Buyer” shall mean each “Buyer” party to the Initial Purchase Agreement, each
holder of a Note (as defined in the Initial Purchase Agreement) and each other
holder of all or any portion of the Initial Purchase Debt, and their respective
successors and assigns, in each case in their capacities as such (including
any
other lender or group of lenders that at any time succeeds to or refinances,
replaces or substitutes for all or any portion of the Initial Purchase Debt
at
any time and from time to time).
“Initial
Purchase Agent” shall mean Viking
Asset Management, LLC, a California limited liability company,
in its
capacity as collateral agent for the Initial Buyers, and its successors and
assigns in such capacity.
“Initial
Purchase Debt” shall mean any and all obligations, liabilities and indebtedness
of every kind, nature and description owing by Borrower or any Obligor to
Initial Purchase Agent and/or any Initial Buyer evidenced by or arising under
the Initial Purchase Documents, whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, including principal, interest, charges, fees, costs,
indemnities and expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal term of
the
Initial Purchase Documents or after the commencement of any
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Insolvency
Proceeding with respect to Borrower or any Obligor (and including, without
limitation, the payment of interest, fees, costs and other charges which would
accrue and become due but for the commencement of such Insolvency Proceeding,
whether or not such amount is allowed or allowable in whole or in part in any
such Insolvency Proceeding), and in each case, whether or not allowed or
allowable in an Insolvency Proceeding.
“Initial
Purchase Default” shall mean a Default under any Initial Purchase
Document.
“Initial
Purchase Documents” shall mean the Initial Purchase Agreement, the Notes, the
Warrants (as defined in the Initial Purchase Agreement), the Replacement
Override Conveyances (as defined in the Initial Purchase Agreement) and all
agreements, documents and instruments at any time executed and/or delivered
by a
Borrower or any Obligor or any other Person with, to or in favor of the Initial
Buyers and/or Initial Purchase Agent in connection therewith or related thereto,
as all of the foregoing now exist or may hereafter be amended, modified,
supplemented, extended, replaced, renewed, refinanced or restated, except in
violation of Section 2.9 hereof.
“Insolvency
Proceeding” shall mean, as to any Person, any insolvency, bankruptcy,
receivership, custodianship, liquidation, dissolution, reorganization,
assignment for the benefit of creditors or other proceeding for the liquidation,
dissolution or other winding up of any Grantor or any of its Subsidiaries or
any
of their respective properties.
“Lien”
shall mean any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, lien, charge, claim, security interest, easement or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the UCC or comparable
law of any jurisdiction).
“Marquis”
shall mean Longview Marquis Master Fund, L.P., British Virgin Islands limited
partnership, and its successors and assigns.
“Obligors”
shall mean, individually and collectively, any Person (other than Borrower)
liable on or in respect of the Initial Purchase Debt or the Bridge Debt, and
each of their successors and assigns, including, without limitation, a receiver,
trustee or debtor-in-possession on behalf of such Person or on behalf of any
such successor or assign.
“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 or
governmental unit (whether federal, state, county, city, municipal, local,
foreign, or otherwise, including any instrumentality, division, agency, body
or
department thereof).
“Proceeds”
shall mean "proceeds" as defined in Article 9 of the UCC as in effect in the
state of New York on the date hereof with respect to Collateral, including
any
payment or property received on account of any secured claim in any Insolvency
Proceeding.
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“Purchase
Documents” shall mean, collectively, the Bridge Purchase Documents and the
Initial Purchase Documents.
“Senior
Debt” shall mean the Bridge Debt and all Initial Purchase Debt held by Marquis
and any future holder in replacement thereof.
“Subsidiary”
shall mean, with respect to any Person, (i) any corporation of which an
aggregate of more than fifty percent (50%) of the outstanding equity securities
having ordinary voting power to elect a majority of the governing body of such
corporation (irrespective of whether, at the time, equity securities of any
other class or classes of such corporation shall have or might have voting
power
by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of fifty percent (50%) or more of such
equity securities whether by proxy, agreement, operation of law or otherwise,
and (ii) any partnership or limited liability company in which such Person
and/or one or more Subsidiaries of such Person shall have an interest (whether
in the form of voting or participation in profits or capital contribution)
of
more than fifty percent (50%) or of which any such Person is a general partner
or may exercise the powers of a general partner.
“UCC”
shall mean the Uniform Commercial Code, as amended and in effect in any
applicable jurisdiction.
Section
2. PAYMENTS;
SECURITY INTERESTS; PRIORITIES; REMEDIES
2.1 Priorities.
(a) The
Bridge Agent, for itself and on behalf of the Bridge Buyers, hereby acknowledges
that the Initial Purchase Agent, for the benefit of itself and the Initial
Buyers, has been granted Liens upon all of the Collateral pursuant to the
Initial Purchase Documents to secure the Initial Purchase Debt. The Initial
Purchase Agent, for itself and on behalf of the Initial Buyers, hereby
acknowledges that the Bridge Agent, for the benefit of itself and the Bridge
Buyers, has been granted Liens upon all of the Collateral pursuant to the Bridge
Purchase Documents to secure the Bridge Debt.
(b) Notwithstanding
the order or time of attachment, or the order, time or manner of perfection,
or
the order or time of filing or recordation of any document or instrument, or
other method of perfecting a Lien in favor of a Buyer Party in any Collateral,
and notwithstanding any conflicting terms or conditions which may be contained
in any of the Purchase Documents, the Liens of Bridge Agent upon the Collateral
have and shall have priority over the Liens of Initial Purchase Agent upon
the
Collateral (and such Liens of Initial Purchase Agent are and shall be junior
and
subordinate to the Liens of Bridge Agent upon the Collateral). The
priorities given to the Liens of Bridge Agent upon the Collateral pursuant
to
this Section 2.1(b) and the
terms
of this Agreement shall continue to govern the relative rights and priorities
of
Bridge Agent and the Bridge Buyers, on the one hand, and Initial Purchase Agent
and the Initial Buyers, on the other hand, even if all or any part of the Liens
in favor of a Buyer Party are subordinated, avoided, disallowed, unperfected,
set aside or otherwise invalidated,
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whether
pursuant to an Insolvency Proceeding, any other judicial proceeding or
otherwise, and this Agreement shall be reinstated if at any time any payment
of
any of the Bridge Debt is rescinded or must be returned by any holder thereof
or
any representative of such holder.
(c) Each
Buyer Party shall be solely responsible for perfecting and maintaining the
perfection of its Lien in and to each item constituting the Collateral in which
such Buyer Party has been granted a Lien. The foregoing provisions of this
Agreement are intended solely to govern the respective Lien priorities as
between the Buyer Parties and shall not impose on any Buyer Party any
obligations in respect of the disposition of Proceeds of any Collateral which
would conflict with prior perfected claims therein in favor of any other Person
or any order or decree of any court or governmental authority or any applicable
law. The Initial Purchase Agent, on behalf of itself and the Initial Buyers,
agrees that it and they will not object to or contest, in any proceeding
(including, without limitation, an Insolvency Proceeding) or otherwise, the
validity, extent, perfection, priority or enforceability of the Liens of the
Bridge Agent, for the benefit of itself and the Bridge Buyers, upon the
Collateral; provided,
that
the foregoing is not intended and shall not be deemed or construed to limit
the
ability of the Initial Purchase Agent or any of the Initial Buyers to enforce
the terms and provisions of this Agreement. The Bridge Agent, on behalf of
itself and the Bridge Buyers, agrees that it and they will not object to or
contest, in any proceeding (including, without limitation, an Insolvency
Proceeding) or otherwise, the validity, extent, perfection, priority or
enforceability of the Liens of the Initial Purchase Agent, on behalf of itself
and the Initial Buyers, upon the Collateral; provided,
that
the foregoing is not intended and shall not be deemed or construed to limit
the
ability of the Bridge Agent or any of the Bridge Buyers to enforce the terms
and
provisions of this Agreement.
(d) Notwithstanding
anything to the contrary contained in the Initial Purchase Documents, until
the
Discharge of Senior Debt, in no event shall Initial Purchase Agent or the
Initial Buyers be permitted to receive or retain any cash payment of principal,
interest, fees, costs, expenses or other amounts on account of the Initial
Purchase Debt unless such payment is made solely on account of Senior Debt
(and
made or delivered to the applicable holder of Senior Debt). No Default shall
be
deemed to exist under any Initial Purchase Document as a result of the operation
of this Section 2.1(d). This Section 2.1(d) shall not apply to any cash
payment of principal, interest, fees, costs, expenses or other amounts received
prior to the effective date of this Agreement on account of the Initial Purchase
Debt.
2.2 No
Alteration.
The
priorities of the Liens provided in this Agreement shall not be altered or
otherwise affected by (a) any amendment, modification, supplement, extension,
renewal, restatement, replacement or refinancing of the Bridge Debt or the
Initial Purchase Debt, nor (b) any action or inaction which any of the Buyer
Parties may take or fail to take in respect of the Collateral. The parties
hereto acknowledge and agree that it is their intention that the Collateral
securing the Bridge Debt and the Collateral securing the Initial Purchase Debt
as of the date hereof be identical in all material respects and, in furtherance
of such intent, the parties hereto agree: (a) to cooperate in good faith in
order to determine, upon any request by the Bridge Agent or the Initial Purchase
Agent, the specific assets included in the Collateral securing their respective
obligations, the steps taken to perfect the Liens thereon and the identity
of
the respective parties obligated under any Purchase Document, and (b) any Lien
obtained by any
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Buyer
Party in respect of any judgment obtained in respect of any obligations shall
be
subject in all respects to the terms of this Agreement.
2.3 Application
of Proceeds.
All
Proceeds of Collateral received by any Buyer Party shall be distributed (a)
first, to Bridge Agent, for application to the Bridge Debt, as a permanent
repayment thereof, in accordance with the terms of the Bridge Purchase Documents
as in effect on the date hereof, until the Discharge of Bridge Debt, (b) second,
to Initial Purchase Agent, for application to the Initial Purchase Debt that
constitutes Senior Debt, until the Discharge of Senior Debt, (c) third, to
Initial Purchase Agent, for application to the remaining Initial Purchase Debt,
until the Discharge of Initial Purchase Debt and (d) fourth, to the Person
legally entitled thereto.
2.4 Insurance
and Condemnation Awards.
Each
Buyer Party agrees that any Collateral or Proceeds thereof or payment with
respect thereto received by any Buyer Party in connection with any insurance
policy claim or any condemnation award (or deed in lieu of condemnation) with
respect to Collateral, shall be promptly transferred or paid over to the
applicable Buyer Party entitled thereto in accordance with Section 2.3 for
application to the Bridge Debt or Initial Purchase Debt, as applicable, in
accordance with Section 2.3, in the same form as received and with any necessary
endorsements or assignments or as a court of competent jurisdiction may
otherwise direct. Until the Discharge of Senior Debt, the holders of Senior
Debt
shall have the sole and exclusive right, subject to the rights of the Borrower
and Obligors under the applicable Purchase Documents, to adjust settlement
of
insurance claims in the event of any covered loss, theft or destruction of
any
Collateral. In the event the holders of Senior Debt permit the Borrower or
any
Obligor to utilize the proceeds of insurance to replace Collateral, the Purchase
Documents shall be deemed to permit such use of proceeds.
2.5 Exercise
of Rights.
(a) Subject
to the terms and conditions set forth in this Agreement, Bridge Agent and the
Bridge Buyers shall have the right to manage, perform and enforce the terms
of
the Bridge Purchase Documents with respect to the Collateral, to exercise and
enforce all privileges and rights thereunder according to their discretion
and
the exercise of their business judgment, including, without limitation, the
right to take or retake control or possession of the Collateral and to hold,
prepare for sale, process, sell, lease, dispose of, or liquidate the Collateral,
and to incur expenses in connection with such sale, lease or other disposition
and to exercise all of the rights and remedies of a secured lender under the
UCC
of any applicable jurisdiction. In conducting any public or private sale under
the UCC, the Bridge Agent shall give the Initial Purchase Agent not less than
five (5) days prior notice of such sale or notice of such sale as may be
required under the applicable UCC; provided,
however,
that,
subject to Section 2.10 hereof, ten (10) days’ notice shall be deemed in all
respects to be commercially reasonable notice.
(b) Until
the
Discharge of Senior Debt, neither the Initial Purchase Agent nor any Initial
Buyer (other than Marquis) shall, without the prior written consent of the
holders of the Senior Debt, take any Enforcement Action.
(c) Notwithstanding
anything to the contrary contained herein, neither Initial Purchase Agent nor
any Initial Buyer will hinder, delay or contest any Enforcement Action
taken
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by
Bridge
Agent, any Bridge Buyer, or Marquis (in the case of Marquis, in respect of
the
Initial Purchase Debt) to the extent such Buyer Party is diligently pursuing
such Enforcement Action in good faith and in a commercially reasonable manner
and in compliance with the terms of this Agreement.
(d) At
any
time in connection with an Enforcement Action taken at the direction of the
Bridge Agent or Bridge Buyers, the Initial Purchase Agent shall release or
otherwise terminate its Liens on the subject Collateral in favor of the Initial
Buyers (including a release of Obligors on a guaranty to the extent such
Enforcement Action consists of a sale of all of the equity securities of such
Obligor which have been pledged to Initial Purchase Agent), to the extent such
Collateral is to be sold or otherwise disposed of pursuant to an Enforcement
Action; provided that such release shall not extend to or otherwise affect
any
of the rights of the Initial Buyers to Liens on and security interests in the
proceeds from any such sale or other disposition of Collateral, subject to
the
terms hereof.
(e) Bridge
Agent and Bridge Buyers may at all times take, or direct Initial Purchase Agent
to take, Enforcement Actions in respect of the Collateral to the extent
permitted by the terms and provisions of the Bridge Purchase Documents and
the
Initial Purchase Documents, in each case without notice to or further consent
of
the Initial Buyers.
2.6 [Reserved].
2.7 No
Impairment.
Nothing
in this Agreement shall be construed to in any way limit or impair the right
of:
(a) Initial Purchase Agent and Initial Buyers to bid for or purchase
Collateral at any private or judicial foreclosure upon such Collateral initiated
by Bridge Agent and Bridge Buyers or (b) Initial Purchase Agent and Initial
Buyers to join (but not control) any foreclosure or other judicial Lien
enforcement proceeding with respect to the Collateral initiated by Bridge Agent
and Bridge Buyers, so long as such Person does not delay or interfere in any
material respect with the exercise by Bridge Agent and Bridge Buyers of their
respective rights as provided in this Agreement.
2.8 [Reserved].
2.9 Amendments
to Purchase Documents.
(a) Bridge
Agent and the Bridge Buyers may at any time and from time to time without the
consent of or notice to Initial Purchase Agent or any Initial Buyer, without
incurring liability to Initial Purchase Agent or any Initial Buyer and without
impairing or releasing the obligations of Initial Purchase Agent or any Initial
Buyer under this Agreement, change the manner or place of payment or extend
the
time of payment of or renew or alter any Bridge Debt, or amend, supplement,
restate or otherwise modify in any manner any Bridge Purchase Document;
provided
that
Bridge Agent and the Bridge Buyers shall not, without the prior written consent
of Initial Buyers holding greater than fifty percent (50%) of the outstanding
principal balance of the Initial Purchase Debt, agree to any modification,
amendment, consent or supplement to the Bridge Purchase Documents, the effect
of
which is to (i) increase any applicable interest rate margin with respect to
the
Bridge Debt by more than two hundred (200) basis points in excess of the
interest rate margins set forth in the Bridge Purchase Agreement as
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in
effect
on the date hereof, except in connection with the imposition of the default
rate
of interest applicable to the Bridge Debt in accordance with the terms of the
Bridge Purchase Documents as in effect on the date hereof or (ii) shorten the
final scheduled maturity date of the Bridge Debt.
(b) Initial
Purchase Agent and the Initial Buyers shall not change the manner or place
of
payment or extend the time of payment of or renew or alter any Initial Purchase
Debt, or amend, supplement, restate or otherwise modify in any manner any
Initial Purchase Document, without the prior written consent of the holders
of
greater than fifty percent (50%) of the outstanding principal balance of the
Bridge Debt.
2.10 Default
Notices.
Each of
Initial Purchase Agent and Bridge Agent shall endeavor to give to the other
Buyer Party concurrently with the giving thereof to the Borrower and/or Obligors
(i) a copy of any written notice by such Buyer Party of a Default under its
respective Purchase Documents with the Borrower and/or Obligors, or written
notice of demand of payment from the Borrower and/or Obligors and (ii) a
copy of any written notice sent by such Buyer Party to the Borrower and/or
Obligors at any time a Default under such Buyer Party’s Purchase Documents with
the Borrower and/or Obligors exists stating such Buyer Party’s intention to
exercise any of its enforcement rights or remedies, including written notice
pertaining to any foreclosure on any of the Collateral or other judicial or
non-judicial remedy in respect thereof to the extent permitted hereunder, and
any legal process served or filed in connection therewith; provided,
that
the failure of any party to give notice as required hereby shall not affect
the
relative priorities of any Buyer Party’s respective Liens as provided herein or
the validity or effectiveness of any such notice as against the Borrower or
any
Obligor.
2.11 Waivers;
Incorrect Payments.
Each
Buyer Party, to the fullest extent permitted by applicable law, waives as to
each other Buyer Party any requirement regarding, and agrees not to demand,
request, plead or otherwise claim the benefit of, any marshalling, appraisement,
valuation or other similar right that may otherwise be available under
applicable law. If prior to the Discharge of Senior Debt any payment (whether
made in cash, securities or other property) is received by Initial Purchase
Agent or any Initial Buyer on account of the Initial Purchase Debt other than
Senior Debt in violation of any term or provision of this Agreement, such
payment shall not be commingled with any asset of Initial Purchase Agent or
such
Initial Buyer, shall be held in trust by such Person for the benefit of the
holders of Senior Debt and shall promptly be paid over to the applicable holder
of Senior Debt entitled thereto, or its designated representative, for
application to the payment of the Senior Debt then remaining
unpaid.
Section
3. [Reserved].
Section
4. INSOLVENCY
4.1 Insolvency
Proceedings.
In the
event of any Insolvency Proceeding:
(a) all
Senior Debt first shall be paid in full in cash before any payment (whether
made
in cash, securities or other property) of or with respect to the Initial
Purchase Debt other than Senior Debt shall be made;
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10 -
(b) any
payment which, but for the terms hereof, otherwise would be payable or
deliverable in respect of the Initial Purchase Debt other than Senior Debt
shall
be paid or delivered directly to the holders of Senior Debt (to be held and/or
applied first to the repayment of any and all then outstanding Bridge Debt
in
accordance with the terms of the Bridge Purchase Agreement and then to the
payment of any and all then outstanding Initial Purchase Debt constituting
Senior Debt) until the Discharge of Senior Debt, and Initial Purchase Agent
and
each Initial Buyer 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 Initial Purchase
Agent and each Initial Buyer also irrevocably authorizes, empowers and directs
the Bridge Agent to demand, xxx for, collect and receive every such payment
or
distribution (on its behalf and for the other holders of Senior Debt);
(c) each
of
Initial Purchase Agent and each Initial Buyer agrees to execute and deliver
to
the Bridge Agent or its representative all such further instruments confirming
the authorization referred to in the foregoing clause (b); and
(d) each
of
Initial Purchase Agent and each Initial Buyer agrees to execute, verify, deliver
and file any proofs of claim in respect of the Initial Purchase Debt requested
by the Bridge Agent in connection with any such Insolvency Proceeding and hereby
irrevocably authorizes, empowers and appoints the Bridge Agent its agent and
attorney-in-fact to execute, verify, deliver and file such proofs of claim
upon
the failure of such Person promptly to do so (and in any event prior to fifteen
(15) days before the expiration of the time to file any proof of claim in
respect of the Initial Purchase Debt); provided the Bridge Agent shall have
no
obligation to execute, verify, deliver, and/or file any such proof of
claim.
4.2 Reorganization
Securities.
If, in
any Insolvency Proceeding, debt obligations of any reorganized Grantor secured
by Liens upon any property of such reorganized Grantor are distributed, pursuant
to a plan of reorganization, on account of both the Bridge Debt and the Initial
Purchase Debt, then, to the extent the debt obligations distributed on account
of the Bridge Debt and on account of the Initial Purchase Debt are secured
by
Liens upon the same assets or property, the provisions of this Agreement will
survive the distribution of such debt obligations pursuant to such plan and
will
apply with like effect to the Liens securing such debt obligations.
4.3 No
Challenges to Claims.
The
Initial Purchase Agent, for itself and on behalf of the Initial Buyers, agrees
that neither Initial Purchase Agent nor any Initial Buyer shall oppose or seek
to challenge any claim by Bridge Agent or any Bridge Buyer for allowance in
any
Insolvency Proceeding of any Bridge Debt, including those consisting of
post-petition interest, fees or expenses. The Bridge Agent, for itself and
on
behalf of the Bridge Buyers, agrees that neither Bridge Agent nor any Bridge
Buyer shall oppose or seek to challenge any claim by Initial Purchase Agent
or
any Initial Buyer for allowance in any Insolvency Proceeding of any Initial
Purchase Debt, including those consisting of post-petition interest, fees or
expenses.
4.4 Separate
Grants of Security and Separate Classes.
Each of
the parties hereto irrevocably acknowledges and agrees that (a) the claims
and
interests of the Initial Purchase Agent and the Initial Buyers, on the one
hand,
and Bridge Agent and the Bridge Buyers, on the other hand, are not
“substantially similar” within the meaning of Section 1122 of the Bankruptcy
Code, or any comparable provision of any other law governing an Insolvency
Proceeding, (b) the
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11 -
grants
of
the Liens to secure the Bridge Debt and the grants of the Liens to secure the
Initial Purchase Debt constitute two separate and distinct grants of Liens,
(c)
Bridge Agent’s and Bridge Buyers’ rights in the Collateral are fundamentally
different from Initial Purchase Agent’s and Initial Buyers’ rights in the
Collateral and (d) as a result of the foregoing, among other things, the Bridge
Debt and the Initial Purchase Debt must be separately classified in any plan
of
reorganization proposed or adopted in any Insolvency Proceeding.
4.5 Survival
After Bankruptcy.
This
Agreement shall be applicable both before and after the institution of any
Insolvency Proceeding involving Borrower or any other Grantor, including,
without limitation, the filing of any petition by or against Borrower or any
other Grantor under the Bankruptcy Code or under any other applicable law
governing an Insolvency Proceeding and all converted or subsequent cases in
respect thereof, and all references herein to Borrower or any Grantor shall
be
deemed to apply to the trustee for Borrower or such Grantor and Borrower or
such
Grantor as debtor-in-possession. The relative rights of the Buyer Parties in
or
to any distributions from or in respect of any Collateral or Proceeds shall
continue after the institution of any Insolvency Proceeding involving Borrower
or any other Grantor, including, without limitation, the filing of any petition
by or against Borrower or any other Grantor under the Bankruptcy Code or under
any other applicable law governing an Insolvency Proceeding and all converted
cases and subsequent cases, on the same basis as prior to the date of such
institution, subject to any court order approving the financing of, or use
of
cash collateral by, Borrower or any other Grantor as debtor-in-possession,
or
any other court order affecting the rights and interests of the parties hereto
not in conflict with this Agreement. This Agreement shall constitute a
subordination agreement for the purposes of Section 510(a) of the Bankruptcy
Code and shall be enforceable in any Insolvency Proceeding in accordance with
its terms.
4.6 Preference
Issues.
If
Bridge Agent or any Bridge Buyer is required in any Insolvency Proceeding or
otherwise to turn over or otherwise pay to the estate of any Grantor or any
other person any amount (a “Recovery”), then the Bridge Debt shall be reinstated
to the extent of such Recovery and Bridge Agent and the Bridge Buyers shall
be
entitled to a reinstatement of Bridge Debt with respect to all such recovered
amounts. If Initial Purchase Agent or any Initial Buyer is required in any
Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate
of any Grantor or any other person any Recovery, then the Initial Purchase
Debt
shall be reinstated to the extent of such Recovery and the Initial Purchase
Agent and Initial Buyers shall be entitled to a reinstatement of Initial
Purchase Debt with respect to all such recovered amounts. If, in connection
with
any Recovery, this Agreement shall have been terminated prior to such Recovery,
this Agreement shall be reinstated in full force and effect, and such prior
termination shall not diminish, release, discharge, impair or otherwise affect
the obligations of the parties hereto from such date of
reinstatement.
Section
5. MISCELLANEOUS
5.1 Representations
and Warranties.
Each
Buyer Party a party hereto hereby represents and warrants (on its own behalf
and
not on behalf of any other Buyer Party) to the other Buyer Party that: (i)
the
execution, delivery and performance of this Agreement by such Buyer Party is
within the powers of such Buyer Party, have been duly authorized by such Buyer
Party, and do not contravene any law, any provision of any of the Purchase
Documents to which such Buyer Party is a party or any other agreement to which
such Buyer Party is a party or by
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12 -
which
it
is bound, (ii) this Agreement constitutes the legal, valid and binding
obligations of such Buyer Party, enforceable in accordance with its terms and
shall be binding on it (except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of
creditors’ rights generally and by equitable principles) and (iii) such Buyer
Party has the power and authority to execute this Agreement on behalf of the
Initial Buyers and Bridge Buyers, as applicable, and the Initial Buyers and
Bridge Buyers shall be bound hereby as a result of such execution.
5.2 Modifications
to this Agreement.
Any
waiver, permit, consent or approval by any Buyer Party of or under any
provision, condition or covenant to this Agreement must be in writing and shall
be effective only to the extent it is set forth in writing and as to the
specific facts or circumstances covered thereby. Any amendment of this Agreement
must be in writing and signed by Bridge Agent and Initial Purchase Agent.
5.3 Successors
and Assigns.
This
Agreement shall be binding upon each Buyer Party and its respective successors
and assigns and shall inure to the benefit of each Buyer Party and its
respective successors, participants and assigns. In connection with any
participation or other transfer or assignment of the Bridge Debt or the Initial
Purchase Debt, a Buyer Party shall disclose to such participant or other
transferee or assignee the existence and terms and conditions of this Agreement.
The Bridge Purchase Documents and Initial Purchase Documents shall provide
that
at all times Bridge Agent and Initial Purchase Agent have the power and
authority to bind the respective Buyer Parties for which it acts as agent to
the
terms of this Agreement and to act as agent for the applicable Buyer Parties
in
respect of receiving all notices to be delivered to a Buyer Party
hereunder.
5.4 Agent
for Perfection.
(a) Each
Buyer Party agrees to hold any Collateral that can be perfected by the
possession or control (as control is contemplated as a manner of perfection
under the UCC) of such Collateral (or of any account in which such Collateral
is
held), and any such Collateral or any such account that is in fact in the
possession or under the control of a Buyer Party, or of agents or bailees of
such Buyer Party (such Collateral being referred to herein as the “Pledged
Collateral”), as bailee and agent for and on behalf of the other Buyer Parties
solely for the purpose of perfecting the security interest granted to the other
Buyer Parties in such Pledged Collateral (including, but not limited to, any
securities or any deposit accounts or securities accounts, if any) pursuant
to
the Bridge Purchase Documents or Initial Purchase Documents, as applicable,
subject to the terms and conditions of this Section 5.4. Prior to the Discharge
of Bridge Debt, any Collateral in the possession or under the control of Initial
Purchase Agent or any Initial Buyer shall be forthwith delivered to the Bridge
Agent, except as otherwise may be required by applicable law or court order,
subject in each case to the terms of this Agreement.
(b) Until
the
Discharge of Bridge Debt has occurred, the Bridge Agent shall, subject to the
terms of this Agreement, be entitled to deal with the Pledged Collateral in
accordance with the terms of the Bridge Purchase Documents as if the Liens
of
Initial Purchase Agent under the Initial Purchase Documents did not
exist.
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13 -
(c) Each
Buyer Party shall have no obligation whatsoever to the other Buyer Parties
to
assure that the Pledged Collateral is genuine or owned by any of the Grantors
or
to preserve rights or benefits of any Person except as expressly set forth
in
this Section 5.4. The duties or responsibilities of each Buyer Party under
this
Section 5.4 shall be limited solely to holding the Pledged Collateral as bailee
and agent for and on behalf of the other Buyer Parties for purposes of
perfecting the Lien held by such other Buyer Parties.
(d) Each
Buyer Party shall not have by reason of the Bridge Purchase Documents, the
Initial Purchase Documents or this Agreement or any other document a fiduciary
relationship in respect of the other Buyer Parties and shall not have any
liability to the other Buyer Parties in connection with its holding the Pledged
Collateral, other than for its gross negligence or willful misconduct as
determined by a final, non-appealable order of a court of competent
jurisdiction.
5.5 Transfer
of Pledged Collateral to Initial Purchase Agent.
Upon
the Discharge of Bridge Debt, to the extent permitted under applicable law,
Bridge Agent shall promptly, without demand and without recourse or warranty,
transfer the possession and control of the Pledged Collateral, if any, then
in
its possession or control to Initial Purchase Agent, except in the event and
to
the extent (a) Bridge Agent and Bridge Buyers have retained or otherwise
acquired such Collateral in full or partial satisfaction of any of the Bridge
Debt and otherwise not in contravention of this Agreement, (b) such
Collateral is sold or otherwise disposed of by Bridge Agent or any Bridge Buyer
or by a Grantor as provided herein or (c) it is otherwise required by any
order of any court or other governmental authority or applicable law or would
result in the risk of liability of Bridge Agent to any third party. The
foregoing provision shall not impose on Bridge Agent any obligations which
would
conflict with prior perfected claims therein in favor of any other person or
any
order or decree of any court or other governmental authority or any applicable
law. In connection with any transfer described herein to Initial Purchase Agent,
Bridge Agent agrees to take reasonable actions in its power (with all reasonable
costs and expenses in connection therewith to be for the account of Initial
Purchase Agent and to be paid by Borrower) as shall be reasonably requested
by
Initial Purchase Agent to permit Initial Purchase Agent to obtain, for its
benefit and the benefit of the Initial Buyers, a first priority security
interest in such Pledged Collateral.
5.6 Notices.
All
notices, requests and demands to or upon the respective parties hereto shall
be
in writing and shall be deemed duly given, made or received: if delivered in
person, immediately upon delivery; if by facsimile transmission, immediately
upon sending and upon confirmation of receipt; if by nationally recognized
overnight courier service with instructions to deliver the next Business Day,
one (1) Business Day after sending; and if mailed by certified mail, return
receipt requested three (3) days after mailing to the parties at their addresses
set forth below (or to such other addresses as the parties may designate in
accordance with the provisions of this Section):
If
to
Bridge Agent:
Viking
Asset Management, LLC
000
Xxxxxxxxxx Xxxxxx, 44th Floor
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14 -
Xxx
Xxxxxxxxx, XX 00000
Attention:
S. Xxxxxxx Xxxxxxx
|
|
Facsimile:
(000) 000-0000
|
with
a
copy to:
Viking
Asset Management, LLC
00
Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxxx
Facsimile:
(000) 000-0000
and
to:
Xxxxxx
Xxxxxx Rosenman LLP
000
X.
Xxxxxx Xx.
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxx Xxxx, Esq.
Facsimile:
(000) 000-0000
If
to
Initial Purchase Agent:
Viking
Asset Management, LLC
000
Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxxxxxxx, XX 00000
Attention:
S. Xxxxxxx Xxxxxxx
Facsimile:
(000) 000-0000
with
a
copy to:
Viking
Asset Management, LLC
00
Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxxx
Facsimile:
(000) 000-0000
and
to:
Xxxxxx
Xxxxxx Rosenman LLP
000
X.
Xxxxxx Xx.
Xxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxx Xxxx, Esq.
Facsimile:
(000) 000-0000
Either
of
the above Buyer Parties may change the address(es) to which all notices,
requests and other communications are to be sent by giving written notice of
such address change to the other Buyer Party in conformity with this
Section 5.6, but such change shall not be effective until notice of such
change has been received by the other Buyer Party.
5.7 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
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15 -
THE
STATE OF NEW YORK. EACH BUYER PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE NEW YORK CITY,
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 BUYER 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 BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, OR BY DEPOSIT WITH A NATIONALLY RECOGNIZED OVERNIGHT DELIVERY
SERVICE, TO SUCH BUYER 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 BUYER 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.
5.8 Final
Agreement; Counterparts.
This
Agreement is intended by the parties as a final expression of their agreement
and is intended as a complete statement of the terms and conditions of their
agreement with respect to the subject matter hereof. This Agreement and any
amendments hereto may be executed and delivered in one or more counterparts,
and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become effective when
counterparts have been signed by each party hereto and delivered to the other
parties hereto, it being understood that all parties need not sign the same
counterpart. In the event that any signature to this Agreement or any amendment
hereto is delivered by facsimile transmission or by e-mail delivery of a “.pdf”
format data file, such signature shall create a valid and binding obligation
of
the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or “.pdf” signature page were an
original thereof. At the request of any party, each other party shall promptly
re-execute an original form of this Agreement or any amendment hereto and
deliver the same to the other party. No party hereto shall raise the use of
a
facsimile machine or e-mail delivery of a “.pdf” format data file to deliver a
signature to this Agreement or any amendment hereto or the fact that such
signature was transmitted or communicated through the use of a facsimile machine
or e-mail delivery of a “.pdf” format data file as a defense to the formation or
enforceability of a contract, and each party hereto forever waives any such
defense.
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16 -
5.9 No
Third Party Beneficiaries.
This
Agreement is solely for the benefit of the Buyer Parties and their respective
successors, participants and assigns, and no other Person shall have any right,
benefit, priority or interest under, or because of the existence of, this
Agreement.
5.10 Continuing
Agreement.
This
Agreement is a continuing agreement and shall remain in full force and effect
until the Discharge of Bridge Debt. Each
5.11
Buyer
Party shall be responsible for keeping itself informed of (a) the financial
condition of the Borrower and the Obligors and all other all endorsers, obligors
and/or guarantors of the Bridge Debt and/or Initial Purchase Debt and (b) all
other circumstances bearing upon the risk of nonpayment of the Bridge Debt
and
Initial Purchase Debt. No Buyer Party shall have any duty to advise any other
Buyer Party of information known to it regarding such condition or any such
other circumstances. No Buyer Party assumes any liability to any other Buyer
Party or to any other Person with respect to: (i) the financial or other
condition of Borrower or Obligors, (ii) the enforceability, validity, value
or
collectibility of the Bridge Debt, Initial Purchase Debt, any Collateral
therefor or any guarantee or security which may have been granted in connection
with any of the foregoing or (iii) Borrower’s or any Obligor’s title or right to
transfer any Collateral or security.
5.12 Equitable
Remedies.
The
parties hereto acknowledge that the provisions of this Agreement are reasonable
and necessary to protect the interests of the parties hereto, that any violation
of this Agreement will result in an irreparable injury to the aggrieved party
and that damages at law would not be reasonable or adequate compensation to
such
aggrieved party for violation of this Agreement and that, in addition to any
other available remedies, the aggrieved party shall be entitled to have the
provisions of this Agreement specifically enforced by preliminary and permanent
injunctive relief without the necessity of proving actual damages or posting
a
bond or other security to an equitable accounting of all earnings, profits
and
other benefits arising out of any violation of this Agreement.
5.13 Subrogation.
Subject
to the Discharge of Senior Debt, the Initial Purchase Agent and Initial Buyers
(to the extent of their interest in Initial Purchase Debt other than Senior
Debt) shall be subrogated to the extent of any payments or distributions made
by
the Initial Purchase Agent and/or Initial Buyers to the holders of Senior Debt,
or to the extent payments made on account of the Initial Purchase Debt are
otherwise applied to payment of the Senior Debt, in each instance, solely by
reason of the provisions of this Agreement, to any rights of the holders of
Senior Debt to receive payments and distributions on account of the Senior
Debt
and/or of Proceeds of Collateral applicable to the Senior Debt, if any, until
the indefeasible payment in full in cash of all Initial Purchase Debt other
than
Senior Debt. For purposes of such subrogation, no payments or distributions
to
the holders of Senior Debt of any cash, securities or other property to which
the Initial Purchase Agent or Initial Buyers (to the extent of their interest
in
Initial Purchase Debt other than Senior Debt) would have been entitled, except
for the provisions of this Agreement, and no payments pursuant to the provisions
of this Agreement to the holders of Senior Debt by Initial Purchase Agreement
and/or any Initial Buyer, shall be deemed to be a payment or distribution by
any
Grantor to or on account of the Senior Debt, it being understood and agreed
that
the provisions of this Section 5.13 are solely for the purpose of defining
the
relative rights of the holders of Senior Debt, on the one hand, and the Initial
Purchase Agent and
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17 -
Initial
Buyers (to the extent of their interest in Initial Purchase Debt other than
Senior Debt), on the other hand.
5.14 Waiver.
Each of
Viking Asset Management, LLC, as Bridge Agent and Initial Purchase Agent,
Marquis and The Longview Fund, L.P. (“Longview”), as an Initial Buyer,
acknowledges and agrees that (i) Xxxxxx Xxxxxx Xxxxxxxx LLP (“Katten”) regularly
represents each of Bridge Agent, Initial Purchase Agent, Marquis and Longview
on
various matters, including matters similar to those contemplated by this
Agreement, and represented each of Bridge Agent, Initial Purchase Agent, Marquis
and Longview in connection with the Initial Purchase Agreement and the other
documents contemplated thereby, (ii) Marquis has requested that Katten draft,
and Katten has drafted, this Agreement and that certain September 2008 Waiver
and Amendment to Senior Notes, by and among Borrower, its Subsidiaries and
each
of the Initial Buyers (the “Amendment”), based on terms provided to Katten by
Marquis, (iii) the interests of each of Marquis and Longview differ, and may
be
adverse to, those of the other with respect to this Agreement and the Amendment,
and the interests of any of the parties hereto may otherwise be adverse to
the
interests of other parties hereto, (iv) Longview has retained separate counsel
to represent Longview in connection with negotiating this Agreement and the
Amendment, and the terms and provisions hereof and thereof, (v) Katten has
represented Marquis in connection with any negotiation between or among the
parties hereto with respect to this Agreement and the Amendment, but, in the
event of any dispute arising between or among Bridge Agent, Initial Purchase
Agent, Marquis and Longview in connection with, or relating to, this Agreement
or the Amendment, Katten will be unable to represent any of Bridge Agent,
Initial Purchase Agent, Marquis or Longview, and (vi) each of Bridge Agent,
Initial Purchase Agent, Marquis and Longview consents to Katten’s representation
of Marquis as described above, notwithstanding the existence of any potential
or
actual conflicts of interest between or among Bridge Agent, Initial Purchase
Agent, Marquis and Longview.
5.15 Right
of First Refusal.
Any
proposed transfer of any holder of Senior Debt shall be subject to the
following:
(a) Any
holder of Senior Debt (the “Offeror”) proposing to transfer all or any of the
Senior Debt pursuant to the terms of a bona fide offer received from any person
or entity shall send written notice (the “Offer”) to The Longview Fund, L.P., a
California limited partnership (the “Offeree”), to offer such Senior Debt (the
“Offered Debt”) on the terms of the proposed transfer. The Offer shall disclose
the identity of the proposed transferee, the Offered Debt proposed to be sold,
the total amount of Senior Debt owned by the Offeror and the terms and
conditions, including price, of the proposed sale. The Offer shall further
state
that the Offeree may acquire, in accordance with the provisions of this
Agreement, all, but not less than all, of the Offered Debt for the price and
upon the other terms and conditions, including, deferred payment (if
applicable), set forth therein. The Offeree may accept such Offer and purchase
the Offered Debt by giving the Offeror written notice to that effect within
five
(5) days after being served with the Offer. Upon the Offeree’s acceptance of
such Offer, Offeree shall consummate the purchase of the Offered Debt within
five (5) days after the date of such acceptance.
(b) If
the
Offeree fails to accept such Offer, then the Offeror, at the expiration of
the
aforementioned five (5) day period, shall be entitled to transfer the Offered
Debt not purchased by the Offeree to the proposed transferee(s) identified
in
the Offer; provided,
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18 -
however,
that in no event shall the Offeror transfer any of the Offered Debt to any
transferee other than such accepting Offeree or such proposed transferee(s)
or
transfer the same on terms more favorable to the buyer(s) than those stated
in
the Offer.
[remainder
of page intentionally left blank; signature pages follow]
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19 -
IN
WITNESS WHEREOF, the parties have caused this Intercreditor Agreement to
be duly
executed as of the day and year first above written.
|
BRIDGE
AGENT:
|
|
|
VIKING
ASSET MANAGEMENT, LLC,
as
Bridge Agent
|
|
|
By:
_________________________________
|
|
|
Name:
|
|
|
Title:
|
|
|
BRIDGE
BUYER:
LONGVIEW
MARQUIS MASTER FUND, L.P.,
a
British Virgin Islands limited partnership
By: Viking
Asset Management, LLC
Its: Investment
Advisor
By:
_________________________________
Name:
S.
Xxxxxxx Xxxxxxx
Title:
Chief
Financial Officer
|
|
|
INITIAL
PURCHASE AGENT:
|
|
|
VIKING
ASSET MANAGEMENT, LLC,
as
Initial Purchase Agent
|
|
|
By:
_________________________________
|
|
|
Name:
|
|
|
Title:
|
|
|
INITIAL
BUYERS:
THE
LONGVIEW FUND, L.P.,
a
California limited partnership
By:
Viking Asset Management, LLC
Its:
Investment Adviser
By:
_________________________________
Name:
S.
Xxxxxxx Xxxxxxx
Title:
Chief
Financial Officer
LONGVIEW
MARQUIS MASTER FUND, L.P.,
a
British Virgin Islands limited partnership
By:
Viking
Asset Management, LLC
Its:
Investment
Advisor
By:
_________________________________
Name:
S.
Xxxxxxx Xxxxxxx
Title:
Chief
Financial Officer
|
Intercreditor
Agreement Signature Page
ACKNOWLEDGMENT
TO INTERCREDITOR AGREEMENT
Each
of
the undersigned hereby acknowledges and agrees to the terms and provisions
of
the foregoing Intercreditor Agreement (capitalized terms used and not defined
herein having the meanings given such terms in said Intercreditor Agreement).
By
its signature below, each of the undersigned agrees that it will, together
with
its successors and assigns, be bound by the provisions hereof.
Each
of
the undersigned agrees that any Buyer Party holding or otherwise controlling
Collateral (the “Controlling Creditor”) does so as bailee (under the UCC) for
and on behalf of the other Buyer Parties which have a Lien on such Collateral,
and each Controlling Creditor is hereby authorized to and may turn over to
Initial Purchase Agent (if Bridge Agent is the Controlling Creditor) or to
Bridge Agent (if Initial Purchase Agent is the Controlling Creditor) upon
request therefor any such Collateral, after all obligations and indebtedness
of
the undersigned to such Controlling Creditor shall have been fully paid and
performed.
Each
of
the undersigned acknowledges and agrees that: (i) although it may sign this
Intercreditor Agreement it is not a party hereto and does not and will not
receive any right, benefit, priority or interest under or because of the
existence of the foregoing Intercreditor Agreement and (ii) it will execute
and
deliver such additional documents and take such additional action as may be
necessary or desirable in the reasonable opinion of any of the Buyer Parties
to
effectuate the provisions and purposes of the foregoing Intercreditor Agreement.
Each of the undersigned acknowledges and agrees that the value of any payments
or distributions in cash, property or other assets received by the Initial
Purchase Agent and/or Initial Buyers (to the extent of their interest in Initial
Purchase Debt other than Senior Debt) that are paid over to the holders of
Senior Debt pursuant to the Intercreditor Agreement shall not reduce any of
the
Initial Purchase Debt.
Dated
September 19, 0000
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XXXXX
XXXXX OIL COMPANY,
|
STO
PROPERTIES LLC,
|
|
a
Nevada corporation
|
a
Texas limited liability company
|
|
By:
___________________________________
|
By:
___________________________________
|
|
Name:
|
Name:
|
|
Title:
|
Title:
|
|
SOUTHERN
TEXAS OIL COMPANY,
|
STO
DRILLING COMPANY,
|
|
a
Texas corporation
|
a
Texas corporation
|
|
By:
___________________________________
|
By:
___________________________________
|
|
Name:
|
Name:
|
|
Title:
|
Title:
|
|
STO
OPERATING COMPANY,
|
|
|
a
Texas corporation
|
|
|
By:
___________________________________
|
|
|
Name:
|
|
|
Title:
|
