JUNE 2008 AMENDMENT AGREEMENT
Exhibit
99.2
JUNE
2008
AMENDMENT AGREEMENT
THIS
JUNE
2008 AMENDMENT AGREEMENT (this “Agreement”)
is
made as of June 18, 2008, among South Texas Oil Company, a Nevada corporation
(the “Company”),
the
Subsidiaries, The Longview Fund, L.P., a California limited partnership
(“Longview”),
and
Longview Marquis Master Fund, L.P., a British Virgin Islands limited partnership
(“Marquis”
and
together with Longview, the “Buyers”).
Capitalized terms used, but not otherwise defined, herein shall have the
meanings ascribed to them in the Purchase Agreement (as defined
below).
WITNESSETH:
WHEREAS,
the Company and the Buyers entered into that certain Securities Purchase
Agreement, dated as of April 1, 2008 (as amended, restated, supplemented or
otherwise modified and in effect from time to time, the “Purchase
Agreement”),
pursuant to which the Company has issued to the Buyers, among other things,
senior secured notes in an original aggregate principal amount of
$29,877,350.82, and (ii) the Company has the option to sell, and if the Company
exercises such option the Buyers are obligated to purchase, subject to the
terms
and conditions of the Purchase Agreement, additional senior secured notes
(including any promissory notes or other securities issued in exchange or
substitution for such senior secured notes or replacement thereof, and as any
of
the same may be amended, restated, modified or supplemented and in effect from
time to time, the “Additional
Notes”);
WHEREAS,
the Company and Buyer desire to amend the terms of the Purchase Agreement as
provided herein;
WHEREAS,
on June 16, 2008, the Company delivered to Longview an Additional Sale Election
Notice, pursuant to which the Company notified Longview of its election to
sell
to Longview an Additional Note in the original principal amount equal to
$500,000, with the Additional Closing Date to be on the date hereof (the
“Additional
Note Issuance”);
NOW,
THEREFORE, in consideration of the agreements, provisions and covenants
contained herein and for other good and valuable consideration, the receipt
and
sufficiency of which are hereby acknowledged, each of the undersigned agrees
as
follows:
1. Amendment
of the Purchase Agreement.
a. Each
of
the Buyers, severally and not jointly, hereby agrees with the Company that,
as
of the date first above written, the Purchase Agreement is hereby amended to
increase the Maximum Borrowing Amount from $30,000,000 to $32,000,000, and,
accordingly, the reference in the Purchase Agreement to “$30,000,000” as the
“Maximum Borrowing Amount” shall be replaced with “$32,000,000.”
b. As
amended hereby, the Purchase Agreement shall remain in full force and
effect.
2. Assignment
and Assumption of Future Additional Note Purchase Obligations.
x. Xxxxxxx
hereby (i) assigns to Longview, and Longview hereby assumes, all of Marquis’s
obligation to purchase Additional Notes on and after the date hereof pursuant
to
the Purchase Agreement (the “Transferred
Additional Note Purchase Obligation”)
(i.e.,
on
and after the date hereof, for purposes Section 1 of the Purchase Agreement,
Longview’s Allocation Percentage shall be one hundred percent (100%) and Marquis
shall have no Allocation Percentage), such that on each Additional Closing
Date
on and after the date hereof, Longview shall, subject to the terms and
conditions set forth in the Purchase Agreement, purchase from the Company an
Additional Note in a principal amount equal to the applicable Additional Note
Issuance Amount and Marquis shall purchase no Additional Note, and (ii) assigns
to Longview, and Longview hereby assumes, all of Marquis’s rights under the
Transaction Documents with respect to the Transferred Additional
Note Purchase
Obligation and
any
Additional Notes purchased pursuant thereto.
b. The
Company hereby consents to the assignment of rights by Marquis to Longview,
and
the assumption of the Transferred Additional Note Purchase Obligation of Marquis
by Longview, under the Purchase Agreement as provided in Section
2(a)
above,
and hereby acknowledges and agrees that, on and after the date hereof, (i)
for
purposes of Section 1 of the Purchase Agreement, the Allocation Percentage
of
Longview shall be one hundred percent (100%) and Marquis shall have no
Allocation Percentage, and (ii) Marquis shall have no further obligations to
purchase Additional Notes pursuant to the Purchase Agreement.
3. Representations
and Warranties of the Company.
The
Company represents and warrants to each of the Buyers that:
a. Authorization;
Enforcement; Validity.
Each of
the Company and the Subsidiaries is a duly organized and validly existing
corporation or limited liability company and has the requisite corporate or
limited liability company power and authority to enter into and perform its
obligations under this Agreement, the Purchase Agreement (as amended hereby)
and
the other Transaction Documents. The execution and delivery of this Agreement
by
the Company and the Subsidiaries and the consummation of the transactions
contemplated hereby, by the Purchase Agreement (as amended hereby) and by the
other Transaction Documents have been duly authorized by the respective boards
of directors of the Company and the Subsidiaries, and no further consent or
authorization is required by the Company, the Subsidiaries or their respective
boards of directors or shareholders. This Agreement has been duly executed
and
delivered by the Company and each of the Subsidiaries, and each of this
Agreement, the Purchase Agreement (as amended hereby) and the other Transaction
Documents constitutes a valid and binding obligation of each of the Company
and
the Subsidiaries (as applicable), enforceable against each of the Company and
the Subsidiaries (as applicable) in accordance with its terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.
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b. No
Conflicts.
The
execution and delivery of this Agreement by each of the Company and the
Subsidiaries, the performance by each of the Company and the Subsidiaries (as
applicable) of their respective obligations hereunder, under the Purchase
Agreement (as amended hereby) and under the other Transaction Documents, and
the
consummation by each of the Company and the Subsidiaries (as applicable) of
the
transactions contemplated hereby, by the Purchase Agreement (as amended hereby)
and by the other Transaction Documents will not (i) result in a violation of
the
articles of incorporation or the bylaws of the Company or the organizational
documents of any Subsidiary; (ii) conflict with, or constitute a breach or
default (or an event which, with the giving of notice or lapse of time or both,
constitutes or would constitute a breach or default) under, or give to others
any right of termination, amendment, acceleration or cancellation of, or other
remedy with respect to, any agreement, indenture or instrument to which the
Company or any of the Subsidiaries is a party; or (iii) result in a violation
of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to the Company or any of
the
Subsidiaries or by which any property or asset of the Company or any of the
Subsidiaries is bound or affected. Neither the Company nor any of the
Subsidiaries is required to obtain any consent, authorization or order of or,
except as required by Section 7 below, make any filing or registration with,
any
court or governmental agency or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under, or
contemplated by, this Agreement, the Purchase Agreement (as amended hereby)
and
the other Transaction Documents.
4. Representation
and Warranties of each of the Buyers.
Each of
the Buyers, severally, and not jointly, represents and warrants to the Company
that (a) such Buyer is a validly existing limited partnership and has the
requisite limited partnership power and authority to enter into and perform
its
obligations under this Agreement, and (b) this Agreement has been duly and
validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer, enforceable against such Buyer in
accordance with its terms.
5. Acknowledgment
of the Company and the Subsidiaries.
The
Company and each of the Subsidiaries hereby irrevocably and unconditionally
acknowledge, affirm and covenant to each Buyer that:
a. Such
Buyer is not in default under any of the Transaction Documents and has not
otherwise breached any obligations to the Company or any of the Subsidiaries;
and
b. there
are
no offsets, counterclaims or defenses to the Liabilities (as defined in the
Security Agreement) or Obligations (as defined in the Subsidiary Guaranty),
including the liabilities and obligations of the Company under the Purchase
Agreement (as amended hereby), or to the rights, remedies or powers of Buyer
in
respect of any of the Liabilities or Obligations or any of the Transaction
Documents, and the Company and each of the Subsidiaries agree not to interpose
(and each does hereby waive and release) any such defense, set-off or
counterclaim in any action brought by such Buyer with respect
thereto.
6. Covenants. Prior
to
5:30 p.m., New York time, on the first Business Day following the date hereof,
the Company shall file a current report on Form 8-K (the “Amendment
Form 8-K”)
with
the Securities and Exchange Commission (the “SEC”), describing
the terms of this Agreement and including this Agreement as an exhibit thereto,
in the form required by the Securities Exchange Act of 1934, as amended. From
and after the filing of this Amendment Form 8-K with the SEC, Buyer shall not
be
in possession of any material nonpublic information received from the Company
or
any of its affiliates, officers, directors, employees or agents as a result
of
this Agreement or any of the matters referred to herein.
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7. Avoidance
of Doubt.
The
parties hereto hereby agree, for the avoidance of doubt, that (a) the term
“Purchase
Agreement”
as
used
in the Transaction Documents shall mean the Purchase Agreement, as, and to
the
extent, amended by this Agreement, and (b) the term “Liabilities”
and
“Obligations”
as
used
in the Transaction Documents shall include all liabilities and obligations
of
the Company under this Agreement, under the Purchase Agreement (as amended
hereby) and under the other Transaction Documents, and each of the parties
hereto agrees not to take any contrary positions.
8. Reservation
of Rights.
Neither
of the Buyers has hereby waived (a) any breach, default or Event of Default
that
may be continuing under any of the Transaction Documents or (b) any of such
Buyer’s rights or remedies arising from any such breach, default or Event of
Default or otherwise available under the Transaction Documents or at law. Each
of the Buyers expressly reserves all such rights and remedies.
9. Successors
and Assigns.
This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. The successors
and
assigns of such entities shall include their respective receivers, trustees
or
debtors-in-possession.
10. Further
Assurances.
The
Company hereby agrees from time to time, as and when requested by any Buyer,
to
execute and deliver or cause to be executed and delivered, all such documents,
instruments and agreements, including secretary’s certificates, stock powers and
irrevocable transfer agent instructions, and to take or cause to be taken such
further or other action, as any Buyer may reasonably deem necessary or desirable
in order to carry out the intent and purposes of this Agreement, the Purchase
Agreement (as amended hereby) and the other Transaction Documents.
11. 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.
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12. Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to each other party.
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. 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.
13. Section
Headings.
The
section headings herein are for convenience of reference only, and shall not
affect in any way the interpretation of any of the provisions
hereof.
14. No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rule of strict construction
will
be applied against any party.
15. Merger.
This
Agreement, the Purchase Agreement (as amended hereby) and the other Transaction
Documents represent the final agreement of each of the parties hereto with
respect to the matters contained herein and may not be contradicted by evidence
of prior or contemporaneous agreements, or prior or subsequent oral agreements,
among any of the parties hereto. Except as expressly set forth in this
Agreement, in the Purchase Agreement (as amended hereby) and in the other
Transaction Documents, none of the Company nor any of the Buyers makes any
representation, warranty, covenant or undertaking with respect to such
matters.
16. Interpretative
Matters.
Unless
otherwise indicated or the context otherwise requires, (i) all references to
Sections, Schedules, Appendices or Exhibits are to Sections, Schedules,
Appendices or Exhibits contained in or attached to this Agreement, (b) words
in
the singular or plural include the singular and plural and pronouns stated
in
either the masculine, the feminine or neuter gender shall include the masculine,
feminine and neuter, (c) the words “hereof,” “herein” and words of similar
effect shall reference this Agreement in its entirety, and (d) the use of the
word “including” in this Agreement shall be by way of example rather than
limitation.
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17. Reaffirmation.
Each of
the Company and the Subsidiaries as issuer, debtor, grantor, pledgor, mortgagor,
guarantor or assignor, or in other any other similar capacity in which such
Person grants liens or security interests in its property or otherwise acts
as
accommodation party or guarantor, as the case may be, hereby (i) acknowledges
and agrees that it has reviewed this Agreement, (ii) ratifies and reaffirms
all
of its obligations, contingent or otherwise, under each of the Transaction
Documents, including the Purchase Agreement (as amended hereby) to which it
is a
party (after giving effect hereto), and (iii) to the extent such Person granted
liens on or security interests in any of its property pursuant to any such
Transaction Document as security for or otherwise guaranteed the Liabilities
under or with respect to the Transaction Documents, ratifies and reaffirms
such
guarantee and grant of security interests and liens and confirms and agrees
that
such security interests and liens hereafter secure all of the Liabilities as
amended hereby. Each of the Company and the Subsidiaries hereby consents to
this
Agreement and acknowledges that each of the Transaction Documents, including
the
Purchase Agreement (as amended hereby), remains in full force and effect and
is
hereby ratified and reaffirmed.
[Remainder
of page intentionally left blank; Signature page
follows]
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IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by each
of
the undersigned as of the date first above written.
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COMPANY:
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SOUTH
TEXAS OIL COMPANY,
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a
Nevada corporation
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By:
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/s/
J. Xxxxx Xxxxxxxxx
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Name:
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J.
Xxxxx Xxxxxxxxx
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Title:
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Chief
Executive Officer
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SUBSIDIARIES:
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SOUTHERN
TEXAS OIL COMPANY.,
a
Texas
corporation
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By:
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/s/
J. Xxxxx Xxxxxxxxx
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Name:
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Title:
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STO
OPERATING COMPANY,
a
Texas
corporation
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By:
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/s/
J. Xxxxx Xxxxxxxxx
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Name:
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Title:
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STO
PROPERTIES LLC,
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a
Texas limited liability company
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By:
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/s/
J. Xxxxx Xxxxxxxxx
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Name:
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Title:
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STO
DRILLING COMPANY,
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a
Texas corporation
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By:
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/s/
J. Xxxxx Xxxxxxxxx
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Name:
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Title:
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BUYERS:
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THE
LONGVIEW FUND, L.P.,
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a
California limited partnership
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By:
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Viking
Asset Management, L.L.C.
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Its:
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Investment
Advisor
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By:
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/s/
S. Xxxxxxx Xxxxxxx
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Name:
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S.
Xxxxxxx Xxxxxxx
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Title:
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Chief
Financial Officer
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LONGVIEW
MARQUIS MASTER FUND, L.P.
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By:
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Viking
Asset Management, LLC
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Its:
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Investment
Advisor
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By:
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/s/
S. Xxxxxxx Xxxxxxx
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Name:
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S.
Xxxxxxx Xxxxxxx
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Title:
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Chief
Financial Officer
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