AMENDMENT TO INTERCREDITOR AGREEMENT
EXHIBIT
99.8
AMENDMENT TO INTERCREDITOR
AGREEMENT
THIS
AMENDMENT TO INTERCREDITOR AGREEMENT (this “Amendment”) is made as of June
16, 2009, by and 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 (such term and each other capitalized term used but not defined
herein shall have the meaning given to it in the Intercreditor Agreement
described below) who guarantees, or grants a Lien on its assets to secure “Note
Debt” and/or Convertible Debt is referred to individually as an “Obligor” and collectively as
the “Obligors”), the
Convertible Debt Creditors (as such term is amended hereby), the Buyers, 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
1,600,000 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
attached thereto, 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
Marquis as the holder of the Marquis April Notes and 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 Initial Bridge Notes held by Marquis in the principal amount of
$5,240,433.53 (the “Marquis
Remaining Bridge Notes”; and together with the Summerview Transferred
Bridge Notes, all other Initial 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 entered into a Securities Purchase Agreement (as amended, restated,
supplemented or otherwise modified and in effect from time to time as permitted
hereunder, the “First
Convertible Debt Purchase
Agreement”), by and among the Company and certain investors party hereto
as “First Convertible Debt Creditors” pursuant to which, among other things,
subject to the terms and conditions set forth therein and in the Intercreditor
Agreement (as defined below), the Company sold, and the First Convertible Debt
Creditors purchased, secured convertible notes in the aggregate original
principal amount of up to $480,000 (such notes, together
with any promissory notes or other securities issued in addition to such notes
pursuant to the First 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 “First Convertible Notes”) and
warrants to purchase shares of common stock of the Company.
F. 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 “Second Convertible Debt Purchase
Agreement”; and collectively with the First Convertible Debt Purchase
Agreement, the “Convertible
Debt Purchase Agreement”), by and among the Company and certain investors
party hereto as “Second Convertible Debt Creditors”
pursuant to which, among other things, subject to the terms and conditions set
forth therein and in the Intercreditor Agreement, the Company will sell, and the
Second Convertible Debt Creditors will purchase, secured convertible notes in
the aggregate original principal amount of up to $75,000 (such notes, together
with any promissory notes or other securities issued in addition to such notes
pursuant to the Second 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 “Second Convertible Notes”; and
together with the First Convertible Notes, the “Convertible Notes”) and
warrants to purchase shares of common stock of the Company.
G. The
Convertible Debt Creditors, Obligors, Buyers and the Collateral Agent are
parties to that certain Intercreditor Agreement dated as of June 10, 2009 (as
amended, restated, supplemented or otherwise modified and in effect from time to
time, the “Intercreditor
Agreement”), pursuant to which the Convertible Debt Creditors agreed,
among other things, that the Convertible Debt (as defined therein) is and shall
be subordinated to the prior payment and performance in full of the Note Debt
(as defined therein) upon the terms and subject to the conditions therein set
forth.
H. Concurrently
herewith, Obligors and Buyers are entering into that certain June 2009 Waiver
and Amendment Agreement dated as of the date hereof (the “June 2009 Waiver”), pursuant
to which Marquis will agree to amend certain provision of the Notes and waive
any and all violations or breaches of the Note Documents to the extent that any
such violation or breach is the direct result of the Obligors’ issuance of the
Second Convertible Notes.
I. As
a condition precedent to the effectiveness of the June 2009 Waiver, the
Collateral Agent and Buyers have required the execution, delivery and
performance of this Amendment by Obligors and Convertible Debt Creditors
pursuant to which certain provisions of the Intercreditor Agreement shall be
amended.
NOW,
THEREFORE, in order to induce the Collateral Agent and Buyers to enter into and
deliver the June 2009 Waiver, and to perform their respective obligations
thereunder, and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Definitions. All capitalized
terms used but not elsewhere defined herein shall have the respective meanings
ascribed to such terms in the Intercreditor Agreement.
2. Amendments.
(a) The
recitals of the Intercreditor Agreement are hereby amended and restated in their
entirety to read as follows:
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
1,600,000 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
attached thereto, 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
Marquis as the holder of the Marquis April Notes and 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 Initial Bridge Notes held by Marquis in the principal amount of
$5,240,433.53 (the “Marquis
Remaining Bridge Notes”; and together with the Summerview Transferred
Bridge Notes, all other Initial 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 entered into a Securities Purchase Agreement (as amended, restated,
supplemented or otherwise modified and in effect from time to time as permitted
hereunder, the “First
Convertible Debt Purchase
Agreement”), by and among the Company and certain investors party to the
Intercreditor Agreement Amendment as “First Convertible Debt Creditors” pursuant
to which, among other things, subject to the terms and conditions set forth
therein and in this Agreement, the Company sold, and the First Convertible Debt
Creditors purchased, secured convertible notes in the aggregate original
principal amount of up to $480,000 (such notes, together
with any promissory notes or other securities issued in addition to such notes
pursuant to the First 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 “First Convertible Notes”) and
warrants to purchase shares of common stock of the Company.
F. The
Company entered into a Securities Purchase Agreement (as amended, restated,
supplemented or otherwise modified and in effect from time to time as permitted
hereunder, the “Second
Convertible Debt Purchase Agreement”; and collectively with the First
Convertible Debt Purchase Agreement, the “Convertible Debt Purchase
Agreement”), by and among the Company and certain investors party to the
Intercreditor Agreement Amendment as “Second Convertible Debt Creditors”
pursuant to which, among other things, subject to the terms and conditions set
forth therein and in this Agreement, the Company sold, and the Second
Convertible Debt Creditors purchased, secured convertible notes in the aggregate
original principal amount of up to $75,000 (such notes, together
with any promissory notes or other securities issued in addition to such notes
pursuant to the Second 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 “Second Convertible Notes”; and
together with the First Convertible Notes, 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:
(b) Section
1 of the Intercreditor Agreement is hereby amended by inserting the following
definitions in the proper alphabetical order:
First
Convertible Debt shall mean all of the obligations and liabilities of
Obligors to First Convertible Debt Creditors evidenced by the First Convertible
Notes and all other amounts and other obligations and liabilities now or
hereafter owed by Obligors to First Convertible Debt Creditors pursuant to the
First Convertible Debt Documents.
First
Convertible Debt Creditor shall mean
each First Convertible Debt Creditor which is signatory to the Intercreditor
Agreement Amendment as such and any other holder of a First Convertible Note or
any other First Convertible Debt from time to time, together with each such
Person’s successors and assigns.
First
Convertible Debt Documents shall mean the First
Convertible Notes, First Convertible Debt Purchase Agreement and all other
documents and instruments evidencing, securing or pertaining to any portion of
the First Convertible Debt, as amended, supplemented, restated or otherwise
modified from time to time to the extent permitted hereunder.
Intercreditor
Agreement Amendment shall mean that certain Amendment to Intercreditor
Agreement dated as of June 16, 2009 among Obligors, Convertible Debt Creditors,
Buyers and the Collateral Agent.
Second
Convertible Debt shall mean all of the obligations and liabilities of
Obligors to Second Convertible Debt Creditors evidenced by the Second
Convertible Notes and all other amounts and other obligations and liabilities
now or hereafter owed by Obligors to Second Convertible Debt Creditors pursuant
to the Second Convertible Debt Documents.
Second
Convertible Debt Creditor shall mean
each Second Convertible Debt Creditor which is signatory to the Intercreditor
Agreement Amendment
as such and any other holder of a Second Convertible Note or any other Second
Convertible Debt from time to time, together with each such Person’s successors
and assigns.
Second
Convertible Debt Documents shall mean the Second Convertible Notes,
Second Convertible Debt Purchase Agreement and all other documents and
instruments evidencing, securing or pertaining to any portion of the Second
Convertible Debt, as amended, supplemented, restated or otherwise modified from
time to time to the extent permitted hereunder.
(c) Section
1 of the Intercreditor Agreement is hereby further amended by amending and
restating the following definitions in their entirety to read as
follows:
Convertible
Debt shall mean all of the First Convertible Debt and the Second
Convertible Debt.
Convertible
Debt Creditor shall mean
each First Convertible Debt Creditor and each Second Convertible Debt
Creditor.
Convertible
Debt Documents shall mean the First Convertible Debt Documents and the
Second Convertible Debt Documents.
(d) Section
2.5 of the Intercreditor Agreement is hereby amended by inserting a paragraph
(d) at the end thereof to read as follows:
(d) All
payments to the Convertible Debt Creditors on account of the Convertible Debt
shall be made pro rata among Convertible Debt Creditors based upon the aggregate
unpaid principal amount of the Convertible Notes held by each Convertible Debt
Creditor. If any Convertible Debt Creditor obtains any payment with
respect to any Convertible Note in excess of such Convertible Debt Creditor’s
pro rata share of such payment obtained by all Convertible Debt Creditors, each
such Convertible Debt Creditor agrees to distribute promptly to the other
Convertible Debt Creditors cash in an amount as is necessary to cause such
Convertible Debt Creditors to share the excess payment ratably among each of
them in accordance with the terms of the immediately preceding
sentence.
(e) Section
15 of the Intercreditor Agreement is hereby amended and restated in its entirety
to read as follows:
15. Termination. This
Agreement (other than Sections 2.5(d), 14, 17 and 19 hereof, which shall
terminate upon the indefeasible Payment in Full of the Convertible Debt) shall
terminate upon the indefeasible Payment in Full of the Note Debt; provided,
however, such provisions of 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.
(f) The
Schedule of Buyers attached to the Intercreditor Agreement is hereby deleted in
its entirety and replaced with the Schedule of Buyers attached hereto as Exhibit
A.
5. Representations.
(a) The
Convertible Debt Creditors hereby represent and warrant to Collateral Agent and
Buyers that no defaults or events of default exist under the Convertible Debt
Documents.
(b) The
Convertible Debt Creditors hereby represent and warrant to Collateral Agent and
Buyers, to their knowledge, all payments received by the Convertible Debt
Creditors under the Convertible Debt Documents were permitted under the terms of
the Intercreditor Agreement.
6. Miscellaneous.
(a) This
Amendment 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.
(b) This
Amendment may be executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which taken together shall be one and the
same instrument. Delivery of an executed signature page of this
Amendment by facsimile transmission or electronic transmission shall be as
effective as delivery of a manually executed counterpart hereof.
(c) This
Amendment is subject to Section 17 of the Intercreditor Agreement.
[remainder
of page intentionally left blank; signature page follows]
IN WITNESS WHEREOF, the each
of the Convertible Debt Creditors have caused this Amendment to be executed as
of the date first above written.
FIRST
CONVERTIBLE DEBT CREDITORS:
_________________________________________
_________________________________________
_________________________________________
_________________________________________
_________________________________________
SECOND
CONVERTIBLE DEBT CREDITORS:
_________________________________________
[_____________]
_________________________________________
[_____________]
_________________________________________
[_____________]
_________________________________________
[_____________]
_________________________________________
[_____________]
IN WITNESS WHEREOF, each Obligor has
caused this Amendment 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: Xxxxxxx
X. Xxxxxxx
Title: Chief
Executive Officer
STO OPERATING COMPANY, a Texas
corporation
By:
Name: Xxxxx
Xxxxxxx
Title: President
STO PROPERTIES LLC, a Texas
limited liability company
By:
Name: Xxxxx
Xxxxxxx
Title: President
STO DRILLING COMPANY, a Texas
corporation
By:
Name: Xxxxxxx
X. Xxxxxxx
Title: Chief
Executive Officer
IN WITNESS WHEREOF, Collateral Agent
and Buyers has caused this Amendment 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
Exhibit
A
Schedule
of Buyers
See
Attached
