JUNE 2009 WAIVER AND AMENDMENT AGREEMENT
EXHIBIT
99.10
JUNE 2009 WAIVER AND
AMENDMENT AGREEMENT
THIS JUNE
2009 WAIVER AND AMENDMENT AGREEMENT (this “Agreement”) is made as of June
16, 2009, among South Texas Oil Company, a Nevada corporation (the “Company”), the Subsidiaries
(as defined in the Purchase Agreements (as defined below)), Longview Marquis
Master Fund, L.P., a British Virgin Islands limited partnership (“Marquis”), and ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Fund, L.P., a Delaware limited partnership (“Summerview” and, together with
Marquis, the “Buyers”).
W I T N E
S S E T H:
WHEREAS,
the Company, Marquis and The Longview Fund, L.P., a California limited
partnership (“Longview”
and, together with Marquis, the “April Buyers”), entered into
that certain Securities Purchase Agreement, dated as of April 1, 2008 (as
amended by each of that certain June 2008 Amendment Agreement, dated as of June
18, 2008, among the Company and the April Buyers, that certain June 2008
Amendment to Senior Notes and Purchase Agreement, dated as of June 30, 2008 (the
“Second June 2008 Amendment
Agreement”), among the Company and the April Buyers, and that certain
September 2008 Waiver and Amendment, dated as of September 19, 2008 (the “September 2008 Waiver and
Amendment”), among the Company and the April Buyers, and as may otherwise
be amended, supplemented, restated or modified and in effect from time to time,
the “April Purchase Agreement”), pursuant
to which (i) the Company issued to Longview senior secured notes in an aggregate
original principal amount of $23,908,013.11, as of the date hereof, none of
which remains outstanding as of the date hereof, (ii) the Company issued to
Marquis 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,
as amended by the Second June 2008 Amendment Agreement and as any of the same
may otherwise be amended, supplemented, restated or otherwise modified and in
effect from time to time, the “Marquis April Notes”), and (iii) the
Warrants (as defined in the April Purchase Agreement) were amended and
restated;
WHEREAS,
the Company and Marquis 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 the Company sold, and Marquis purchased, a senior secured note
in the aggregate original principal amount of $7,000,000 (such note, 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 Bridge Notes”);
WHEREAS,
pursuant to that certain Assignment and Assumption Agreement, dated as of May
29, 2009, Marquis transferred to Summerview, among other things, a portion of
the Marquis April Notes in the principal amount of $2,252,994.73 (the “Summerview Transferred April
Notes”), a portion of the Warrants representing the right to acquire
62,841 shares of common stock (“Common Stock”) of the Company
(the “Transferred
Warrants”), and a portion of the Marquis 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, the “April Notes”), the remainder
of the Warrants representing the right to acquire 187,159 shares of Common Stock
(the “Remaining
Warrants” and, together with the Transferred Warrants, the “April Warrants”), and the
remainder of the Marquis Bridge Notes in the principal amount of $5,240,433.53
(the “Marquis Remaining Bridge
Notes” and, together with the Summerview Transferred Bridge Notes, the
“Bridge Notes;” the Bridge Notes and
the April Notes being collectively referred to as the “Notes”) continuing to be held
by Marquis.
WHEREAS,
the Company desires to enter into a Securities Purchase Agreement (such
Securities Purchase Agreement, in the form attached hereto as Exhibit A, without
amendment or other modification, the “Subordinated Purchase
Agreement”), by and among the Company and the investors listed on the
Schedule of
Buyers thereto (the “Subordinated Buyers”),
pursuant to which, subject to the terms and conditions set forth therein and in
that certain Intercreditor Agreement, among the Company, the Subsidiaries, the
Buyers and Other Offering Investors (as defined in the Subordinated Purchase
Agreement), dated as of June 10, 2009, as amended by that certain amendment to
Intercreditor Agreement, dated as of the date hereof (such amendment to
Intercreditor Agreement, in the form attached hereto as Exhibit B, the “Intercreditor Agreement
Amendment”), by and among the Company, the Buyers and the Subordinated
Buyers, the Company will sell, and the Subordinated Buyers will purchase,
convertible notes in an aggregate original principal amount of up to $75,000
(such secured convertible notes, each in the form attached hereto as Exhibit C, without
amendment or other modification, collectively, the “Subordinated Notes”) and
warrants (such warrants, each in the form attached hereto as Exhibit D,
without amendment or other modification, collectively, the “Subordinated Warrants” and,
together with the Subordinated Notes, the “Subordinated Securities”) to
purchase 150,000 shares of common stock of the Company (the “Common Stock”), subject to
adjustment as set forth in the Subordinated Warrants; and
WHEREAS,
the Company and the Buyers desire to amend the terms of each of the Notes and
permit the issuance by the Company of the Subordinated Securities to the
Subordinated Buyers, in the manner provided herein.
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 April
Notes.
a. The
Company hereby agrees with each of the Buyers, severally and not jointly, that,
as of the date first above written, the definition of “Event of Default” set forth in
Section 7(a) of each of the April Notes is hereby amended by adding new
paragraph (xix) immediately after paragraph (xviii) thereof, such paragraph to
read in its entirety as follows:
“(xix) Any
“Event of Default,” as
defined in those certain convertible notes, dated June 16, 2009, issued by the
Company pursuant to that certain Securities Purchase Agreement, dated as of June
16, 2009, among the Company and the investors listed on the Schedule of Buyers
thereto.”
b. As
amended hereby, each of the April Notes shall remain in full force and
effect.
2. Amendment of the Bridge
Notes.
a. The
Company hereby agrees with each of the Buyers, severally and not jointly, that,
as of the date first above written, the definition of “Event of Default” set forth in
Section 10(a) of each of the Bridge Notes is hereby amended by adding new
paragraph (xxi) immediately after paragraph (xx) thereof, such paragraph to read
in its entirety as follows:
“(xxi) Any
“Event of Default,” as
defined in those certain convertible notes, dated June 16, 2009, issued by the
Company pursuant to that certain Securities Purchase Agreement, dated as of
June16, 2009, among the Company and the investors listed on the Schedule of Buyers
thereto.”
b. As
amended hereby, each of the Bridge Notes shall remain in full force and
effect.
3. Limited
Waiver.
a. Subject
to and effective upon the due execution and delivery by the Company and each of
the Subordinated Buyers of the Intercreditor Agreement Amendment, and subject to
the conditions set forth in Section 3(b) hereof,
each of the Buyers, severally and not jointly, hereby waives any and all
violations or breaches of the April Notes (as amended hereby) and the Bridge
Notes (as amended hereby), respectively, and any of the other Transaction
Documents (as defined in each of the Purchase Agreements, collectively, the
“Buyer Transaction
Documents”), as applicable, and any Event of Default (as defined in each
of the Notes), solely to the extent that any such violation, breach or Event of
Default is the direct result of the Company’s and the Subsidiaries’ issuance of
the Subordinated Securities, and entering into, and carrying out their
respective obligations under, the Subordinated Purchase Agreement, the
Subordinated Securities, the Mortgage Amendments (as defined in the Subordinated
Purchase Agreement) and the Subsidiary Guaranty (as defined in the Subordinated
Purchase Agreement) (the Mortgage Amendments and the Subsidiary Guaranty, each
in the form attached hereto as Exhibit E, without
amendment or other modification, together with the Subordinated Purchase
Agreement and the Subordinated Securities, the “Subordinated Transaction
Documents”); provided, however, that upon
any amendment, restatement or other modification of, supplement to, or waiver by
any party of any of the conditions or obligations of any of the Subordinated
Buyers set forth in, the Subordinated Purchase Agreement, or the Subordinated
Securities or any of the other Subordinated Transaction Documents, without the
prior written consent of the Buyers, the limited waiver set forth in this Section 3(a) shall be
null and void and of no further force and effect as if the Buyers had never
granted the limited waiver set forth in this Section
3(a).
b. The
limited waivers set forth in Section 3(a) hereof,
(i) are not, nor shall they be deemed to be, waivers of any adjustment to the
Purchase Price (as defined in the April Warrants) pursuant to Section 3.4 of the
April Warrants held by the Buyers, resulting from, or otherwise relating to, the
consummation of the transactions contemplated by the Subordinated Purchase
Agreement and the other Subordinated Transaction Documents, including the
issuance by the Company of the Subordinated Securities, (ii) are not, nor
shall they be deemed to be,
waivers
under any other circumstance or waivers of any other condition, requirement,
provision or breach of, or rights under, any of the Notes (as amended hereby),
any of the Buyer Transaction Documents or any other agreement or instrument, and
(iii) do not, nor shall they be deemed to, establish a custom or course of
dealing.
4. 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 Intercreditor
Agreement Amendment, each of the Notes (as amended hereby) and the other Buyer
Transaction Documents. The execution and delivery of this Agreement
and the Intercreditor Agreement Amendment by the Company and the Subsidiaries
and the consummation of the transactions contemplated hereby, by the Notes (as
amended hereby) and by the other Buyer 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
Intercreditor Agreement Amendment, the Notes (as amended hereby) and the other
Buyer 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.
b. No
Conflicts. The execution and delivery of this Agreement and
the Intercreditor Agreement Amendment by each of the Company and the
Subsidiaries, as applicable, the performance by each of the Company and the
Subsidiaries (as applicable) of their respective obligations hereunder, under
the Intercreditor Agreement Amendment, under the Notes (as amended hereby) and
under the other Buyer Transaction Documents, and the consummation by each of the
Company and the Subsidiaries (as applicable) of the transactions contemplated
hereby, by the Intercreditor Agreement Amendment, by the Notes (as amended
hereby) and by the other Buyer 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 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
Intercreditor
Agreement Amendment, the Notes (as amended hereby) and the other Buyer
Transaction Documents.
5. 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 the Intercreditor Agreement Amendment, and (b) each of this
Agreement and the Intercreditor Agreement Amendment 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.
6. Acknowledgment of the
Company and the Subsidiaries. The Company and each of the
Subsidiaries hereby irrevocably and unconditionally acknowledge, affirm and
covenant to such Buyer that:
a. such
Buyer is not in default under any of the Buyer Transaction Documents, as
applicable, 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 Obligations (as defined in each
of the Amended and Restated Security Agreement (as
defined in the April Purchase Agreement), the Subsidiary Guaranty (as defined in
April Purchase Agreement), the Bridge Security Agreement (as defined in the
Bridge Purchase Agreement) and the Bridge Guaranty (as defined in the Bridge
Purchase Agreement)), including the liabilities and obligations of the Company
under the Notes (as amended hereby), or to the rights, remedies or powers of
such Buyer in respect of any of the Obligations or any of the Buyer Transaction
Documents, as applicable, 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.
7. Avoidance of
Doubt. The parties hereto hereby agree, for the avoidance of
doubt, that (a) the term “Notes” as used in the
Transaction Documents (as defined in the April Purchase Agreement, the “April Transaction Documents”)
shall include the April Notes, as, and to the extent, amended by this Agreement,
(b) the term “Bridge
Notes” as used in the
Transaction Documents (as defined in the Bridge Purchase Agreement, the “Bridge Transaction Documents”)
shall mean the Bridge Notes, as, and to the extent, amended by this Agreement,
(c) the term “Obligations” as used in the
April Transaction Documents shall include all liabilities and obligations of the
Company under this Agreement, under the Intercreditor Agreement Amendment, under
the April Notes (as amended hereby) and under the other April Transaction
Documents, and (d) the term “Obligations” as used in the
Bridge Transaction Documents shall include all liabilities and obligations of
the Company under this Agreement, under the Intercreditor Agreement Amendment,
under the Bridge Notes (as amended hereby) and under the other Bridge
Transaction Documents, and each of the parties hereto agrees not to take any
contrary positions.
8. Expenses. In
accordance with Section 5(h) of the April Purchase Agreement and Section
5(h)(ii) of the Bridge Purchase Agreement, contemporaneously with the execution
and delivery of this Agreement, the Company shall reimburse each Buyer for all
of the out-of-pocket
fees,
costs and expenses incurred thereby in connection with the drafting, negotiation
and execution of this Agreement and the Intercreditor Agreement Amendment and
otherwise in connection with the Subordinated Purchase Agreement and the
transactions contemplated thereby.
9. Reservation of
Rights. Except as expressly set forth in Section 3(a) hereof,
and subject to the execution and delivery of the Intercreditor Agreement
Amendment by the Company and the Subordinated Buyers to the Buyers and the terms
and conditions of Section 3(b) hereof,
none of the Buyers has hereby waived (a) any breach, default or Event of Default
that may be continuing under any of the Buyer Transaction Documents, as
applicable, 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 Buyer
Transaction Documents, as applicable, or at law. Each of the Buyers
expressly reserves all such rights and remedies.
10. 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.
11. 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, 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 Intercreditor Agreement
Amendment, the Notes (as amended hereby) and the other Buyer Transaction
Documents, as applicable.
12. 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.
13. 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.
14. 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.
15. 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.
16. Merger. This
Agreement, the Intercreditor Agreement Amendment, the Notes (as amended hereby),
as applicable, and the other Buyer 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
Intercreditor Agreement Amendment, in the Notes (as amended hereby) and in the
other Buyer Transaction Documents, neither of the Company nor any of the Buyers
makes any representation, warranty, covenant or undertaking with respect to such
matters.
17. 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, (ii) 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, (iii) the words “hereof,” “herein”
and words of similar effect shall reference this Agreement in its entirety, and
(iv) the use of the word “including” in this Agreement shall be by way of
example rather than limitation.
18. 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 (as defined in each of the April Purchase
Agreement and the Bridge Purchase Agreement) 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 Buyer Transaction Documents, including the Notes (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 of the Buyer Transaction Document as security for or otherwise
guaranteed the Obligations under or with respect to the Buyer 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 Obligations as amended hereby. Each of
the Company and the Subsidiaries hereby consents to this Agreement and
acknowledges that each of the Buyer Transaction Documents, including the Notes
(as amended hereby), remains in full force and effect and is hereby ratified and
reaffirmed.
[Remainder
of page intentionally left blank; Signature page follows]
IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by each of
the undersigned as of the date first above written.
COMPANY:
SOUTH TEXAS OIL
COMPANY,
a Nevada
corporation
By:
Name: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
Title: Chief
Executive Officer
SUBSIDIARIES:
SOUTHERN TEXAS OIL COMPANY., a
Texas corporation
By:
Name:
Title:
STO OPERATING COMPANY, a Texas
corporation
By:
Name:
Title:
STO PROPERTIES
LLC,
a Texas
limited liability company
By:
Name:
Title:
STO DRILLING
COMPANY,
a Texas
corporation
By:
Name:
Title:
[Signature
page to June 2009 Waiver and Amendment Agreement]
MARQUIS:
LONGVIEW
MARQUIS MASTER FUND, L.P.
By: Summerline
Asset Management, LLC
Its: Investment
Advisor
By:
Name: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
Title: Co-Managing
Member
SUMMERVIEW:
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ FUND, L.P.
By: Summerline
Asset Management, LLC
Its: Investment
Advisor
By:
Name: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
Title: Co-Managing
Member
[Signature
page to June ▇▇▇▇ ▇▇▇▇▇▇ and Amendment Agreement]