EXHIBIT A Property Descriptions [See Exhibit A to First Amendment]
EXHIBIT
A
Property
Descriptions
[See
Exhibit A to First Amendment]
Exhibit
99.31
THIS
PLEDGE AGREEMENT,
made as
of February 14, 2008 (this “Agreement”),
is
between SONTERRA
RESOURCES, INC. (f/k/a
River Capital Group, Inc.),
a
Delaware corporation (“Pledgor”),
and
VIKING
ASSET MANAGEMENT LLC,
a
California limited liability company, in its capacity as collateral agent for
Buyer identified below (in such capacity, together with its successors and
assigns, the “Pledgee”).
WHEREAS:
A. Sonterra
Oil & Gas, Inc. (f/k/a Sonterra
Resources, Inc.), a Delaware corporation (“Sonterra”),
The
Longview Fund, L.P., a California limited partnership (“Buyer”)
and
certain officers of Sonterra are parties to that certain Amended and Restated
Securities Purchase Agreement, dated effective as of July 9, 2007 (as amended,
restated, supplemented, or otherwise modified from time to time, the
“Purchase
Agreement”),
pursuant to which Buyer purchased (i) 333 shares (the “New
Sonterra Shares”)
of
common stock, no par value, of Sonterra (“Sonterra
Common Stock”);
for
an aggregate amount of $9,990, which shares constitute 100% of the issued and
outstanding Capital Stock of Sonterra, and (ii) a senior secured note of
Sonterra in the initial principal amount of $322,500 (the “Deposit
Note”).
B. Contemporaneously
with the execution and delivery of that certain Securities Exchange and
Additional Note Purchase Agreement between Pledgor and Buyer, dated as of August
3, 2007 (as amended by the February 2008 Amendment Agreement, dated as of
February 14, 2008, and as may be further amended, modified, restated or
supplemented and in effect from time to time, the “Exchange
Agreement”),
the
transactions contemplated by the Purchase Agreement to occur at the Equity
Closing (as defined in the Purchase Agreement) and the transactions contemplated
by the Cinco Purchase Agreement were consummated; without limiting the
foregoing, pursuant to the Purchase Agreement, Buyer purchased from Sonterra
a
senior secured note of Sonterra in the initial principal amount of $5,990,010
(of which $322,500 represented refinancing of the Deposit Note, which was then
being surrendered to Sonterra) (as amended, restated, supplemented, or otherwise
modified from time to time, the “Sonterra
Equity Note”)
and a
warrant to purchase 50 shares of Sonterra Common Stock (as amended, restated,
supplemented, or otherwise modified from time to time, the “Sonterra
Warrants”).
C. At
the
Flash Acquisition Closing (as defined in the Purchase Agreement), the
transactions contemplated by the Purchase Agreement to occur at the Flash
Acquisition Closing and the transactions contemplated by the Flash Purchase
Agreement were consummated subject to the terms and conditions of the Purchase
Agreement; without limiting the foregoing, pursuant to the Purchase Agreement,
at the Flash Acquisition Closing Buyer purchased an additional senior secured
note of Sonterra in the initial principal amount of $2,000,000 (as amended,
restated, supplemented, or otherwise modified from time to time, the
“Sonterra
Non-Equity Note”).
1
D. At
the
Exchange Closing, subject to the terms and conditions thereof, Buyer (i) is
exchanging all of its Sonterra Common Stock and the Sonterra Equity Note for
common stock of Pledgor, par value $0.001 per share (the common stock of Pledgor
being referred to herein as “RCGI
Common Stock”;
and
any shares thereof being referred to herein as “RCGI
Common Shares”)
(the
RCGI Common Shares received by Buyer in such exchange being referred to as
the
“New
RCGI Common Shares”),
(ii)
is exchanging the Sonterra Warrant for a warrant (such warrant, together with
any warrants or other securities issued in exchange or substitution therefor
or
replacement thereof, and as any of the same may be amended or modified and
in
effect from time to time, the “RCGI
Warrant”)
to
purchase RCGI Common Shares (subject to adjustment to reflect the Reverse Stock
Split and any other stock split, stock dividend, stock combination or similar
transaction after the date thereof) (the “Warrant
Shares”),
which
RCGI Warrant shall have a term of five years and be exercisable into the Warrant
Shares at a price per Warrant Share (the “Warrant
Exercise Price”)
equal
to 110% of the quotient of $6,000,000 divided by the number of New RCGI Common
Shares issued to Buyer at the Exchange Closing; and (iii) is exchanging the
Sonterra Non-Equity Note, if issued, for a senior secured note of Pledgor in
an
initial principal amount equal to the principal amount owing under the Sonterra
Non-Equity Note on the Exchange Closing Date (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 or modified from
time to time, the “Initial
RCGI Note”).
E. Subject
to
the terms and conditions set forth in the Exchange Agreement, during the
Additional Note Issuance Period (as defined therein), Pledgor will have the
option to sell, and if Pledgor exercises such option Buyer shall be obligated
to
purchase, 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
RCGI Notes”;
and,
collectively with the Initial RCGI Note, the “Notes”),
each
with a maturity date of August 31, 2010, in an original aggregate principal
amount of up to the result of $10,000,000 minus the original principal amount
of
the Initial RCGI Note.
F. The
Pledgor legally and beneficially owns one hundred percent (100%) of the issued
and outstanding shares of Capital Stock of Sonterra (Sonterra and any other
corporation or other entity, the stock or other equity interests and securities
of which are owned or acquired by Pledgor and described on an addendum hereto
from time to time executed by Pledgor in form and substance satisfactory to
Pledgee, is referred to herein as a “Pledge
Entity”
and
collectively as the “Pledge
Entities”;
provided that the parties hereto agree that, as of the date hereof, Sonterra
is
the only Pledged Entity).
2
G. Pursuant
to a Joinder to Security Agreement dated as of the date hereof, Pledgor has
become a party to and a “Debtor” under that certain Security Agreement dated
July 9, 2007 between Sonterra and Pledgee (as amended by that certain First
Amendment to Security Agreement dated as of the date hereof between Sonterra
and
Pledgee, and as the same may be further amended, restated, modified or
supplement and in effect from time to time, the “Security
Agreement”),
and
Pledgor has granted Pledgee, for the benefit of Buyer, a first priority security
interest in, lien upon and pledge of its rights in the Pledgor’s Collateral (as
defined in the Security Agreement).
H. To
induce
Buyer to make the Loans, and in order to secure the payment and performance
by
Pledgor of the Liabilities (as defined in the Security Agreement), Pledgor
has
agreed to pledge to Pledgee all of the capital stock and other equity interests
and securities of the Pledge Entities now or hereafter owned or acquired by
Pledgor to secure the Liabilities (as defined in the Security
Agreement).
NOW,
THEREFORE,
in
consideration of the premises and in order to induce Buyer to purchase the
Notes
under the Exchange Agreement and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, Pledgor hereby agrees
with Pledgee as follows:
3
| II. |
Defined
Terms.
Unless otherwise defined herein, all capitalized terms used herein
shall
have the meanings given them in the Exchange
Agreement.
|
| III. |
Pledge.
|
| A. |
Pledgor
hereby pledges, assigns, hypothecates, delivers and grants to Pledgee,
for
the benefit of itself and Buyer, a first lien on and first priority
perfected security interest in (i) all of the Capital Stock or other
equity interests of the Pledge Entities now owned or hereafter acquired
by
Pledgor (collectively, the “Pledged
Shares”),
(ii) all other property hereafter delivered to, or in the possession
or in
the custody of, Pledgee, in substitution for or in addition to the
Pledged
Shares, (iii) any other property of Pledgor described in Section
4
below or otherwise, whether now or hereafter delivered to, or in
the
possession or custody of Pledgor, and (iv) all proceeds of the collateral
described in the preceding clauses
(i),
(ii)
and (iii)
(the collateral described in clauses
(i)
through (iv)
of
this Section
2
being collectively referred to as the “Pledged
Collateral”),
as collateral security for the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise)
of
the Liabili-ties (as defined in the Security Agreement). All of the
Pledged Shares now owned by Pledgor which are presently represented
by
certificates are listed on Exhibit A
hereto, which certificates, with undated assignments separate from
certificates or stock powers duly executed in blank by Pledgor and
irrevocable proxies, are being delivered to Pledgee simultaneously
herewith. Upon the creation or acquisition of any new Pledged Shares,
Pledgor shall execute an Addendum in the form of Exhibit
B
attached hereto (a “Pledge
Addendum”).
Any Pledged Collateral described in a Pledge Addendum executed by
Pledgor
shall thereafter be deemed to be listed on Exhibit
A
hereto. Pledgee shall maintain possession and custody of the certificates
representing the Pledged Shares and any additional Pledged
Collateral.
|
| B. |
Pledgor
shall cause each Pledged Share consisting of either (i) a membership
interest in a Person that is a limited liability company or (ii)
a
partnership interest in a Person that is a partnership (if any) to
be
“securities” governed by Article 8 of the UCC at all times. Pledgor shall
cause the applicable Persons to issue certificates evidencing such
membership interests or partnership interests (if any) to Pledgor.
Pledgor
shall not cause and shall not permit any Pledged Entity which is
not a
corporation to “opt-out” of Article 8 of the UCC. Pledgor shall not take,
and shall not permit any Pledged Entity which is not a corporation
to
take, any actions to cause the capital stock, membership interests,
partnership interests or similar equity interests of such Pledged
Entity
to cease to be classified as “securities” governed by Article 8 of the
UCC.
|
| IV. |
Representations
and Warranties of Pledgor. Pledgor
represents and warrants to Pledgee, and covenants with Pledgee,
that:
|
| A. |
Exhibit
A
sets forth (i) the authorized capital stock or other equity interests
of
each Pledge Entity, (ii) the number of shares of capital stock or
other
equity interests of each Pledge Entity that are issued and outstanding
as
of the date hereof, and (iii) the percentage of the issued and outstanding
shares of capital stock or other equity interests of each Pledge
Entity
held by Pledgor. Pledgor is the record and beneficial owner of, and
has
good and marketable title to, the Pledged Shares, and such shares
are and
will remain free and clear of all pledges, liens, security interests
and
other encumbrances and restrictions whatsoever, except the liens
and
security interests in favor of Pledgee created by this
Agreement;
|
4
| B. |
Except
as set forth on Exhibit
A,
there are no outstanding options, warrants or other similar agreements
with respect to the Pledged Shares or any of the other Pledged
Collateral;
|
| C. |
this
Agreement is the legal, valid and binding obligation of Pledgor,
enforceable against Pledgor in accordance with its terms except to
the
extent that such enforceability is subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and moratorium
laws and
other laws of general application affecting enforcement of creditors’
rights generally, or the availability of equitable remedies, which
are
subject to the discretion of the court before which an action may
be
brought;
|
| D. |
the
Pledged Shares have been duly and validly authorized and issued,
are fully
paid and non-assessable, and the Pledged Shares listed on Exhibit
A
constitute all of the issued and outstanding capital stock or other
equity
interests of the Pledge Entities;
|
| E. |
no
consent, approval or authorization of or designation or filing with
any
governmental or regulatory authority on the part of Pledgor is required
in
connection with the pledge and security interest granted under this
Agreement;
|
| F. |
the
execution, delivery and performance of this Agreement will not violate
any
provision of any applicable law or regulation or of any order, judgment,
writ, award or decree of any court, arbitrator or governmental authority,
domestic or foreign, which are applicable to Pledgor, or of the articles
or certificate of incorporation, bylaws or
any other similar organizational documents of
Pledgor or any Pledge Entity or of any securities issued by Pledgor
or any
Pledge Entity or of any mortgage, indenture, lease, contract, or
other
agreement, instrument or undertaking to which Pledgor or any Pledge
Entity
is a party or which is binding upon Pledgor or any Pledge Entity
or upon
any of the assets of Pledgor or any Pledge Entity, and will not result
in
the creation or imposition of any lien, charge or encumbrance on
or
security interest in any of the assets of Pledgor or any Pledge Entity,
except as otherwise contemplated by this
Agreement;
|
| G. |
assuming
the Pledgee retains control of and holds all certificates and executed
stock powers for the Pledged Shares and the Pledged Collateral, the
pledge, assignment and delivery of the Pledged Shares and the other
Pledged Collateral pursuant to this Agreement creates a valid first
lien
on and perfected first priority security interest in such Pledged
Shares
and Pledged Collateral and the proceeds thereof in favor of Pledgee,
subject to no prior pledge, lien, mortgage, hypothecation, security
interest, charge, option or encumbrance or to any agreement purporting
to
grant to any third party a security interest in the property or assets
of
Pledgor which would include the Pledged Shares or any other Pledged
Collateral. Until this Agreement is terminated pursuant to Section
11
hereof, Pledgor covenants and agrees that it will defend, for the
benefit
of Pledgee, Pledgee’s right, title and security interest in and to the
Pledged Shares, the other Pledged Collateral and the proceeds thereof
against the claims and demands of all other persons or entities;
and
|
| H. |
Neither
Pledgor nor any Pledged Entity (i) will become a person whose property
or
interests in property are blocked or subject to blocking pursuant
to
Section 1 of Executive Order 13224 of September 23, 2001 Blocking
Property
and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit
or Support Terrorism (66 Fed. Reg. 49079(2001), (ii) will engage
in any
dealings or transactions prohibited by Section 2 of such executive
order,
or (iii) will otherwise become a person on the list of Specially
Designated Nationals and Blocked Persons or subject to the limitations
or
prohibitions under any other Office of Foreign Asset Control regulation
or
executive order.
|
5
| V. |
Dividends,
Distributions, Etc. If,
prior to irrevocable repayment in full in cash of the Liabilities,
Pledgor
shall receive any certificate (including, without limitation, any
certificate representing a dividend or a distribution in connection
with
any reclassification, increase or reduction of capital, or issued
in
connection with any reorganization, merger or consolidation), or
any
options or rights, whether as an addition to, in substitution for,
or in
exchange for any of the Pledged Shares or otherwise, Pledgor agrees,
in
each case, to accept the same as Pledgee’s agent and to hold the same in
trust for Pledgee, and to deliver the same promptly (but in any event
within five Business Days) to Pledgee in the exact form received,
with the
endorsement of Pledgor when necessary and/or with appropriate undated
assignments separate from certificates or stock powers duly executed
in
blank, to be held by Pledgee subject to the terms hereof, as additional
Pledged Collateral. Pledgor shall promptly deliver to Pledgee (i)
a Pledge
Addendum with respect to such additional certificates, and (ii) any
financing statements or amendments to financing statements as requested
by
Pledgee in writing. Pledgor hereby authorizes Pledgee to attach each
such
Pledge Addendum to this Agreement. In case any distribution of capital
shall be made on or in respect of the Pledged Shares or any property
shall
be distributed upon or with respect to the Pledged Shares pursuant
to the
recapitalization or reclassification of the capital of the issuer
thereof
or pursuant to the reorganization thereof, the property so distributed
shall be delivered to Pledgee to be held by it as additional Pledged
Collateral. Except as provided in Section
5(b)
below, all sums of money and property so paid or distributed in respect
of
the Pledged Shares which are received by Pledgor shall, until paid
or
delivered to Pledgee, be held by Pledgor in trust as additional Pledged
Collateral.
|
| VI. |
Voting
Rights; Dividends; Certificates.
|
| A. |
So
long as no Event of Default (as defined in the Notes) has occurred
and is
continuing, Pledgor shall be entitled (subject to the other provisions
hereof, including, without limitation, Section
8
below) to exercise its voting and other consensual rights with respect
to
the Pledged Shares and otherwise exercise the incidents of ownership
thereof in any manner not inconsistent with this Agreement or the
Exchange
Agreement and the other Transaction Documents. Pledgor hereby grants
to
Pledgee or its nominee, an irrevocable proxy to exercise all voting
and
corporate rights relating to the Pledged Shares in any instance,
which
proxy shall be effective, at the discretion of Pledgee, upon the
occurrence and during the continuance of an Event of Default. Upon
the request of Pledgee at any time, Pledgor agrees to deliver to
Pledgee
such further evidence of such irrevocable proxy or such further
irrevocable proxies to vote the Pledged Shares as Pledgee may
request.
|
| B. |
So
long as no Event of Default shall have occurred and be continuing,
Pledgor
shall be entitled to receive cash dividends or other distributions
made in
respect of the Pledged Shares, to the extent permitted to be made
pursuant
to the terms of the Notes. Upon the occurrence and during the continuance
of an Event of Default, in the event that Pledgor, as record and
beneficial owner of the Pledged Shares, shall have received or shall
have
become entitled to receive, any cash dividends or other distributions
in
the ordinary course, Pledgor shall deliver to Pledgee, and Pledgee
shall
be entitled to receive and retain, for the benefit of Pledgee and
Buyer,
all such cash or other distributions as additional security for the
Liabilities.
|
6
| C. |
Subject
to any sale or other disposition by Pledgee of the Pledged Shares,
any
other Pledged Collateral or other property pursuant to this Agreement,
upon the indefeasible full payment in cash, satisfaction and termination
of all of the Liabilities and the termination of this Agreement pursuant
to Section
11
hereof and of the liens and security interests hereby granted, the
Pledged
Shares, the other Pledged Collateral and any other property then
held as
part of the Pledged Collateral in accordance with the provisions
of this
Agreement shall be returned to Pledgor or to such other persons or
entities as shall be legally entitled
thereto.
|
| D. |
Pledgor
shall cause all Pledged Shares to be certificated at all times while
this
Agreement is in effect.
|
| VII. |
Rights
of Pledgee. Pledgee
shall not be liable for failure to collect or realize upon the Liabilities
or any collateral security or guaranty therefor, or any part thereof,
or
for any delay in so doing, nor shall Pledgee be under any obligation
to
take any action whatsoever with regard thereto. Any or all of the
Pledged
Shares held by Pledgee hereunder may, if an Event of Default has
occurred
and is continuing, without notice, be registered in the name of Pledgee
or
its nominee, and Pledgee or its nominee may thereafter without notice
exercise all voting and corporate rights at any meeting with respect
to
any Pledge Entity and exercise any and all rights of conversion,
exchange,
subscription or any other rights, privileges or options pertaining
to any
of the Pledged Shares as if it were the absolute owner thereof, including,
without limitation, the right to vote in favor of, and to exchange
at its
discretion any and all of the Pledged Shares upon, the merger,
consolidation, reorganization, recapitalization or other readjustment
with
respect to any Pledge Entity or upon the exercise by any Pledge Entity,
Pledgor or Pledgee of any right, privilege or option pertaining to
any of
the Pledged Shares, and in connection therewith, to deposit and deliver
any and all of the Pledged Shares with any committee, depository,
transfer
agent, registrar or other designated agency upon such terms and conditions
as Pledgee may reasonably determine, all without liability except
to
account for property actually received by Pledgee, but Pledgee shall
have
no duty to exercise any of the aforesaid rights, privileges or options
and
shall not be responsible for any failure to do so or delay in so
doing.
|
7
| VIII. |
Remedies. Upon
the occurrence and during the continuance of an Event of Default,
Pledgee
may exercise in respect of the Pledged Collateral, in addition to
other
rights and remedies provided for herein or otherwise available to
it, all
the rights and remedies of a secured party under the Uniform Commercial
Code (“UCC”)
in effect in the State of New York from time to time, whether or
not the
UCC applies to the affected Pledged Collateral (or the Uniform Commercial
Code as in effect in any other relevant jurisdiction). Pledgee also,
without demand of performance or other demand, advertisement or notice
of
any kind (except the notice specified below of time and place of
public or
private sale) to or upon Pledgor or any other person or entity (all
and
each of which demands, advertisements and/or notices are hereby expressly
waived), may upon the occurrence and during the continuance of an
Event of
Default forthwith collect, receive, appropriate and realize upon
the
Pledged Collateral, or any part thereof, and/or may forthwith date
and
otherwise fill in the blanks on any assignments separate from certificates
or stock power or otherwise sell, assign, give an option or options
to
purchase, contract to sell or otherwise dispose of and deliver said
Pledged Collateral, or any part thereof, in one or more portions
at one or
more public or private sales or dispositions, at any exchange or
broker’s
board or at any of Pledgee’s offices or elsewhere upon such terms and
conditions as Pledgee may deem advisable and at such prices as it
may deem
best, for any combination of cash and/or securities or other property
or
on credit or for future delivery without assumption of any credit
risk,
with the right to Pledgee upon any such sale, public or private,
to
purchase the whole or any part of said Pledged Collateral so sold,
free of
any right or equity of redemption in Pledgor, which right or equity
is
hereby expressly waived or released. Pledgee shall apply the net
proceeds
of any such collection, recovery, receipt, appropriation, realization,
sale or disposition, after deducting all costs and expenses of every
kind
incurred therein or incidental to the safekeeping of any and all
of the
Pledged Collateral or in any way relating to the rights of Pledgee
hereunder, including attorneys’ fees and legal expenses, to the payment,
in whole or in part, of the Liabilities, in such order as Pledgee
may
elect. Pledgor shall remain liable for any deficiency remaining unpaid
after such application. Only after so paying over such net proceeds
and
after the payment by Pledgee of any other amount required by any
provision
of law, including, without limitation, Section 9-608 of the UCC,
need
Pledgee account for the surplus, if any, to Pledgor. Pledgor agrees
that
Pledgee need not give more than ten (10) days’ notice of the time and
place of any public sale or of the time after which a private sale
or
other intended disposition is to take place and that such notice
is
reasonable notification of such matters. No notification need be
given to
Pledgor if it has signed after default a statement renouncing or
modifying
any right to notification of sale or other intended disposition.
|
| IX. |
No
Disposition, Etc. Until
the irrevocable payment in full in cash of the Liabilities, Pledgor
agrees
that it will not sell, assign, transfer, exchange, or otherwise dispose
of, or grant any option with respect to, the Pledged Shares or any
other
Pledged Collateral, nor will Pledgor create, incur or permit to exist
any
pledge, lien, mortgage, hypothecation, security interest, charge,
option
or any other encumbrance with respect to any of the Pledged Shares
or any
other Pledged Collateral, or any interest therein, or any proceeds
thereof, except for the lien and security interest of Pledgee provided
for
by this Agreement and the Security Agreement and Permitted Liens,
as
defined in the Exchange
Agreement.
|
| X. |
Sale
of Pledged Shares.
|
| A. |
Pledgor
recognizes that Pledgee may be unable to effect a public sale or
disposition (including, without limitation, any disposition in connection
with a merger of a Pledge Entity) of any or all the Pledged Shares
by
reason of certain prohibitions contained in the Securities Act of
1933, as
amended (the “1933
Act”),
and applicable state securities laws, but may be compelled to resort
to
one or more private sales or dispositions thereof to a restricted
group of
purchasers who will be obliged to agree, among other things, to acquire
such securities for their own account, for investment and not with
a view
to the distribution or resale thereof. Pledgor acknowledges and agrees
that any such private sale or disposition may result in prices and
other
terms (including the terms of any securities or other property received
in
connection therewith) less favorable to the seller than if such sale
or
disposition were a public sale or disposition and, notwithstanding
such
circumstances, agrees that any such private sale or disposition shall
be
deemed to be reasonable and affected in a commercially reasonable
manner.
Pledgee shall be under no obligation to delay a sale or disposition
of any
of the Pledged Shares in order to permit Pledgor or a Pledge Entity
to
register such securities for public sale under the 1933 Act, or under
applicable state securities laws, even if Pledgor or a Pledge Entity
would
agree to do so.
|
8
| B. |
Pledgor
further agrees to do or cause to be done all such other acts and
things as
may be reasonably necessary to make such sales or dispositions of
the
Pledged Shares valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees
or
awards of any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over
any such
sales or dispositions, all at Pledgor's expense; provided that Pledgor
shall not have any obligation to register the Pledged Shares as securities
under the 1933 Act or the applicable state securities laws solely
by
virtue of this Section
9(b).
Pledgor further agrees that a breach of any of the covenants contained
in
Sections
4,
5(a),
5(b),
8,
9
and 24
will cause irreparable injury to Pledgee and that Pledgee has no
adequate
remedy at law in respect of such breach and, as a consequence, agrees,
without limiting the right of Pledgee to seek and obtain specific
performance of other obligations of Pledgor contained in this Agreement,
that each and every covenant referenced above shall be specifically
enforceable against Pledgor, and Pledgor hereby waives and agrees
not to
assert any defenses against an action for specific performance of
such
covenants.
|
| C. |
Pledgor
further agrees to indemnify and hold harmless Buyer, Pledgee and
their
respective successors and assigns, their respective officers, directors,
employees, attorneys and agents, and any person or entity in control
of
any thereof, from and against any loss, liability, claim, damage
and
expense, including, without limitation, legal fees and expenses (in
this
paragraph collectively called the “Indemnified
Liabilities”),
under federal and state securities laws or otherwise insofar as such
Indemnified Liability (i) arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained
in any
registration statement, prospectus or offering memorandum or in any
preliminary prospectus or preliminary offering memorandum or in any
amendment or supplement to any thereof or in any other writing prepared
by
Pledgor in connection with the offer, sale or resale of all or any
portion
of the Pledged Collateral unless such untrue statement of material
fact
was provided by Pledgee, in writing, specifically for inclusion therein,
or (ii) arises out of or is based upon any omission or alleged omission
to
state therein a material fact required to be stated or necessary
to make
the statements therein not misleading, such indemnification to remain
operative regardless of any investigation made by or on behalf of
Pledgee
or any successor thereof, or any person or entity in control of any
thereof. In connection with a public sale or other distribution,
Pledgor
will provide customary indemnification to any underwriters, their
successors and assigns, officers and directors and each person or
entity
who controls any such underwriter (within the meaning of the 1933
Act). If
and to the extent that the foregoing undertakings in this paragraph
may be
unenforceable for any reason, Pledgor agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The obligations
of
Pledgor under this paragraph
(c)
shall survive any termination of this
Agreement.
|
9
| D. |
Pledgor
further agrees to waive any and all rights of subrogation it may
have
against a Pledge Entity upon the sale or disposition of all or
any portion
of the Pledged Collateral by Pledgee pursuant to the terms of this
Agreement until the termination of this Agreement in accordance
with
Section
11
below.
|
| XI. |
No
Waiver; Cumulative Remedies.
Pledgee shall not by any act, delay, omission or otherwise be deemed
to
have waived any of its remedies hereunder, and no waiver by Pledgee
shall
be valid unless in writing and signed by Pledgee, and then only to
the
extent therein set forth. A waiver by Pledgee of any right or remedy
hereunder on any one occasion shall not be construed as a bar to
any right
or remedy which Pledgee would otherwise have on any further occasion.
No
course of dealing between Pledgor and Pledgee and no failure to exercise,
nor any delay in exercising on the part of Pledgee or Buyer of, any
right,
power or privilege hereunder or under the other Transaction Documents
shall impair such right or remedy or operate as a waiver thereof;
nor
shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein
provided are cumulative and may be exercised singly or concurrently,
and
are not exclusive of any rights or remedies provided by law or in
the
Exchange Agreement.
|
| XII. |
Termination. This
Agreement and the liens and security interests granted hereunder
shall
terminate and Pledgee shall return any Pledged Shares or other Pledged
Collateral then held by Pledgee in accordance with the provisions
of this
Agreement to Pledgor upon the termination of the Notes and the full
and
complete performance and indefeasible satisfaction of all of the
Liabilities (i) in respect of the Notes (including, without limitation,
the indefeasible payment in full in cash of all such Liabilities)
and (ii)
with respect to which claims have been asserted by Pledgee and/or
Buyer.
|
| XIII. |
Possession
of Collateral. Beyond
the exercise of reasonable care to assure the safe custody of the
Pledged
Shares in the physical possession of Pledgee pursuant hereto, neither
Pledgee, nor any nominee of Pledgee, shall have any duty or liability
to
collect any sums due in respect thereof or to protect, preserve or
exercise any rights pertaining thereto (including any duty to ascertain
or
take action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relating to the Pledged Collateral and any
duty
to take any necessary steps to preserve rights against any parties
with
respect to the Pledged Collateral), and shall be relieved of all
responsibility for the Pledged Collateral upon surrendering them
to
Pledgor. Pledgor assumes the responsibility for being and keeping
itself
informed of the financial condition of a Pledge Entity and of all
other
circumstances bearing upon the risk of non-payment of the Liabilities,
and
Pledgee shall have no duty to advise Pledgor of information known
to
Pledgee regarding such condition or any such circumstance. Pledgee
shall
have no duty to inquire into the powers of a Pledge Entity or its
officers, directors, managers, members, partners or agents thereof
acting
or purporting to act on its behalf.
|
| XIV. |
Taxes
and Expenses.
Pledgor will upon demand pay to Pledgee, (a) any taxes (excluding
income
taxes, franchise taxes or other taxes levied on gross earnings, profits
or
the like of Pledgee) payable or ruled payable by any Governmental
Authority (as defined in the Security Agreement) in respect of this
Agreement, together with interest and penalties, if any, and (b)
all
expenses, including the fees and expenses of counsel for Pledgee
and of
any experts and agents that Pledgee may incur in connection with
(i) the
administration, modification or amendment of this Agreement, (ii)
the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise
or
enforcement of any of the rights of Pledgee hereunder, or (iv) the
failure
of Pledgor to perform or observe any of the provisions
hereof.
|
| XV. |
Pledgee
Appointed Attorney-In-Fact.
Pledgor hereby irrevocably appoints Pledgee as Pledgor’s attorney-in-fact,
with full authority in the place and stead of Pledgor and in the
name of
Pledgor or otherwise, from time to time in Pledgee’s discretion, to take
any action and to execute any instrument that Pledgee deems reasonably
necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect
all
instruments made payable to Pledgor representing any dividend,
interest
payment or other distribution in respect of the Pledged Collateral
or any
part thereof and to give full discharge for the same, when and
to the
extent permitted by this Agreement; provided that the power of
attorney
granted hereunder shall only be exercised by Pledgee after the
occurrence
and during the continuance of an Event of
Default.
|
10
| XVI. |
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 non-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. Notwithstanding
the
foregoing, the Pledgee may enforce its rights and remedies in any
other
jurisdiction applicable to the Pledged Collateral. 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.
|
| XVII. |
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 the other party; provided that a facsimile, .pdf or similar
electronically transmitted signature shall be considered due execution
and
shall be binding upon the signatory thereto with the same force and
effect
as if the signature were an original
signature.
|
| XVIII. |
Headings.
The headings of this Agreement are for convenience of reference and
shall
not form part of, or affect the interpretation of, this
Agreement.
|
11
| XIX. |
Severability.
If any provision of this Agreement shall be invalid or unenforceable
in
any jurisdiction, such invalidity or unenforceability shall not affect
the
validity or enforceability of the remainder of this Agreement in
that
jurisdiction or the validity or enforceability of any provision of
this
Agreement in any other
jurisdiction.
|
| XX. |
Entire
Agreement; Amendments.
This Agreement supersedes all other prior oral or written agreements
between each Pledgor, Pledgee, Buyer and their affiliates and persons
acting on their behalf with respect to the matters discussed herein,
and
this Agreement and the Transaction Documents and instruments referenced
herein and therein contain the entire understanding of the parties
with
respect to the matters covered herein and
therein.
|
| XXI. |
Notices.
All notices, approvals, requests, demands and other communications
hereunder shall be delivered or made in the manner set forth in,
and shall
be effective in accordance with the terms of, the Exchange Agreement,
in
the case of communications to the Collateral Agent, directed to the
notice
address set forth in the Security
Agreement.
|
| XXII. |
Successors
and Assigns.
This Agreement shall be binding upon and inure to the benefit of
the
parties and their respective successors and assigns, including any
purchasers of the Notes. Pledgor shall not assign this Agreement
or any
rights or obligations hereunder without the prior written consent
of
Pledgee. Pledgee may assign its rights hereunder without the consent
of
Pledgor, in which event such assignee shall be deemed to be Pledgee
hereunder with respect to such assigned
rights.
|
| XXIII. |
No
Third Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their
respective successors and permitted assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other person
or
entity.
|
| XXIV. |
Survival.
All representations, warranties, covenants and agreements of Pledgor
and
Pledgee shall survive the execution and delivery of this
Agreement.
|
| XXV. |
Further
Assurances.
Pledgor agrees that at any time and from time to time upon the written
request of Pledgee, Pledgor will execute and deliver all assignments
separate from certificates or stock powers, financing statements
and such
further documents and do such further acts and things as Pledgee
may
reasonably request consistent with the provisions hereof in order
to carry
out the intent and accomplish the purpose of this Agreement and the
consummation of the transactions contemplated
hereby.
|
| XXVI. |
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 rules
of
strict construction will be applied against any
party.
|
| XXVII. |
Pledgee
Authorized.
Pledgor hereby authorizes Pledgee to file one or more financing or
continuation statements and amendments thereto (or similar documents
required by any laws of any applicable jurisdiction) relating to
all or
any part of the Pledged Shares or other Pledged Collateral without
the
signature of Pledgor.
|
12
| XXVIII. |
Pledgee
Acknowledgement.
Pledgor
acknowledges receipt of an executed copy of this Agreement. The Pledgor
waives the right to receive any amount that it may now or hereafter
be
entitled to receive (whether by way of damages, fine, penalty, or
otherwise) by reason of the failure of the Pledgee to deliver to
the
Pledgor a copy of any financing statement or any statement issued
by any
registry that confirms registration of a financing statement relating
to
this Agreement.
|
| XXIX. |
Collateral
Agent.
The
terms and provisions of Section
5.12
of the Security Agreement which set forth the appointment of the
Collateral Agent and the indemnifications to which the Collateral
Agent is
entitled are hereby incorporated by reference herein as if fully
set forth
herein.
|
[Signature
Page Follows]
13
IN
WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be
duly
executed and delivered by their duly authorized officers on the date first
above
written.
|
PLEDGOR:
|
||
|
SONTERRA
RESOURCES, INC. (f/k/a River Capital Group, Inc.), a Delaware
corporation
|
||
|
By:
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
Name:
|
▇▇▇▇▇▇
▇▇▇▇▇▇
|
|
|
Title:
|
Chief
Executive Officer
|
|
|
PLEDGEE:
|
||
|
VIKING
ASSET MANAGEMENT LLC, a California limited liability company, in
its capacity as collateral agent for Buyer
|
||
|
By:
|
S.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
|
|
Name:
|
S.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
|
|
Title:
|
Chief
Financial Officer
|
|
[Signature
Page to Pledge Agreement]
14