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EXHIBIT 10.6
 
Confidential                                                                                                                    Execution
Version

FINDER’S FEE AGREEMENT

between

STRANDED OIL RESOURCES CORPORATION, a Delaware corporation

and

LAREDO OIL, INC., a Delaware corporation

___________________________

Dated as of June 14, 2011
___________________________

 

 

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FINDER’S FEE AGREEMENT
 
THIS FINDER’S FEE AGREEMENT (this “Agreement”) is dated as of June 14, 2011
(“Agreement Date”), and is between STRANDED OIL RESOURCES CORPORATION, a
Delaware corporation (the “Company”) and LAREDO OIL, INC., a Delaware
corporation (“Laredo”).
 
RECITALS
 
WHEREAS, concurrently herewith the Company and Laredo are entering into a
certain License Agreement dated of even date herewith (“Laredo License
Agreement”) pursuant to which the Company will obtain from Laredo an exclusive
license (“Laredo License”) to use and exploit certain intellectual property
owned by Laredo and Mark See, an individual (“MS”), relating to the UGD Process
and the Selection Process under the terms and conditions set forth in the Laredo
License Agreement;
 
WHEREAS, concurrently herewith, Laredo and MS are entering into a certain
License Agreement of even date herewith (“MS-Laredo License Agreement”) pursuant
to which MS grants to Laredo an exclusive license to use the “Licensed
Intellectual Property” defined therein solely for the purpose of including such
“Licensed Intellectual Property” in the Licensed Intellectual Property which is
the subject of the Laredo License Agreement;
 
WHEREAS, concurrently herewith the Company and Laredo are entering into a
certain Management Services Agreement of even date herewith (“Management
Services Agreement”);
 
WHEREAS, concurrently herewith the Company and Laredo are entering into a
certain Additional Interests Grant Agreement of even date herewith (“Additional
Interests Grant Agreement”);
 
WHEREAS, concurrently herewith, Licensee and Alleghany Capital Corporation, a
Delaware corporation (“Alleghany”) are executing and delivering a certain
Funding Agreement of even date herewith (“Funding Agreement”);
 
WHEREAS, Laredo and Sunrise Securities Corp. (“Sunrise”) have entered into a
certain agreement dated November 19, 2010 (“Sunrise Agreement”);
 
WHEREAS, under the terms of the Sunrise Agreement, Laredo has agreed to pay
certain finder’s fees to Sunrise, subject to the terms and conditions of the
Sunrise Agreement; and
 
WHEREAS, the Company has agreed to fund payment by Laredo to Sunrise of the
finder’s fees described in Exhibit A attached hereto (“Finder’s Fees”), subject
to the terms and conditions of this Agreement, if and when any such Finder’s
Fees are due and payable by Laredo to Sunrise;
 
NOW, THEREFORE, in consideration of the mutual covenants and obligations set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Laredo, on the one
hand, and the Company, on the other, hereby agree as follows:
 

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AGREEMENT
 
1.           Defined Terms
 
1.1           All terms not herein defined shall have the meaning attributed to
them in the Laredo License Agreement.
 
1.2           As used in this Agreement, the following terms shall have the
following meanings.
 
“Alleghany” means Alleghany Capital Corporation, a Delaware corporation.
 
“Effective Date” means the Agreement Date.
 
“Event of Default” means the existence or occurrence of any one or more of the
following: (a) any breach or failure on the part of Laredo to perform one or
more of its duties and obligations under this Agreement or any Related Agreement
and, if such breach or failure is capable of being cured or remedied, such
breach or failure is not cured or remedied (i) within thirty (30) days after
Laredo receives written notice of such breach or failure or (ii) if any other
cure period for such breach or failure is expressly set forth in this Agreement
or any Related Agreement, within such cure period expressly set forth in this
Agreement or any Related Agreement; (b) the breach or inaccuracy of any
representation or warranty made by Laredo in this Agreement or any Related
Agreement and, if such breach or inaccuracy is capable of being cured or
remedied, such breach or inaccuracy is not cured or remedied (i) within thirty
(30) days after Laredo receives written notice of such breach or inaccuracy or
(ii) if any other cure period for such breach or inaccuracy is expressly set
forth in this Agreement or any Related Agreement, within such cure period
expressly set forth in this Agreement or any Related Agreement; (c) any breach
or failure on the part of Laredo to perform one or more of its duties and
obligations under any other written agreement with any Person other than the
Company if such breach or failure materially and adversely affects or is
reasonably expected to materially and adversely affect Licensor’s ability to
perform its duties and obligations under this Agreement or any Related
Agreement; (d) any MS-Laredo Event of Default; and/or (e) any termination of the
Laredo License Agreement, the MS-Laredo License Agreement and/or the Management
Services Agreement, including, without limitation, any such termination or
deemed termination in any bankruptcy proceeding.
 
“MS-Laredo Event of Default” shall have the meaning set forth in the Laredo
License Agreement.
 
“Person” or “person” means any individual, sole proprietorship, corporation,
limited liability company, general partnership, limited partnership, limited
liability partnership, trust, association, fund, firm or other entity.
 
“Related Agreements” means and includes all of the following: (a) the Management
Services Agreement; (b) that certain Loan Agreement dated as of November 22,
2010 between Alleghany Capital Corporation and Laredo; (c) that certain Senior
Promissory Note dated November 22, 2010 made by Laredo; (d) that certain Loan
Agreement dated as of April 6, 2011 between Alleghany Capital Corporation and
Laredo; (e) that certain Senior Promissory Note dated April 6, 2011 made by
Laredo; and (f) the Laredo License Agreement; (g) the MS-Laredo License
Agreement; (h) the “MS License” (as this term is defined in the Laredo License
Agreement); (i) the Additional Interests Grant Agreement; and (j) any other
written agreement entered into either as of the Effective Date or after the
Effective Date between the Company and/or its Affiliates, on the one hand, and
Laredo and/or its Affiliates, on the other hand.
 

 
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2.           Funding of Finder’s Fees
 
2.1           Finder’s Fee Notice.
 
(a)           From time to time during the Term, Laredo shall give the Company
at least thirty (30) days prior written notice of the date on which any Finder’s
Fees are due and payable to Sunrise during the Term pursuant to the terms and
conditions of the Sunrise Agreement (“Finder’s Fee Notice”).
 
(b)           Each such Finder’s Fee Notice shall set forth in reasonable detail
the calculation of the amount of Finder’s Fees due and payable to Sunrise.
 
(c)           Each such Finder’s Fee Notice shall also include a representation
and warranty on the part of Laredo that the amount of the Finder’s Fees referred
to in the Finder’s Fee Notice is due and payable to Sunrise in accordance with
the terms and conditions of the Sunrise Agreement.
 
(d)           Each such Finder’s Fee Notice shall include wire transfer
instructions from Sunrise setting forth the Sunrise account to which the payment
of the Finder’s Fees should be made (“Sunrise Account”).
 
2.2           Payment.  If the Company does not in good faith have any
objections to the Finder’s Fee Notice and the amounts set forth therein, then
the Company shall, on behalf and for the account of Laredo, remit payment of the
Finder’s Fees set forth in each such Finder’s Fee Notice to Sunrise by wire
transfer to the Sunrise Account.  All amounts funded or contributed by Alleghany
to the Company for purposes of enabling the Company to remit payment of the
Finder’s Fees set forth in each such Finder’s Fee Notice as provided above shall
constitute “Preferred Stock Capital” (as this term is defined in the Laredo
License Agreement).
 
3.           Indemnification by Laredo.
 
3.1           Indemnification by Laredo.  Laredo shall indemnify, hold harmless
and defend, with counsel selected by Laredo, and approved by the Company, which
approval shall not be unreasonably withheld, the Company and each of its past,
present and future directors, officers, employees, agents, representatives,
attorneys, subsidiaries, partners, parent and affiliated entities and their
respective predecessors, successors, and assigns (collectively with the Company,
the “Company Indemnitees”) from and against any and all claims, demands,
liabilities, losses, damages, rights of action, causes of action, costs and
expenses, charges, fines, penalties, awards, judgments and assessments
(including, without limitation, reasonable attorneys’ fees, court costs and
litigation expenses) (collectively, the “Claims and Losses”) suffered or
incurred or otherwise asserted against any Company Indemnitee, if such Claims
and Losses are in connection with, or arise out of, or result from, or are
claimed to be in connection with, arise out of or result from, in whole or in
part, any of the following: (a) any breach of or failure of performance with
respect to any covenant or agreement required to be performed by Laredo under
this Agreement; (b) the inaccuracy or breach of any representation or warranty
made by or on behalf of Laredo under this Agreement; and (c) any Claim asserted,
filed or brought by Sunrise.
 

 
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3.2           Indemnification By the Company.  The Company shall indemnify, hold
harmless and defend, with counsel selected by the Company, and approved by
Laredo, which approval shall not be unreasonably withheld, Laredo and each of
its past, present and future directors, officers, employees, agents,
representatives, attorneys, subsidiaries, partners, parent and affiliated
entities and their respective predecessors, successors, and assigns
(collectively with Laredo, the “Laredo Indemnitees”) from and against any and
all Claims and Losses suffered or incurred or otherwise asserted against any
Laredo Indemnitee, if such Claims and Losses are in connection with, or arise
out of, or result from, or are claimed to be in connection with, arise out of or
result from, in whole or in part, any of the following: (a) any breach or
failure of performance with respect to any covenant or agreement required to be
performed by the Company under this Agreement; and (b) the inaccuracy or breach
of any representation or warranty made by or on behalf of the Company under this
Agreement.
 
3.3           Procedures.
 
(a)           Third Party Claims.
 
(i)           In order for a Person (the “Indemnified Party”) to be entitled to
any indemnification provided for under this Section 3.3(a) in respect of,
arising out of or involving a claim made by any third Person against the
Indemnified Party (a “Third Party Claim”), such Indemnified Party must notify
the Person obligated to provide indemnification under this Section 3.3(a) (the
“Indemnifying Party”) in writing of the Third Party Claim promptly following
receipt by such Indemnified Party of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not affect the
indemnification provided under this Agreement except to the extent the
Indemnifying Party shall have been prejudiced as a result of such
failure.  Thereafter, the Indemnified Party shall deliver to the Indemnifying
Party, promptly following the Indemnified Party’s receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified Party
relating to the Third Party Claim.
 
(ii)           If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to assume the defense thereof by written
notice to the Indemnified Party within ten (10) days after the Indemnifying
Party’s receipt of the notice of the Third Party Claim contemplated by paragraph
(i) above with counsel selected by the Indemnifying Party, in its sole and
absolute discretion, and approved by the Indemnified Party, which approval shall
not be unreasonably withheld; provided that such counsel is not reasonably
objected to by the Indemnified Party; and provided further that notwithstanding
the foregoing, the Indemnifying Party shall not be entitled to assume control of
such defense and, instead, shall pay the reasonable legal fees, costs and
expenses of counsel retained by the Indemnified Party if (A) the claim for
indemnification relates to or arises in connection with any criminal proceeding,
action, indictment, allegation or investigation, (B) the claim seeks an
injunction or equitable relief against the Indemnified Party, (C) the
Indemnifying Party failed or is failing to reasonably prosecute or defend such
claim, (D) assuming such claim is determined adversely, such claim could
reasonably be expected to give rise to Losses which such Indemnifying Party is
unable to pay or which could be reasonably expected to exceed the ability of
such Indemnifying Party to pay, or (E) in the Indemnified Party’s reasonable
judgment based upon a written opinion from such Indemnified Party’s counsel, a
conflict of interest between the Indemnified Party and the Indemnifying Party
exists with respect to the claim.
 

 
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(iii)           If the Indemnifying Party assumes the defense of a Third Party
Claim, (1) the Indemnifying Party shall not be liable to the Indemnified Party
for any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof and (2) in addition to the rights set forth
in subparagraph (iv) below, the Indemnified Party shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Party.  The Indemnifying
Party shall be liable for the fees, costs and expenses of counsel employed by
the Indemnified Party for any period during which the Indemnifying Party has not
assumed the defense thereof (including in respect of Third Party Claims the
defense of which the Indemnifying Party was not entitled to assume or continue
in accordance with the second proviso of the first sentence of paragraph (ii)).
 
(iv)           The Indemnified Party shall have the right to control the defense
of any Third Party Claim, including any Third Party Claim the defense of which
has been assumed by the Indemnifying Party.  Without limiting the generality of
the foregoing, all important legal and strategic decisions with respect to the
defense of such Third Party Claim shall be made by the Indemnified Party and the
Indemnifying Party shall not admit any liability with respect to any Third Party
Claim, or settle, compromise or discharge any Third Party Claim, in each case
without the prior written consent of the Indemnified Party.
 
(v)           If the Indemnifying Party assumes the defense of a Third Party
Claim, all the Indemnified Parties shall cooperate in the defense or prosecution
thereof.  Such cooperation shall include the retention and (upon the
Indemnifying Party’s request) provision to the Indemnifying Party of records and
information that are reasonably relevant to such Third Party Claim, and making
employees available on a mutually convenient basis to provide additional
information and explanation of any materials provided hereunder.
 
(vi)           The indemnification with respect to an Indemnifying Party’s
obligation to pay legal fees and other costs and expenses of defense of a Third
Party Claim required by this Section 3.3(a) shall be made by periodic payments
of the amount thereof during the course of the investigation or defense of the
Third Party Claim, as and when bills are received.
 
(vii)           All claims under this Section 3 other than Third Party Claims
shall be governed by Section 3.3(b) below.
 
 

 
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(b)           Direct Claims.  If any Indemnified Party should have a claim
against any Indemnifying Party under this Section 3 that does not involve a
Third Party Claim being asserted against or sought to be collected from such
Indemnified Party (any such claim, a “Direct Claim”), the Indemnified Party
shall deliver notice of such Direct Claim with reasonable promptness to the
Indemnifying Party (which notice shall set forth in reasonable detail the
basis upon which such Indemnified Party believes it is entitled to
indemnification pursuant to this Section 3 and the amount of Losses it is
seeking recovery from the Indemnified Party); provided that the failure to give
such notification shall not affect the indemnification provided under this
Agreement, except to the extent the Indemnifying Party shall have been
prejudiced as a result of such failure.  If the Indemnifying Party does not
notify the Indemnified Party within thirty (30) calendar days following its
receipt of such notice that the Indemnifying Party disputes its liability to the
Indemnified Party under the applicable provisions of this Section 3, such Direct
Claim specified in such notice shall be conclusively deemed a liability of the
Indemnifying Party under the applicable provision of this Section 3, and the
Indemnifying Party shall pay the amount of such liability to the Indemnified
Party on demand or, in the case of any notice in which the amount of the Direct
Claim (or any portion thereof) is estimated, on such later date when the amount
of such Direct Claim (or such portion thereof) becomes finally determined.  If
the Indemnifying Party has timely disputed its liability with respect to such
Direct Claim as provided above, the Company, on the one hand, and Laredo, on the
other hand, shall proceed in good faith to negotiate a resolution of such
dispute and, if not resolved within the foregoing thirty (30) day period through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction.
 
4.           Miscellaneous
 
4.1           No Liability Under Sunrise Agreement; No Third Party
Beneficiaries.
 
(a)           Notwithstanding anything which may be contained in this Agreement
or in any Related Agreement, neither the Company nor Alleghany, nor any of their
Affiliates, shall have any liability or responsibility whatsoever under or in
respect of the Sunrise Agreement or any amounts or other consideration payable
by Laredo pursuant to the terms and conditions of the Sunrise Agreement.
 
(b)           This Agreement is not intended to and shall not confer upon any
Person (other than the Company and Laredo) or otherwise give any Person (other
than the Company and Laredo), directly or indirectly, any right, benefit, remedy
or claim under or in respect of this Agreement, or the performance by any party
hereto of their duties and obligations under this Agreement, and no such Person
shall have any right to enforce any provisions of this Agreement.  For avoidance
of doubt, this Agreement is not intended to and shall not confer upon Sunrise
any right, benefit, remedy or claim under or in respect of this Agreement.
 
4.2           Governing Law.  This Agreement shall be governed by, and construed
and interpreted, in accordance with the internal laws of the State of New York
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of New
York to the rights and duties of the parties.
 
4.3           Force Majeure.  No party shall be held responsible for any delay
or failure in performance under this Agreement to the extent caused by strikes,
embargoes, unexpected governmental and/or regulatory requirements (including,
without limitation, moratoriums), court, administrative or governmental orders
or decrees (including, without limitation, injunctions and/or cease and desist
orders), civil or military authorities, acts of God, earthquake, or by the
public enemy, or other causes reasonably beyond such party’s control and without
such party’s fault or negligence (“Force Majeure Event(s)”).  The affected party
shall notify each unaffected party as soon as reasonably possible of the
existence of such Force Majeure Event.  Any time period for the performance by
the affected party of any duties and obligations under this Agreement, and any
time period for the satisfaction or accomplishment of any condition, event,
milestone or deadline, including, without limitation, those associated with a
Development Failure, shall be extended for a period of time equal to the
duration of the Force Majeure Event(s).  In addition, the affected party shall
be excused from the performance of its obligations hereunder to the extent such
performance is prevented or impeded by any such Force Majeure Event(s) for the
duration of such Force Majeure Event(s).
 

 
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4.4           Assignment.
 
(a)           Notwithstanding anything to the contrary in this Agreement, Laredo
shall not, directly or indirectly, either voluntarily or involuntarily, by
merger, operation of law or otherwise, assign, or suffer or permit an assignment
of, its rights or obligations under or its interests in this Agreement, without
the express prior written consent of the Company, which the Company may withhold
in its sole discretion.  Any purported assignment by Laredo without the express
prior written consent of the Company shall be null and void.  For the purposes
of this Section, the terms “assign” and “assignment” shall be deemed to include,
without limitation, a Change of Control or the voluntary or involuntary
dissolution or liquidation of Laredo.  Subject to the foregoing, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and permitted assigns.
 
(b)           Notwithstanding anything to the contrary in this Agreement, the
Company shall not, directly or indirectly, either voluntarily or involuntarily,
by merger, operation of law or otherwise, assign, or suffer or permit an
assignment of, its rights or obligations under or its interests in this
Agreement, without the express prior written consent of Laredo, which Laredo may
withhold in its sole and absolute discretion, and any purported assignment by
the Company without the express prior written consent of Laredo shall be null
and void; provided, however, that any assignment or transfer by the Company,
directly or indirectly, of its rights or obligations under or its interests in
this Agreement either in connection with a Corporate Event or to any one or more
Affiliates of the Company shall not require the prior consent or approval,
written or otherwise, of Laredo and any such assignment or transfer shall be
permitted and effective without such consent or approval.  Subject to the
foregoing, this Agreement shall be binding upon and shall inure to the benefit
of the parties and their respective successors and permitted assigns.
 
4.5           Notices.  Any notice, report, communication or consent required or
permitted by this Agreement shall be in writing and shall be sent (a) by prepaid
registered or certified mail, return receipt requested, (b) by overnight express
delivery service by an internationally recognized courier, for next business day
delivery, or (c) via confirmed facsimile or telecopy, followed within fourteen
(14) days by a copy mailed in the preceding manner, addressed to the other party
at the address shown below or at such other address for which such party gives
notice hereunder.  Such notice will be deemed to have been given when actually
delivered or, if delivery is not accomplished by some fault of the addressee,
when tendered.
 
If to Laredo:
 
Laredo Oil, Inc.
111 Congress Avenue, Suite 400
Austin, Texas 78701
Facsimile:  817.753.2091
Attention:  Mark See, Chief Executive Officer

 
With a copy to:

James L. Rice III, Esq.
 
Akin Gump Strauss Hauer & Feld LLP
 
1111 Louisiana Street, 44th Floor
 
Houston, Texas  77002-5200
 
Facsimile: 713.236.0822
 
If to the Company:
 
Stranded Oil Resources Corporation
c/o Alleghany Capital Corporation
7 Times Square Tower, 17th Floor
New York, NY  10036
Facsimile:  212.759.8149
Attention:  Mr. David Van Geyzel
 

 
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With a copy to:

Alleghany Corporation
7 Times Square Tower, 17th Floor
New York, NY  10036
Facsimile:  212.759.3295
Attention:  Christopher K. Dalrymple, Vice President and General Counsel
 
4.6           Modification; Waiver.  This Agreement may not be altered, amended
or modified in any way except by a writing signed by the parties hereto.  The
failure of a party to enforce any rights or provisions of this Agreement shall
not be construed to be a waiver of such rights or provisions, or a waiver by
such party to thereafter enforce such rights or provision or any other rights or
provisions hereunder.  No waiver shall be effective unless made in writing and
signed by the waiving parties.
 
4.7           Severability. If any provision of this Agreement is found by a
court of competent jurisdiction to be void, invalid or unenforceable, the same
shall be reformed to comply with applicable law or stricken if not so
conformable, so as not to affect the validity or enforceability of this
Agreement; provided that if such reformation or striking would materially change
the economic benefit of this Agreement to the parties hereto, such provision
shall be modified in accordance with this Section 4.7 to obtain a legal, valid
and enforceable provision and provide an economic benefit to the parties hereto
that most nearly effects the parties’ intent in entering into this Agreement.
 
4.8           Entire Agreement.  The parties hereto acknowledge that this
Agreement, together with the exhibit attached hereto, sets forth the entire
agreement and understanding of the parties as to the subject matter hereof, and
supersedes all prior and contemporaneous discussions, agreements and writings in
respect hereto.
 
4.9           Headings.  The section and paragraph headings contained in this
Agreement are for the purposes of convenience only, and are not intended to
define or limit the contents of the sections or paragraphs to which such
headings apply.
 
4.10           Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument, binding on all parties hereto.
 
[Next Page Is Signature Page]
 

 
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[Signature Page]
 
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized representatives as of the Agreement Date.
 

 
LAREDO
LAREDO OIL, INC., a Delaware corporation
 
By:  ______________________
Name:  ___________________
Title:  ____________________
 
COMPANY
STRANDED OIL RESOURCES CORPORATION, a Delaware corporation
 
By:  ______________________
Name:  ___________________
Title:  ____________________
 

 
 
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