EXHIBIT 10.14
 
SECOND AMENDMENT OF AMENDED AND RESTATED CREDIT AGREEMENT,
BORROWING BASE REDETERMINATION AND FORBEARANCE AGREEMENT
 
THIS SECOND AMENDMENT OF AMENDED AND RESTATED CREDIT AGREEMENT, BORROWING BASE
REDETERMINATION AND FORBEARANCE AGREEMENT (this “Amendment”), dated as of
December 31, 2009, is by and among SEFTON RESOURCES, INC., a British Virgin
Islands corporation (“Parent”), TEG OIL & GAS U.S.A., INC., a Colorado
corporation (“TEGOG”), TEG MIDCONTINENT, INC., a Colorado corporation (“TEGMC”),
and BANK OF THE WEST, a California corporation (“BOTW”). Parent, TEGOG and TEGMC
are herein collectively referred to as “Borrowers.”
 
RECITALS
 
A.           Borrowers and BOTW entered into an Amended and Restated Credit
Agreement dated as of October 21, 2008, as heretofore amended (as so amended,
the “Credit Agreement”). Capitalized terms used herein but not defined herein
shall have the same meanings as set forth in the Credit Agreement.
 
B.           Borrowers and BOTW desire that this Amendment be executed and
delivered in order to amend certain terms and provisions of the Credit
Agreement, to evidence a Borrowing Base redetermination and to provide for the
terms upon which BOTW has agreed to forbear temporarily from taking action in
connection with Borrowers’ violation of a covenant contained in the Credit
Agreement.
 
AGREEMENT
 
NOW, THEREFORE, in consideration of $10.00 and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
 
1.           Credit Agreement.  Effective as of the date hereof, the Credit
Agreement shall be, and hereby is, amended by substituting “$7,000,000” for
“$7,500,000” in line 1 of the definition of “Maximum Loan Amount” in Section 1.1
on page 7 of the Credit Agreement.
 
2.           Borrowing Base Redetermination.  The parties have agreed that the
Borrowing Base shall be redetermined as of the date hereof and that the
Borrowing Base is hereby set at $7,000,000, which redetermination shall be
deemed to be the Borrowing Base redetermination originally scheduled for
December 1, 2009. In addition, the proviso relating to future Borrowing Base
redeterminations, as contained in Section 2 of the July 23, 2009 First Amendment
of Amended and Restated Credit Agreement, Borrowing Base Redetermination and
Limited Waiver, shall no longer be applicable from and after the date hereof.
 
3.           Forbearance.  BOTW hereby agrees to forbear temporarily from
declaring an Event of Default, accelerating the maturity of the Obligations or
taking any other remedial action based upon Borrowers’ failure to comply with
the Interest Coverage Ratio covenant contained in Section 6.2(a)(2) of the
Credit Agreement as of September 30, 2009; provided that Borrowers hereby agree
with and covenant to BOTW that Borrowers shall be in compliance with said
Interest Coverage Ratio covenant as of December 31, 2009 and at all times
thereafter as of which said covenant shall be measured; provided further that
the foregoing agreement to forbear: (a) shall not preclude BOTW from declaring
an Event of Default, accelerating the maturity of the obligations or taking any
other remedial action based upon any other Default pursuant to the Credit
Agreement, and (b) shall expire upon the earlier to occur of: (1) 20 days after
BOTW gives notice to Borrowers of the termination of such forbearance, or (2)
April 30, 2010.
 
 
 

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4.           Loan Documents.  All references in any document to the Credit
Agreement shall be deemed to refer to the Credit Agreement, as amended pursuant
to this Amendment.
 
5.           Certification by Borrowers.  Borrowers hereby certify to BOTW that,
as of the date of this Amendment, after giving effect to the provisions hereof
and except as to any matters as to which BOTW has agreed to forbear temporarily:
(a) all of Borrowers’ representations and warranties contained in the Credit
Agreement are true, accurate and complete in all material respects, (b)
Borrowers have performed and complied with all agreements and conditions
required to be performed or complied with by Borrowers under the Credit
Agreement and/or any Loan Document on or prior to this date, and (c) no Default
or Event of Default has occurred under the Credit Agreement.
 
6.           Conditions Precedent.  The obligations of the parties under this
Amendment are subject, at the option of BOTW, to the prior satisfaction of the
condition that Borrowers shall have delivered to BOTW the following (all
documents to be satisfactory in form and substance to BOTW and, if appropriate,
duly executed and/or acknowledged on behalf of the parties other than BOTW):
 
(a)           This Amendment.
 
(b)           A fee in the amount of $7,000, payable to BOTW in connection with
the temporary forbearance being agreed to by BOTW as provided herein.
 
7.           Continuation of the Credit Agreement.  Except as specified in this
Amendment, the provisions of the Credit Agreement shall remain in full force and
effect.
 
8.           Expenses.  Borrowers shall pay all expenses incurred in connection
with the transactions contemplated by this Amendment, including without
limitation all fees and expenses of the attorney for BOTW and any and all filing
and recording expenses.
 
9.           Miscellaneous.  This Amendment shall be governed by and construed
under the laws of the state of Colorado and shall be binding upon and inure to
the benefit of the parties hereto and their successors and assigns. This
Amendment may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one instrument.
 
 
[SIGNATURES ON FOLLOWING PAGE]

 
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EXECUTED as of the date first above written.
 

 
SEFTON RESOURCES, INC.
         
By:
/s/ Jim Ellerton
   
     Jim Ellerton,
   
     Chief Executive Officer
             
TEG OIL & GAS U.S.A., INC.
         
By:
/s/ Jim Ellerton
   
     Jim Ellerton,
   
     Chairman
             
TEG MIDCONTINENT, INC.
         
By:
/s/ Jim Ellerton
   
     Jim Ellerton,
   
     Chairman
             
BANK OF THE WEST
         
By:
/s/ Duc Duong
   
     Duc Duong,
   
     Vice President

 
 
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