Exhibit 10.1


 


SECURITY AGREEMENT


 


VOYAGER OIL & GAS, INC.


 


Minimum: $12,000,000 Principal Amount


Maximum: $15,000,000 Principal Amount


12.00% Senior Secured Promissory Notes


 






 


This
SECURITY AGREEMENT (the “Agreement”) is entered into as of the 22nd day of
September, 2010, by Voyager Oil & Gas, Inc., a Delaware
corporation (the “Debtor”),
in favor of the parties set forth on Exhibit A hereto (the “Secured Parties”) and holders of certain 12.00% Senior
Secured Promissory Notes of even date (the “Promissory Notes”).


 


RECITALS


 


A.            The Secured Parties have agreed to
purchase the Promissory Notes from the Debtor pursuant to the terms of certain
Subscription Agreements of even date herewith.


 


B.            In connection with the issuance of the Promissory Notes,
the Debtor has agreed to grant to the Secured Parties a security interest in
the property described below.


 


AGREEMENT


 


NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Debtor agrees as
follows:


 


1.             Grant
of Security Interest.  The
Debtor grants to Secured Parties a security interest in the following described
property of the Debtor (the “Collateral”):


 


Any
and all assets of the Debtor of any kind and nature whatsoever, including, but
not limited to, all leasehold
interests, drilling rights, contract rights, royalty interests, furnishings,
fixtures, equipment, accounts, 
as-extracted collateral,  chattel
paper, deposit accounts, documents, goods,
instruments, inventory, investment property, letter-of-credit rights, general intangibles and all other assets at
all of Debtor wherever located and however situated, together with any and all proceeds
and products of all of the foregoing;


 


to
secure payment to the Secured Parties of the “Secured Obligations” as defined
below.  Definitions in the Uniform
Commercial Code as adopted and in effect in the State of Montana shall apply to
words and phrases used in this Security Agreement.


 


2.             The
Secured Obligations.  The Secured Parties’ security interest in the Collateral shall secure
payment and performance of each and every debt, liability and obligation of
Debtor to the Secured Parties due or to become due, direct or indirect,
absolute or contingent, joint or several, howsoever created, arising or
evidenced, now existing or hereafter at any time created, arising or incurred,
under the


 

















 


Promissory
Notes and ancillary documents executed by the Debtor and the Secured Parties
(the “Secured
Obligations”).


 


3.             Representations, Warranties and Covenants.  Debtor represents, warrants and
agrees that so long as any of the Secured Obligations remain outstanding and
unsatisfied:


 


(a)           The Debtor shall not
enter into any agreement, understanding or other arrangement providing for any
indebtedness with a secured position or on other terms otherwise senior or on
parity to the Secured Parties with any third party without the prior written
consent of all Secured Parties.


 


(b)           The Debtor shall not
use the proceeds from the Promissory Notes to enter into agreements,
understandings or other arrangements that provide for the acquisition of any
interest in any oil, gas or mineral rights having an aggregate value in excess
of $2,000,000 without the prior written consent of all Secured Parties.


 


(c)           The proceeds of the
Promissory Notes shall be used for capital expenditures associated with the
drilling of new crude oil and natural gas wells, as well as general working
capital.


 


(d)           The Debtor shall be
the sole owner of the Collateral free and clear of all levies, attachments,
liens, charges, encumbrances and security interests of every kind or character
other than the security interest granted to the Secured Parties.


 


(e)           The Debtor has full
power and authority to execute this Security Agreement and to subject the
Collateral to the security interest created hereby.  Debtor has not previously granted a security
interest covering all or any part of the Collateral in favor of any creditor
other than the Secured Parties.


 


(f)            Debtor is a
Delaware corporation, and its address as set forth on the signature page hereof,
will not be changed without prior written notice to the Secured Parties.


 


(g)           Debtor’s true name
is as set forth above.  Neither Debtor
nor any predecessor in title to any of the Collateral has executed any
financing statements which remain of record or security agreements which remain
in effect as “debtor” covering any of the Collateral in any other name within
the past three years.


 


(h)           Debtor will at any
time or times hereafter, execute such financing statements, account control
agreements and other instruments and perform such acts as a majority in
interest of the Secured Parties may request to establish and maintain an
attached, perfected security interest in the Collateral subject only to those
security interests perfected and existing on the date hereof and will pay all
costs of filing and recording.  Debtor
authorizes the Secured Parties to file all of the Secured Parties’ financing
statements and amendments thereto relative to the Collateral or any part
thereof, in such form and substance as the Secured Parties may determine.


 


(i)            Debtor shall not
transfer or otherwise dispose of the Collateral outside its usual and ordinary
course of business without the prior written consent of a majority in interest
of all Secured Parties.


 


(j)            Any and all
revenues received by Debtor shall be deposited in and maintained in its
currently existing bank accounts.


 

















 


(k)           Debtor shall not
open any additional bank accounts of any nature without providing a minimum of
ten (10) days’ prior notice to all of the Secured Parties and without
allowing the Secured Parties to perfect their first priority security interest
in such bank account(s).


 


(l)            Debtor shall keep
the Collateral free and clear of all levies, attachments, liens, charges,
encumbrances and security interests of every kind or character; and shall
forever defend title thereto against claims of all persons.


 


(m)          Debtor shall maintain
all records, instruments or other documentation evidencing or otherwise
relating to the Collateral.


 


(n)           At any time and from time to time, upon the written
request any Secured Parties, the Debtor will promptly and duly execute and
deliver such further instruments and documents and take such further actions as
such party reasonably may request for the purposes of obtaining or preserving
the full benefits of this Security Agreement and of the rights and powers
granted by this Security Agreement.


 


4.             Secured
Parties’ Authority; Power of Attorney.  Upon the occurrence of an Event of Default, a
majority in interest of the Secured Parties shall have the authority, but shall
not be obligated to:


 


(a)           demand, collect,
receive and receipt for, compound, compromise, settle and prosecute and
discontinue any suits or proceedings in respect of any or all of the Collateral
in the name of Debtor or otherwise; and


 


(b)           take any action
which the Secured Parties may deem necessary or desirable in order to realize
on the Collateral, including, without limitation, performance of any contract
and endorsement in the name of Debtor of any checks, drafts, notes or other
instruments or documents received on account of the Collateral.


 


Debtor
hereby irrevocably appoints Bonnie Turpin as the agent and attorney-in-fact for
the Debtor and Secured Parties, with full authority in the place and stead of
Debtor and in the name of Debtor, or otherwise, from time to time as directed
by a majority in interest of the Secured Parties to take any action and to
execute any instrument which a majority in interest of the Secured Parties may
deem necessary or advisable in pursuing or taking the foregoing rights and
actions.


 


All powers, authorizations
and agencies contained in this Security Agreement are coupled with an interest
and are irrevocable until this Security Agreement is terminated and the liens
created hereby are released.


 


5.                                      Default/Event of Default.  The terms “default” or “event of default” shall mean:


 


(a)           The Debtor fails to make when due, whether by acceleration
or otherwise, any payment of principal of, or interest on, the Promissory
Notes, which failure to pay shall remain uncured for ten (10) days after
the date of written notice of default from the Secured Parties to the Debtor
relating to the same;


 


(b)           The Debtor fails to comply with any material agreement,
covenant, condition, provision or term contained in the Promissory Notes (and
such failure shall not constitute an Event of Default under any of the other
provisions hereof) and such failure to comply shall continue for ten (10) days
after the date of written notice of default from the Lender to the Borrower
relating to the same;


 

















 


(c)           The Debtor defaults in the payment of interest or
principal on any debt of the Debtor and such debt shall, as a result thereof,
have been accelerated (or comparable event shall have occurred) so that the same
shall have become due and payable prior to the date on which the same would
otherwise have become due and payable;


 


(d)           The Debtor violates any representation, warranty or
covenant in a material respect, set forth in any transaction document or set
forth in Section 3 above or any other provision of this Agreement; or


 


(3)           An Act of Bankruptcy shall occur with respect to the
Debtor; as used herein, an “Act of Bankruptcy” shall mean, if at any time (i) the
Debtor shall (1) be or become insolvent, or (2) apply for or consent
to the appointment of, or the taking of possession by, a receiver, custodian,
trustee, liquidator or the like of the Debtor or of all or a substantial part
of the Debtor’s property, or (3) commence a voluntary case under any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation or similar proceeding under the laws of any
jurisdiction, or (4) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, or (5) admit in writing such Debtor’s
inability to pay such Debtor’s debts as they mature, or (6) make an
assignment for the benefit of Debtor’s creditors; or (ii) a proceeding or
case shall be commenced, without the application or consent of the Debtor, in
any court of competent jurisdiction, seeking (1) the liquidation,
reorganization, dissolution, winding up or the composition or adjustment of
debts of the Debtor, (2) the appointment of a trustee, receiver, custodian
or liquidator or the like of the Debtor or of all or any substantial part of
the Debtor’s property, or (3) similar relief in respect of the Debtor
under any law relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts.


 


Upon
the happening of any of the foregoing events, the Secured Parties may, at its
option, and without notice to or demand on Debtor, do any one or more of the
following immediately:


 


(a)           The Secured Parties
may exercise in respect of the Collateral, in addition to other rights and
remedies otherwise available to it, all the rights and remedies of a Secured
Parties under the Uniform Commercial Code as adopted and in effect in the State
of Montana (the “UCC”).


 


(b)           Without limiting the
generality of the foregoing, the Secured Parties may, upon default, to the
fullest extent permitted by applicable law, without notice, hearing or process
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, for cash, on credit or for future
delivery, and upon such other terms as the Secured Parties may deem
commercially reasonable, and the Secured Parties may purchase all or any part
of the Collateral at public or, if permitted by law, private sale, and in lieu
of actual payment of such purchase price, may set off the amount of such
purchase price against the Secured Obligations. 
The Secured Parties may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
with notice, be made at the time and place to which it was so adjourned.  The Secured Parties may abandon any such
proposed sale.  The Secured Parties may
also elect to retain the Collateral in partial or full satisfaction of the
Secured Obligations and Debtor agrees not to oppose such election.  Debtor acknowledges that any private sales of
Collateral effected by the Secured Parties may result in terms less favorable
to a seller than public sales but Debtor agrees that such private sales shall
nevertheless be deemed commercially reasonable.


 

















 


(c)           If any notification
of intended disposition of any of the Collateral is required by law, such
notification shall be deemed reasonably and properly given if deposited in the
United States Postal Service at least fifteen (15) days before such
disposition, postage prepaid, addressed to the Debtor at the address set forth
on the signature page hereof.  Such
disposition shall be established by affidavit executed by the Secured Parties,
receipts or other reasonable method.


 


(d)           Debtor agrees to pay
all costs and expenses incurred by the Secured Parties, including attorney’s
fees and court costs, in connection with any sale held pursuant to this
Security Agreement or otherwise in connection with enforcing the rights of the
Secured Parties hereunder.


 


(e)           The
rights and remedies of the Secured Parties hereunder are cumulative and
nonexclusive and the exercise of any one or more of the remedies provided for
herein or under the UCC shall not be construed as a waiver of any of the other
remedies of the Secured Parties so long as any part of the Secured Obligations
remain unsatisfied.  No failure on the
part of the Secured Parties to exercise, and no delay in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy by the Secured
Parties preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.


 


(f)            Any payments or
proceeds received by the Secured Parties from the Collateral shall be applied
to the payment of costs and expenses incurred by the Secured Parties in
connection with performing, managing, maintaining or selling the Collateral,
including reasonable attorneys’ fees and expenses, and the balance, if any,
shall be applied by the Secured Parties to payment of the Secured Obligations,
in order of application as the Secured Parties shall determine.


 


6.             No Waiver.  Any forbearance or failure to act or delay by
the Secured Parties in exercising any right, power or remedy shall not preclude
the further exercise thereof, and every right, power or remedy of the Secured
Parties’ shall continue in full force and effect until such right, power or
remedy is specifically waived by any instrument in writing executed by the
Secured Parties.


 


7.             Debtor’s
Waiver of Rights.  Except as
otherwise set forth herein, to the fullest extent permitted by law, the Debtor
waives the benefit of all laws now existing or that may subsequently be enacted
providing for (a) any appraisement before sale of any portion of the
Collateral, (b) any extension of the time for the enforcement of the
collection of the indebtedness or the creation or extension of a period of
redemption from any sale made in collecting such debt, (c) any notice of
default or an event of default and (d) exemption of any portion of the
Collateral from attachment, levy or sale under execution or exemption from
civil process.  Except as otherwise set
forth herein, to the fullest extent the Debtor may do so, the Debtor agrees
that the Debtor will not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force providing for any
appraisement, valuation, stay, exemption, extension or redemption, or requiring
foreclosure of this Security Agreement before exercising any other remedy
granted hereunder and the Debtor, for the Debtor, and for any and all persons
ever claiming any interest in the Collateral, to the extent permitted by law,
hereby waives and releases all rights of redemption, valuation, appraisement,
stay of execution, notice of election to mature or declare due the whole of the
Secured Obligations and marshalling in the event of foreclosure of the liens
hereby created.


 


8.             Partial Invalidity.  In the event any provision of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision (or remaining part of the affected
provision) of this Agreement; but this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision


 

















 


(or
part thereof) had not been contained in this Agreement, but only to the extent
it is invalid, illegal, or unenforceable.


 


9.             Captions.  The captions herein set forth are for
convenience only and shall not be deemed to define, limit, or describe the
scope and intent of this Agreement.


 


10.          Governing Law;
Jurisdiction.  The
provisions of this Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of Montana as the same may be in effect
from time to time, without regard to principles of conflict of laws.  The parties hereby irrevocably submit to the
jurisdiction of any state or federal court sitting in the State of Montana over
any suit, action, or proceeding arising out of or relating to this Agreement
and hereby irrevocably waive, to the fullest extent permitted by law, any
objection that they may now or hereafter have to the laying of the venue of any
such suit, action, or proceeding brought in any such court and any claim that
any such suit, action, or proceeding brought in any such court has been brought
in an inconvenient forum.  Final judgment
in any such suit, action, or proceeding brought in any such court shall be
conclusive and binding upon the parties and may be enforced in any court in
which the parties are subject to jurisdiction by a suit upon such judgment
provided that service of process is effected upon the defending party as
provided in this Agreement or as otherwise permitted by applicable law.


 


11.          Construction.  Each party warrants that they have been given
the chance, to their satisfaction, to seek the advice of independent counsel
prior to signing this Security Agreement. 
This Security Agreement is the result of negotiation and compromise
between the parties and shall not be interpreted against the party originally
drafting this Security Agreement.


 


Executed
and delivered as of the day first set forth above.


 


 


	
  DEBTOR:

  	
   

  	
  Voyager
  Oil & Gas, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  James R. Reger

  
	
   

  	
   

  	
  By
  James R. Reger

  
	
   

  	
   

  	
  Its
  Chief Executive Officer