WITH RESPECT TO THE MATTERS DISCUSSED HEREIN, AND THIS AGREEMENT,
TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS AND THE OTHER INSTRUMENTS
REFERENCED HEREIN AND THEREIN, CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES
WITH RESPECT TO THE MATTERS COVERED HEREIN AND THEREIN AND, EXCEPT AS
SPECIFICALLY SET FORTH HEREIN OR THEREIN, NEITHER THE SECURED PARTY NOR ANY
OBLIGOR MAKES ANY REPRESENTATION, WARRANTY, COVENANT OR UNDERTAKING WITH RESPECT
TO SUCH MATTERS. AS OF THE DATE OF THIS AGREEMENT, THERE ARE NO UNWRITTEN
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE MATTERS DISCUSSED HEREIN. NO
PROVISION OF THIS AGREEMENT MAY BE AMENDED, MODIFIED OR SUPPLEMENTED OTHER THAN
BY AN INSTRUMENT IN WRITING SIGNED BY THE OBLIGORS AND THE SECURED PARTY.
- Remainder of Page Intentionally Left Blank; Signature Page Follows -
26
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed and delivered as of the day and year first above written.
DEBTORS:
SONTERRA RESOURCES, INC., a Delaware
corporation
By:
Name:
D.E. Vandenberg
Title:
President
FEIN: 26-0380344
NORTH TEXAS DRILLING SERVICES, INC., a
Texas corporation
By:
Name:
Title:
FEIN:
SONTERRA OPERATING, INC., a Delaware
corporation
By:
Name:
Title:
FEIN:
VELOCITY ENERGY LIMITED LLC, a Texas
limited liability company
By:
Name:
Title:
FEIN:
VELOCITY ENERGY INC., a Delaware
corporation
By:
Name:
Title:
FEIN:
VELOCITY ENERGY OFFSHORE LP, a
Delaware limited partnership
By:
Name:
Title:
FEIN:
VELOCITY ENERGY PARTNERS LP, a
Delaware limited partnership
By:
Name:
Title:
FEIN:
SECURED PARTY:
SUMMERLINE ASSET MANAGEMENT, LLC, a
Delaware limited liability company, in its capacity as
Collateral Agent for Buyers
By:
Name:
Robert J. Brantman
Title:
Co-Managing Member
Notice Address:
Summerline Asset Management, LLC
70 West Red Oak Lane, 4th Floor
White Plains, New York 10604
Attention: Robert J. Brantman
Telecopy: (914) 697-4767
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed and delivered as of the day and year first above written.
BUYER(S):
Solely for the purposes of Section 5.11
LONGVIEW MARQUIS MASTER
FUND, L.P., a British Virgin Island limited
partnership, as a Buyer
By: Viking Asset Management, LLC
Its: Investment Adviser
By:
Name:
S. Michael Rudolph
Title:
Chief Financial Officer
EXHIBIT A
Form of Joinder
Joinder to Security Agreement
The undersigned, ______________________________, hereby joins in the execution
of that certain Security Agreement dated as of November 13, 2008 (as amended,
restated, supplemented or otherwise modified from time to time, the "Security
Agreement") by Sonterra Resources, Inc., a Delaware corporation, North Texas
Drilling Services, Inc., a Texas corporation, Buyers (as defined therein), and
each other Person that becomes a Debtor or a Buyer thereunder after the date
thereof and hereof and pursuant to the terms thereof, to and in favor of
Summerline Asset Management, LLC, in its capacity as Collateral Agent for
Buyers. By executing this Joinder, the undersigned hereby agrees that it is a
Debtor thereunder and agrees to be bound by all of the terms and provisions of
the Security Agreement. The undersigned represents and warrants that the
representations