Document:

Unassociated Document

    
      

    

    Exhibit
      10.6

     

    PLEDGE
      AGREEMENT

    

    THIS
      PLEDGE AGREEMENT, made as of this 10th day of September, 2007 (this
“Agreement”), is between GULF WESTERN PETROLEUM
      CORPORATION, a Nevada corporation (“GWPC”),
GULF WESTERN PETROLEUM LP, a Texas limited partnership
      (“Gulf LP”), WHARTON RESOURCES LLC, a Delaware
      limited liability company (“Wharton LLC”), WHARTON RESOURCES
      CORP., a Delaware corporation (“Wharton Corp.”, together with
      GWPC, Gulf LP, Wharton LLC and each other Person who becomes a party to this
      Agreement by execution of an addendum in the form of Exhibit B attached hereto,
      is hereinafter referred to collectively as “Pledgor”),
      and METAGE FUNDS LIMITED (in its capacity as Collateral
      Agent for the Buyers identified below (in such capacity, together with its
      successors and assigns, the “Pledgee”).

    

    WHEREAS:

    

    A.           GWPC
      has executed and delivered to each of the Buyers those certain senior secured
      convertible notes each made by GWPC and dated as of the date hereof in an
      original aggregate principal amount of $3,700,000 (such
      notes, 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, supplemented, restated or modified and in effect from time to time,
      the
“Notes”).  The Notes were issued pursuant to a
      certain Securities Purchase Agreement dated as of even date herewith (as the
      same may be amended, restated, supplemented or otherwise modified, the
“Purchase Agreement”), among GWPC and Metage Funds Limited and
      NCIM Limited (together with their respective successors and assigns, the
“Buyers”), and pursuant to which the Buyers have made certain
      loans (“Loans”) to GWPC.

    

    B.           Pursuant
      to a Security Agreement of even date herewith by and among Pledgor and Pledgee
      (as the same may be amended, restated, modified or supplement and in effect
      from
      time to time, the “Security Agreement”), Pledgor has granted
      Pledgee, for its benefit and the benefit of the Buyers, a first priority
      security interest in, lien upon and pledge of its rights in the Collateral
      (as
      defined in the Security Agreement).

     

    C.           To
      induce the Buyers 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 Wharton Corp., Wharton LLC and
      Gulf
      LP now or hereafter owned or acquired by Pledgor.

     

    NOW,
      THEREFORE, in consideration of the premises to induce the Buyers and
      for other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged, Pledgor hereby agrees with Pledgee as
      follows:

    

    1.           Defined
      Terms.  Unless otherwise defined herein, all capitalized terms
      used herein shall have the meanings given them in
      the Purchase Agreement.

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    2.           Pledge.  Pledgor
      hereby pledges, assigns, hypothecates, transfers, delivers and grants to
      Pledgee, for the benefit of itself and the Buyers, a first lien on and first
      priority perfected security interest in (i) all of the capital stock or other
      equity interests of Wharton Corp., Wharton LLC and Gulf LP 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, as 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 Liabili­ties.  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 actual physical
      possession and custody of the certificates representing the Pledged Shares
      and
      any additional Pledged Collateral.

     

    3.           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;

     

    (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;

     

    
      
        
          
          

        

        
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    (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
      Wharton Corp., Wharton LLC and Gulf LP;

     

    (e)           except
      for a UCC-1 financing statement filed by Pledgee pursuant to this Agreement
      and
      any subsequent amendments thereto, 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, 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 purports to be 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)           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 upon
      the
      proper filing of a UCC-1 financing statement, the 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.  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;

     

    (h)           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) are “securities” governed by Article 8 of the
      UCC.  Certificates evidencing such membership interests or partnership
      interests (if any) have been issued to Pledgor by the applicable Person and
      will
      be delivered to Pledgee.  Pledgor will not cause and will not permit
      GWPC to “opt-out” of Article 8 of the UCC.  Pledgor will not take, and
      will not permit Wharton Corp., Wharton LLC and Gulf LP to take, any actions
      to
      cause the capital stock, membership interests, partnership interests or similar
      equity interests of Wharton Corp., Wharton LLC and Gulf LP (if any) to cease
      to
      be classified as “securities” governed by Article 8 of the UCC; and

     

    
      
        
          
          

        

        
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    (i)           no
      Pledgor (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.

     

    4.           Dividends,
      Distributions, Etc. If, while this Agreement is in
      effect, Pledgor shall become entitled to receive or 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 ten (10) 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.
      Pledgor hereby authorizes Pledgee to attach each Pledge Amendment 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.

     

    5.           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 Purchase 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 only 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.

    

    
      
        
          
          

        

        
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    (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 the Buyers, all such cash or other distributions as
      additional security for the Liabilities.

     

    (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 that are certificated to remain certificated
      at
      all times while this Agreement is in effect.

     

    6.           Rights
      of Pledgee. To the extend permitted by applicable
      laws, 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.

     

    
      
         

      

      
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    7.           Remedies. Upon
      the occurrence and only 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 Pledgee under the Uniform Commercial Code
      (“UCC”) in effect in the State of Texas 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 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 reasonable and necessary
      out of pocket 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 reasonable attorneys’ fees based
      on reasonable rates customarily charged 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 written 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.

     

    8.           No
      Disposition, Etc. 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.

    

    
      
        
          
          

        

        
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    9.           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.

     

    (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.  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 the Buyers, 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, reasonable outside counsel fees based on
      reasonable rates customarily charged 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 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.

    

    
      
        
          
          

        

        
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    (d)           Pledgor
      further agrees to defer 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
      irrevocable payment in full of the Liabilities.

     

    (e)           Pledgor
      further waives any requirements pursuant to the terms of the agreement of
      limited partnership for the delivery of an opinion of counsel with respect
      to
      the pledge of the partnership interests of Gulf LP.

     

    10.           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
      the
      Buyers 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 Purchase Agreement.

     

    11.           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 payment in full of all Liabilities or conversion of the indebtedness
      under the Notes in accordance with the terms thereof.

     

    12.           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 except as provided above, 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.

    

    
      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

    

    13.           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 reasonable fees and expenses of outside counsel for Pledgee,
      at
      reasonable rates customarily charged, 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.

     

    14.           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 only
      during the continuance of an Event of Default.

     

    15.           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 Texas, without giving effect
      to
      any choice of law or conflict of law provision or rule (whether of the State
      of
      Texas or any other jurisdiction) that would cause the application of the laws
      of
      any jurisdiction other than the State of Texas.  Each party hereby
      irrevocably submits to the non-exclusive jurisdiction of the state and federal
      courts sitting in Houston, Texas, 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.

    

    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

    

    16.           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.

     

    17.           Headings.  The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    18.           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.

     

    19.           Entire
      Agreement; Amendments.  This Agreement supersedes all other prior
      oral or written agreements between each Pledgor, Pledgee, the Buyers 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.

     

    20.           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 Purchase Agreement, in the case of
      communications to the Collateral Agent, directed to the notice address set
      forth
      in the Security Agreement.

     

    21.           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 Buyers 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 with
      Pledgor’s prior written consent if no Event of Default shall exist, but without
      the consent of Pledgor if an Event of Default exists, in which event such
      assignee shall be deemed to be Pledgee hereunder with respect to such assigned
      rights.

    

    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

    

    22.           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.

     

    23.           Survival.  All
      representations, warranties, covenants and agreements of Pledgor and Pledgee
      shall survive the execution and delivery of this Agreement.

     

    24.           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.

     

    25.           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.

     

    26.           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) indicating as
      collateral covered thereunder all or any part of the Pledged Shares or other
      Pledged Collateral without the signature of Pledgor.

     

    27.           Pledgee
      Acknowledgement.  Pledgee acknowledges receipt of an executed copy
      of this Agreement.  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.

     

    28.           Collateral
      Agent and Buyer Indemnification.

     

    (a)           Each
      Buyer hereby irrevocably appoints and authorizes the Pledgee to act as
      collateral agent (the “Collateral Agent”) on its behalf under
      this Agreement and to enter into each of the instruments, documents and
      agreements, including any pledge agreement, guaranty, financing statements,
      mortgage, Account Control Agreement or any other Security Documents (the
“Financing Documents”), to which Pledgee is a party (including
      in its capacity as Collateral Agent) on such Buyer’s behalf and to take such
      actions as Collateral Agent on such Buyer’s behalf and to exercise such powers
      under the Financing Documents as are delegated to Collateral Agent or Pledgee
      (as applicable) by the terms thereof, together with all such powers as are
      reasonably incidental thereto.  The Collateral Agent shall take such
      action under this Agreement and/or any other Transaction Documents as the
      Collateral Agent shall reasonably be directed by the Requisite Buyers in
      accordance with the terms of the Transaction Documents.  Pledgee is
      authorized and empowered to amend, modify, or waive any provisions of this
      Agreement or the other Financing Documents only with the consent of the
      Requisite Buyers.

    

    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

    

    (b)           Whether
      or not the transactions contemplated hereby shall be consummated, upon demand
      therefor the Buyers shall indemnify the Collateral Agent (to the extent not
      reimbursed by or on behalf of Pledgor and without limiting the obligation of
      Pledgor to do so), ratably from and against any and all liabilities,
      obligations, losses, damages, penalties, actions, judgments, suits, costs,
      expenses and disbursements of any kind whatsoever, including, for purposes
      of
      clarification, all Taxes, which may at any time (including at any time following
      the payment in full of the Notes and the termination or resignation of the
      Collateral Agent) be imposed on, incurred by or asserted against the Collateral
      Agent in any way relating to or arising out of this Agreement, any other
      Financing Document or any document contemplated hereby or referred to herein
      or
      the transactions contemplated hereby or thereby or any action taken or omitted
      by the Collateral Agent under or in connection with any of the foregoing;
provided, however, that no Buyer shall be liable for the payment
      to the Collateral Agent of any portion of such liabilities, obligations, losses,
      damages, penalties, actions, judgments, suits, costs, expenses or disbursements
      resulting solely from the Collateral Agent’s gross negligence or willful
      misconduct.  In addition, each Buyer shall reimburse the Collateral
      Agent upon demand for its ratable share of any costs or out-of-pocket expenses
      (including attorney costs) incurred by the Collateral Agent in connection with
      the preparation, execution, delivery, administration, modification, amendment
      or
      enforcement (whether through negotiations, legal proceedings or otherwise)
      of,
      or legal advice in respect of rights or responsibilities under, this Agreement,
      any other Transaction Document, or any document contemplated hereby or referred
      to herein to the extent that the Collateral Agent is not reimbursed for such
      expenses by or on behalf of Pledgor.  Without limiting the generality
      of the foregoing, if any Governmental Authority of any jurisdiction asserts
      a
      claim that the Collateral Agent did not properly withhold tax from amounts
      paid
      to or for the account of any Buyer (because the appropriate form was not
      delivered, was not properly executed, or because such Buyer failed to notify
      the
      Collateral Agent of a change in circumstances which rendered the exemption
      from,
      or reduction of, withholding tax ineffective, or for any other reason) such
      Buyer shall indemnify the Collateral Agent fully for all amounts paid, directly
      or indirectly, by the Collateral Agent as tax or otherwise, including penalties
      and interest, and including any taxes imposed by any jurisdiction on the amounts
      payable to the Collateral Agent under this Section 28, together with all
      related costs and  expenses (including attorney costs).  The
      obligation of the Buyers in this Section 28 shall survive the payment of
      all Liabilities hereunder.

     

    (c)           The
      Collateral Agent shall not be deemed to have knowledge or notice of the
      occurrence of any Event of Default or any event that with the giving of notice
      or passage of time would constitute an Event of Default unless the Collateral
      Agent shall have received written notice from a Buyer describing such Event
      of
      Default or event that with the giving of notice or passage of time would
      constitute an Event of Default and stating that such notice is a “notice of
      default”.  Upon the occurrence and continuance of an Event of Default,
      or an event that with the giving of notice or passage of time would constitute
      an Event of Default, the Collateral Agent shall take such action under this
      Agreement and/or any other Transaction Documents with respect to such Event
      of
      Default or event that with the giving of notice or passage of time would
      constitute an Event of Default as Collateral Agent shall reasonably be directed
      by the Requisite Buyers in accordance with the terms of the Transaction
      Documents, provided that unless and until the Collateral Agent shall have
      received such directions, the Collateral Agent may (but shall not be obligated
      to) take such action, or refrain from taking such action, with respect of such
      Event of Default or event that with the giving of notice or passage of time
      would constitute an Event of Default or as the Collateral Agent shall deem
      advisable in the best interests of the Buyers.  In taking such action
      or refraining from taking such action without specific direction from the
      Requisite Buyers, the Collateral Agent shall use the same degree of care and
      skill as a prudent person would exercise or use under the circumstances in
      the
      conduct of such person’s own affairs.

    

    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

    

    (d)           Nothing
      in this Section 28 shall be deemed to limit or otherwise affect the
      rights of Pledgee or Buyers to exercise any remedy provided in this Agreement
      or
      any other Transaction Document.

     

    (e)           The
      Collateral Agent may resign from the performance of all of its functions and
      duties hereunder and/or under the other Financing Documents at any time by
      giving thirty (30) Business Days prior written notice to the
      Buyers.  Such resignation shall take effect upon the appointment of a
      successor Collateral Agent pursuant to clause (f) below or as otherwise provided
      below.

     

    (f)           Upon
      (i) the Buyers’ receipt of a notice of resignation by the Collateral Agent in
      accordance with clause (e) above, or (ii) written notice by the Requisite Buyers
      to Collateral Agent of the Requisite Buyers’ election to remove the existing
      Collateral Agent and appoint a successor Collateral Agent, the Requisite Buyers
      shall have the right to appoint a successor Collateral Agent.  Upon
      the acceptance of a successor's appointment as Collateral Agent hereunder and
      notice of such acceptance to the retiring Collateral Agent, such successor
      shall
      succeed to and become vested with all of the rights, powers, privileges and
      duties of the retiring (or retired) Collateral Agent, the retiring Collateral
      Agent's resignation shall become immediately effective and the retiring
      Collateral Agent shall be discharged from all of its duties and obligations
      hereunder and under the other Financing Documents (if such resignation was
      not
      already effective and such duties and obligations not already discharged, as
      provided below in this paragraph).  If no such successor shall have
      been so appointed by Requisite Buyers and shall have accepted such appointment
      within thirty (30) days after the retiring Collateral Agent gives notice of
      its
      resignation or the Requisite Buyers give notice of their election to replace
      the
      retiring Collateral Agent, then the retiring Collateral Agent may, on behalf
      of
      the Buyers (but without any obligation) appoint a successor Collateral Agent
      without the consent of any Buyer.  From and following the expiration
      of such thirty (30) day period, Collateral Agent shall have the exclusive right
      without any Person's consent, upon one (1) Business Days' notice to the Buyers,
      to make its resignation or removal effective immediately.  From and
      following the effectiveness of such notice, (i) the retiring Collateral
      Agent shall be discharged from its duties and obligations hereunder and under
      the other Financing Documents and (ii) all actions, payments,
      communications and determinations provided to be made by, to or through
      Collateral Agent shall instead be made by or to each Buyer directly, until
      such
      time as Requisite Buyers appoint a Collateral Agent as provided for above in
      this paragraph.  The provisions of this Agreement shall continue in
      effect for the benefit of any retiring Collateral Agent and its sub-agents
      after
      the effectiveness of its resignation or removal hereunder and under the other
      Financing Documents in respect of any actions taken or omitted to be taken
      by
      any of them while the retiring Collateral Agent was acting or was continuing
      to
      act as Collateral Agent.

     

    [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:  

            	 
	 	 	 	 	 
	 	
              GULF
                WESTERN PETROLEUM   

            	 
	 	CORPORATION,
              a Nevada corporation  	 
	 	 	 	 	 
	 	
              By:

            	
              /s/  Donald
                L. Sytsma 

            	 
	 	
              Name:

            	
              Donald
                L. Sytsma 

            	 
	 	
              Title:

            	
              CFO 

            	 
	 	 	 	 	 
	 	 	 	 	 
	 	
              GULF
                WESTERN PETROLEUM LP,  

            	 
	 	
              a
                Texas limited partnership  

            	 
	 	 	 	 	 
	 	
              By:

            	
              Wharton
                Resources, LLC, 

            	 
	 	 	
              a
                Delaware limited liability company, 

            	 
	 	 	
              its
                general partner 

            	 
	 	 	 	 	 
	 	 	
              By:

            	
              /s/
                Donald L. Sytsma

            	 
	 	 	
              Name:

            	
              Donald
                L. Sytsma

            	 
	 	 	
              Title:

            	
              CFO

            	 
	 	 	 	 	 
	 	 	 	 	 
	 	
              WHARTON
                RESOURCES LLC,  

            	 
	 	
              a
                Delaware limited liability company  

            	 
	 	 	 	 	 
	 	
              By:

            	
              /s/  Donald
                L. Sytsma 

            	 
	 	
              Name:

            	
              Donald
                L. Sytsma 

            	 
	 	
              Title:

            	
              CFO 

            	 
	 	 	 	
               

            	 
	 	 	 	 	 
	 	
              WHARTON
                RESOURCES CORP.,  

            	 
	 	
              a
                Delaware corporation  

            	 
	 	 	 	 	 
	 	
              By:

            	
              /s/  Donald
                L. Sytsma 

            	 
	 	
              Name:

            	
              Donald
                L. Sytsma 

            	 
	 	
              Title:

            	
              CFO 

            	 

    

     

    Signature
      Page to Pledge Agreement

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      	 	
              PLEDGEE: 

            	 
	 	 	 	 
	 	
              METAGE
                FUNDS LIMITED, 

            	 
	 	
              in
                its capacity as Collateral Agent for the Buyers 

            	 
	 	 	 	 
	 	
              By:

            	
              /s/  Tom
                Sharp

            	 
	 	
              Name:

            	
              Tom
                Sharp

            	 
	 	
              Title:

            	
              Investment
                Manager

            	 

    

     

    Signature
      Page to Pledge
      Agreement

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be
      duly
      executed and delivered as of the day and year first above written.

    

    
      	 	
              BUYERS:  

            
	 	 	 	 
	 	
              Solely
                for the purposes of Section 28  

            
	 	 	 	 
	 	
              NCIM
                LIMITED, as a Buyer  

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	
              /s/  J.M.
                Roberts

            	 
	 	
              Name:

            	
              J.M.
                Roberts

            	 
	 	
              Title:

            	
              Manager

            	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
              METAGE
                FUNDS, LIMITED, as a Buyer  

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	
              /s/  Tom
                Sharp

            	 
	 	
              Name:

            	
              Tom
                Sharp

            	 
	 	
              Title:

            	
              Investment
                Manager

            	 

    

     

    Signature
      Page to Pledge
      Agreement

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      A

    to
      Pledge Agreement

    

    

    DESCRIPTION
      OF PLEDGED SHARES

    

    

    
      	
              Name of
                Entity

            	
              Class of Stock or 

              Other
                Equity Interests

            	
              Authorized
                No. of

              Shares or
                Units

            	
              Issued and
                Outstanding 

              Shares or
                Units

            	
              Percentage of
                Shares or Units

              Beneficially
                Owned 

              by
                Pledgor

            
	
              Wharton
                Resources Corp.

            	
              Common
                Stock

            	
              100

            	
              100

            	
              100%

            
	
              Wharton
                Resources LLC

            	
              LLC
                Unit

            	
              1

            	
              1

            	
              100%

            
	
              Gulf
                Western Petroleum, LP

            	
              Partnership
                Interest

            	
              100

            	
              100

            	
              100%

            

    

    

    

    DESCRIPTION
      OF PLEDGED SHARES OR UNITS

    

    
      	
              Nam

              Pledge
                Entity

            	
              Class of Stock or 

              Other
                Equity Interests

            	
              Stock or Unit

              Certificate No.

            	
              No. of Shares or Units

              Represented by

              Certificate

            
	
              Wharton
                Resources Corp.

            	
              Common
                Stock

            	
              1

            	
              1

            
	
              Wharton
                Resources LLC

            	
              LLC
                Unit

            	
              1

            	
              1

            
	
              Gulf
                Western Petroleum, LP

            	
              General
                Partnership Interest

            	
              1

            	
              1

            
	
              Gulf
                Western Petroleum, LP

            	
              Limited
                Partnership Interest

            	
              2

            	
              99

            

    

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    EXHIBIT
      B

    to
      Pledge Agreement

    

    Addendum
      to Pledge Agreement

    

    The
      undersigned, being the Pledgor pursuant to that certain Pledge Agreement dated
      as of  September 10, 2007 (as amended, restated, supplemented or
      otherwise modified from time to time, the “Pledge Agreement”)
      in favor of Metage Funds Limited as Collateral Agent
      (“Pledgee”), by executing this Addendum, hereby acknowledges
      that Pledgor has acquired and legally and beneficially owns all of the issued
      and outstanding [ shares of capital stock ] of [__________________, a _______
      corporation ] (“Company”) described below (the
“Shares”).  Pledgor hereby agrees and acknowledges
      that the Shares shall be deemed Pledged Shares pursuant to the Pledge
      Agreement.  Pledgor hereby represents and warrants to Pledgee that (i)
      all of the [ capital stock ] of the Company now owned by Pledgor is presently
      represented by the certificates listed below, which certificates, with undated
      assignments separate from certificate or stock powers duly executed in blank
      by
      Pledgor, are being delivered to Pledgee, simultaneously herewith (or have been
      previously delivered to Pledgee), and (ii) after giving effect to this addendum,
      the representations and warranties set forth in Section 3 of the Pledge
      Agreement are true, complete and correct as of the date hereof.

    

    Pledged
      Shares

    

    
      	
              Name of

              the Pledged Entity

            	
              Class of Equity Interest

            	
              Certificate No.

            	
              No. of Shares

              Represented by

              Certificate

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

    

    

    

    IN
      WITNESS WHEREOF, Pledgor has executed this Addendum this _____ day of
      ______.

     

    
      	 	
              PLEDGOR:  

            
	 	 
	 	
              GULF
                WESTERN PETROLEUM 

            
	 	CORPORATION,
              a Nevada
              corporation  
	 	 	 	 
	 	
              By:

            	 	 
	 	
              Name:

            	 	 
	 	
              Title:Unassociated Document

    
      

    

    Exhibit
      10.7

     

    GUARANTY

     

    This
      GUARANTY (as amended, restated, supplemented, or otherwise
      modified and in effect from time to time, this “Guaranty”) is
      made as of this 10th day of September, 2007, jointly and severally, by each
      of
GULF WESTERN PETROLEUM LP, a Texas limited partnership
      (“Gulf Western”), WHARTON RESOURCES LLC, a
      Delaware limited liability company (“Wharton GP”),
WHARTON RESOURCES CORP., a Delaware corporation
      (“Wharton LP”; Gulf Western, Wharton GP and Wharton LP,
      together with each other person or entity who becomes a party to this Guaranty
      by execution of a joinder in the form of Exhibit A attached hereto, is
      referred to individually as a “Guarantor” and collectively as
      the “Guarantors”) in favor of
      METAGE FUNDS LIMITED, on its own behalf and in its capacity as
      collateral agent (together with its successors and assigns in such capacity,
      the
“Collateral Agent”) for the benefit of the entities identified
      on the Schedule of Buyers attached to the Purchase Agreement defined below,
      and
NCIM LIMITED,
      (in
      each case together with their successors and assigns, the
“Buyers”).

     

    W
      I T N E S S E T H:

     

    WHEREAS,
      as of the date hereof, Buyers have made loans and certain other financial
      accommodations (collectively, the “Loans”) to GULF
      WESTERN PETROLEUM CORPORATION,
      a Nevada corporation (the “Company”), as evidenced by
      that certain senior secured convertible note of even date herewith in an
      original principal amount of $3,700,000 (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, supplemented, restated or modified and in effect from time to time,
      the
“Notes”);

     

    WHEREAS,
      the Notes are being acquired by Buyers pursuant to a Securities Purchase
      Agreement dated as of even date herewith among the Buyers and the Company (as
      the same may be amended, restated, supplemented or otherwise modified from
      time
      to time, the “Purchase Agreement”);

     

    WHEREAS,
      pursuant to a Pledge Agreement of even date herewith (as the same may be
      amended, restated, supplemented or otherwise modified and in effect from time
      to
      time, the “Company Pledge Agreement”) by the Company in favor
      of the Collateral Agent, the Company has pledged a lien on and security interest
      in all of the membership interest in and capital stock as the case may be,
      of
      each of Wharton GP and Wharton LP;

     

    WHEREAS,
      pursuant to a Pledge Agreement of even date herewith (as the same may be
      amended, restated, supplemented or otherwise modified and in effect from time
      to
      time, the “Wharton Pledge Agreement”; and together with the
      Company Pledge Agreement, the “Pledge Agreements”) by Wharton
      GP and Wharton LP in favor of the Collateral Agent, Wharton GP and Wharton
      LP
      have pledged a lien on and security interest in all of the partnership interests
      in of Gulf Western;

     

    WHEREAS,
      pursuant to a Security Agreement of even date herewith (as the same may be
      amended, restated, supplemented or otherwise modified and in effect from time
      to
      time, the “Security Agreement”) by the “Debtors” (as defined
      therein) in favor of the Collateral Agent, such Debtors have granted the
      Collateral Agent, for its benefit and the benefit of the Buyers, a first
      priority security interest in, lien upon and pledge of each of their rights
      in
      the Collateral (as defined in the Security Agreement); and

     

    
      
        
          
          

        

        
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    WHEREAS,
      the Guarantors are direct or indirect subsidiaries of the Company and, as such,
      will derive substantial benefit and advantage from the Loans and other financial
      accommodations available to the Company set forth in the Purchase Agreement,
      the
      Notes and the other Transaction Documents, and it will be to each Guarantor’s
      direct interest and economic benefit to assist the Company in procuring said
      Loans and other financial accommodations from Buyers.

     

    NOW,
      THEREFORE, for and in consideration of the premises and in order to
      induce Buyers to make the Loans, and for other good and valuable consideration,
      the receipt and sufficiency of which are hereby acknowledged, each Guarantor
      hereby jointly and severally agrees as follows:

     

    1.           Definitions:  Capitalized
      terms used herein without definition and defined in the Purchase Agreement
      are
      used herein as defined therein.  In addition, as used
      herein:

     

     “Bankruptcy
      Code” shall mean the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
§101, et seq.), as amended and in effect from time to time
      thereunder.

     

     “Obligations”
      shall mean (i) all obligations, liabilities and indebtedness of every nature
      of
      the Company from time to time owed or owing to the Buyers and Collateral Agent,
      under the Security Documents, the Purchase Agreement, the Notes, the Loans,
      the
      Warrants, the Registration Rights Agreement and the other Transaction Documents,
      including, without limitation, the principal amount of all debts, claims and
      indebtedness, accrued and unpaid interest and all fees, taxes, indemnities,
      costs and expenses, whether primary, secondary, direct, contingent, fixed or
      otherwise, heretofore, now and/or from time to time hereafter owing, due or
      payable under the Transaction Documents, whether before or after the filing
      of a
      bankruptcy, insolvency or similar proceeding under applicable federal, state,
      foreign or other law and whether or not an allowed claim in any such proceeding,
      and (ii) all obligations, liabilities and indebtedness of every nature of
      the Guarantors from time to time owed or owing to the Buyers and/or Collateral
      Agent, including, without limitation, all obligations, liabilities and
      indebtedness of every nature of the Guarantors under or in respect of this
      Guaranty, the Pledge Agreements, the Security Agreement, the Purchase Agreement,
      the Notes, the Loans, the Warrants, the Registration Rights Agreement, the
      other
      Security Documents and the other Transaction Documents to which they are a
      party, as the case may be, including, without limitation, the principal amount
      of all debts, claims and indebtedness, accrued and unpaid interest and all
      fees,
      taxes, indemnities, costs and expenses, whether primary, secondary, direct,
      contingent, fixed or otherwise, heretofore, now and/or from time to time
      hereafter owing, due or payable under the Transaction Documents, whether before
      or after the filing of a bankruptcy, insolvency or similar proceeding under
      applicable federal, state, foreign or other law and whether or not an allowed
      claim in any such proceeding.

    

    
      
        
          
          

        

        
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    2.           Guaranty
      of Payment.

     

    (a)           Each
      Guarantor, jointly and severally, hereby unconditionally and irrevocably
      guaranties the full and prompt payment and performance to Buyers and Collateral
      Agent, on behalf of itself and in its capacity as agent for the benefit of
      Buyers, when due, upon demand, at maturity or by reason of acceleration or
      otherwise and at all times thereafter, of any and all of the
      Obligations.

     

    (b)           Each
      Guarantor acknowledges that valuable consideration supports this Guaranty,
      including, without limitation, the consideration set forth in the recitals
      above, as well as any commitment to lend, extension of credit or other financial
      accommodation, whether heretofore or hereafter made by Buyers to the Company;
      any extension, renewal or replacement of any of the Obligations; any forbearance
      with respect to any of the Obligations or otherwise; any cancellation of an
      existing guaranty; any purchase of any of the Company’s assets by any Buyer or
      Collateral Agent; or any other valuable consideration.

     

    (c)           Each
      Guarantor agrees that all payments under this Guaranty shall be made in United
      States currency and in the same manner as provided for the
      Obligations.

     

    (d)           Notwithstanding
      any provision of this Guaranty to the contrary, it is intended that this
      Guaranty, and any interests, liens and security interests granted by Guarantors
      as security for this Guaranty, not constitute a “Fraudulent Conveyance” (as
      defined below) in the event that this Guaranty or such interest is subject
      to
      the Bankruptcy Code or any applicable fraudulent conveyance or fraudulent
      transfer law or similar law of any state.  Consequently, Guarantors,
      Collateral Agent and Buyers agree that if this Guaranty, or any such interests,
      liens or security interests securing this Guaranty, would, but for the
      application of this sentence, constitute a Fraudulent Conveyance, this Guaranty
      and each such lien and security interest shall be valid and enforceable only
      to
      the maximum extent that would not cause this Guaranty or such interest, lien
      or
      security interest to constitute a Fraudulent Conveyance, and this Guaranty
      shall
      automatically be deemed to have been amended accordingly at all relevant
      times.  For purposes hereof, “Fraudulent Conveyance”
means a fraudulent conveyance under Section 548 of the Bankruptcy
      Code or a
      fraudulent conveyance or fraudulent transfer under the provisions of any
      applicable fraudulent conveyance or fraudulent transfer law or similar law
      of
      any state, as in effect from time to time.

     

    3.           Costs
      and Expenses. Each Guarantor, jointly and severally, agrees to pay on
      demand, all costs and expenses of every kind incurred by any Buyer or Collateral
      Agent: (a) in enforcing this Guaranty, (b) in collecting any of the Obligations
      from the Company or any Guarantor, (c) in realizing upon or protecting or
      preserving any collateral for this Guaranty or for payment of any of the
      Obligations, and (d) in connection with any amendment of, modification to,
      waiver or forbearance granted under, or enforcement or administration of any
      Transaction Document or for any other purpose in connection with any Transaction
      Document.  “Costs and expenses” as used in the
      preceding sentence shall include, without limitation, reasonable attorneys’ fees
      incurred by any Buyer or Collateral Agent in retaining outside counsel at
      reasonable rates customarily charged for such matters for advice, suit, appeal,
      any insolvency or other proceedings under the Bankruptcy Code or otherwise,
      or
      for any purpose specified in the preceding sentence.

    

    
      
        
          
          

        

        
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    4.           Nature
      of Guaranty: Continuing, Absolute and Unconditional.

     

    (a)           This
      Guaranty is and is intended to be a continuing guaranty of payment of the
      Obligations, and not of collectibility, and is intended to be independent of
      and
      in addition to any other guaranty, indorsement, collateral or other agreement
      held by Buyers or Collateral Agent therefor or with respect thereto, whether
      or
      not furnished by a Guarantor.  None of Buyers and Collateral Agent
      shall be required to prosecute collection, enforcement or other remedies against
      Company, any other Guarantor or guarantor of the Obligations or any other person
      or entity, or to enforce or resort to any of the Collateral or other rights
      or
      remedies pertaining thereto, before calling on a Guarantor for
      payment.  The obligations of each Guarantor to repay the Obligations
      hereunder shall be unconditional.  Each Guarantor shall defer its
      right of subrogation with respect to any payments made by any Guarantor
      hereunder until repayment of the Obligations, and until such time hereby waives
      any benefit of, and any right to participate in, any security or collateral
      given to Buyers to secure payment of the Obligations, and each Guarantor agrees
      that it will not take any action to enforce any obligations of the Company
      to
      any Guarantor prior to the Obligations being finally and irrevocably paid in
      full in cash, provided that, in the event of the bankruptcy or insolvency
      of the Company, Collateral Agent, for the benefit of itself and Buyers, and
      Buyers shall be entitled notwithstanding the foregoing, to file in the name
      of
      any Guarantor or in its own name a claim for any and all indebtedness owing
      to a
      Guarantor by the Company (exclusive of this Guaranty), vote such claim and
      to
      apply the proceeds of any such claim to the Obligations.

     

    (b)           For
      the further security of Buyers and without in any way diminishing the liability
      of the Guarantors, following the occurrence but only during the continuation
      of
      an Event of Default, all debts and liabilities, present or future of the Company
      to the Guarantors and all monies received from the Company or for its account
      by
      the Guarantors in respect thereof shall be received in trust for Buyers and
      Collateral Agent and forthwith upon receipt shall be paid over to Collateral
      Agent, for its benefit and in its capacity as collateral agent for the benefit
      of Buyers, until all of the Obligations have been paid in full in
      cash.  This assignment and postponement is independent of and
      severable from this Guaranty and shall remain in full effect whether or not
      any
      Guarantor is liable for any amount under this Guaranty.

     

    (c)           This
      Guaranty is absolute and unconditional and shall not be changed or affected
      by
      any representation, oral agreement, act or thing whatsoever, except as herein
      provided.  This Guaranty is intended by the Guarantors to be the
      final, complete and exclusive expression of the guaranty agreement between
      the
      Guarantors and Buyers.  No modification or amendment of any provision
      of this Guaranty shall be effective against any party hereto unless in writing
      and signed by a duly authorized officer of such party.

     

    (d)           Until
      irrevocable payment in full of the Obligations, each Guarantor hereby agrees
      not
      to assert or enforce (whether by or in a legal or equitable proceeding or
      otherwise) any “claims” (as defined in Section 101(5) of the Bankruptcy Code),
      whether arising under any law, ordinance, rule, regulation, order, policy or
      other requirement of any domestic or foreign government or any instrumentality
      or agency thereof, having jurisdiction over the conduct of its business or
      assets or otherwise, to which such Guarantor is or would at any time be entitled
      by virtue of its obligations hereunder, any payment made pursuant hereto or
      the
      exercise by any Buyer or Collateral Agent of its rights with respect to the
      Collateral, including any such claims to which such Guarantor may be entitled
      as
      a result of any right of subrogation, exoneration or reimbursement.

    

    
      
        
          
          

        

        
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    5.           Certain
      Rights and Obligations.

     

    (a)           Each
      Guarantor acknowledges and agrees that Buyers and Collateral Agent, for its
      benefit and as collateral agent for the benefit of Buyers, may, without notice,
      demand or any reservation of rights against such Guarantor and without affecting
      such Guarantor’s obligations hereunder, from time to time:

     

    (i)           renew,
      extend, increase, accelerate or otherwise change the time for payment of, the
      terms of or the interest on the Obligations or any part thereof or grant other
      indulgences to the Company or others;

     

    (ii)         accept
      from any person or entity and hold collateral for the payment of the Obligations
      or any part thereof, and modify, exchange, enforce or refrain from enforcing,
      or
      release, compromise, settle, waive, subordinate or surrender, with or without
      consideration, such collateral or any part thereof;

     

    (iii)        accept
      and hold any indorsement or guaranty of payment of the Obligations or any part
      thereof, and discharge, release or substitute any such obligation of any such
      indorser or guarantor, or discharge, release or compromise any Guarantor, or
      any
      other person or entity who has given any security interest in any collateral
      as
      security for the payment of the Obligations or any part thereof, or any other
      person or entity in any way obligated to pay the Obligations or any part
      thereof, and enforce or refrain from enforcing, or compromise or modify, the
      terms of any obligation of any such indorser, guarantor, or person or
      entity;

     

    (iv)        dispose
      of any and all collateral securing the Obligations in any manner as the
      Collateral Agent, in its sole discretion, may deem appropriate, and direct
      the
      order or manner of such disposition and the enforcement of any and all
      endorsements and guaranties relating to the Obligations or any part thereof
      as
      Collateral Agent in its sole discretion may determine;

     

    (v)     determine
      the manner, amount and time of application of payments and credits, if any,
      to
      be made on all or any part of any component or components of the Obligations
      (whether principal, interest, fees, costs, and expenses, or otherwise),
      including, without limitation, the application of payments received from any
      source to the payment of indebtedness other than the Obligations even though
      Buyers might lawfully have elected to apply such payments to the Obligations
      to
      amounts which are not covered by this Guaranty; and

     

    (vi)        take
      advantage or refrain from taking advantage of any security or accept or make
      or
      refrain from accepting or making any compositions or arrangements when and
      in
      such manner as Collateral Agent, in its sole discretion, may deem
      appropriate;

     

    and
      generally do or refrain from doing any act or thing which might otherwise,
      at
      law or in equity, release the liability of such Guarantor as a guarantor or
      surety in whole or in part, and in no case shall Buyers or Collateral Agent
      be
      responsible or shall any Guarantor be released either in whole or in part for
      any act or omission in connection with Buyers or Collateral Agent having sold
      any security at less than its value, except as provided under applicable
      law.

    

    
      
        
          
          

        

        
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    (b)           Following
      the occurrence of, but only during the continuation of, an Event of Default,
      and
      upon ten (10) days written demand by Collateral Agent, each Guarantor, jointly
      and severally, hereby agrees to pay the Obligations to the extent hereinafter
      provided:

     

    (i)           without
      deduction by reason of any setoff, defense (other than payment) or counterclaim
      of the Company or any other Guarantor;

     

    (ii)         without
      requiring presentment, protest or notice of nonpayment or notice of default
      to
      any Guarantor, to the Company or to any other person or entity;

     

    (iii)        without
      demand for payment or proof of such demand or filing of claims with a court
      in
      the event of receivership, bankruptcy or reorganization of the Company or any
      other Guarantor;

     

    (iv)        without
      requiring Buyers or Collateral Agent to resort first to the Company (this being
      a guaranty of payment and not of collection), to any other Guarantor, or to
      any
      other guaranty or any collateral which Buyers or Collateral Agent may
      hold;

     

    (v)         without
      requiring notice of acceptance hereof or assent hereto by any Buyer or
      Collateral Agent; and

     

    (vi)        without
      requiring notice that any of the Obligations has been incurred, extended or
      continued or of the reliance by any Buyer or Collateral Agent upon this
      Guaranty;

     

    all
      of
      which each Guarantor hereby waives.

     

    (c)           Each
      Guarantor’s obligation hereunder shall not be affected by any of the following,
      all of which such Guarantor hereby waives:

     

    (i)          any
      failure to perfect or continue the perfection of any security interest in or
      other lien on any collateral securing payment of any of the Obligations or
      any
      Guarantor’s obligation hereunder;

     

    (ii)         the
      invalidity, unenforceability, propriety of manner of enforcement of, or loss
      or
      change in priority of any document or any such security interest or other lien
      or other guaranty of the Obligations;

     

    (iii)        any
      failure to protect, preserve or insure any such collateral;

     

    (iv)        failure
      of a Guarantor to receive notice of any intended disposition of such
      collateral;

    

    
      
        
          
          

        

        
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    (v)         any
      defense arising by reason of the cessation from any cause whatsoever of
      liability of the Company including, without limitation, any failure, or omission
      by any Buyer or Collateral Agent in enforcing its claims against the
      Company;

     

    (vi)        any
      release, settlement or compromise of any obligation of the Company, any other
      Guarantor or any other guarantor of the Obligations;

     

    (vii)       the
      invalidity or unenforceability of any of the Obligations;

     

    (viii)      any
      change of ownership of the Company, any other Guarantor or any other guarantor
      of the Obligations or the insolvency, bankruptcy or any other change in the
      legal status of the Company, any other Guarantor or any other guarantor of
      the
      Obligations;

     

    (ix)         any
      change in, or the imposition of, any law, decree, regulation or other
      governmental act which does or might impair, delay or in any way affect the
      validity, enforceability or the payment when due of the
      Obligations;

     

    (x)          the
      existence of any claim, setoff or other rights which the Guarantor, Company,
      any
      other Guarantor or guarantor of the Obligations or any other person or entity
      may have at any time against any Buyer, Collateral Agent or the Company in
      connection herewith or any unrelated transaction;

     

    (xi)         any
      Buyer’s or Collateral Agent’s election in any case instituted under chapter 11
      of the Bankruptcy Code, of the application of section 1111(b)(2) of the
      Bankruptcy Code;

     

    (xii)        any
      use of cash collateral, or grant of a security interest by the Company, as
      debtor in possession, under sections 363 or 364 of the Bankruptcy
      Code;

     

    (xiii)       the
      disallowance of all or any portion of any of any Buyer’s or Collateral Agent’s
      claims for repayment of the Obligations under sections 502 or 506 of the
      Bankruptcy Code; or

     

    (xiv)      any
      other fact or circumstance which might otherwise constitute grounds at law
      or
      equity for the discharge or release of a Guarantor from its obligations
      hereunder, all whether or not such Guarantor shall have had notice or knowledge
      of any act or omission referred to in the foregoing clauses (i) through (xiii)
      of this Section 5(c).

     

    6.           Representations
      and Warranties. Each Guarantor further represents and warrants to Buyers and
      Collateral Agent that: (a) such Guarantor is a corporation or other entity
      duly
      incorporated or organized, as applicable, validly existing and in good standing
      under the laws of the jurisdiction of its incorporation or formation, as
      applicable, and has full power, authority and legal right to own its property
      and assets and to transact the business in which it is engaged; (b) such
      Guarantor has full power, authority and legal right to execute and deliver,
      and
      to perform its obligations under, this Guaranty, and has taken all necessary
      action to authorize the guarantee hereunder on the terms and conditions of
      this
      Guaranty and to authorize the execution, delivery and performance of this
      Guaranty; (c) this Guaranty has been duly executed and delivered by such
      Guarantor and constitutes a legal, valid and binding obligation of such
      Guarantor enforceable against such Guarantor 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; and (d)
      the execution, delivery and performance by each Guarantor of this Guaranty
      do
      not require any action by or in respect of, or filing with, any governmental
      body, agency or official and do not violate, conflict with or cause a breach
      or
      a default under any provision of applicable law or regulation or of the
      organizational documents of any Guarantor or of any agreement, judgment,
      injunction, order, decree or other instrument binding upon it.

    

    
      
        
          
          

        

        
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      7.           Negative
        Covenants. Each Guarantor covenants with Buyers and Collateral Agent that
        such Guarantor shall not grant any security interest in or permit any lien,
        claim or encumbrance upon any of its assets in favor of any person or entity
        other than liens and security interests in favor of Buyers and Collateral
        Agent
        and Permitted Liens.

       

      8.           Termination.
        This Guaranty shall terminate when all Indebtedness under the Notes shall
        be
        finally and irrevocably paid in full in cash or converted pursuant to the
        terms
        thereof.  Thereafter, but subject to the following, Collateral Agent,
        on its behalf and as agent for Buyers, shall take such action and execute
        such
        documents as the Guarantors may reasonably request (and at the Guarantors’ cost
        and expense) in order to evidence the termination of this
        Guaranty.  Each Guarantor further agrees that, to the extent that the
        Company makes a payment or payments to Buyers or Collateral Agent on the
        Obligations, or Buyers or Collateral Agent receive any proceeds of collateral
        securing the Obligations or any other payments with respect to the Obligations,
        which payment or receipt of proceeds or any part thereof is subsequently
        invalidated, declared to be fraudulent or preferential, set aside or required
        to
        be returned or repaid to the Company, its estate, trustee, receiver, debtor
        in
        possession or any other person or entity, including, without limitation,
        the
        Guarantors, under any insolvency or bankruptcy law, state or federal law,
        common
        law or equitable cause, then to the extent of such payment, return or repayment,
        the obligation or part thereof which has been paid, reduced or satisfied
        by such
        amount shall be reinstated and continued in full force and effect as of the
        date
        when such initial payment, reduction or satisfaction occurred, and this Guaranty
        shall continue in full force notwithstanding any contrary action which may
        have
        been taken by any Buyer or Collateral Agent in reliance upon such payment,
        and
        any such contrary action so taken shall be without prejudice to any Buyer’s or
        Collateral Agent’s rights under this Guaranty and shall be deemed to have been
        conditioned upon such payment having become final and irrevocable.

       

      9.           Guaranty
        of Performance. Each Guarantor also guaranties the full, prompt and
        unconditional performance of all obligations and agreements of every kind
        owed
        or hereafter to be owed by the Company to Buyers and Collateral Agent under
        the
        Purchase Agreement, Registration Rights Agreement, the Warrants, Security
        Documents and the Notes.  Every provision for the benefit of Buyers
        and Collateral Agent contained in this Guaranty shall apply to the guaranty
        of
        performance given in this Section 9.

       

      10.         Assumption
        of Liens and Obligations. To the extent that a Guarantor has received or
        shall hereafter receive distributions or transfers from the Company of property
        or cash that are subject, at the time of such receipt, to liens and security
        interests in favor of Buyers and/or the Collateral Agent in accordance with
        the
        Notes, the Security Agreement or any other Security Document, such Guarantor
        hereby expressly agrees that (i) it shall hold such assets subject to such
        liens
        and security interests, and (ii) it shall be liable for the payment of the
        Obligations secured thereby.  Each Guarantor’s obligations under this
Section 10 shall be in addition to its obligations as set forth in other
        Sections of this Guaranty and not in substitution therefor or in lieu
        thereof.

       

    

    
      
        
          
          

        

        
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    11.         Miscellaneous.

     

    (a)           The
      terms “Company” and “Guarantor” as used in this Guaranty shall include: (i) any
      successor association, partnership, limited liability company or corporation
      to
      which all or substantially all of the business or assets of the Company or
      such
      Guarantor shall have been transferred and (ii) any other association,
      partnership, limited liability company, corporation or entity into or with
      which
      the Company or such Guarantor shall have been merged, consolidated, reorganized,
      or absorbed.

     

    (b)           Without
      limiting any other right of any Buyer or Collateral Agent, whenever any Buyer
      or
      Collateral Agent has the right to declare upon the continuation of an Event
      of
      Default any of the Obligations to be immediately due and payable (whether or
      not
      such Obligations have been so declared), Collateral Agent, on its behalf and
      in
      its capacity as agent for the benefit of Buyers, at its sole election with
      prior
      written notice to the undersigned may appropriate and set off against the
      Obligations upon the continuation of an Event of Default:

     

    (i)           any
      and all indebtedness or other moneys due or to become due to any Guarantor
      by
      any Buyer or Collateral Agent in any capacity; and

     

    (ii)           any
      credits or other property belonging to any Guarantor (including all account
      balances, whether provisional or final and whether or not collected or
      available) at any time held by or coming into the possession of any Buyer or
      Collateral Agent, or any affiliate of any Buyer or Collateral Agent, whether
      for
      deposit or otherwise;

     

    and
      the
      applicable Buyer or Collateral Agent shall be deemed to have exercised such
      right of set off immediately at the time of such election even though any charge
      therefor is made or entered on such Buyer’s or Collateral Agent’s records
      subsequent thereto.  Collateral Agent agrees to notify such Guarantor
      in a reasonably practicable time of any such set-off; however, failure to so
      notify such Guarantor shall not affect the validity of any set-off.

     

    (c)           Each
      Guarantor’s obligation hereunder is to pay the Obligations in full in cash when
      due according to the Notes, the Security Documents and the other agreements,
      documents and instruments governing the Obligations to the extent provided
      herein, and shall not be affected by any stay or extension of time for payment
      by the Company or any other Guarantor resulting from any proceeding under the
      Bankruptcy Code or any similar law.

     

    (d)           No
      course of dealing between the Company or any Guarantor and Buyers or Collateral
      Agent and no act, delay or omission by Buyers or Collateral Agent in exercising
      any right or remedy hereunder or with respect to any of the Obligations shall
      operate as a waiver thereof or of any other right or remedy, and no single
      or
      partial exercise thereof shall preclude any other or further exercise thereof
      or
      the exercise of any other right or remedy.  Any Buyer or Collateral
      Agent may remedy any default by the Company under any agreement with the Company
      or with respect to any of the Obligations in any reasonable manner without
      waiving the default remedied and without waiving any other prior or subsequent
      default by the Company.  All rights and remedies of Buyers and
      Collateral Agent hereunder are cumulative.

    

    
      
        
          
          

        

        
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    (e)           This
      Guaranty shall inure to the benefit of each Buyer and Collateral Agent, and
      each
      such entity’s successors and assigns.

     

    (f)           Captions
      of the sections of this Guaranty are solely for the convenience of the parties
      hereto, and are not an aid in the interpretation of this Guaranty and do not
      constitute part of the agreement of the parties set forth herein.

     

    (g)           If
      any provision of this Guaranty is unenforceable in whole or in part for any
      reason, the remaining provisions shall continue to be effective.

     

    (h)           All
      questions concerning the construction, validity, enforcement and interpretation
      of this Guaranty 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 Guarantor hereby irrevocably submits to the exclusive
      jurisdiction of the state and federal courts sitting in the City of New York
      (Borough of Manhattan), New York, 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 Guarantor 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.

     

    (i)           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 Purchase Agreement or, in the case of
      communications to the Collateral Agent, directed to the notice address set
      forth
      in the Security Agreement; provided, that any communication shall be effective
      as to any Guarantor if made or sent to the Company in accordance with the
      foregoing.

     

    12.         WAIVERS.

     

    (a)           EACH
      GUARANTOR WAIVES THE BENEFIT OF ALL VALUATION, APPRAISAL AND EXEMPTION
      LAWS.

     

    (b)           UPON
      THE OCCURRENCE BUT ONLY DURING THE CONTINUATION OF AN EVENT OF DEFAULT, EACH
      GUARANTOR HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR
      TO
      THE EXERCISE BY ANY BUYER OR COLLATERAL AGENT, ON ITS BEHALF AND IN ITS CAPACITY
      AS AGENT FOR THE BENEFIT OF BUYERS, OF ITS RIGHTS TO REPOSSESS THE COLLATERAL
      WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL
      WITHOUT PRIOR NOTICE OR HEARING.  EACH GUARANTOR ACKNOWLEDGES THAT IT
      HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS TRANSACTION
      AND
      THIS GUARANTY.

    

    
      
        
          
          

        

        
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    (c)           EACH
      GUARANTOR, BUYERS AND COLLATERAL AGENT WAIVES ITS RIGHTS TO A TRIAL BY JURY
      OF
      ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
      GUARANTY, OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING
      OR
      OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY BUYER OR COLLATERAL
      AGENT.  EACH GUARANTOR, BUYERS AND COLLATERAL AGENTS AGREES THAT ANY
      SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
      JURY.  WITHOUT LIMITING THE FOREGOING, EACH GUARANTOR, BUYERS AND
      COLLATERAL AGENTS FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY JURY IS WAIVED
      BY
      OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
      WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
      OF
      THIS GUARANTY OR ANY PROVISION HEREOF.  THIS WAIVER SHALL APPLY TO ANY
      SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
      GUARANTY.

     

    13.         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 therein.

     

    14.         Payments
      Free of Taxes.

     

    (a)           Definitions.  In
      this Section 14:

     

    (i)            
      “Excluded Taxes” means, with respect to the Collateral Agent or
      the Buyers, or any other recipient of any payment to be made by or on account
      of
      any obligations of any Guarantor under this Guaranty, or under any other
      Security Document, income or franchise taxes imposed on (or measured by) its
      net
      income by the United States of America or such other jurisdiction under the
      laws
      of which such recipient is organized or in which its principal office is
      located.

     

    (ii)           
      “Governmental Authority” means the government of the United
      States of America or any other nation, or any political subdivision thereof,
      whether state or local, or any agency, authority, instrumentality, regulatory
      body, court, central bank or other entity exercising executive, legislative,
      judicial, taxing, regulatory or administrative powers or functions of or
      pertaining to government over the Company or any of its Subsidiaries, or any
      of
      their respective properties, assets or undertakings.

     

    (iii)           “Indemnified
      Taxes” means Taxes other than Excluded Taxes.

    

    
      
        
          
          

        

        
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    (iv)           “Taxes”
      means any and all present or future taxes, levies, imposts, duties, deductions,
      charges or withholdings imposed by any Governmental Authority.

     

    (b)           Any
      and all payments by or on account of any obligation of any of the Guarantors
      under this Guaranty or any other Security Document shall be made without any
      set-off, counterclaim or deduction and free and clear of and without deduction
      for any Indemnified Taxes; provided that if any Guarantor shall be required
      to
      deduct any Indemnified Taxes from such payments, then (i) the sum payable shall
      be increased as necessary so that after making all required deductions
      (including deductions applicable to additional sums payable under this
Section 14(b)), the Collateral Agent or Buyers, as applicable, receives
      an amount equal to the sum it would have received had no such deductions been
      made, (ii) such Guarantor shall make such deductions and (iii) such Guarantor
      shall pay the full amount deducted to the relevant Governmental Authority in
      accordance with applicable law.

     

    (c)           Indemnification
      by the Guarantors. Each Guarantor shall indemnify the Collateral Agent and
      the Buyers, within ten (10) days after written demand therefor, for the full
      amount of any Indemnified Taxes paid by the Collateral Agent or Buyers, as
      applicable, on or with respect to any payment by or on account of any obligation
      of such Guarantor under this Guaranty and the other Security Documents
      (including Indemnified Taxes or imposed or asserted on or attributable to
      amounts payable under this Section 14) and any penalties, interest and
      reasonable expenses arising therefrom or with respect thereto, whether or not
      such Indemnified Taxes were correctly or legally imposed or asserted by the
      relevant Governmental Authority.  A certificate of the Collateral
      Agent or any Buyer as to the amount of such payment or liability under this
      Section 14 shall be delivered to such Guarantor and shall be conclusive
      absent manifest error.

     

    15.         Counterparts.
      This Guaranty 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 each 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.

     

    [Remainder
      of page intentionally left blank; signature page follows]

    

    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

    

    IN
      WITNESS WHEREOF, Guarantors have executed this Guaranty as of the date first
      written above.

     

    
      	 	
              GUARANTORS:   

            
	 	 	 	 	 
	 	
              Wharton
                Resources LLC,  

            	 
	 	
              a
                Delaware limited liability company  

            	 
	 	 	 	 	 
	 	
              By:

            	
                /s/  Donald
                L. Sytsma 

            	 
	 	
              Name:

            	
                Donald
                L. Sytsma 

            	 
	 	
              Title:

            	
                CFO 

            	 
	 	 	 	 	 
	 	 	 	 	 
	 	
              Wharton
                Resources Corp.,  

            	 
	 	
              a
                Delaware corporation  

            	 
	 	 	 	 	 
	 	
              By:

            	
                /s/  Donald
                L. Sytsma 

            	 
	 	
              Name:

            	
                Donald
                L. Sytsma 

            	 
	 	
              Title:

            	
                CFO 

            	 
	 	 	 	 	 
	 	 	 	 	 
	 	
              Gulf
                Western Petroleum LP,  

            	 
	 	
              a
                Texas limited partnership  

            	 
	 	 	 	 	 
	 	
              By:

            	
              Wharton
                Resources, LLC, 

            	 
	 	 	
              a
                Delaware limited liability company, 

            	 
	 	 	
              its
                general partner 

            	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	
              By:

            	
                /s/
                Donald L. Sytsma

            	 
	 	 	
              Name:

            	
                Donald
                L. Sytsma

            	 
	 	 	
              Title:

            	
                CFO

            	 

    

     

     

     

    Signature
      Page to Guaranty

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    EXHIBIT
      A

    

    Form
      of Joinder

    Joinder
      to Guaranty

    

    The
      undersigned, [__________] a [__________], hereby joins in the execution of
      that
      certain Guaranty dated as of September 10, 2007 (the
“Guaranty”), by each of GULF WESTERN PETROLEUM LP, a Texas
      limited partnership, WHARTON RESOURCES LLC, a Delaware limited liability
      company, WHARTON RESOURCES CORP., a Delaware corporation, and each other person
      or entity that becomes a Guarantor thereunder after the date and pursuant to
      the
      terms thereof, to and in favor of Metage Funds Limited, and NCIM
      Limited.  By executing this Joinder, the undersigned hereby agrees
      that effective as of the date hereof, it is a Guarantor thereunder with the
      same
      force and effect as if originally named therein as a Guarantor.  The
      undersigned agrees to be bound by all of the terms and provisions of the
      Guaranty and represents and warrants that the representations and warranties
      set
      forth in Section 6 of the Guaranty are, with respect to the undersigned,
      true and correct as of the date hereof.  Effective as of the date
      hereof, each reference to a Guarantor in the Guaranty shall be deemed to include
      the undersigned.

     

    In
      Witness Whereof, the undersigned has executed this Joinder this ___ day of
      _________, 200_.

     

    
      	 	 	 

    

    

    Guaranty

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