Document:

Exhibit 10.13

 

THESE SECURITIES ARE NOT REGISTERED UNDER STATE OR
FEDERAL SECURITIES LAWS, AND MAY NOT BE OFFERED, OR SOLD, PLEDGED (EXCEPT
A PLEDGE PURSUANT TO THE TERMS OF WHICH ANY OFFER OR SALE UPON FORECLOSURE
WOULD BE MADE IN A MANNER THAT WOULD NOT VIOLATE THE REGISTRATION PROVISIONS OF
FEDERAL OR STATE SECURITIES LAWS) OR OTHERWISE DISTRIBUTED FOR VALUE, NOR MAY THESE
SECURITIES BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT OPINION OF
COUNSEL, CONCURRED IN BY COUNSEL FOR THE COMPANY, THAT NO VIOLATION OF SAID
REGISTRATION PROVISIONS WOULD RESULT THEREFROM.

 

AMENDED AND RESTATED

CONVERTIBLE PROMISSORY NOTE

 

	
  $1,000,000.00

  	
   

  	
  December 30, 2009

  
	
   

  	
   

  	
  New York, New York

  

 

This Amended and Restated
Convertible Promissory Note (this “Note”) amends and restates in its
entirety the Convertible Promissory Note dated August 7, 2009 (the “Original
Note”), issued by XShares Group, Inc., a Delaware corporation (the “Company”),
promises to pay to MGT Capital Investments, Inc. (the “Holder”) in
the original principal amount of $1,000,000.00.

 

For value receivedthe
Company promises to pay to the Holder, the principal sum of One Million Dollars
($1,000,000.00). Interest shall accrue from the date of the Orignal Note on the
unpaid principal amount at a rate equal to ten percent (10%) per annum,
compounded annually.  The Original Note was made in
conjunction with the execution of that certain Securities Purchase Agreement
dated May 13, 2009 (the “Purchase Agreement”).  This Note is subject to the terms and
conditions of the Purchase Agreement, as amended to date, and as set forth
below:

 

1.             Maturity.

 

(a)           Unless converted as provided in Section 2, this Note
will automatically mature and be due and payable on April 30, 2010  (the “Maturity Date”).  Subject to Sections 1(b) and 2 below,
interest shall accrue on this Note  but
shall not be due and payable until the Maturity Date.

 

(b)           Notwithstanding the foregoing, the entire unpaid principal
sum of this Note, together with accrued and unpaid interest thereon and
interest at the rate of eighteen (18%) percent per annum going forward, shall
become immediately due and payable upon the insolvency of the Company, the
commission of any act of bankruptcy by the Company, the execution by the
Company of a general assignment for the benefit of creditors, the filing by or
against the Company of a petition in bankruptcy or any petition for relief
under the federal bankruptcy act or the continuation of such petition without
dismissal for a period of ninety (90) days or more, the appointment of a
receiver or trustee to take possession of the property or assets of the
Company, the breach of any representations, warranties or covenants under the
Purchase Agreement or this Note, or the failure to pay this Note on the
Maturity Date.

 

(c)           This Note may be prepaid in full at any time prior to
conversion pursuant to Section 2( below), with or without notice, without
penalty or premium.

 

1

 

2.             Conversion.

 

(a)           Conversion into Series B
Preferred Stock.  The
entire principal amount of this Note shall be converted into shares of the
Company’s Series B Preferred Stock at the second Closing.  Accrued interest on this Note shall be
converted into Accruing Dividends (as defined in the Company’s Second Amended and
Restated Articles of Incorporation attached to the Purchase Agreement (the “Certificate”))
from the date of the Original Note.

 

(b)           Conversion prior to
Second Closing.  At any
time, and from time to time, prior to the second Closing, the Holder may at its
sole option, convert the all or a portion of unpaid principal sum of this Note,
and interest thereon, into shares of the Company’s Series B Preferred
Stock at a price of $0.0284 per share. 
In addition, if at any time prior to the second Closing, there shall be (a) an
acquisition of the Company by another entity other than Holder or its
affiliates by means of a merger, consolidation, or other transaction or series
of related transactions resulting in the exchange of the outstanding shares of
the Company’s capital stock such that shareholders of the Company prior to such
transaction own, directly or indirectly, less than 50% of the voting power of
the surviving entity, or (b) a sale or transfer of all or substantially
all of the Company’s assets to any other person other than Holder or its
affiliates, then, at the Holder’s option, the entire unpaid principal sum of
this Note, and interest thereon, shall be immediately paid to the Holder or
converted into shares of the Company’s Series B Preferred Stock at a price
of $0.0284 per share.

 

(c)           Mechanics and Effect
of Conversion.  No
fractional shares of the Company’s capital stock will be issued upon conversion
of this Note.  In lieu of any fractional
share to which the Holder would otherwise be entitled, the Company will pay to
the Holder in cash the amount of the unconverted principal and interest balance
of this Note that would otherwise be converted into such fractional share.  Upon conversion of this Note pursuant to this
Section 2, the Holder shall surrender this Note, duly endorsed, at the
principal offices of the Company or any transfer agent of the Company.  At its expense, the Company will, as soon as
practicable thereafter, issue and deliver to such Holder, at such principal
office, a certificate or certificates for the number of shares to which such
Holder is entitled upon such conversion, together with any other securities and
property to which the Holder is entitled upon such conversion under the terms
of this Note, including a check payable to the Holder for any cash amounts
payable as described herein.  Upon
conversion of this Note, the Company will be forever released from all of its
obligations and liabilities under this Note with regard to that portion of the
principal amount and accrued interest being converted including without
limitation the obligation to pay such portion of the principal amount and
accrued interest.

 

3.             Payment.  All payments shall be made in lawful money of
the United States of America at such place as the Holder hereof may from time
to time designate in writing to the Company. 
Payment shall be credited first to the accrued interest then due and
payable and the remainder applied to principal.

 

4.             Transfer; Successors and Assigns.  The terms and conditions of this Note shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties.  Notwithstanding
the foregoing, the Holder may not assign, pledge, or otherwise transfer this
Note, except for transfers to affiliates. 
Subject to the preceding sentence, this Note may be transferred only
upon surrender of the original Note for registration of transfer, duly
endorsed, or accompanied by a duly executed written instrument of transfer in
form satisfactory to the Company. 
Thereupon, a new note for the same principal amount and interest will be
issued to, and registered in the name of, the transferee.  Interest and principal are payable only to
the registered holder of this Note.

 

2

 

5.             Governing Law.  This Note and any controversy arising out of
or relating to this Note shall be governed by and construed in accordance with
the General Corporation Law of the State of Delaware as to matters within the
scope thereof, and as to all other matters shall be governed by and construed
in accordance with the internal laws of the State New York, without regard to
conflict of law principles that would result in the application of any law
other than the law of the State of New York.

 

6.             Notices.  All notices and other communications given or
made pursuant to this Note shall be in writing and shall be deemed effectively
given upon the earlier of actual receipt or: 
(a) personal delivery to the party to be notified, (b) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (c) one (1) business day after deposit
with a nationally recognized overnight courier, freight prepaid, specifying
next business day delivery, with written verification of receipt.  All communications shall be sent to the
respective parties at their address as set forth on the signature page, or to
such e-mail address, facsimile number or address as subsequently modified by
written notice given in accordance with this Section 6.

 

7.             Amendments and
Waivers.  Any term of this
Note may be amended only with the written consent of the Company and the
Holder. 
Any amendment or waiver effected in accordance with this Section 7
shall be binding upon the Company, the Holder and each transferee of the Note.

 

8.             Shareholders,
Officers and Directors Not Liable.  In no event shall any shareholder, officer or
director of the Company be liable for any amounts due or payable pursuant to
this Note.

 

9.             Failure or
Indulgence Not Waiver.  No
failure or delay on the part of the Holder in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privilege, nor shall
any waiver by the Holder of any such right or rights on any one occasion be
deemed a waiver of the same right or rights on any future occasion.

 

3

 

10.           Action to Collect on Note.  If action is instituted to collect on this
Note, the Company promises to pay all costs and expenses, including reasonable
attorney’s fees, incurred in connection with such action.

 

	
   

  	
   

  	
  XSHARES GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  James McCluskey, Authorized Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  XShares Group, Inc.

  
	
   

  	
   

  	
   

  	
  420 Lexington Avenue, Suite 2550

  
	
   

  	
   

  	
   

  	
  New York, NY 10170

  
	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED AND ACCEPTED:

  	
   

  	
   

  
	
  this 30th day of December,
  2009,

  	
   

  	
   

  
	
  By: MGT CAPITAL INVESTMENTS,
  INC.,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  MGT Capital Investments, Inc.

  	
   

  	
   

  
	
   

  	
  Kensington Centre

  	
   

  	
   

  
	
   

  	
  66 Hammersmith Road

  	
   

  	
   

  
	
   

  	
  London W14 8UD

  	
   

  	
   

  
	
   

  	
  United Kingdom

  	
   

  	
   

  
								

 

4Exhibit
10.1

 

AMENDMENT NO. 1 AND AGREEMENT

 

This AMENDMENT NO. 1 AND AGREEMENT (“Amendment”)
entered into and made effective as of December 30, 2009 (“Effective
Date”), is among Cano Petroleum, Inc., a Delaware corporation (“Borrower”),
the Guarantors (as defined below), the Lenders (as defined below), and Union
Bank, N.A. (f/k/a Union Bank of California, N.A.), as administrative agent for
such Lenders (in such capacity, the “Administrative Agent”) and as
issuing lender (in such capacity, the “Issuing Lender”).

 

RECITALS

 

A.                                   The Borrower is
party to that certain Amended and Restated Credit Agreement dated as of December 17,
2008 (as amended, restated and otherwise modified from time to time, the “Credit
Agreement”) among the Borrower, the lenders party thereto from time to time
(the “Lenders”), the Administrative Agent and the Issuing Lender.

 

B.                                     The Lenders,
subject to the terms and conditions set forth herein, wish to (1) redetermine
the amount of the Borrowing Base and (2) amend the Credit Agreement as provided
herein.

 

THEREFORE,
the Borrower, the Guarantors, the Lenders, the Administrative Agent and the
Issuing Lender hereby agree as follows:

 

Section 1.                                          Defined
Terms; Other Definitional Provisions.  As used in this Amendment, each of the terms
defined in the opening paragraph and the Recitals above shall have the meanings
assigned to such terms therein.  Each
term defined in the Credit Agreement and used herein without definition shall
have the meaning assigned to such term in the Credit Agreement, unless
expressly provided to the contrary.  The
words “hereof”, “herein”, and “hereunder” and words of similar import when used
in this Amendment shall refer to this Amendment as a whole and not to any
particular provision of this Amendment. 
Paragraph headings have been inserted in this Amendment as a matter of
convenience for reference only and it is agreed that such paragraph headings
are not a part of this Amendment and shall not be used in the interpretation of
any provision of this Amendment.

 

Section 2.                                          Redetermination
of Borrowing Base. 
Subject to the terms of this Amendment, the parties hereto agree that,
as of the Effective Date, the Borrowing Base shall be equal to $60,000,000 and
such Borrowing Base shall remain in effect at such amount until the Borrowing
Base is redetermined in accordance with the Credit Agreement.

 

Section 3.                                          Amendments to Credit Agreement.

 

(a)                                  Section 1.01
(Certain Defined Terms) of the Credit Agreement is hereby amended by adding the
following new term “General Advance Amount” in alphabetical order:

 

“General
Advance Amount” means, as of the date of determination, the aggregate
amount of Advances outstanding on such date the proceeds of which 

 

 

were used
by the Borrower or any of its Subsidiaries for any purpose other than to acquire
proved, developed, producing Oil and Gas Properties.

 

(b)                                 Section 5.09
(Use of Proceeds) is hereby deleted in its entirety and replaced with the
following:

 

Section 5.09                            Use of Proceeds. 
The Borrower shall use the proceeds of the Advances and Letters of
Credit (a) to develop and acquire Oil and Gas Properties, (b) for working
capital purposes and (c) for general corporate purposes; provided
that the Borrower shall not use the proceeds of any Advance for any purpose
other than to acquire proved, developed, producing Oil and Gas Properties
unless the use thereof for such other purpose would not cause the General
Advance Amount, after the application thereof, to exceed $52,000,000.

 

(c)                                  Section 6.18
(Leverage Ratio) of the Credit Agreement is hereby amended by adding a new
sentence to the end thereof as follows:

 

Notwithstanding the foregoing,
this Section 6.18 shall not apply for the fiscal quarter ending December 31,
2009.

 

(d)                                 Section 6.19
(Interest Coverage Ratio) of the Credit Agreement is hereby amended by adding a
new sentence to the end thereof as follows:

 

Notwithstanding the foregoing,
this Section 6.19 shall not apply for the fiscal quarter ending December 31,
2009.

 

Section 4.                                          Agreement.  The Borrower hereby agrees to pay on or
before January 5, 2010, (a) an amendment fee in the amount of
$90,000 to the Administrative Agent for the pro rata account of the Lenders and
(b) all costs and expenses that have been invoiced prior to such date and
are payable pursuant to Section 9.04 of the Credit Agreement.

 

Section 5.                                          Representations and Warranties.  The Borrower and each Guarantor represents
and warrants that: (a) the representations and warranties contained in the
Credit Agreement and the representations and warranties contained in the other
Loan Documents are true and correct in all material respects on and as of the
Effective Date as if made on as and as of such date except to the extent that
any such representation or warranty expressly relates solely to an earlier
date, in which case such representation or warranty is true and correct in all
material respects as of such earlier date; (b) no Default has occurred and
is continuing; (c) the
execution, delivery and performance of this Amendment are within the corporate,
limited liability company, or partnership power and authority of such Person
and have been duly authorized by appropriate corporate, limited liability
company, or partnership actions and proceedings; (d) this Amendment
constitutes the legal, valid, and binding obligation of such Person enforceable
in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the rights of
creditors generally and general principles of equity; (e) there are no
governmental or other third party consents, licenses and approvals required in
connection with the execution, delivery, performance, validity and
enforceability of this Amendment; (f) the Liens under the Security
Instruments are valid and subsisting and secure the Borrower’s and such 

 

2

 

Person’s
obligations under the Loan Documents; and (g) as to each Guarantor, it has
no defenses to the enforcement of the Guaranty.

 

Section 6.                                          Conditions to Effectiveness.  This Amendment and the
amendments to the Credit Agreement provided herein shall become effective on and as of the Effective Date and
enforceable against the parties hereto upon the occurrence (whether before or after the Effective
Date) of the following conditions precedent: (a) the Administrative
Agent shall have received multiple original counterparts, as requested by the
Administrative Agent, of this Amendment duly and validly executed and delivered
by duly authorized officers of the Borrower, the Guarantors, the Administrative
Agent, and the Lenders, (b) no Default shall have occurred and be
continuing as of the Effective Date, (c) the representations and
warranties in this Amendment shall be true and correct in all material
respects, and (d) the Borrower
shall have paid all costs and expenses that have been invoiced prior to the
Effective Date and are payable pursuant to Section 9.04 of the Credit
Agreement.

 

Section 7.                                          Acknowledgments and Agreements.

 

(a)                                  The Borrower
acknowledges that on the date hereof all Obligations are payable without
defense, offset, counterclaim or recoupment.

 

(b)                                 The
Administrative Agent and the Lenders hereby expressly reserve all of their
rights, remedies, and claims under the Loan Documents.  Nothing in this Amendment shall constitute a
waiver or relinquishment of (i) any Default or Event of Default under any
of the Loan Documents, (ii) any of the agreements, terms or conditions
contained in any of the Loan Documents, (iii) any rights or remedies of
the Administrative Agent or any Lender with respect to the Loan Documents, or (iv) the
rights of the Administrative Agent or any Lender to collect the full amounts
owing to them under the Loan Documents.

 

(c)                                  Each of the
Borrower, the Guarantors, the Lenders, the Administrative Agent and the Issuing
Lender does hereby adopt, ratify, and confirm the Credit Agreement, as amended
hereby, and acknowledges and agrees that the Credit Agreement, as amended
hereby, is and remains in full force and effect, and the Borrower and the
Guarantors acknowledge and agree that their respective liabilities and
obligations under the Credit Agreement, as amended hereby, and the Guaranty,
are not impaired in any respect by this Amendment.

 

(d)                                 From and after
the Effective Date, all references to the Credit Agreement and the Loan
Documents shall mean such Credit Agreement and such Loan Documents as amended
by this Amendment.

 

(e)                                  This Amendment
is a Loan Document for the purposes of the provisions of the other Loan
Documents.  Without limiting the
foregoing, any breach of representations, warranties, and covenants under this
Amendment shall be a Default or Event of Default, as applicable, under the
Credit Agreement.

 

Section 8.                                          Reaffirmation of the Guaranty.  Each Guarantor hereby ratifies, confirms,
acknowledges and agrees that its obligations under the Guaranty are in full
force and effect and that such Guarantor continues to unconditionally and
irrevocably guarantee the full and punctual payment, when due, whether at
stated maturity or earlier by acceleration or 

 

3

 

otherwise,
all of the Guaranteed Obligations (as defined in the Guaranty), as such
Guaranteed Obligations may have been amended by this Amendment, and its
execution and delivery of this Amendment does not indicate or establish an
approval or consent requirement by such Guarantor under the Guaranty in
connection with the execution and delivery of amendments, consents or waivers
to the Credit Agreement, the Notes or any of the other Loan Documents.

 

Section 9.                                          Counterparts;
Invalidity.  This Amendment may be signed in any number of
counterparts, each of which shall be an original and all of which, taken
together, constitute a single instrument. 
This Amendment may be executed by facsimile signature and all such signatures
shall be effective as originals.  In the
event that any one or more of the provisions contained in this Amendment shall
for any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Amendment.

 

Section 10.                                   Successors
and Assigns.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted pursuant to the Credit Agreement.

 

Section 11.                                   Governing
Law.  This
Amendment shall be deemed to be a contract made under and shall be governed by
and construed in accordance with the laws of the State of Texas.

 

Section 12.                                   Entire
Agreement.  THIS AMENDMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS AMENDMENT, THE
NOTES, AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG
THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY
PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

 

THERE ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES.

 

[signature pages follow]

 

4

 

EXECUTED effective as of the
date first above written.

 

	
  BORROWER:

  	
  CANO
  PETROLEUM, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ben Daitch

  
	
   

  	
  Name:

  	
  Ben Daitch

  
	
   

  	
  Title:

  	
  SVP & CFO 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  GUARANTORS:

  	
  SQUARE
  ONE ENERGY, INC.

  
	
   

  	
  LADDER
  COMPANIES, INC.

  
	
   

  	
  W.O.
  ENERGY OF NEVADA, INC.

  
	
   

  	
  WO
  ENERGY, INC.

  
	
   

  	
  CANO
  PETRO OF NEW MEXICO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Each by:

  	
  /s/ Ben Daitch

  
	
   

  	
  Name:

  	
  Ben Daitch

  
	
   

  	
  Title:

  	
  VP & CFO 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  W.O. OPERATING
  COMPANY, LTD.

  
	
   

  	
  W.O.
  PRODUCTION COMPANY, LTD.

  
	
   

  	
  Each
  by: WO Energy, Inc., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ben Daitch

  
	
   

  	
  Name:

  	
  Ben Daitch

  
	
   

  	
  Title:

  	
  VP & CFO 

  
				

 

Signature Page to
Amendment No. 1

 

 

	
   

  	
  UNION
  BANK, N.A. (f/k/a Union Bank of

  California, N.A.), as Administrative Agent, Issuing

  Lender and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randall Osterberg

  
	
   

  	
  Name:

  	
  Randall Osterberg

  
	
   

  	
  Title:

  	
  SVP

  

 

Signature Page to
Amendment No. 1

 

 

	
   

  	
  NATIXIS,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donovan C.
  Broussard

  
	
   

  	
  Name:

  	
  Donovan C. Broussard

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Liana Tchernysheva

  
	
   

  	
  Name:

  	
  Liana Tchernysheva

  
	
   

  	
  Title:

  	
  Director

  

 

Signature Page to
Amendment No. 1

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