EXHIBIT 99.5
AND RESTATED DEPOSIT ACCOUNT CONTROL
AGREEMENT
THIS AMENDED AND RESTATED DEPOSIT ACCOUNT
CONTROL AGREEMENT (this “Agreement”) is entered into as
of September 19, 2008, by and among the following
parties:
PARTIES:
VIKING ASSET
MANAGEMENT, LLC, a California limited liability company, as
collateral agent for the Buyers (as defined in the Purchase
Agreement described below) parties to that certain Securities
Purchase Agreement dated as of April 1, 2008 (as amended, restated,
supplemented or otherwise modified from time to time, the
“Purchase Agreement”), by and among South Texas Oil
Company, a Nevada corporation, and the “Buyers” party
thereto (in such capacity, the “Subordinated
Creditor”)
VIKING ASSET
MANAGEMENT, LLC, a California limited liability company, as
collateral agent for the Buyers (as defined in the Bridge Purchase
Agreement described below) parties to that certain Securities
Purchase Agreement dated as of September 19, 2008 (as amended,
restated, supplemented or otherwise modified from time to time, the
“Bridge Purchase Agreement”), by and among South Texas
Oil Company, a Nevada corporation, and the “Buyers”
party thereto (in such capacity, the “Senior Creditor”;
and together with the Subordinated Creditor, the
“Creditors”)
STO Operating
Company, a Texas corporation (“Customer”)
WELLS FARGO
BANK, NATIONAL ASSOCIATION (“Depository”)
BACKGROUND:
Customer has granted to each Creditor a security
interest in a deposit account maintained by Customer with
Depository and in all funds now in, or hereafter deposited into,
that account, including any interest earned thereon. The parties
are entering into this Agreement to perfect Creditors’
security interests in that account.
NOW, THEREFORE, in consideration of their mutual
covenants and promises, the parties agree as follows:
AGREEMENT:
1. The Account . Depository represents and warrants to each
Creditor that:
(a) Customer maintains deposit account number
7476-409011 with Depository (said account and, if it is a
certificate of deposit or other time deposit, any renewal thereof
shall be referred to as the “Account”). The Account is
a demand deposit account.
(b) As of the date of this Agreement Depository
does not know of any claim to or interest in the Account, except
for claims and interests of the parties hereto.
2. Control of Account by Creditors;
Customer’s Rights in Account .
(a) Depository will comply with instructions
(“Orders”) originated by Controlling Creditor for the
disposition of funds in the Account without further consent from
Customer or the other Creditor and without regard to any
inconsistent or conflicting Orders given to Depository by Customer
or the other Creditor. In addition, at all times when Subordinated
Creditor is not the Controlling Creditor, Depository will also, if,
and only if, consented to in writing by Senior Creditor, comply
with all Orders originated by Subordinated Creditor for the
disposition of funds in the Account without further consent from
Customer and without regard to any inconsistent or conflicting
Orders given to Depository by Customer provided that Depository
shall, in all cases, have a reasonable period of time to comply
with any Order. As used herein, “Controlling Creditor”
means (i) Senior Creditor, until such time as Senior Creditor has
provided the Depository with a written notice that Senior Creditor
has ceased to be the Controlling Creditor hereunder (such notice
being the “Controlling Creditor Notice”), and (ii)
thereafter, “Controlling Creditor ” shall mean the
Subordinated Creditor. It is understood and agreed hereby that the
Depositor shall rely exclusively on a Controlling Creditor Notice
as to the determination of whether the Senior Creditor or the
Subordinated Creditor is the Controlling Creditor hereunder and
shall be under no obligation to make any independent investigation
thereof.
(b) The provisions of the paragraph checked below
shall apply (only one of the paragraphs below should be checked,
and if none or both of them are checked, then the provisions of the
first paragraph titled “Account Not Restricted
Immediately” shall apply):
_ X __
Account Not Restricted
Immediately .
Notwithstanding the provisions of Section 2(a) hereof, unless and
until Controlling Creditor delivers to Depository an Order
directing Depository not to act on Customer’s Orders (a
“Control Notice”), Depository may continue to comply
with Orders originated by Customer, including Orders for the
withdrawal of funds from the Account, the payment of interest
earned on the Account and the renewal or closing of the
Account.
___ Account Restricted Immediately
. Except as provided in this
Agreement or as otherwise agreed to by Controlling Creditor in
writing, as of and after the date of this Agreement Customer may
not make debits to or withdrawals from the Account and shall have
no access to the Account, and Controlling Creditor shall have
exclusive access to the Account. If the Account is a certificate of
deposit or other time deposit, then at the expiration of its term,
unless Depository has received an Order to the contrary from
Controlling Creditor, the Account shall be renewed for a term,
which is equal to the immediately preceding term.
(c) Before Controlling Creditor attempts to give
Depository any Orders concerning the Account, Controlling Creditor
shall deliver to Depository such documentation as Depository may
from time to time reasonably request to evidence the authority of
those partners, officers, employees or agen