Contract
This
Blocked Deposit Account Control Agreement dated as of May 11, 2007 (this
“Agreement”)
among
TEKOIL
AND GAS GULF COAST, LLC,
a
Delaware limited liability company (the “Debtor”),
X.
XXXX & COMPANY,
as
administrative agent for the beneficiaries (the “Secured
Party”)
and
AMEGY
BANK NATIONAL ASSOCIATION,
a
national banking association, in its capacity as a “bank” as defined in Section
9-102 of the UCC (in such capacity, the “Financial
Institution”).
Capitalized terms used but not defined herein shall have the meaning assigned
thereto in the Pledge and Security Agreement, dated as of May 11, 2007, among
the Debtor, the other Grantors party thereto, and the Secured Party (as amended,
restated, supplemented or otherwise modified from time to time, the
“Security
Agreement”).
Capitalized terms used but not otherwise defined herein or in the Security
Agreement shall have the meaning assigned thereto in the Credit and Guaranty
Agreement, dated as of May 11, 2007, among the Debtor, Tekoil & Gas
Corporation, other guarantors party thereto, various lenders, and the Secured
Party, as administrative agent for the various lenders. All references herein
to
the “UCC” shall mean the Uniform Commercial Code as in effect in the State of
New York.
Section
1. Establishment
of Deposit Account.
The
Financial Institution hereby confirms and agrees that:
(a) The
Financial Institution has established account number XXXXXXX
in the
name “Tekoil
and Gas Gulf Coast - Blocked Receivable Account”
(such
account and any successor account, the “Deposit
Account”)
and
the Financial Institution shall not change the name or account number of the
Deposit Account without the prior written consent of the Secured Party;
and
(b) The
Deposit Account is a “deposit account” within the meaning of Section
9-102(a)(29) of the UCC.
Section
2. Control
of the Deposit Account.
(a) The
Deposit Account shall be under the control of the Secured Party. The Secured
Party shall at all times have "control" (as defined in Section 9-104 of the
Uniform Commercial Code as adopted in the state of New York) of the Deposit
Account. The Financial Institution shall comply with instructions originated
by
the Secured Party directing disposition of funds in the Depository Account
without further consent by the Debtor.
(b) The
Secured Party shall have exclusive dominion and control over the Deposit
Account. Neither the Debtor nor any person acting through or on behalf of the
Debtor shall have any right of access to or withdrawal from the Deposit Account,
and the Financial Institution shall not comply with any instructions originated
by the Debtor or any such person directing disposition of funds in the Deposit
Account.
BLOCKED
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
(c) Upon
receipt of a funding disbursement notice (a "Disbursement
Notice")
from
the Secured Party to the Financial Institution's address as set forth in Section
11 of this Agreement, the Financial Institution will initiate a federal funds
wire transfer of all or a portion of collected funds, as indicated in such
Disbursement Notice (subject to the Financial Institution's funds availability
policy), in the Deposit Account to the master/operating account, (account number
XXXXXXX)
of the
Debtor with the Financial Institution (or such other account as may be
designated in writing by the Secured Party in such Disbursement
Notice).
(d) The
Financial Institution has established a unique U.S. Postal Service address,
X.X.
Xxx 0000, Xxxx. 000, Xxxxxxx, Xxxxx 00000-0000 (the "Lockbox").
The
Debtor will cause its account debtors to remit payment of the Debtor's accounts
receivable to the Lockbox. The Financial Institution shall have exclusive and
unrestricted access to, and use of, the Lockbox for purposes of handling such
remittances. The Financial Institution will collect, open and process for
deposit into the Deposit Account all mail received in the Lockbox in accordance
with the procedures set forth on Exhibit
A
attached
hereto.
Section
3. Subordination
of Lien; Waiver of Set-Off.
In the
event that the Financial Institution has or subsequently obtains by agreement,
by operation of law or otherwise a security interest in the Deposit Account
or
any funds credited thereto, the Financial Institution hereby agrees that such
security interest shall be subordinate to the security interest of the Secured
Party. Money and other items credited to the Deposit Account will not be subject
to deduction, set-off, banker’s lien, or any other right in favor of any person
other than the Secured Party (except that the Financial Institution may set
off
(i) all amounts due to the Financial Institution in respect of customary fees
and expenses for the routine maintenance and operation of the Deposit Account
and (ii) the face amount of any checks which have been credited to such Deposit
Account but are subsequently returned unpaid because of uncollected or
insufficient funds).
Section
4. Certain
Matters Affecting Financial Institution.
(a) Neither
this Agreement nor the Security Agreement imposes or creates any obligation
or
duty of Financial Institution except for those expressly set forth in this
Agreement, and no implied obligations shall be read into this Agreement against
Financial Institution.
(b) Financial
Institution may rely on notices and communications it reasonably believes have
been given by an authorized representative of Administrative Agent or Debtor,
and Financial Institution shall have no obligation to review or confirm that
actions taken pursuant to any such notice in accordance with this Agreement
comply with any other agreement or document.
(c) If
Debtor
becomes subject to a bankruptcy proceeding or if Financial Institution is
otherwise served with legal process which Financial Institution believes affects
funds deposited in the Deposit Account, Financial Institution shall have the
right to place a hold on funds in the Deposit Account until such time as
Financial Institution receives an appropriate court order or other assurances
satisfactory to Financial Institution establishing that funds may continue
to be
disbursed in accordance with this Agreement.
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DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
(d) If
at any
time Financial Institution, in good faith, is in doubt as to the action it
should take under this Agreement, Financial Institution shall have the right
(i)
to place a hold on funds in the Deposit Account until such time as Financial
Institution receives an appropriate court order or other assurances satisfactory
to Financial Institution as to the disposition of funds in the Deposit Account,
or (ii) to commence an interpleader action in an appropriate court and to take
no further action except in accordance with joint instructions from
Administrative Agent and Debtor or in accordance with the final order of the
court in such action.
(e) All
Financial Institution's obligations under this Agreement shall be subject to
applicable laws and regulations. Nothing in this Agreement shall require
Financial Institution to act in violation of any law or regulation.
(f) Financial
Institution will not be liable to any party hereunder for any expense, claim,
cause of action, liability, loss, damage or cost arising out of or relating
to
the Deposit Account or this Agreement other than those resulting from Financial
Institution’s acts or omissions constituting gross negligence or willful
misconduct, and Debtor agrees to indemnify and hold Financial Institution
harmless from any such expense, claim, cause of action, liability, loss, damages
or cost.
(g)
Financial Institution shall not be liable for losses or delays resulting from
computer malfunction, interruption of communication facilities, labor
difficulties, acts of God, terrorist acts, and other causes beyond Financial
Institution’s reasonable control. In no event shall Financial Institution be
liable for any indirect, special, consequential, exemplary or punitive damages
including, without limitation, lost profits.
Section
5. Choice
of Law.
This
Agreement and the Deposit Account shall each be governed by the laws of the
State of New York. Regardless of any provision in any other agreement, for
purposes of the UCC, New York shall be deemed to be the Financial Institution’s
jurisdiction (within the meaning of Section 9-304 of the UCC) and the Deposit
Account shall be governed by the laws of the State of New York.
Section
6 Interpleader.
If
at any
time Financial Institution receives conflicting claims to or demands regarding
the Deposit Accounts and reasonably believes it may become subject to liability
as a result of complying with this Agreement or any instructions from Secured
Party, Bank may (a) freeze and hold all funds in the Deposit Accounts pending
resolution of such issues, and/or (b) interplead all Deposit Account funds
and
deposits in an action commenced in a court of competent jurisdiction naming
Debtor, Secured Party, and any competing claimants as defendants. Upon
interpleading such funds, Financial Institution will be released from all
further liability under this Agreement and the costs and expenses of Financial
Institution relating to the interpleader action, including filling fees and
reasonable attorneys fees, shall be paid by Debtor and, if Debtor fails to
pay,
Secured Party shall pay such fees.
BLOCKED
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
Section
7. Conflict
with Other Agreements.
(a) In
the
event of any conflict between this Agreement (or any portion thereof) and any
other agreement now existing or hereafter entered into, the terms of this
Agreement shall prevail;
(b) No
amendment or modification of this Agreement or waiver of any right hereunder
shall be binding on any party hereto unless it is in writing and is signed
by
all of the parties hereto; and
(c) The
Financial Institution hereby confirms and agrees that:
(i) There
are
no other agreements entered into between the Financial Institution and the
Debtor with respect to the Deposit Account; and
(ii) It
has
not entered into, and until the termination of this Agreement, will not enter
into, any agreement with any other person relating the Deposit Account and/or
any funds credited thereto pursuant to which it has agreed to comply with
instructions originated by such persons as contemplated by Section 9-104 of
the
UCC.
Section
8. Adverse
Claims.
The
Financial Institution does not know of any liens, claims or encumbrances
relating to the Deposit Account. If any person asserts any lien, encumbrance
or
adverse claim (including any writ, garnishment, judgment, warrant of attachment,
execution or similar process) against the Deposit Account, the Financial
Institution will promptly notify the Secured Party and the Debtor thereof.
Section
9. Maintenance
of Deposit Account.
In
addition to, and not in lieu of, the obligation of the Financial Institution
to
honor instructions as set forth in Section 2 hereof, the Financial Institution
agrees to maintain the Deposit Account as follows:
(a) Statements
and Confirmations.
Upon
receipt of a written request by Secured Party, the Financial Institution will
promptly send copies of all statements, confirmations and other correspondence
concerning the Deposit Account simultaneously to each of the Debtor and the
Secured Party at the address for each set forth in Section 11 of this Agreement;
and
(b) Tax
Reporting.
All
interest, if any, relating to the Deposit Account, shall be reported to the
Internal Revenue Service and all state and local taxing authorities under the
name and taxpayer identification number of the Debtor.
Section
10. Representations,
Warranties and Covenants of the Financial Institution.
The
Financial Institution hereby makes the following representations, warranties
and
covenants:
(a) The
Deposit Account has been established as set forth in Section 1 and such Deposit
Account will be maintained in the manner set forth herein until termination
of
this Agreement; and
BLOCKED
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
(b) This
Agreement is the valid and legally binding obligation of the Financial
Institution.
Section
11. Indemnification
of Financial Institution.
The
Debtor and the Secured Party hereby agree that (a) the Financial Institution
is
released from any and all liabilities to the Debtor and the Secured Party
arising from the terms of this Agreement and the compliance of the Financial
Institution with the terms hereof, except to the extent that such liabilities
arise from the Financial Institution’s negligence and (b) the Debtor, its
successors and assigns shall at all times indemnify and save harmless the
Financial Institution from and against any and all claims, actions and suits
of
others arising out of the terms of this Agreement or the compliance of the
Financial Institution with the terms hereof, except to the extent that such
arises from the Financial Institution’s negligence, and from and against any and
all liabilities, losses, damages, costs, charges, counsel fees and other
expenses of every nature and character arising by reason of the same, until
the
termination of this Agreement.
Section
12. Successors;
Assignment.
The
terms of this Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective corporate successors or heirs and
personal representatives who obtain such rights solely by operation of law.
The
Secured Party may assign its rights hereunder only with the express written
consent of the Financial Institution and by sending written notice of such
assignment to the Debtor.
Section
13. Notices.
Any
notice, request or other communication required or permitted to be given under
this Agreement shall be in writing and deemed to have been properly given when
delivered in person, or when sent by telecopy or other electronic means and
electronic confirmation of error free receipt is received or two (2) days after
being sent by certified or registered United States mail, return receipt
requested, postage prepaid, addressed to the party at the address set forth
below.
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Debtor:
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Tekoil
and Gas Gulf Coast, LLC
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00000
X-00 Xxxxx, Xxxxx 000
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Xxx
Xxxxxxxxx, Xxxxx 00000
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Attention:
Xxxx Xxxxxxx
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Telecopier:
281-364-8007
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Secured
Party:
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X.
Xxxx & Company
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00
Xxxxx Xxxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Attention:
Xxxxx Xxxxxx
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Telecopier:
000-000-0000
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with
a copy to:
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Xxxxxxx
Sachs E&P Capital
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0000
Xxxxxxxxx, Xxxxx 000
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Xxxxxxx,
Xxxxx 00000
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Attention:
Xxxx X. Xxxxx
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Telecopier:
000-000-0000
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BLOCKED
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
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Financial
Institution:
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Amegy
Bank National Association
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Five
Post Oak Park
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0000
Xxxx Xxx Xxxxxxx
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Xxxxxxx,
XX 00000
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Attention:
Xxxx Xxxxxx
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Telecopier:
___________
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And
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Amegy
Bank National Association
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Five
Post Oak Park
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0000
Xxxx Xxx Xxxxxxx
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Xxxxxxx,
XX 00000
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Attention:
Xxxx Xxxx
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Telecopier:
000-000-0000
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Any
party
may change its address for notices in the manner set forth above.
Section
14. Termination.
The
obligations of the Financial Institution to the Secured Party pursuant to this
Agreement shall continue in effect until the security interest of the Secured
Party in the Deposit Account has been terminated pursuant to the terms of the
Security Agreement and the Secured Party has notified the Financial Institution
of such termination in writing. The Secured Party agrees to provide Notice
of
Termination in substantially the form of Exhibit
B
hereto
to the Financial Institution upon the request of the Debtor on or after the
termination of the Secured Party’s security interest in the Deposit Account
pursuant to the terms of the Security Agreement. The termination of this
Agreement shall not terminate the Deposit Account or alter the obligations
of
the Financial Institution to the Debtor pursuant to any other agreement with
respect to the Deposit Account.
Section
15. Counterparts.
This
Agreement may be executed in any number of counterparts, all of which shall
constitute one and the same instrument, and any party hereto may execute this
Agreement by signing and delivering one or more counterparts.
[Remainder
of page intentionally left blank.]
BLOCKED
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
IN
WITNESS WHEREOF, the parties hereto have caused this Blocked Deposit Account
Control Agreement to be executed as of the date first above written by their
respective officers thereunto duly authorized.
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TEKOIL
AND GAS GULF COAST, LLC
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By:
Tekoil & Gas Corporation, its Managing Member
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| By: | /s/ Xxxx Xxxxxxx | |
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Name:
Xxxx Xxxxxxx
Title:
CEO and Chairman of the Board of
Directors
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SIGNATURE
PAGE
TO
BLOCKED
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
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X.
XXXX & COMPANY,
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as
Secured Party
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| By: | /s/ Xxxxxxx Xxxxxx | |
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Name:
Xxxxxxx Xxxxxx
Title:
Managing Director
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SIGNATURE
PAGE
TO
BLOCKED
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
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AMEGY
BANK NATIONAL ASSOCIATION
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as
Financial Institution
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| By: | /s/ Xxxxxxx X. Xxxxxx, III | |
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Name:
Xxxxxxx X. Xxxxxx, III
Title:
Vice President
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SIGNATURE
PAGE
TO
BLOCKED
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
EXHIBIT
A
EXHIBIT
A
Financial
Institution Procedures for Lockbox Management:
(Capitalized
terms used in this Exhibit
A
have the
same meaning stated in the Agreement to which this Exhibit
A
is
attached.)
1) Mail
from Lockbox.
The
Financial Institution will retrieve mail from the Lockbox from time to time
in
accordance with the Financial Institution's regular lockbox collection
schedules.
2) Inspections
of Items.
Items
contained in the envelopes recovered from the Lockbox will be inspected and
handled as follows:
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(a)
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Payees.
An item not bearing an acceptable payee designation, as set forth
in the
specifications, or a reasonable variation thereof, will not be deposited
in the Deposit Account. If a necessary endorsement of a payee other
than
the Debtor is missing, the item will not be deposited into the Deposit
Account.
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(b)
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Dates.
An item will be deposited into the Deposit Account whether it is
stale-dated, post dated or does not bear a
date.
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(c)
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Amounts.
If the written and numeric amounts of an item differ, the written
amount
shall control over the numeric amount unless the written amount is
ambiguous. If the amount of an item cannot be determined from application
of the preceding sentence, or if the amount is missing altogether,
the
item will not be deposited into the Deposit
Account.
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(d)
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Drawer's
Signatures.
For an item in which the drawer's signature is missing, the Financial
Institution will deposit it into the Deposit Account and affix a
stamp
requesting the drawee bank or other payor to contact the drawer for
authority to pay the item.
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(e)
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Alterations.
An item which appears to the Financial Institution to have been materially
altered will not be deposited into the Deposit
Account.
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(f)
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Other
Language.
The Financial Institution will not examine the front and back sides
of
items to detect handwritten or typed "paid in full" or similar language.
Such items will be deposited into the Deposit Account and the Financial
Institution shall have no liability to the Debtor or the Secured
Party for
depositing such items.
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(g)
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International
Payments.
An item denominated in foreign currency and drawn on a foreign bank
will
not be deposited into the Deposit Account but will be submitted for
collection only. An appropriate advice will be forwarded to the Debtor.
The Financial Institution shall not be responsible for fluctuation
in
exchange rates.
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EXHIBIT
A
TO
BLOCKED
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
3) Processing
Procedures.
Items
found acceptable for deposit under Section 2 of this Exhibit
A
will be
encoded, photocopied, endorsed and deposited into the Deposit Account. The
endorsement will be the standard endorsement for lockbox items as used by the
Financial Institution from time to time, and this endorsement will function
as
the endorsement of the payee of the item. In order to maximize daily receipts
and funds availability, the Financial Institution will make deposits throughout
the day in anticipation of major check clearing deadlines. The Financial
Institution will send the following to the Debtor in accordance with the
Financial Institution's customary and standard practices for maintenance of
a
Deposit Account:
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photocopies
of deposited items and the original accompanying
papers.
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| (b) |
one
deposit ticket copy for each deposit.
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(c)
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except
as set forth in Section 2(g) of this Exhibit
A,
original items unacceptable for deposit under Section 2 of this
Exhibit
A,
accompanying papers and other miscellaneous written communications
received through the lockbox.
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4) Microfilm.
All
deposited items will be microfilmed in processing sequence for reference
purposes. The Financial Institution will retain such microfilm for at least
two
years and will provide photocopies of deposited items to the Debtor within
said
time upon request and payment of the Financial Institution's retrieval and
photocopying charges.
EXHIBIT
A
TO
BLOCKED
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
EXHIBIT
B
[Letterhead
of the Secured Party]
[Date]
[Name
and
Address of the Financial Institution]
Attention:
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Re:
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Termination
of Blocked Deposit Account Control
Agreement
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You
are
hereby notified that the Blocked Deposit Account Control Agreement dated as
of
May 11, 2007 among Tekoil and Gas Gulf Coast, LLC, you and the undersigned
(a
copy of which is attached) is terminated and you have no further obligations
to
the undersigned pursuant to such Agreement. Notwithstanding any previous
instructions to you, you are hereby instructed to accept all future directions
with respect to account number(s) __________________from Tekoil and Gas Gulf
Coast, LLC. This notice terminates any obligations you may have to the
undersigned with respect to such account, however nothing contained in this
notice shall alter any obligations which you may otherwise owe to Tekoil and
Gas
Gulf Coast, LLC pursuant to any other agreement.
You
are
instructed to deliver a copy of this notice by facsimile transmission to Tekoil
and Gas Gulf Coast, LLC.
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Very
truly yours,
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X.
XXXX & COMPANY,
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as
Secured Party
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| By: | ||
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| Name: |
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| Title: |
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EXHIBIT
B TO
BLOCKED
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
