DEPOSIT ACCOUNT CONTROL AGREEMENT
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Dated
as of:
November
13, 2008
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Company:
North
Texas Drilling Services, Inc., a Texas corporation
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The
Bank:
First
National Bank of Xxxxxxxxxxx
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Address
of Bank:
000
Xxxx Xxxxx
Xxxxxxxxxxx,
XX 00000-0000
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Secured
Party/Pledgee:
Summerline
Asset Management, LLC, a Delaware limited liability company, in its
capacity as Collateral Agent for the benefit of itself and the Buyers
referred to below
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This DEPOSIT ACCOUNT CONTROL
AGREEMENT (as amended, restated, supplemented or otherwise modified from
time to time, this “Agreement”), by and among the
Bank identified above, the Company identified above, and the Secured
Party/Pledgee identified above (the “Collateral Agent”) is dated as
of the date written above.
WHEREAS:
A. Sonterra
Resources, Inc., a Delaware corporation (“Borrower”) and the Buyers (as
defined in the Purchase Agreement described below) have entered into that
certain Securities Purchase Agreement dated as of November 13, 2008 (as amended,
restated, supplemented or otherwise modified and in effect from time to time,
the “Purchase
Agreement”) pursuant to which Buyers have purchased certain senior
secured notes dated as of November 13, 2008 in the aggregate original principal
amount of $8,800,000 (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”) and made certain
financial accommodations to the Borrower.
B. To secure,
among other things, Borrower’s obligations under the Purchase Agreement and
other Transaction Documents (as defined therein), pursuant to a Security
Agreement dated as of the date hereof (as the same may be amended, restated,
modified or supplemented and in effect from time to time, the “Security Agreement”), entered
into among the Company, the other “Debtors” party thereto and Collateral Agent,
the Company has granted the Collateral Agent, for its benefit and the benefit of
the Buyers, a first priority security interest in, lien upon and pledge of all
of their right, title and interest in and to the Account(s) (as defined below)
and the Account Collateral (as defined below), including, without limitation,
all free credit balances, cash and cash balances contained or on deposit in the
Accounts and all proceeds thereof, whether now existing or hereafter
arising.
C. This Agreement is
intended to perfect Collateral Agent’s and the Buyers’ security interest
in the Account(s) and the Account Collateral pursuant to Sections 9.104, 9.312
and 9.314 of the Uniform Commercial Code and shall also serve as
instructions regarding the operation of and procedures for all deposit accounts
now or hereafter maintained at Bank by, or for the deposit, credit or custody of
property of, the Company.
NOW THEREFORE, the Bank, the
Company and Collateral Agent hereby agree as follows:
1. Account
Identification. This Agreement applies to the accounts
identified below that have been established at the Bank on behalf of and in the
name of the Company and to each other deposit account hereafter established at
the Bank on behalf of the Company (collectively, the “Accounts”). All
parties hereto acknowledge and agree that each of the Accounts is a “Deposit Account” within the
meaning of Article 9 of the Uniform Commercial Code. The Bank hereby
agrees to deliver written notice to Collateral Agent of the establishment of any
accounts other than those listed below (whether characterized as a deposit
account or otherwise) at the Bank by or on behalf of the Company.
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Account Holder
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Name of Account
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Account Number
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First
National Bank of Weatherford
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North
Texas Drilling Services, Inc
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2. Security Interest;
Agency.
(a) Each of Bank,
the Company and Collateral Agent acknowledges that, in order to secure the
prompt and complete payment, performance and observance of all “Liabilities” (as defined in
the Security Agreement), the Company has granted, and for avoidance of doubt and
without limiting any prior grant, do hereby grant, to Collateral Agent, for the
benefit of itself and the Buyers, a continuing lien upon, and security interest
in, the Accounts and all funds, checks, cash, items, instruments, investments,
securities and other things of value at any time paid, deposited, credited or
held in, payable or withdrawable from or in transit to any Account (whether for
collection, provisionally or otherwise), and all other property of the Company
from time to time in the possession or under the control of, or in transit to,
the Bank or any agent, bailee or custodian therefor, and all proceeds of all of
the foregoing (collectively, the “Account
Collateral”).
(b) The
Bank agrees to comply with instructions originated by Collateral Agent directing
disposition of the funds in the Accounts or any other Account Collateral or to
take such other action as shall from time to time be specified in writing from
Collateral Agent, in all cases without notice to or the consent of the
Company. The Bank shall follow the instructions of Collateral Agent
as to the holding, investment and transfer of all Account Collateral (including
without limitation, any instructions to transfer such collected amounts to
Buyers or to an account designated by Collateral Agent). The Company
hereby irrevocably authorizes and directs the Bank to comply with any such
instructions by Collateral Agent without further action or consent by the
Company and notwithstanding any subsequent objection or contrary direction the
Bank may receive from the Company. In addition, the Company agrees
that the Bank may act as the agent of Collateral Agent in exercising any rights
of set-off provided by applicable law or by any Transaction Document as to any
Account Collateral. The Company agrees that the Bank shall be
entitled to rely, without independent investigation, on any written notice in
the form of Exhibit
A from Collateral Agent to the effect that an Event of Default (each as
defined in the Notes) has occurred and is continuing or any other statement of
Collateral Agent to the effect that any exercise of set-off requested by
Collateral Agent is permitted under applicable law, the Security Agreement or
any applicable Transaction Document.
(c) Without
limiting or qualifying the provisions of clause (b) above, Collateral Agent, on
its behalf and on behalf of the Buyers, hereby appoints the Bank as Collateral
Agent’s and the Buyers’ agent and pledgee-in-possession for the Accounts and all
Account Collateral, for the purpose of perfecting Collateral Agent’s and the
Buyers’ security interest therein; and the Bank by its execution and delivery of
this Agreement hereby accepts such appointment and agrees to be bound by the
terms of this Agreement. The Company each hereby agrees to such
appointment of the Bank and further agrees that the Bank, on behalf of
Collateral Agent and the Buyers, shall be entitled to exercise, upon the
instructions of Collateral Agent, any and all rights that the Collateral Agent
and the Buyers may have under the Purchase Agreement, the Security Agreement and
all other agreements, documents and instruments executed pursuant thereto, or
under applicable law, with respect to the Accounts and the Account
Collateral.
3. Debtor’s Access to
Accounts. Collateral Agent agrees that, until such time
as Bank receives written notice in the form of Exhibit A from
Collateral Agent of the occurrence of any Event of Default, the Company shall be
allowed access to the Accounts and the Account Collateral without Collateral
Agent’s further consent (including, without limitation, presenting items drawn
on the Accounts or giving Bank instructions as to the withdrawal or other
disposition of any funds from time to time credited to the Accounts); provided,
that the Company shall not be permitted to close any of the
Accounts. Upon receipt by Bank of notice by Collateral Agent of the
occurrence of an Event of Default, and at all times thereafter, the Company
shall not be entitled access to the Accounts or the Account Collateral and the
Bank shall not comply with any instructions or directions originated by the
Company or otherwise permit the Company access to or control over the Accounts
or the Account Collateral, including without limitation giving stop payment
orders, presenting items for payment or making withdrawals
therefrom.
4. Irrevocable
Agreement. The Company hereby agrees and acknowledges that the
agreements made by it and the authorizations granted by it herein are
irrevocable and that the authorizations granted herein are powers coupled with
an interest.
5. Set-off. The
Bank hereby waives all existing and future rights of recoupment or set-off and
banker’s liens against the Accounts and the Account Collateral, except those
rights of set-off and banker’s liens arising in connection with (a) items
deposited in the Accounts that are subsequently returned to the Bank unpaid and
(b) any compensation and expenses owing and payable to Bank with respect to the
Accounts which are assessed in accordance with the Bank’s standard account
documentation.
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6. Account
Information. The Bank shall provide Collateral Agent, at the
address indicated in Section 11 below, with such information with respect to the
Accounts and Account Collateral as Collateral Agent may from time to time
reasonably request, including, without limitation and duplicate copies of all
bank statements which are sent to the Company. The Company hereby
consents to such information being provided to Collateral Agent.
7. Exculpation. The
Bank undertakes to perform only such duties as are expressly set forth
herein. Notwithstanding any other provisions of this Agreement, the
parties hereto agree that the Bank shall not be liable for any action taken by
it or any of its directors, officers, agents or employees in accordance with
this Agreement. In no event shall the Bank be liable for indirect,
special or consequential damages.
8. Indemnity. The
Company agrees to indemnify the Bank and hold it harmless against any loss,
damage, or expense (including reasonable attorneys’ fees and other litigation
expenses) which it may suffer as a direct result of the Bank’s entering into
this Agreement and performing its obligation hereunder, including, honoring any
instructions or direction it receives from Collateral Agent with respect to the
Accounts during the term of this Agreement, other than any loss, damage or
expense incurred as a result of the gross negligence or willful misconduct of,
or breach of this Agreement by, the Bank or its officers, agents or
employees.
9. No Other
Assignments. Bank represents and warrants to Collateral Agent,
on its behalf and on behalf of the Buyers, that no other notices of assignment
of, lien upon or security interest in the Accounts or the Account Collateral are
reflected in Bank’s records concerning the Accounts, and Bank has no knowledge
of any such assignment or lien. The Company hereby instructs Bank and
Bank hereby agrees to record in Bank’s records concerning the Accounts any such
notice of assignment of the Accounts that it receives, including the notice
conferred by this Agreement. Bank agrees with and covenants to
Collateral Agent, on its behalf and on behalf of the Buyers, that it shall not
enter into any other agreement with any Person which would obligate Bank to
follow such Person’s instructions with respect to the Account or the Account
Collateral, or which would otherwise confer control of the Accounts or the
Account Collateral upon such Person.
10. Termination. This
Agreement shall remain in full force and effect until such time as Collateral
Agent shall deliver written notice to the Bank that all of the Liabilities have
been indefeasibly paid in full in cash and the Security Agreement has been
terminated, whereupon this Agreement shall terminate. All rights of
the Bank under Sections 7 and 8 for the period prior to any such termination
shall survive such termination.
11. Notices. Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the sending
party); and Bank must receive transmission during normal banking hours, Monday
thru Friday and 8:00am to 5:00 pm CDT, excluding holidays or (iii) one (1)
business day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications
shall be:
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Collateral
Agent:
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Summerline
Asset Management, LLC
00
Xxxx Xxx Xxx Xxxx, 0xx Xxxxx
Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx
Xxxxxxxx
Telecopy: (000)
000-0000
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Bank:
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First
National Bank of Weatherford
Attention:
Xxxx Xxxxx
Telephone: 000-000-0000
Facsimile:
000-000-0000
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Company:
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000
Xxxxx Xxx Xxxxxxx Xxxx Xxxx
Xxxxx
000
Xxxxxxx,
Xxxxx 00000
Attention:
X. X. Xxxxxxxxxx
Telephone:
(281) _______
Facsimile:
(000) 000-0000
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If to any
party named above, at such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile
machine containing the time, date, recipient facsimile number and an image of
the first page of such transmission or (C) provided by a nationally
recognized overnight delivery service shall be rebuttable evidence of personal
service, receipt by facsimile or deposit with a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
12. Applicable
Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO ITS CONFLICT OF LAWS PRINCIPLES, AND THE BANK’S
JURISDICTION FOR PURPOSES OF SECTION 9-304 OF THE UNIFORM COMMERCIAL CODE SHALL
BE NEW YORK.
13. Miscellaneous
Provisions. This Agreement shall supersede any other agreement
(to the extent conflicting herewith) relating to the matters referred to herein,
including any conflicting provision of the Bank’s customary account
documentation or any other account agreement between the Company and the
Bank. This Agreement is binding upon the parties hereto and their
respective successors and assigns (including any trustee of the Company
appointed or elected in any action under the Bankruptcy Reform Act of 1978, as
amended) and shall inure to their benefit. This Agreement may not be
changed, amended, modified or waived, except by a writing signed by the parties
hereto, provided that any such writing need be signed only by the Bank and
Collateral Agent if it does not change any rights or obligations of, or
authorizations granted by, the Company hereunder and notice thereof is provided
to the Company by Collateral Agent. Any provision of this Agreement
that may prove unenforceable under any law or regulation shall not affect the
validity of any other provision hereof. 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 each other party; provided that a
facsimile 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, not a facsimile signature.
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Remainder of Page Intentionally Left Blank; Signature Page Follows
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IN WITNESS WHEREOF, the undersigned
have executed this Deposit Account Control Agreement by their respective duly
authorized officers as of the date first forth above.
Company:
NORTH TEXAS DRILLING SERVICES,
INC.,
a Texas
corporation
By:__________________________________
Name:________________________________
Title:_________________________________
Secured
Party/Pledgee:
SUMMERLINE ASSET MANAGEMENT,
LLC, a
Delaware
limited liability company, in its
capacity
as Collateral Agent
By:__________________________________
Name:
Xxxxxx Xxxxxxxx
Title:
Bank:
FIRST
NATIONAL BANK OF WEATHERFORD
By:__________________________________
Name:________________________________
Title:_________________________________
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EXHIBIT
A
Form of Notification of
Event of Default
First
National Bank of Weatherford
000 Xxxx
Xxxxx
Xxxxxxxxxxx,
XX 00000-0000
Attention: [__________]
Ladies
and Gentlemen:
Reference
is made to the Deposit Account Control Agreement, dated as of November __, 2008
(the “Account Control
Agreement”) among First National Bank of Weatherford, North Texas
Drilling Services, Inc., a Texas corporation, and Summerline Asset Management,
LLC, in its capacity as Collateral Agent. Capitalized terms used and
not otherwise defined in this notification letter are used with the meanings set
forth in the Account Control Agreement.
You are
hereby notified, in accordance with Section 3 of the Account Control Agreement,
that an Event of Default has occurred. In light of the foregoing, you
are hereby instructed not to allow Company to access the Accounts or the Account
Collateral and not to comply with any instructions or directions originated by
Company or otherwise permit Company access to or control over the Accounts or
the Account Collateral, including without limitation giving stop payment orders,
presenting items for payment or making withdrawals therefrom.
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Date:
[ ],
200__
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SUMMERLINE ASSET MANAGEMENT,
LLC, in its capacity as Collateral Agent
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| By:__________________________________
Name:________________________________
Title:_________________________________
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