Contract
This
Default Deposit Account Default 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 - Master/Operating Account”
and account number XXXXXXXXX
in
the name of “Tekoil
and Gas Gulf Coast - Controlled Disbursement/Check Disbursements”
(each such account and any successor account to each such account, a “Deposit
Account”,
and collectively, the “Deposit
Accounts”)
and the Financial Institution shall not change the name or account number of
the Deposit Accounts without the prior written consent of the Secured Party;
and
(b) Each
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 Accounts 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 Texas) of the Deposit
Accounts. 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) Unless
the Financial Institution shall have received written notice of a default from
the Secured Party (a "Default Notice") that an "event of default" has occurred
under the loan documents between the Debtor and the Secured Party (an "Event
of
Default") (subject to paragraph (d) below), the Debtor shall have full right
of
access to and withdrawal from the Deposit Accounts.
DEFAULT
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
(c) Subject
to paragraph (d) below, from and after the receipt by the Financial Institution
of a Default Notice (and until the Financial Institution receives a written
withdrawal of such notice), (i) the Secured Party shall have exclusive dominion
and control over the Deposit Accounts, (ii) 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 Accounts, and (iii) the Financial Institution shall
not comply with any instructions originated by the Debtor or any such person
directing disposition of funds in the Deposit Accounts.
(d) Any
Default Notice shall be in writing, shall refer to this Agreement and shall
include clear and specific instruction with respect to the disposition of funds
in the Deposit Accounts. The Financial Institution shall act on a Default Notice
from the Secured Party, upon effective delivery thereof, pursuant to the terms
of this Agreement within a reasonable period of time not to exceed one (1)
Business Day (hereinafter defined) following the date on which the Financial
Institution receives such Default Notice to act on such Default Notice. The
Financial Institution may rely on a Default Notice notwithstanding any other
or
conflicting information it may receive from the Debtor. With limiting the
foregoing, upon receipt of a Default Notice, the Financial Institution shall
have no obligation to determine whether an Event of Default has occurred. As
used in this Agreement, the term "Business Day" means any day on which the
Financial Institution and the Secured Party are not authorized or required
to
close.
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 Accounts
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 Accounts 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
Accounts and (ii) the face amount of any checks which have been credited to
such
Deposit Accounts 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 the Financial Institution except for those expressly set forth in this
Agreement, and no implied obligations shall be read into this Agreement against
the Financial Institution.
(b) Financial
Institution may rely on notices and communications it reasonably believes have
been given by an authorized representative of the Secured Party or the Debtor,
and the 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
the
Debtor becomes subject to a bankruptcy proceeding or if the Financial
Institution is otherwise served with legal process which the Financial
Institution believes affects funds deposited in the Deposit Account, the
Financial Institution shall have the right to place a hold on funds in the
Deposit Account until such time as the Financial Institution receives an
appropriate court order or other assurances satisfactory to the Financial
Institution establishing that funds may continue to be disbursed in accordance
with this Agreement.
DEFAULT
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
(d) If
at any
time the Financial Institution, in good faith, is in doubt as to the action
it
should take under this Agreement, the Financial Institution shall have the
right
(i) to place a hold on funds in the Deposit Account until such time as the
Financial Institution receives an appropriate court order or other assurances
satisfactory to the 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 the Secured Party and the Debtor or in accordance with the final order
of
the court in such action.
(e) All
of
the Financial Institution's obligations under this Agreement shall be subject
to
applicable laws and regulations. Nothing in this Agreement shall require the
Financial Institution to act in violation of any law or regulation.
(f) The
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 the Financial Institution’s acts or omissions constituting gross negligence
or willful misconduct, and the Debtor agrees to indemnify and hold the Financial
Institution harmless from any such expense, claim, cause of action, liability,
loss, damages or cost.
(g) The
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 the Financial
Institution’s reasonable control. In no event shall the 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 each 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 each Deposit
Account shall be governed by the laws of the State of New York.
Section
6. Interpleader.
If at
any time the 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
the Secured Party, the Financial Institution 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 the Debtor, the Secured Party, and any competing
claimants as defendants. Upon interpleading such funds, the Financial
Institution will be released from all further liability under this Agreement
and
the costs and expenses of the Financial Institution relating to the interpleader
action, including filling fees and reasonable attorneys fees, shall be paid
by
the Debtor and, if the Debtor fails to pay, the Secured Party shall pay such
fees.
DEFAULT
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 Accounts; 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 Accounts 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 Accounts. 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 Accounts, 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 Accounts 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 Accounts 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 Accounts, 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 Accounts have been established as set forth in Section 1 and each such
Deposit Account will be maintained in the manner set forth herein until
termination of this Agreement; and
DEFAULT
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.
| Debtor: | Tekoil and Gas Gulf Coast, LLC | |
| 00000 X-00 Xxxxx, Xxxxx 000 | ||
| Xxx Xxxxxxxxx, Xxxxx 00000 | ||
| Attention: Xxxx Xxxxxxx | ||
| Telecopier: 281-364-8007 | ||
| Secured Party: | X. Xxxx & Company | |
| 00 Xxxxx Xxxxxx | ||
| Xxx Xxxx, Xxx Xxxx 00000 | ||
| Attention: Xxxxx Xxxxxx | ||
| Telecopier: 000-000-0000 | ||
| with a copy to: | Xxxxxxx Sachs E&P Capital | |
| 0000 Xxxxxxxxx, Xxxxx 000 | ||
| Xxxxxxx, Xxxxx 00000 | ||
| Attention: Xxxx X. Xxxxx | ||
| Telecopier: 000-000-0000 |
DEFAULT
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
| Financial Institution: | Amegy Bank National Association | |
| Five Post Oak Park | ||
| 0000 Xxxx Xxx Xxxxxxx | ||
| Xxxxxxx, XX 00000 | ||
| Attention: Xxxx Xxxxxx | ||
| Telecopier: ______________ | ||
| And | ||
| Amegy Bank National Association | ||
| Five Post Oak Park | ||
| 0000 Xxxx Xxx Xxxxxxx | ||
| Xxxxxxx, XX 00000 | ||
| Attention: Xxxx Xxxx | ||
| Telecopier: 000-000-0000 |
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 each 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
A
hereto
to the Financial Institution upon the request of the Debtor on or after the
termination of the Secured Party’s security interest in each Deposit Account
pursuant to the terms of the Security Agreement. The termination of this
Agreement shall not terminate the Deposit Accounts or alter the obligations
of
the Financial Institution to the Debtor pursuant to any other agreement with
respect to the Deposit Accounts.
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.]
DEFAULT
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
IN
WITNESS WHEREOF, the parties hereto have caused this Default Deposit Account
Control Agreement to be executed as of the date first above written by their
respective officers thereunto duly authorized.
|
TEKOIL
AND GAS GULF COAST, LLC
|
||
| |
|
|
| By: | Tekoil & Gas Corporation, its Managing Member | |
| By: | /s/ Xxxx Xxxxxxx | |
|
Name: Xxxx Xxxxxxx |
||
| Title: CEO and Chairman of the Board of Directors | ||
SIGNATUREPAGE
TO
DEFAULT
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
|
X.
XXXX & COMPANY,
|
||
| as Secured Party | ||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxxx | |
|
Name: Xxxxxxx Xxxxxx |
||
| Title: Managing Director | ||
SIGNATUREPAGE
TO
DEFAULT
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
|
AMEGY
BANK NATIONAL ASSOCIATION
|
||
|
as
Financial Institution
|
||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxxx, III | |
|
Name: Xxxxxxx X. Xxxxxx, III |
||
| Title: Vice President. Energy Lending | ||
SIGNATUREPAGE
TO
DEFAULT
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
EXHIBIT
A
[Letterhead
of the Secured Party]
[Date]
[Name
and
Address of the Financial Institution]
Attention:
|
Re:
|
Termination
of Default Deposit Account Control
Agreement
|
You
are
hereby notified that the Default 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.
|
Very
truly yours,
|
||
|
X.
XXXX & COMPANY,
|
||
| as Secured Party | ||
| |
|
|
| By: | ||
|
Name:
|
||
|
Title:
|
||
EXHIBIT
A TO
DEFAULT
DEPOSIT
ACCOUNT
CONTROL
AGREEMENT
