PLEDGE AND SECURITY AGREEMENT dated as of May 11, 2007 between EACH OF THE GRANTORS PARTY HERETO and J. ARON & COMPANY, as Agent, as the Secured Party
Exhibit
10.31
dated
as of May 11, 2007
between
EACH
OF THE GRANTORS PARTY HERETO
and
▇.
▇▇▇▇ & COMPANY, as Agent,
as
the Secured Party
TABLE
OF CONTENTS
|
Page
|
||
|
SECTION
1
|
DEFINITIONS
|
1
|
|
1.1
|
General
Definitions
|
1
|
|
1.2
|
Definitions;
Interpretation
|
7
|
|
SECTION
2
|
GRANT
OF SECURITY
|
7
|
|
2.1
|
Grant
of Security
|
7
|
|
2.2
|
Certain
Limited Exclusions
|
8
|
|
SECTION
3
|
SECURITY
FOR OBLIGATIONS; GRANTORS REMAIN LIABLE
|
8
|
|
3.1
|
Security
for Obligations
|
8
|
|
3.2
|
Continuing
Liability Under Collateral
|
9
|
|
SECTION
4
|
REPRESENTATIONS
AND WARRANTIES AND COVENANTS
|
9
|
|
4.1
|
Generally
|
9
|
|
4.2
|
Investment
Related Property; Investment Related Property Generally
|
11
|
|
4.3
|
Pledged
Equity Interests
|
13
|
|
4.4
|
Investment
Accounts
|
15
|
|
4.5
|
Letter
of Credit Rights
|
16
|
|
4.6
|
Commercial
Tort Claims
|
16
|
|
4.7
|
Vessels;
Certificates of Title Equipment
|
16
|
|
SECTION
5
|
ACCESS;
RIGHT OF INSPECTION AND FURTHER ASSURANCES;
|
|
|
ADDITIONAL
GRANTORS
|
17
|
|
|
5.1
|
Access;
Right of Inspection
|
17
|
|
5.2
|
Further
Assurances
|
17
|
|
5.3
|
Additional
Grantors
|
18
|
|
SECTION
6
|
SECURED
PARTY APPOINTED ATTORNEY-IN-FACT
|
18
|
|
6.1
|
Power
of Attorney
|
18
|
|
6.2
|
No
Duty on the Part of Secured Party or Beneficiaries
|
19
|
|
SECTION
7
|
REMEDIES
|
20
|
|
7.1
|
Generally
|
20
|
|
7.2
|
Application
of Proceeds
|
21
|
|
7.3
|
Sales
on Credit
|
22
|
|
7.4
|
Deposit
Accounts
|
22
|
|
7.5
|
Investment
Related Property
|
22
|
i
TABLE
OF CONTENTS
(continued)
|
Page
|
||
|
7.6
|
Intellectual
Property
|
22
|
|
7.7
|
Cash
Proceeds
|
24
|
|
SECTION
8
|
AGENT
|
25
|
|
SECTION
9
|
CONTINUING
SECURITY INTEREST; TRANSFER OF LOANS
|
25
|
|
SECTION
10
|
STANDARD
OF CARE; SECURED PARTY MAY PERFORM
|
26
|
|
SECTION
11
|
MISCELLANEOUS
|
26
|
ii
TABLE
OF CONTENTS
(continued)
| SCHEDULES: | 4.1 — General Information | |
| 4.3 — Investment Related Property | ||
| 4.5 — Description of Letters of Credit | ||
| 4.6 — Commercial Tort Claims | ||
| 4.7 — Vessels and Certificates of Title Equipment | ||
| EXHIBITS: | A — Pledge Supplement | |
| B-1 — Default Deposit Account Control Agreement | ||
| B-2 — Blocked Deposit Account Control Agreement |
iii
This
PLEDGE
AND SECURITY AGREEMENT,
dated
as of May 11, 2007 (this "Agreement"),
by
and among TEKOIL
AND GAS GULF COAST, LLC, a
Delaware limited liability company (the "Company"),
each
of the undersigned affiliates of the Company, whether as an original signatory
hereto or as an Additional Grantor (as herein defined) (together with the
Company, collectively, the "Grantors"
and
individually, a "Grantor"),
and
▇.
▇▇▇▇ & COMPANY, as
administrative agent for the Beneficiaries (as herein defined) (in such
capacity, the "Secured
Party").
RECITALS:
WHEREAS,
reference is made to that certain Credit and Guaranty Agreement, dated as of
the
date hereof (as it may be amended, restated, supplemented or otherwise modified
from time to time, the "Credit
Agreement")
by and
among the Company, TEKOIL
& GAS CORPORATION,
a
Delaware corporation, and
the
other guarantors party thereto, ▇.
▇▇▇▇ & COMPANY,
individually and in its capacity as Administrative Agent (the "Agent")
for
the benefit of the lenders from time to time parties thereto (the "Lenders"),
Lead
Arranger, Syndication Agent, and Secured Party, and such Lenders;
WHEREAS,
subject
to the terms and conditions of the Credit Agreement, certain Grantors may enter
into one or more Hedging Contracts with one or more Lender
Counterparties;
WHEREAS,
in
consideration of the extensions of credit and other accommodations of Lenders
and Lender Counterparties as set forth in the Credit Agreement and the Hedging
Contracts, respectively, each Grantor has agreed to secure the Company's and
the
other Obligors' obligations under the Transaction Documents and the Hedging
Contracts as set forth herein; and
NOW,
THEREFORE,
in
consideration of the premises and the agreements, provisions and covenants
herein contained, each Grantor and the Secured Party agree as
follows:
SECTION
1
DEFINITIONS
1.1 General
Definitions.
In this
Agreement, the following terms shall have the following meanings:
"Account
Debtor"
shall
mean each Person who is obligated on a Receivable or any Supporting Obligation
related thereto.
"Accounts"
shall
mean all "accounts" as defined in Article 9 of the UCC.
"Agreement"
shall
have the meaning set forth in the preamble.
"Additional
Grantors"
shall
have the meaning assigned in Section 5.3.
"Assigned
Agreements"
shall
mean all agreements and contracts to which such Grantor is a party as of the
date hereof, or to which such Grantor becomes a party after the date hereof,
including each Material Contract, as each such agreement may be amended,
supplemented or otherwise modified from time to time.
-1-
"Beneficiaries"
means
the Agent, the Lenders and the Lender Counterparties and shall include, without
limitation, all former Lenders and Lender Counterparties to the extent that
any
Obligations owing to such Persons were incurred while such Persons were Lenders
or Lender Counterparties and such Obligations have not been paid or satisfied
in
full.
"Cash
Proceeds"
shall
have the meaning assigned in Section 7.7.
"Chattel
Paper"
shall
mean all "chattel paper" as defined in Article 9 of the UCC, including
"electronic chattel paper" or "tangible chattel paper", as each term is defined
in Article 9 of the UCC.
"Collateral"
shall
have the meaning assigned in Section 2.1 and shall not include the Excluded
Collateral, other than to the extent such Excluded Collateral becomes Collateral
as provided in Section 2.2.
"Collateral
Records"
shall
mean books, records, ledger cards, files, correspondence, customer lists,
blueprints, technical specifications, manuals, computer software, computer
printouts, tapes, disks and related data processing software and similar items
that at any time evidence or contain information relating to any of the
Collateral or are otherwise necessary or helpful in the collection thereof
or
realization thereupon.
"Collateral
Support"
shall
mean all property (real or personal) assigned, hypothecated or otherwise
securing any Collateral and shall include any security agreement or other
agreement granting a lien or security interest in such real or personal
property.
"Commercial
Tort Claims"
shall
mean all "commercial tort claims" as defined in Article 9 of the UCC,
including all commercial tort claims listed on Schedule 4.6 (as such schedule
may be amended or supplemented from time to time).
"Commodities
Accounts"
shall
mean all "commodity accounts" as defined in Article 9 of the UCC.
"Copyright
Licenses"
shall
mean any and all agreements providing for the granting of any right in or to
Copyrights (whether such Grantor is licensee or licensor
thereunder).
"Copyrights"
shall
mean all United States and foreign copyrights, all mask works fixed in
semi-conductor chip products (as defined under 17 U.S.C. 901 of the U.S.
Copyright Act), whether registered or unregistered, now or hereafter in force
throughout the world, all registrations and applications therefor, all rights
corresponding thereto throughout the world, all extensions and renewals of
any
thereof, the right to ▇▇▇ for past, present and future infringements of any
of
the foregoing, and all proceeds of the foregoing, including licenses, royalties,
income, payments, claims, damages, and proceeds of suit.
"Credit
Agreement"
shall
have the meaning set forth in the recitals.
-2-
"Deposit
Accounts"
(i)
shall mean all "deposit accounts" as defined in Article 9 of the UCC and (ii)
shall include, without limitation, all of the accounts listed on Schedule 4.3
under the heading "Deposit Accounts" (as such schedule may be amended or
supplemented from time to time).
"Documents"
shall
mean all "documents" as defined in Article 9 of the UCC.
"Equipment"
shall
mean: (i) all "equipment" as defined in Article 9 of the UCC, (ii) all
machinery, manufacturing equipment, data processing equipment, computers, office
equipment, furnishings, furniture, appliances, fixtures and tools (in each
case,
regardless of whether characterized as equipment under the UCC) and (iii) all
accessions or additions thereto, all parts thereof, whether or not at any time
of determination incorporated or installed therein or attached thereto, and
all
replacements therefor, wherever located, now or hereafter existing, including
any fixtures.
"Excluded
Collateral" shall
have the meaning set forth in Section 2.2 but shall not include any such rights,
properties or assets that become Collateral as provided in Section
2.2.
"General
Intangibles"
(i)
shall mean all "general intangibles" as defined in Article 9 of the UCC,
including "payment intangibles" also as defined in Article 9 of the UCC and
(ii)
shall include, without limitation, all interest rate or currency protection
or
hedging arrangements, all tax refunds, all licenses, permits, concessions and
authorizations, all Assigned Agreements and all Intellectual Property (in each
case, regardless of whether characterized as general intangibles under the
UCC).
"Goods"
(i)
shall mean all "goods" as defined in Article 9 of the UCC and (ii) shall
include, without limitation, all Inventory and Equipment (in each case,
regardless of whether characterized as goods under the UCC).
"Grantors"
shall
have the meaning set forth in the preamble.
"Instruments"
shall
mean all "instruments" as defined in Article 9 of the UCC.
"Insurance"
shall
mean all insurance policies covering any or all of the Collateral (regardless
of
whether the Secured Party is the loss payee thereof.
"Intellectual
Property"
shall
mean, collectively, the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets,
and
the Trade Secret Licenses.
"Inventory"
shall
mean: (i) all "inventory" as defined in Article 9 of the UCC and (ii) all goods
held for sale or lease or to be furnished under contracts of service or so
leased or furnished, all raw materials, work in process, finished goods, and
materials used or consumed in the manufacture, packing, shipping, advertising,
selling, leasing, furnishing or production of such inventory or otherwise used
or consumed in any Grantor's business; all goods in which any Grantor has an
interest in mass or a joint or other interest or right of any kind; and all
goods which are returned to or repossessed by any Grantor, all computer programs
embedded in any goods and all accessions thereto and products thereof (in each
case, regardless of whether characterized as inventory under the
UCC).
-3-
"Investment
Accounts"
shall
mean the Securities Accounts, Commodities Accounts and Deposit
Accounts.
"Investment
Related Property"
shall
mean: (i) all "investment property" (as such term is defined in Article 9 of
the
UCC) and (ii) all of the following (regardless of whether classified as
investment property under the UCC): all Pledged Equity Interests, the Investment
Accounts, and certificates of deposit.
"Lender"
shall
have the meaning set forth in the recitals.
"Letter
of Credit Right"
shall
mean "letter-of-credit right" as defined in Article 9 of the UCC.
"Money"
shall
mean "money" as defined in the UCC.
"Patent
Licenses"
shall
mean all agreements providing for the granting of any right in or to Patents
(whether such Grantor is licensee or licensor thereunder).
"Patents"
shall
mean all United States and foreign patents and applications for letters patent
throughout the world, all reissues, divisions, continuations,
continuations-in-part, extensions, renewals, and reexaminations of any of the
foregoing, all rights corresponding thereto throughout the world, and all
proceeds of the foregoing, including licenses, royalties, income, payments,
claims, damages, and proceeds of suit and the right to ▇▇▇ for past, present
and
future infringements of any of the foregoing.
"Payment
Intangible"
shall
have the meaning specified in Article 9 of the UCC.
"Pledge
Supplement"
shall
mean any supplement to this agreement in substantially the form of Exhibit
A.
"Pledged
Debt"
shall
mean all Indebtedness owed to such Grantor issued by the obligors named
thereunder, the instruments evidencing such Indebtedness, and all interest,
cash, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all
of such Indebtedness.
"Pledged
Equity Interests"
shall
mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests
and
Pledged Trust Interests.
"Pledged
LLC Interests"
shall
mean all interests in any limited liability company, including all limited
liability company interests listed on Schedule 4.3 under the heading "Pledged
LLC Interests" (as such schedule may be amended or supplemented from time to
time) and the certificates, if any, representing such limited liability company
interests and any interest of such Grantor on the books and records of such
limited liability company or on the books and records of any securities
intermediary pertaining to such interest and all dividends, distributions,
cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such limited liability company
interests.
-4-
"Pledged
Partnership Interests"
shall
mean all interests in any general partnership, limited partnership, limited
liability partnership or other partnership, including all partnership interests
listed on Schedule 4.3 under the heading "Pledged Partnership Interests" (as
such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such partnership interests and any interest
of such Grantor on the books and records of such partnership or on the books
and
records of any securities intermediary pertaining to such interest and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
partnership interests.
"Pledged
Stock"
shall
mean all shares of capital stock owned by such Grantor, including all shares
of
capital stock described on Schedule 4.3 under the heading "Pledged Stock" (as
such schedule may be amended or supplemented from time to time), and the
certificates, if any, representing such shares and any interest of such Grantor
in the entries on the books of the issuer of such shares or on the books of
any
securities intermediary pertaining to such shares, and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
shares.
"Pledged
Trust Interests"
shall
mean all interests in a Delaware statutory trust or other trust, including
all
trust interests listed on Schedule 4.3 under the heading "Pledged Trust
Interests" (as such schedule may be amended or supplemented from time to time)
and the certificates, if any, representing such trust interests and any interest
of such Grantor on the books and records of such trust or on the books and
records of any securities intermediary pertaining to such interest and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
trust interests.
"Proceeds"
shall
mean: (i) all "proceeds" as defined in Article 9 of the UCC, (ii) payments
or
distributions made with respect to any Investment Related Property and (iii)
whatever is receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
"Receivables"
shall
mean all rights to payment, whether or not earned by performance, for goods
or
other property sold, leased, licensed, assigned or otherwise disposed of, or
services rendered or to be rendered, including all such rights constituting
or
evidenced by any Account, Chattel Paper, Instrument, General Intangible or
Investment Related Property, together with all of Grantor's rights, if any,
in
any goods or other property giving rise to such right to payment and all
Collateral Support and Supporting Obligations related thereto and all
Receivables Records.
"Receivables
Records"
shall
mean (i) all original copies of all documents, instruments or other writings
or
electronic records or other Records evidencing the Receivables, (ii) all
books, correspondence, credit or other files, Records, ledger sheets or cards,
invoices, and other papers relating to Receivables, including all tapes, cards,
computer tapes, computer discs, computer runs, record keeping systems and other
papers and documents relating to the Receivables, whether in the possession
or
under the control of Grantor or any computer bureau or agent from time to time
acting for Grantor or otherwise, (iii) all evidences of the filing of financing
statements and the registration of other instruments in connection therewith,
and amendments, supplements or other modifications thereto, notices to other
creditors or Beneficiaries, and certificates, acknowledgments, or other
writings, including lien search reports, from filing or other registration
officers, (iv) all credit information, reports and memoranda relating thereto
and (v) all other written or nonwritten forms of information related in any
way
to the foregoing or any Receivable.
-5-
"Record"
shall
have the meaning specified in Article 9 of the UCC.
"Secured
Obligations"
shall
have the meaning assigned in Section 3.1.
"Secured
Party"
shall
have the meaning set forth in the preamble.
"Securities"
shall
mean any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or other evidences
of
indebtedness, secured or unsecured, convertible, subordinated or otherwise,
or
in general any instruments commonly known as "securities" or any certificates
of
interest, shares or participations in temporary or interim certificates for
the
purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.
"Securities
Accounts"
shall
mean all "securities accounts" as defined in Article 8 of the UCC.
"Supporting
Obligation"
shall
mean all "supporting obligations" as defined in Article 9 of the
UCC.
"Trade
Secret Licenses"
shall
mean any and all agreements providing for the granting of any right in or to
Trade Secrets (whether such Grantor is licensee or licensor
thereunder).
"Trade
Secrets"
shall
mean all trade secrets and all other confidential or proprietary information
and
know-how now or hereafter owned or used in, or contemplated at any time for
use
in, the business of such Grantor (all of the foregoing being collectively called
a "Trade Secret"), whether or not such Trade Secret has been reduced to a
writing or other tangible form, including all documents and things embodying,
incorporating, or referring in any way to such Trade Secret, the right to ▇▇▇
for past, present and future infringement of any Trade Secret, and all proceeds
of the foregoing, including licenses, royalties, income, payments, claims,
damages, and proceeds of suit.
"Trademark
Licenses"
shall
mean any and all agreements providing for the granting of any right in or to
Trademarks (whether such Grantor is licensee or licensor
thereunder).
"Trademarks"
shall
mean all United States, state and foreign trademarks, trade names, corporate
names, company names, business names, fictitious business names, internet domain
names, trade styles, service marks, certification marks, collective marks,
logos, other source or business identifiers, designs and general intangibles
of
a like nature, all registrations and applications for any of the foregoing,
all
extensions or renewals of any of the foregoing, all of the goodwill of the
business connected with the use of and symbolized by the foregoing, the right
to
▇▇▇ for past, present and future infringement or dilution of any of the
foregoing or for any injury to goodwill, and all proceeds of the foregoing,
including licenses, royalties, income, payments, claims, damages, and proceeds
of suit.
-6-
"UCC"
shall
mean the Uniform Commercial Code as in effect from time to time in the State
of
New York or, when the context implies, the Uniform Commercial Code as in effect
from time to time in any other applicable jurisdiction.
"United
States"
shall
mean the United States of America.
1.2 Definitions;
Interpretation.
All
capitalized terms used herein (including the preamble and recitals hereto)
and
not otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement or, if not defined therein, in the UCC. References to
"Sections," "Exhibits" and "Schedules" shall be to Sections, Exhibits and
Schedules, as the case may be, of this Agreement unless otherwise specifically
provided. Section headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement for any
other purpose or be given any substantive effect. Any of the terms defined
herein may, unless the context otherwise requires, be used in the singular
or
the plural, depending on the reference. The use herein of the word "include"
or
"including", when following any general statement, term or matter, shall not
be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation"
or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
If
any conflict or inconsistency exists between this Agreement and the Credit
Agreement, the Credit Agreement shall govern. All references herein to
provisions of the UCC shall include all successor provisions under any
subsequent version or amendment to any Article of the UCC.
SECTION
2
GRANT
OF SECURITY
2.1 Grant
of Security.
Subject
to Section 2.2, each Grantor hereby grants to the Secured Party a security
interest and continuing lien on all of such Grantor's right, title and interest
in, to and under all personal property of such Grantor including, but not
limited to the following, in each case whether now owned or existing or
hereafter acquired or arising and wherever located (all of which being
hereinafter collectively referred to as the "Collateral"):
(a) Accounts;
(b) Chattel
Paper;
(c) Documents;
(d) General
Intangibles;
-7-
(e) Goods;
(f) Instruments;
(g) Insurance;
(h) Intellectual
Property;
(i) Investment
Related Property;
(j) Letter
of
Credit Rights;
(k) Money;
(l) Receivables
and Receivable Records;
(m) Commercial
Tort Claims;
(n) to
the
extent not otherwise included above, all Collateral Records, Collateral Support
and Supporting Obligations relating to any of the foregoing; and
(o) to
the
extent not otherwise included above, all Proceeds, products, accessions, rents
and profits of or in respect of any of the foregoing.
2.2 Certain
Limited Exclusions.
Notwithstanding anything herein to the contrary, in no event shall the security
interest granted under Section 2.1 hereof attach to any lease, license,
contract, property rights or agreement to which any Grantor is a party or any
of
its rights or interests thereunder if and for so long as the grant of such
security interest shall constitute or result in (i) the abandonment,
invalidation or unenforceability of any right, title or interest of any Grantor
therein or (ii) in a breach or termination pursuant to the terms of, or a
default under, any such lease, license, contract property rights or agreement
(other than to the extent that any such term would be rendered ineffective
pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor
provision or provisions) of any relevant jurisdiction or any other applicable
law (including the Bankruptcy Code) or principles of equity)(collectively,
the
"Excluded
Collateral"),
provided however that such security interest shall attach immediately at such
time as the condition causing such abandonment, invalidation or unenforceability
shall be remedied and to the extent severable, shall attach immediately to
any
portion of such lease, license, contract, property rights or agreement that
does
not result in any of the consequences specified in (i) or (ii) above (and all
of
Grantors' rights, title and interest in such lease, license, contract, property
rights or agreements, or portion thereof, shall automatically be included in
and
considered as "Collateral").
SECTION
3
SECURITY
FOR OBLIGATIONS; GRANTORS REMAIN LIABLE
3.1 Security
for Obligations.
This
Agreement secures, and the Collateral is collateral security for, the prompt
and
complete payment or performance in full when due, whether at stated maturity,
by
required prepayment, declaration, acceleration, demand or otherwise (including
the payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
§362(a) (and any successor provision thereof)), of all Obligations (the
"Secured
Obligations").
-8-
3.2 Continuing
Liability Under Collateral.
Notwithstanding anything herein to the contrary, (i) each Grantor shall remain
liable for all obligations under the Collateral and nothing contained herein
is
intended or shall be a delegation of duties to the Secured Party or any
Beneficiary and (ii) each Grantor shall remain liable under each of the
agreements included in the Collateral, including any agreements relating to
Pledged Partnership Interests or Pledged LLC Interests, to perform all of the
obligations undertaken by it thereunder all in accordance with and pursuant
to
the terms and provisions thereof and neither the Secured Party nor any
Beneficiary shall have any obligation or liability under any of such agreements
by reason of or arising out of this Agreement or any other document related
thereto nor shall the Secured Party nor any Beneficiary have any obligation
to
make any inquiry as to the nature or sufficiency of any payment received by
it
or have any obligation to take any action to collect or enforce any rights
under
any agreement included in the Collateral, including any agreements relating
to
Pledged Partnership Interests or Pledged LLC Interests, (iii) the exercise
by
the Secured Party of any of its rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Collateral.
SECTION
4
REPRESENTATIONS
AND WARRANTIES AND COVENANTS
4.1 Generally.
(a) Representations
and Warranties.
Each
Grantor hereby represents and warrants that:
(i) it
owns
the Collateral purported to be owned by it or otherwise has the rights it
purports to have in each item of Collateral and, as to all Collateral whether
now existing or hereafter acquired, will continue to own or have such rights
in
each item of the Collateral, in each case free and clear of any and all Liens,
rights or claims of all other Persons other than Permitted Liens;
(ii) it
has
indicated on Schedule 4.1(A)(as such schedule may be amended or supplemented
from time to time): (w) the type of organization of such Grantor, (x) the
jurisdiction of organization of such Grantor, (y) its organizational
identification number and (z) the jurisdiction where the chief executive office
or its sole place of business is (or the principal residence if such Grantor
is
a natural person), and for the one-year period preceding the date hereof has
been, located.
(iii) the
full
legal name of such Grantor is as set forth on Schedule 4.1(A) and it has not
done in the last five (5) years, and does not do, business under any other
name
(including any trade-name or fictitious business name) except for those names
set forth on Schedule 4.1(B) (as such schedule may be amended or supplemented
from time to time);
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(iv) except
as
provided on Schedule 4.1(C), it has not changed its name, jurisdiction of
organization, chief executive office or sole place of business (or principal
residence if such Grantor is a natural person) or its corporate structure in
any
way (e.g., by merger, consolidation, change in corporate form or otherwise)
within the past five (5) years;
(v) it
has
not within the last five (5) years become bound (whether as a result of merger
or otherwise) as debtor under a security agreement entered into by another
Person, which has not heretofore or contemporaneously herewith been
terminated;
(vi) upon
the
filing of all UCC financing statements naming each Grantor as "debtor" and
the
Secured Party as "secured party" and describing the Collateral in the filing
offices set forth opposite such Grantor's name on Schedule 4.1(D) hereof (as
such schedule may be amended or supplemented from time to time) and other
filings delivered by each Grantor, upon execution of a control agreement
substantially in the form of Exhibit B-1 or Exhibit B-2 hereto (as required
by
the Secured Party), with respect to any Deposit Account, and upon consent of
the
issuer with respect to Letter of Credit Rights, the security interests granted
to the Secured Party hereunder constitute valid and perfected first priority
Liens (subject in the case of priority only to Permitted Liens) on all of the
Collateral;
(vii) all
actions and consents, including all filings, notices, registrations and
recordings necessary for the exercise by the Secured Party of the voting or
other rights provided for in this Agreement or the exercise of remedies in
respect of the Collateral have been made or obtained;
(viii) other
than the financing statements filed in favor of the Secured Party, no effective
UCC financing statement, fixture filing or other instrument similar in effect
under any applicable law covering all or any part of the Collateral is on file
in any filing or recording office except for financing statements for which
proper termination statements have been delivered to the Secured Party for
filing;
(ix) no
authorization, approval or other action by, and no notice to or filing with,
any
Governmental Authority or regulatory body is required for either (i) the pledge
or grant by any Grantor of the Liens purported to be created in favor of the
Secured Party hereunder or (ii) the exercise by Secured Party of any rights
or
remedies in respect of any Collateral (whether specifically granted or created
hereunder or created or provided for by applicable law), except (A) for the
filings contemplated by clause (vii) above and (B) as may be required, in
connection with the disposition of any Investment Related Property, by laws
generally affecting the offering and sale of Securities;
(x) each
Receivable (a) is and will be the legal, valid and binding obligation of the
Account Debtor in respect thereof, representing an unsatisfied obligation of
such Account Debtor, (b) is and will be enforceable in accordance with its
terms, (c) is not and will not be subject to any setoffs, defenses, taxes,
counterclaims (except with respect to refunds, returns and allowances in the
ordinary course of business with respect to damaged merchandise) and (d) is
and
will be in compliance with all applicable laws, whether federal, state, local
or
foreign;
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(xi) none
of
the Account Debtors in respect of any Receivable is the government of the United
States, any agency or instrumentality thereof, any state or municipality or
any
foreign sovereign; and
(xii) no
Receivable is evidenced by, or constitutes, an Instrument or Chattel Paper
which
has not been delivered to, or otherwise subjected to the control of, the Secured
Party.
(b) Covenants
and Agreements.
Each
Grantor hereby covenants and agrees that:
(i) except
for the security interest created by this Agreement, it shall not create or
suffer to exist any Lien upon or with respect to any of the Collateral, except
Permitted Liens, and such Grantor shall defend the Collateral against all
Persons at any time claiming any interest therein;
(ii) it
shall
not produce, use or permit any Collateral to be used unlawfully or in violation
of any provision of this Agreement or any applicable statute, regulation or
ordinance or any policy of insurance covering the Collateral;
(iii) it
shall
not take or permit any action which could reasonably be expected to impair
the
Secured Party's rights in the Collateral; and
(iv) it
shall
keep and maintain at its own cost and expense satisfactory and complete records
of the Collateral.
4.2 Investment
Related Property; Investment Related Property Generally.
(a) Covenants
and Agreements.
Each
Grantor hereby covenants and agrees that:
(i) in
the
event it acquires rights in any Investment Related Property after the date
hereof, it shall deliver to the Secured Party a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto, reflecting such new Investment Related
Property and all other Investment Related Property. Notwithstanding the
foregoing, it is understood and agreed that the security interest of the Secured
Party shall attach to all Investment Related Property immediately upon any
Grantor's acquisition of rights therein and shall not be affected by the failure
of any Grantor to deliver a supplement as required hereby;
(ii) except
as
provided in the next sentence, in the event such Grantor receives any dividends,
interest or distributions on any Investment Related Property, or any securities
or other property upon the merger, consolidation, liquidation or dissolution
of
any issuer of any Investment Related Property, then (a) such dividends, interest
or distributions and securities or other property shall be included in the
definition of Collateral without further action and (b) such Grantor shall
immediately take all steps, if any, necessary or advisable to ensure the
validity, perfection, priority and, if applicable, control of the Secured Party
over such Investment Related Property (including delivery thereof to the Secured
Party) and pending any such action such Grantor shall be deemed to hold such
dividends, interest, distributions, securities or other property in trust for
the benefit of the Secured Party and shall be segregated from all other property
of such Grantor. Notwithstanding the foregoing, so long as no Event of Default
shall have occurred and be continuing, the Secured Party authorizes each Grantor
to retain all ordinary cash dividends and distributions permitted to be paid
to
such Grantor under the Credit Agreement and all scheduled payments of interest
permitted to be paid to such Grantor under the Credit Agreement;
and
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(iii) each
Grantor consents to the grant by each other Grantor of a Security Interest
in
all Investment Related Property to the Secured Party.
(b) Delivery
and Control.
Each
Grantor agrees that with respect to any Investment Related Property in which
it
currently has rights it shall comply with the provisions of this Section on
or
before the Closing Date and with respect to any Investment Related Property
hereafter acquired by such Grantor it shall comply with the provisions of this
Section immediately upon acquiring rights therein, in each case in form and
substance satisfactory to the Secured Party. With respect to any Investment
Related Property that is represented by a certificate or that is an "instrument"
(other than any Investment Related Property credited to a Securities Account)
it
shall cause such certificate or instrument to be delivered to the Secured Party,
indorsed in blank by an "effective indorsement" (as defined in
Section 8-107 of the UCC), regardless of whether such certificate
constitutes a "certificated security" for purposes of the UCC. With respect
to
any Investment Related Property that is an "uncertificated security" for
purposes of the UCC (other than any "uncertificated securities" credited to
a
Securities Account), it shall cause the issuer of such uncertificated security
to either (i) register the Secured Party as the registered owner thereof on
the
books and records of the issuer or (ii) execute an agreement in form and
substance satisfactory to the Secured Party, pursuant to which such issuer
agrees to comply with the Secured Party's instructions with respect to such
uncertificated security without further consent by such Grantor.
(c) Voting
and Distributions.
(i) So
long
as no Event of Default shall have occurred and be continuing:
(1) except
as
otherwise provided under the covenants and agreements relating to Investment
Related Property in this Agreement or elsewhere herein or in the Credit
Agreement, each Grantor shall be entitled to exercise or refrain from exercising
any and all voting and other consensual rights pertaining to the Investment
Related Property or any part thereof for any purpose not inconsistent with
the
terms of this Agreement or the Credit Agreement; provided, no Grantor shall
exercise or refrain from exercising any such right if the Secured Party shall
have notified such Grantor that, in the Secured Party's reasonable judgment,
such action would have a Material Adverse Effect on the value of the Investment
Related Property or any part thereof; and provided further, such Grantor shall
give the Secured Party at least five (5) Business Days prior written notice
of
the manner in which it intends to exercise, or the reasons for refraining from
exercising, any such right; it being understood, however, that neither the
voting by such Grantor of any Pledged Stock for, or such Grantor's consent
to,
the election of directors (or similar governing body) at a regularly scheduled
annual or other meeting of stockholders or with respect to incidental matters
at
any such meeting, nor such Grantor's consent to or approval of any action
otherwise permitted under this Agreement and the Credit Agreement, shall be
deemed inconsistent with the terms of this Agreement or the Credit Agreement
within the meaning of this Section 4.2(c)(i)(1), and no notice of any such
voting or consent need be given to the Secured Party; and
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(2) the
Secured Party shall promptly execute and deliver (or cause to be executed and
delivered) to each Grantor all proxies, and other instruments as such Grantor
may from time to time reasonably request for the purpose of enabling such
Grantor to exercise the voting and other consensual rights when and to the
extent which it is entitled to exercise pursuant to clause (1)
above;
(3) Upon
the
occurrence and during the continuation of an Event of Default:
(A) all
rights of each Grantor to exercise or refrain from exercising the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant hereto shall cease and all such rights shall thereupon become vested
in
the Secured Party who shall thereupon have the sole right to exercise such
voting and other consensual rights; and
(B) in
order
to permit the Secured Party to exercise the voting and other consensual rights
which it may be entitled to exercise pursuant hereto and to receive all
dividends and other distributions which it may be entitled to receive hereunder:
(1) each Grantor shall promptly execute and deliver (or cause to be executed
and
delivered) to the Secured Party all proxies, dividend payment orders and other
instruments as the Secured Party may from time to time reasonably request and
(2) the each Grantor acknowledges that the Secured Party may utilize the power
of attorney set forth in Section 6.
4.3 Pledged
Equity Interests.
(a) Representations
and Warranties.
Each
Grantor hereby represents and warrants that:
(i) Schedule
4.3 (as such schedule may be amended or supplemented from time to time) sets
forth under the headings "Pledged Stock", "Pledged LLC Interests," "Pledged
Partnership Interests" and "Pledged Trust Interests," respectively, all of
the
Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged
Trust Interests owned by any Grantor and such Pledged Equity Interests
constitute the percentage of issued and outstanding shares of stock, percentage
of membership interests, percentage of partnership interests or percentage
of
beneficial interest of the respective issuers thereof indicated on such
Schedule;
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(ii) except
as
provided on Schedule 4.3, it has not acquired any equity interests of another
entity or substantially all the assets of another entity within the past five
(5) years;
(iii) it
is the
record and beneficial owner of the Pledged Equity Interests free of all Liens,
rights or claims of other Persons other than Permitted Liens and there are
no
outstanding warrants, options or other rights to purchase, or shareholder,
voting trust or similar agreements outstanding with respect to, or property
that
is convertible into, or that requires the issuance or sale of, any Pledged
Equity Interests;
(iv) without
limiting any other provision hereof, no consent of any Person including any
other general or limited partner, any other member of a limited liability
company, any other shareholder or any other trust beneficiary is necessary
or
desirable in connection with the creation, perfection or first priority status
of the security interest of the Secured Party in any Pledged Equity Interests
or
the exercise by the Secured Party of the voting or other rights provided for
in
this Agreement or the exercise of remedies in respect thereof;
(v) none
of
the Pledged LLC Interests nor Pledged Partnership Interests are or represent
interests in issuers that are: (a) registered as investment companies, (b)
are
dealt in or traded on securities exchanges or markets or (c) have opted to
be
treated as securities under the uniform commercial code of any
jurisdiction;
(b) Covenants
and Agreements.
Each
Grantor hereby covenants and agrees that:
(i) without
the prior written consent of the Secured Party, it shall not vote to enable
or
take any other action to: (a) amend or terminate any partnership agreement,
limited liability company agreement, certificate of incorporation, by-laws
or
other organizational documents in any way that materially changes the rights
of
such Grantor with respect to any Investment Related Property or adversely
affects the validity, perfection or priority of the Secured Party's security
interest, (b) permit any issuer of any Pledged Equity Interest to issue any
additional stock, partnership interests, limited liability company interests
or
other equity interests of any nature or to issue securities convertible into
or
granting the right of purchase or exchange for any stock or other equity
interest of any nature of such issuer, (c) other than as permitted under the
Credit Agreement, permit any issuer of any Pledged Equity Interest to dispose
of
all or a material portion of their assets, (d) waive any default under or breach
of any terms of any organizational document relating to the issuer of any
Pledged Equity Interest or the terms of any Pledged Debt, or (e) cause any
issuer of any Pledged Partnership Interests or Pledged LLC Interests which
are
not securities (for purposes of the UCC) on the date hereof to elect or
otherwise take any action to cause such Pledged Partnership Interests or Pledged
LLC Interests to be treated as securities for purposes of the UCC; provided,
however, notwithstanding the foregoing, if any issuer of any Pledged Partnership
Interests or Pledged LLC Interests takes any such action in violation of the
foregoing in this clause (e), such Grantor shall promptly notify the Secured
Party in writing of any such election or action and, in such event, shall take
all steps necessary or advisable to establish the Secured Party's "control"
thereof;
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(ii) it
shall
comply with all of its obligations under any partnership agreement or limited
liability company agreement relating to Pledged Partnership Interests or Pledged
LLC Interests and shall enforce all of its rights with respect to any Investment
Related Property;
(iii) each
Grantor consents to the grant by each other Grantor of a security interest
in
all Investment Related Property to the Secured Party and, without limiting
the
foregoing, consents to the transfer of any Pledged Partnership Interest and
any
Pledged LLC Interest to the Secured Party or its nominee following an Event
of
Default and to the substitution of the Secured Party or its nominee as a partner
in any partnership or as a member in any limited liability company with all
the
rights and powers related thereto; and
(iv) it
shall
notify the Secured Party of any default under any Pledged Debt that has caused,
either in any case or in the aggregate, a Material Adverse Effect.
4.4 Investment
Accounts.
(a) Covenants
and Agreements.
Each
Grantor hereby covenants and agrees that:
(i) With
respect to any Investment Related Property consisting of Securities Accounts
or
Securities Entitlements, it shall cause the securities intermediary maintaining
such Securities Account or Securities Entitlement to enter into an agreement
substantially in form and substance satisfactory to the Secured Party pursuant
to which it shall agree to comply with the Secured Party's "entitlement orders"
without further consent by such Grantor. With respect to any Investment Related
Property that is a "Deposit Account," it shall cause the depositary institution
maintaining such account to enter into an agreement substantially in the form
of
Exhibit B-1 or Exhibit B-2 hereto (or such other form satisfactory to the
Secured Party), pursuant to which the Secured Party shall have both sole
dominion and control over such Deposit Account (within the meaning of the common
law) and "control" (within the meaning of Section 9-104 of the UCC) over such
Deposit Account.
(ii) In
addition to the foregoing, if any issuer of any Investment Related Property
is
located in a jurisdiction outside of the United States, each Grantor shall
take
such additional actions, including causing the issuer to register the pledge
on
its books and records or making such filings or recordings, in each case as
may
be necessary or advisable, under the laws of such issuer's jurisdiction to
insure the validity, perfection and priority of the security interest of the
Secured Party. Upon the occurrence of an Event of Default, the Secured Party
shall have the right, without notice to any Grantor, to transfer all or any
portion of the Investment Related Property to its name or the name of its
nominee or agent. In addition, the Secured Party shall have the right at any
time, without notice to any Grantor, to exchange any certificates or instruments
representing any Investment Related Property for certificates or instruments
of
smaller or larger denominations.
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4.5 Letter
of Credit Rights.
(a) Representations
and Warranties.
Each
Grantor hereby represents and warrants that:
(i) all
material letters of credit to which such Grantor has rights are listed on
Schedule 4.5 (as such schedule may be amended or supplemented from time to
time)
hereto; and
(ii) it
has
obtained the consent of each issuer of any material letter of credit to the
assignment of the proceeds of the letter of credit to the Secured
Party.
(b) Covenants
and Agreements.
Each
Grantor hereby covenants and agrees that with respect to any material letter
of
credit hereafter arising it shall obtain the consent of the issuer thereof
to
the assignment of the proceeds of the letter of credit to the Secured Party
and
shall deliver to the Secured Party a completed Pledge Supplement, substantially
in the form of Exhibit A attached hereto, together with all Supplements to
Schedules thereto.
4.6 Commercial
Tort Claims.
(a) Representations
and Warranties.
Each
Grantor hereby represents and warrants that Schedule 4.6 (as such schedule
may
be amended or supplemented from time to time) sets forth all Commercial Tort
Claims of each Grantor; and
(b) Covenants
and Agreements.
Each
Grantor hereby covenants and agrees that with respect to any Commercial Tort
Claim hereafter arising it shall deliver to the Secured Party a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto, together
with all Supplements to Schedules thereto, identifying such new Commercial
Tort
Claims.
4.7 Vessels;
Certificate of Title Equipment.
(a) Representations
and Warranties.
Each
Grantor hereby represents and warrants that Schedule 4.7 (as such schedule
may
be amended or supplemented from time to time) sets forth all vessels and
certificates of title Equipment of each Grantor; and
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(b) Covenants
and Agreements.
Each
Grantor hereby covenants and agrees that with respect to any vessel(s) or
Equipment subject to certificate of title requirements hereafter acquired it
shall promptly notify the Secured Party thereof and it shall deliver such
documentation and other items as Agent requests to grant and/or perfect Secured
Party's lien on and secured interest in such asset, together with all
supplements to any schedules thereto, identifying any such new vessel(s) and
Equipment.
SECTION
5
ACCESS;
RIGHT OF INSPECTION AND FURTHER ASSURANCES;
ADDITIONAL
GRANTORS
5.1 Access;
Right of Inspection.
The
Secured Party shall at all times have full and free access during normal
business hours to all the books, correspondence and records of each Grantor,
and
the Secured Party and its representatives may examine the same, take extracts
therefrom and make photocopies thereof,
and
each Grantor agrees to render to the Secured Party, at such Grantor's cost
and
expense, such clerical and other assistance as may be reasonably requested
with
regard thereto. Upon reasonably prior notice from the Secured Party to the
Grantor, the Secured Party and its representatives shall at all times also
have
the right to enter any premises of such Grantor and inspect any property of
each
Grantor where any of the Collateral of such Grantor granted pursuant to this
Agreement is located for the purpose of inspecting the same, observing its
use
or otherwise protecting its interests therein.
5.2 Further
Assurances.
(a) Each
Grantor agrees that from time to time, at the expense of such Grantor, that
it
shall promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that the Secured
Party may reasonably request, in order to create and/or maintain the validity,
perfection or priority of and protect any security interest granted or purported
to be granted hereby or to enable the Secured Party to exercise and enforce
its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, each Grantor shall:
(i) file
such
financing or continuation statements, or amendments thereto, and execute and
deliver such other agreements, instruments, endorsements, powers of attorney
or
notices, as may be necessary or desirable, or as the Secured Party may
reasonably request, in order to perfect and preserve the security interests
granted or purported to be granted hereby;
(ii) take
all
actions necessary to ensure the recordation of appropriate evidence of the
liens
and security interest granted hereunder in the Intellectual Property with any
intellectual property registry in which said Intellectual Property is registered
or in which an application for registration is pending, including the United
States Patent and Trademark Office, the United States Copyright Office, the
various Secretaries of State, and the foreign counterparts on any of the
foregoing;
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(iii) at
any
reasonable time, upon request by the Secured Party, assemble the Collateral
and
allow inspection of the Collateral by the Secured Party, or persons designated
by the Secured Party; and
(iv) at
the
Secured Party's request, appear in and defend any action or proceeding that
may
affect such Grantor's title to or the Secured Party's security interest in
all
or any part of the Collateral.
(b) Each
Grantor hereby authorizes the Secured Party to file a Record or Records,
including financing or continuation statements, and amendments thereto, in
any
jurisdictions and with any filing offices as the Secured Party may determine,
in
its sole discretion, are necessary or advisable to perfect the security interest
granted to the Secured Party herein. Such financing statements may describe
the
Collateral in the same manner as described herein or may contain an indication
or description of collateral that describes such property in any other manner
as
the Secured Party may determine is necessary, advisable or prudent to ensure
the
perfection of the security interest in the Collateral granted to the Secured
Party herein, including describing such property as "all assets" or "all
personal property, whether now owned or hereafter acquired". Each Grantor shall
furnish to the Secured Party from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Secured Party may reasonably request, all in
reasonable detail.
5.3 Additional
Grantors.
From
time to time subsequent to the date hereof, additional Persons may become
parties hereto as additional Grantors (each, an "Additional
Grantor"),
by
executing a Counterpart Agreement. Upon delivery of any such Counterpart
Agreement to the Secured Party, notice of which is hereby waived by Grantors,
each Additional Grantor shall be a Grantor and shall be as fully a party hereto
as if Additional Grantor were an original signatory hereto. Each Grantor
expressly agrees that its obligations arising hereunder shall not be affected
or
diminished by the addition or release of any other Grantor hereunder, nor by
any
election of Secured Party not to cause any Subsidiary of Company to become
an
Additional Grantor hereunder. This Agreement shall be fully effective as to
any
Grantor that is or becomes a party hereto regardless of whether any other Person
becomes or fails to become or ceases to be a Grantor hereunder.
SECTION
6
SECURED
PARTY APPOINTED ATTORNEY-IN-FACT
6.1 Power
of Attorney.
Each
Grantor hereby irrevocably appoints the Secured Party (such appointment being
coupled with an interest) as such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such
Grantor, the Secured Party or otherwise, from time to time in the Secured
Party's discretion to take any action and to execute any instrument that the
Secured Party may deem reasonably necessary or advisable to accomplish the
purposes of this Agreement, including the following:
(a) upon
the
occurrence and during the continuance of any Event of Default, to obtain and
adjust insurance required to be maintained by such Grantor pursuant to the
Credit Agreement or paid to the Secured Party pursuant to the Credit
Agreement;
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(b) upon
the
occurrence and during the continuance of any Event of Default, to ask for,
demand, collect, ▇▇▇ for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;
(c) upon
the
occurrence and during the continuance of any Event of Default, to receive,
endorse and collect any drafts or other instruments, documents and chattel
paper
in connection with clause (b) above;
(d) upon
the
occurrence and during the continuance of any Event of Default, to file any
claims or take any action or institute any proceedings that the Secured Party
may deem necessary or desirable for the collection of any of the Collateral
or
otherwise to enforce the rights of the Secured Party with respect to any of
the
Collateral;
(e) Subject
to Section 5.2(b), to prepare and file any UCC financing statements against
such
Grantor as debtor covering the Collateral;
(f) to
prepare, sign, and file for recordation in any intellectual property registry,
appropriate evidence of the lien and security interest granted herein in the
Intellectual Property in the name of such Grantor as assignor;
(g) to
take
or cause to be taken all actions necessary to perform or comply or cause
performance or compliance with the terms of this Agreement, including access
to
pay or discharge taxes or Liens (other than Permitted Liens) levied or placed
upon or threatened against the Collateral, the legality or validity thereof
and
the amounts necessary to discharge the same to be determined by the Secured
Party in its sole discretion, any such payments made by the Secured Party to
become obligations of such Grantor to the Secured Party, due and payable
immediately without demand; and
(h) generally
to sell, transfer, pledge, make any agreement with respect to or otherwise
deal
with any of the Collateral as fully and completely as though the Secured Party
were the absolute owner thereof for all purposes, and to do, at the Secured
Party's option and such Grantor's expense, at any time or from time to time,
all
acts and things that the Secured Party deems reasonably necessary to protect,
preserve or realize upon the Collateral and the Secured Party's security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
6.2 No
Duty on the Part of Secured Party or Beneficiaries.
The
powers conferred on the Secured Party hereunder are solely to protect the
interests of the Beneficiaries in the Collateral and shall not impose any duty
upon the Secured Party or any Beneficiary to exercise any such powers. The
Secured Party and the Beneficiaries shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither
they nor any of their officers, directors, employees or agents shall be
responsible to any Grantor for any act or failure to act hereunder, except
for
their own gross negligence or willful misconduct.
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SECTION
7
REMEDIES
7.1 Generally.
(a) If
any
Event of Default shall have occurred and be continuing, the Secured Party may
exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it at law or in equity,
all the rights and remedies of the Secured Party on default under the UCC
(whether or not the UCC applies to the affected Collateral) to collect, enforce
or satisfy any Secured Obligations then owing, whether by acceleration or
otherwise, and also may pursue any of the following separately, successively
or
simultaneously:
(i) require
any Grantor to, and each Grantor hereby agrees that it shall at its expense
and
promptly upon request of the Secured Party forthwith, assemble all or part
of
the Collateral as directed by the Secured Party and make it available to the
Secured Party at a place to be designated by the Secured Party that is
reasonably convenient to both parties;
(ii) enter
onto the property where any Collateral is located and take possession thereof
with or without judicial process;
(iii) prior
to
the disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner
to
the extent the Secured Party deems appropriate; and
(iv) without
notice except as specified below or under the UCC, sell, assign, lease, license
(on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral
or any part thereof in one or more parcels at public or private sale, at any
of
the Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as the Secured Party may deem commercially reasonable.
(b) The
Secured Party or any Beneficiary may be the purchaser of any or all of the
Collateral at any public or private sale (to the extent to portion of the
Collateral being privately sold is of a kind that is customarily sold on a
recognized market or the subject of widely distributed standard price
quotations) in accordance with the UCC and the Secured Party, as collateral
agent for and representative of the Beneficiaries, shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such sale made in accordance
with the UCC, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by the Secured Party
at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Grantor, and each
Grantor hereby waives (to the extent permitted by applicable law) all rights
of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Each Grantor agrees that, to the extent notice of sale shall be required by
law,
at least ten (10) days notice to such Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Secured Party shall not be obligated
to
make any sale of Collateral regardless of notice of sale having been given.
The
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Each
Grantor agrees that it would not be commercially unreasonable for the Secured
Party to dispose of the Collateral or any portion thereof by using Internet
sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capability of doing so, or that match
buyers and sellers of assets. Each Grantor hereby waives any claims against
the
Secured Party arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if the Secured Party
accepts the first offer received and does not offer such Collateral to more
than
one offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, Grantors shall be liable
for the deficiency and the fees of any attorneys employed by the Secured Party
to collect such deficiency. Each Grantor further agrees that a breach of any
of
the covenants contained in this Section will cause irreparable injury to the
Secured Party, that the Secured Party has no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained
in
this Section shall be specifically enforceable against such Grantor, and such
Grantor hereby waives and agrees not to assert any defenses against an action
for specific performance of such covenants except for a defense that no default
has occurred giving rise to the Secured Obligations becoming due and payable
prior to their stated maturities. Nothing in this Section shall in any way
alter
the rights of the Secured Party hereunder.
-20-
(c) The
Secured Party may sell the Collateral without giving any warranties as to the
Collateral. The Secured Party may specifically disclaim or modify any warranties
of title or the like. This procedure will not be considered to adversely affect
the commercial reasonableness of any sale of the Collateral.
(d) The
Secured Party shall have no obligation to marshal any of the
Collateral.
7.2 Application
of Proceeds.
Except
as expressly provided elsewhere in this Agreement, all proceeds received by
the
Secured Party in respect of any sale, any collection from, or other realization
upon all or any part of the Collateral shall be applied in full or in part
by
the Secured Party against, the Secured Obligations in the following order of
priority: first, to the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to the
Secured Party and its agents and counsel, and all other expenses, liabilities
and advances made or incurred by the Secured Party in connection therewith,
and
all amounts for which the Secured Party is entitled to indemnification hereunder
(in its capacity as the Secured Party and not as a Lender) and all advances
made
by the Secured Party hereunder for the account of the applicable Grantor, and
to
the payment of all costs and expenses paid or incurred by the Secured Party
in
connection with the exercise of any right or remedy hereunder or under the
Credit Agreement, all in accordance with the terms hereof or thereof; second,
to
the extent of any excess of such proceeds, to the payment of all other Secured
Obligations for the ratable benefit of the Lenders and the Lender
Counterparties; and third, to the extent of any excess of such proceeds, to
the
payment to or upon the order of such Grantor or to whosoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction may
direct.
-21-
7.3 Sales
on Credit.
If
Secured Party sells any of the Collateral upon credit, Grantor will be credited
only with payments actually made by purchaser and received by Secured Party
and
applied to indebtedness of the Purchaser. In the event the purchaser fails
to
pay for the Collateral, Secured Party may resell the Collateral and Grantor
shall be credited with proceeds of the sale.
7.4 Deposit
Accounts.
If any
Event of Default shall have occurred and be continuing, the Secured Party may
apply the balance from any Deposit Account or instruct the bank at which any
Deposit Account is maintained to pay the balance of any Deposit Account to
or
for the benefit of the Secured Party.
7.5 Investment
Related Property. Each
Grantor recognizes that, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws, the Secured Party may
be
compelled, with respect to any sale of all or any part of the Investment Related
Property conducted without prior registration or qualification of such
Investment Related Property under the Securities Act and/or such state
securities laws, to limit purchasers to those who will agree, among other
things, to acquire the Investment Related Property for their own account, for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges that any such private sale may be at prices and on terms
less favorable than those obtainable through a public sale without such
restrictions (including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such circumstances,
each Grantor agrees that any such private sale shall be deemed to have been
made
in a commercially reasonable manner and that the Secured Party shall have no
obligation to engage in public sales and no obligation to delay the sale of
any
Investment Related Property for the period of time necessary to permit the
issuer thereof to register it for a form of public sale requiring registration
under the Securities Act or under applicable state securities laws, even if
such
issuer would, or should, agree to so register it. If the Secured Party
determines to exercise its right to sell any or all of the Investment Related
Property, upon written request, each Grantor shall and shall cause each issuer
of any Pledged Stock to be sold hereunder, each partnership and each limited
liability company from time to time to furnish to the Secured Party all such
information as the Secured Party may request in order to determine the number
and nature of interest, shares or other instruments included in the Investment
Related Property which may be sold by the Secured Party in exempt transactions
under the Securities Act and the rules and regulations of the Securities and
Exchange Commission thereunder, as the same are from time to time in
effect.
7.6 Intellectual
Property.
(a) Anything
contained herein to the contrary notwithstanding, upon the occurrence and during
the continuation of an Event of Default:
(i) the
Secured Party shall have the right (but not the obligation) to bring suit or
otherwise commence any action or proceeding in the name of any Grantor, the
Secured Party or otherwise, in the Secured Party's sole discretion, to enforce
any Intellectual Property, in which event such Grantor shall, at the request
of
the Secured Party, do any and all lawful acts and execute any and all documents
required by the Secured Party in aid of such enforcement and such Grantor shall
promptly, upon demand, reimburse and indemnify the Secured Party as provided
in
Section 10 of the Credit Agreement in connection with the exercise of its rights
under this Section, and, to the extent that the Secured Party shall elect not
to
bring suit to enforce any Intellectual Property as provided in this Section,
each Grantor agrees to use all reasonable measures, whether by action, suit,
proceeding or otherwise, to prevent the infringement of any of the Intellectual
Property by others and for that purpose agrees to diligently maintain any
action, suit or proceeding against any Person so infringing as shall be
necessary to prevent such infringement;
-22-
(ii) upon
written demand from the Secured Party, each Grantor shall grant, assign, convey
or otherwise transfer to the Secured Party an absolute assignment of all of
such
Grantor's right, title and interest in and to the Intellectual Property and
shall execute and deliver to the Secured Party such documents as are necessary
or appropriate to carry out the intent and purposes of this
Agreement;
(iii) each
Grantor agrees that such an assignment and/or recording shall be applied to
reduce the Secured Obligations outstanding only to the extent that the Secured
Party (or any Beneficiary) receives Cash Proceeds in respect of the sale of,
or
other realization upon, the Intellectual Property;
(iv) within
five (5) Business Days after written notice from the Secured Party, each Grantor
shall make available to the Secured Party, to the extent within such Grantor's
power and authority, such personnel in such Grantor's employ on the date of
such
Event of Default as the Secured Party may reasonably designate, by name, title
or job responsibility, to permit such Grantor to continue, directly or
indirectly, to produce, advertise and sell the products and services sold or
delivered by such Grantor under or in connection with the Trademarks, Trademark
Licenses, such persons to be available to perform their prior functions on
the
Secured Party's behalf and to be compensated by the Secured Party at such
Grantor's expense on a per diem, pro-rata basis consistent with the salary
and
benefit structure applicable to each as of the date of such Event of Default;
and
(v) the
Secured Party shall have the right to notify, or require each Grantor to notify,
any obligors with respect to amounts due or to become due to such Grantor in
respect of the Intellectual Property, of the existence of the security interest
created herein, to direct such obligors to make payment of all such amounts
directly to the Secured Party, and, upon such notification and at the expense
of
such Grantor, to enforce collection of any such amounts and to adjust, settle
or
compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done;
(1) all
amounts and proceeds (including checks and other instruments) received by
Grantor in respect of amounts due to such Grantor in respect of the Collateral
or any portion thereof shall be received in trust for the benefit of the Secured
Party hereunder, shall be segregated from other funds of such Grantor and shall
be forthwith paid over or delivered to the Secured Party in the same form as
so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 7.7 hereof; and
-23-
(2) Grantor
shall not adjust, settle or compromise the amount or payment of any such amount
or release wholly or partly any obligor with respect thereto or allow any credit
or discount thereon.
(b) If
(i) an
Event of Default shall have occurred and, by reason of cure, waiver,
modification, amendment or otherwise, no longer be continuing, (ii) no other
Event of Default shall have occurred and be continuing, (iii) an assignment
or
other transfer to the Secured Party of any rights, title and interests in and
to
the Intellectual Property shall have been previously made and shall have become
absolute and effective, and (iv) the Secured Obligations shall not have become
immediately due and payable, upon the written request of any Grantor, the
Secured Party shall promptly execute and deliver to such Grantor, at such
Grantor's sole cost and expense, such assignments or other transfer as may
be
necessary to reassign to such Grantor any such rights, title and interests
as
may have been assigned to the Secured Party as aforesaid, subject to any
disposition thereof that may have been made by the Secured Party; provided,
after giving effect to such reassignment, the Secured Party's security interest
granted pursuant hereto, as well as all other rights and remedies of the Secured
Party granted hereunder, shall continue to be in full force and effect; and
provided further, the rights, title and interests so reassigned shall be free
and clear of any Liens granted by or on behalf of the Secured Party and the
Beneficiaries.
(c) Solely
for the purpose of enabling the Secured Party to exercise rights and remedies
under this Section 7.6 and at such time as the Secured Party shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to
the
Secured Party, to the extent it has the right to do so, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Grantor), subject, in the case of Trademarks, to sufficient
rights to quality control and inspection in favor of such Grantor to avoid
the
risk of invalidation of said Trademarks, to use, operate under, license, or
sublicense any Intellectual Property now owned or hereafter acquired by such
Grantor, and wherever the same may be located.
7.7 Cash
Proceeds.
All
proceeds of any Collateral received by any Grantor consisting of cash, checks
and other near-cash items (collectively, "Cash
Proceeds")
shall
be held by such Grantor in trust for the Secured Party, segregated from other
funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
turned over to the Secured Party in the exact form received by such Grantor
(duly indorsed by such Grantor to the Secured Party, if required) and held
by
the Secured Party. Any Cash Proceeds received by the Secured Party (whether
from
a Grantor or otherwise): (i) if no Event of Default shall have occurred and
be
continuing, shall be held by the Secured Party for the ratable benefit of the
Beneficiaries, as collateral security for the Secured Obligations (whether
matured or unmatured) and (ii) if an Event of Default shall have occurred and
be
continuing, may, in the sole discretion of the Secured Party, (A) be held by
the
Secured Party for the ratable benefit of the Beneficiaries, as collateral
security for the Secured Obligations (whether matured or unmatured) and/or
(B)
then or at any time thereafter may be applied by the Secured Party against
the
Secured Obligations then due and owing.
-24-
SECTION
8
AGENT
The
Secured Party has been appointed to act as secured party hereunder by Lenders
and, by their acceptance of the benefits hereof, the other Beneficiaries. The
Secured Party shall be obligated, and shall have the right hereunder, to make
demands, to give notices, to exercise or refrain from exercising any rights,
and
to take or refrain from taking any action (including the release or substitution
of Collateral), solely in accordance with this Agreement and the Credit
Agreement. In furtherance of the foregoing provisions of this Section, each
Beneficiary, by its acceptance of the benefits hereof, agrees that it shall
have
no right individually to realize upon any of the Collateral hereunder, it being
understood and agreed by such Beneficiary that all rights and remedies hereunder
may be exercised solely by the Secured Party for the benefit of Lenders and
Lender Counterparties in accordance with the terms of this Section. Secured
Party may resign at any time by giving thirty (30) days' prior written notice
thereof to Lenders and the Grantors, and Secured Party may be removed at any
time with or without cause by an instrument or concurrent instruments in writing
delivered to the Grantors and Secured Party signed by the Required Lenders.
Upon
any such notice of resignation or any such removal, Required Lenders shall
have
the right, upon five (5) Business Days' notice to the Secured Party, following
receipt of the Grantors' consent (which shall not be unreasonable withheld
or
delayed and which shall not be required while an Event of Default exists),
to
appoint a successor Secured Party. Upon the acceptance of any appointment as
Secured Party hereunder by a successor Secured Party, that successor Secured
Party shall thereby be deemed the successor Secured Party under this Agreement.
Upon the acceptance of any appointment as Administrative Agent under the terms
of the Credit Agreement by a successor Administrative Agent, that successor
Administrative Agent shall thereby also be deemed the successor Secured Party
and such successor Secured Party shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring or removed
Secured Party under this Agreement, and the retiring or removed Secured Party
under this Agreement shall promptly (i) transfer to such successor Secured
Party all sums, Securities and other items of Collateral held hereunder,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Secured Party
under this Agreement, and (ii) execute and deliver to such successor
Secured Party such amendments to financing statements, and take such other
actions, as may be necessary or appropriate in connection with the assignment
to
such successor Secured Party of the security interests created hereunder,
whereupon such retiring or removed Secured Party shall be discharged from its
duties and obligations under this Agreement. After any retiring or removed
Secured Party's resignation or removal hereunder as the Secured Party, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was the Secured
Party
hereunder.
SECTION
9
CONTINUING
SECURITY INTEREST; TRANSFER OF LOANS
This
Agreement shall create a continuing security interest in the Collateral and
shall remain in full force and effect until the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments, be binding
upon
each Grantor, its successors and assigns, and inure, together with the rights
and remedies of the Secured Party hereunder, to the benefit of the Secured
Party
and its successors, transferees and assigns. Without limiting the generality
of
the foregoing, but subject to the terms of the Credit Agreement, any Lender
may
assign or otherwise transfer any Loans held by it to any other Person, and
such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise. Upon the payment in full of
all
Secured Obligations, the cancellation or termination of the Commitments, the
security interest granted hereby shall terminate hereunder and of record and
all
rights to the Collateral shall revert to Grantors. Upon any such termination
the
Secured Party shall, at Grantors' expense, execute and deliver to Grantors
such
documents as Grantors shall reasonably request to evidence such
termination.
-▇▇-
▇▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇; SECURED PARTY MAY PERFORM
Except
for the exercise of reasonable care in the custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
the
Secured Party shall have no duty as to any Collateral or as to the taking of
any
necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. The Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in
its
possession if such Collateral is accorded treatment substantially equal to
that
which the Secured Party accords its own property. Neither the Secured Party
nor
any of its directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon all or any part of the Collateral or for
any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or otherwise. If any Grantor
fails to perform any agreement contained herein, the Secured Party may itself
perform, or cause performance of, such agreement, and the expenses of the
Secured Party incurred in connection therewith shall be payable by each Grantor
under Section 10.2 of the Credit Agreement.
SECTION
11
MISCELLANEOUS
Any
notice required or permitted to be given under this Agreement shall be given
in
accordance with Section 10.1 of the Credit Agreement. No failure or delay on
the
part of the Secured Party in the exercise of any power, right or privilege
hereunder or under any other Transaction Document shall impair such power,
right
or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right
or
privilege preclude other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement and
the other Transaction Documents are cumulative to, and not exclusive of, any
rights or remedies otherwise available. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. All
covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that
it
would be permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence of a Default
or
an Event of Default if such action is taken or condition exists. This Agreement
shall be binding upon and inure to the benefit of the Secured Party and Grantors
and their respective successors and assigns. No Grantor shall, without the
prior
written consent of the Secured Party given in accordance with the Credit
Agreement, assign any right, duty or obligation hereunder. This Agreement and
the other Transaction Documents embody the entire agreement and understanding
between Grantors and the Secured Party and supersede all prior agreements and
understandings between such parties relating to the subject matter hereof and
thereof. Accordingly, the Transaction Documents may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties. This Agreement
may
be executed in one or more counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but
one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
-26-
THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF
THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS (OTHER
THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
LAW).
[Remainder
of page intentionally left blank.]
-27-
IN
WITNESS WHEREOF, each Grantor and the Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
|
GRANTORS:
TEKOIL
AND GAS GULF COAST, LLC,
a Delaware limited liability company |
||
|
By:
Tekoil & Gas Corporation, its Managing
Member
|
||
| |
|
|
| By: | /s/ ▇▇▇▇ ▇. Western | |
|
Name:
▇▇▇▇ ▇▇▇▇▇▇▇
|
||
|
Title:
CEO and Chairman of the Board of Directors
|
||
Signature
Page to Pledge and Security Agreement
|
SECURED
PARTY:
▇.
▇▇▇▇ & COMPANY,
as Administrative Agent
|
||
| By: | /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |
|
Authorized
Signatory
▇▇▇▇▇▇▇
▇▇▇▇▇▇
Managing
Director
|
||
SCHEDULE
4.1
GENERAL
INFORMATION
|
(A)
|
Full
Legal Name, Type of Organization, Jurisdiction of Organization, Chief
Executive Office/Sole Place of Business and Organizational Identification
Number of each Grantor:
|
|
Full
Legal
Name
|
Type
of
Organization |
Jurisdiction
of
Organization |
Chief
Executive Office
|
Organization
I.D.# |
||||
|
Tekoil
and Gas Gulf Coast, LLC
|
Limited
liability company
|
Delaware
|
▇▇▇▇▇
▇-▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
|
4286069
|
(B) Other
Names (including any Trade-Name or Fictitious Business Name) under which each
Grantor has conducted business for the past five (5) years:
Masters
Acquisition Co., LLC, a Delaware limited liability company
(C) Changes
in Name, Jurisdiction of Organization, Chief Executive Office and Corporate
Structure within past five (5) years:
Masters
Acquisition Co., LLC, a Delaware limited liability company
|
(D)
|
Filing
Offices:
|
|
Name
of Grantor
|
Filing
Jurisdiction(s)
|
|
Tekoil
and Gas Gulf Coast, LLC
|
Delaware
|
SCHEDULE
4.3
INVESTMENT
RELATED PROPERTY
Pledged
Stock:
None.
Pledged
LLC Interests:
None.
Pledged
Partnership Interests:
None.
Pledged
Trust Interests:
None.
Acquisitions:
None.
Deposit
Accounts:
|
Grantor
|
Name
of
Depositary
Bank
|
Account
Number
|
Account
Name
|
|||
|
Tekoil
and Gas Gulf Coast LLC
|
Amegy
Bank National Association
|
XXXXXXX
|
Blocked
Receivable Account
|
|||
|
Tekoil
and Gas Gulf Coast LLC
|
Amegy
Bank National Association
|
XXXXXXX
|
Master/Operating
Account
|
|||
|
Tekoil
and Gas Gulf Coast LLC
|
Amegy
Bank National Association
|
XXXXXXXXX
|
Controlled
Disbursement/
Check
Disbursements
|
SCHEDULE
4.5
LETTER
OF CREDIT RIGHTS
None.
SCHEDULE
4.6
COMMERCIAL
TORT CLAIMS
None.
SCHEDULE
4.7
VESSELS
AND CERTIFICATES OF TITLE EQUIPMENT
|
Equipment/Vessel
|
ID
No.
|
Location
|
Year
Built
|
Length
|
Depth
|
Width
|
||||||
|
Masters
Rig #1
(Slotted
Key Way Barge
|
No
Hull #
|
2005
|
200’
|
3’
|
53’
|
|||||||
|
Manitowoc
(30 ton) Crane
|
Inline
4 Cycl Detroit 150 HP
|
|||||||||||
|
▇▇▇▇
▇▇▇▇▇
|
LAFCO1224
|
Oak
Island
|
1974
|
29’
|
3”
|
10”
|
||||||
|
Miss
▇▇▇▇▇
|
JBC19893G495
|
1994
|
18’
|
1”
|
6”
|
|||||||
|
▇▇▇▇
▇▇▇▇
|
1138953
|
Oak
Island
|
1972
|
39’
|
6.5”
|
14”
|
||||||
|
Airboat
|
▇▇▇▇▇▇▇▇▇▇▇▇
|
▇▇▇
▇▇▇▇▇▇
|
▇▇▇▇
|
15’
|
0
|
8”
|
||||||
|
Kabota
Tractor 8200
|
Pt.
▇▇▇▇▇▇
|
|||||||||||
|
Kabota
Tractor B21
|
Goat
Island
|
|||||||||||
|
1998
Chevrolet S-10 Pickup Truck
|
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
|
Pt.
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2006
Ford F150 Pickup Truck
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Pt.
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2006
Ford F350 Pickup Truck
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Pt.
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-1-
EXHIBIT
A
TO
PLEDGE AND SECURITY AGREEMENT
PLEDGE
SUPPLEMENT
This
PLEDGE
SUPPLEMENT,
dated
[mm/dd/yy],
is
delivered pursuant to the Pledge and Security Agreement, dated as of May 11,
2007 (as it may be from time to time amended, restated, modified or
supplemented, the "Security
Agreement"),
among
TEKOIL
AND GAS GULF COAST, LLC,
a
Delaware
limited liability company,
the
other Grantors named therein, and ▇.
▇▇▇▇ & COMPANY,
as the
Secured Party. Capitalized terms used herein not otherwise defined herein shall
have the meanings ascribed thereto in the Security Agreement.
Grantor
hereby confirms the grant to the Secured Party set forth in the Security
Agreement of, and does hereby grant to the Secured Party, a security interest
in
all of Grantor's right, title and interest in and to all Collateral to secure
the Secured Obligations, in each case whether now or hereafter existing or
in
which Grantor now has or hereafter acquires an interest and wherever the same
may be located. Grantor represents and warrants that the attached Supplements
to
Schedules accurately and completely set forth all additional information
required pursuant to the Security Agreement and hereby agrees that such
Supplements to Schedules shall constitute part of the Schedules to the Security
Agreement.
IN
WITNESS WHEREOF,
Grantor
has caused this Pledge Supplement to be duly executed and delivered by its
duly
authorized officer as of [mm/dd/yy].
|
TEKOIL
AND GAS GULF COAST, LLC
|
||
| |
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| By: | ||
|
Name:
|
|
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Title:
|
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||
-1-
SUPPLEMENTS
TO SCHEDULES
TO
PLEDGE AND SECURITY AGREEMENT
[Insert
Required Information]
-2-
EXHIBIT
B-1
TO
PLEDGE AND SECURITY AGREEMENT
DEFAULT
DEPOSIT ACCOUNT CONTROL AGREEMENT
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”),
▇.
▇▇▇▇ & 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 XXXXXXXXin
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"), 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 have a period of time,
not exceeding [three
(3) Business Days]
(hereinafter defined) following the date on which the Financial Institution
receives a 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. 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
5. 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
Default
Deposit Account Control Agreement
(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
6. 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
7. 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
8. 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
(b) This
Agreement is the valid and legally binding obligation of the Financial
Institution.
Section
9. 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.
Default
Deposit Account Control Agreement
Section
10. 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
11. 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
|
||
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▇▇▇▇▇
▇-▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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Attention:
▇▇▇▇ ▇▇▇▇▇▇▇
|
|||
|
Telecopier:
281-364-8007
|
|||
|
Secured
Party:
|
▇.
▇▇▇▇ & Company
|
||
|
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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|||
|
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇
|
|||
|
Telecopier:
▇▇▇-▇▇▇-▇▇▇▇
|
|||
|
with
a copy to:
|
▇▇▇▇▇▇▇
Sachs E&P Capital
|
||
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▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
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Attention:
▇▇▇▇ ▇. ▇▇▇▇▇
|
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|
Telecopier:
▇▇▇-▇▇▇-▇▇▇▇
|
|||
|
Financial
Institution:
|
Amegy
Bank National Association
|
||
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Five
Post Oak Park
|
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▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Attention:
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
|
|||
|
Telecopier:
(▇▇▇) ▇▇▇-▇▇▇▇
|
Any
party
may change its address for notices in the manner set forth above.
Default
Deposit Account Control Agreement
Section
12. 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
13. 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
|
||
| |
|
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| By: | ||
|
|
||
| Name: | ||
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||
| Title: | ||
|
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||
|
▇.
▇▇▇▇ & COMPANY,
as
Secured Party
|
||
| |
|
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| By: | ||
|
|
||
| Name: | ||
|
|
||
| Title: | ||
|
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||
|
AMEGY
BANK NATIONAL ASSOCIATION
as
Financial Institution
|
||
| |
|
|
| By: | ||
|
Name:
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
Senior Vice President, Energy
Lending
|
||
Signature
page to Default Deposit Account Control Agreement
EXHIBIT
A
TO
DEFAULT DEPOSIT ACCOUNT CONTROL AGREEMENT
[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,
▇.
▇▇▇▇ & COMPANY,
as
Secured Party
|
||
| |
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| By: | ||
|
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||
|
Name:
|
||
|
|
||
|
Title:
|
||
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||
-1-
EXHIBIT
B-2
TO
PLEDGE AND SECURITY AGREEMENT
BLOCKED
DEPOSIT ACCOUNT CONTROL AGREEMENT
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”),
▇.
▇▇▇▇ & 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.
(c) On
each
Business Day the Financial Institution will initiate a federal funds wire
transfer of all collected funds (subject to the Financial Institution's funds
availability policy) in the Deposit Account to the following account of the
Secured Party (or such other account as may be designed in writing by the
Secured Party) (the "Secured
Party's Account"):
Account
Number: ______________________________________
Account
Name: ________________________________________
Receiving
Financial Institution Name: _______________________
Receiving
Financial Institution ABA Number: _________________
Attention:
____________________________________________
Reference:
___________________________________________
Blocked
Deposit Account Control Agreement
(d) The
Financial Institution has established a unique U.S. Postal Service address,
P.O.
Box ____________, Houston, Texas 77210-_________ (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. 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
5. 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
Blocked
Deposit Account Control Agreement
(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
6. 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
7. 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
8. 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
(b) This
Agreement is the valid and legally binding obligation of the Financial
Institution.
Section
9. 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.
Blocked
Deposit Account Control Agreement
Section
10. 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
11. 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
|
||
|
▇▇▇▇▇
▇-▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
|||
|
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
|
|||
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Attention:
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Telecopier:
281-364-8007
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Secured
Party:
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▇.
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Attention:
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Telecopier:
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with
a copy to:
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Sachs E&P Capital
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Attention:
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Telecopier:
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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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Attention:
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Telecopier:
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Any
party
may change its address for notices in the manner set forth above.
Section
12. 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.
Blocked
Deposit Account Control Agreement
Section
13. 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: | ||
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| Name: | ||
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| Title: | ||
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▇.
▇▇▇▇ & COMPANY,
as
Secured Party
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| By: | ||
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| Name: | ||
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Title:
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AMEGY
BANK NATIONAL ASSOCIATION
as
Financial Institution
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Name:
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
Senior Vice President, Energy
Lending
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Signature
page to Blocked Deposit Account Control Agreement
EXHIBIT
A
TO
BLOCKED DEPOSIT ACCOUNT CONTROL AGREEMENT
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:
| (a) |
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
TO
BLOCKED DEPOSIT ACCOUNT CONTROL AGREEMENT
[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,
▇.
▇▇▇▇ & COMPANY,
as
Secured Party
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| By: | ||
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Name:
|
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Title:
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Exhibit
A
to Blocked Deposit Account Control Agreement